FEBRUARY 26 2016

Alan Krueger et al.: Letter to Sanders. We are former Chairs of the Council of Economic Advisers for Presidents Barack Obama and Bill Clinton. For many years, we have worked to make the Democratic Party the party of evidence-based economic policy. We are concerned to see the Sanders campaign citing extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan—claims that cannot be supported by the economic evidence.

Whither Mortgages et al, NY FED: The Graying of American Debt. The U.S. population is aging and so are its debts. We find that aggregate debt balances held by younger borrowers have declined modestly from 2003 to 2015, with a debt portfolio reallocation away from credit card, auto, and mortgage debt, toward student debt. Debt held by borrowers between the ages of 50 and 80, however, increased by roughly 60 percent over the same time period. This shifting of debt from younger to older borrowers is of obvious relevance to markets fueled by consumer credit. It is also relevant from a loan performance perspective as consumer debt payments are being made by older debtors than ever before.

Ben S. Bernanke Blog: The relationship between stocks and oil prices. In this post we first confirm the positive correlation between stocks and oil prices, noting that it is not just a recent phenomenon. We then investigate the hypothesis that underlying changes in aggregate demand explain the oil-stocks relationship. We find that an underlying demand factor does account for much of the positive relationship, and that if, in addition, we account for shifts in market risk preferences, we can explain still more. However, even with these two factors included, a significant part of the oil-stocks correlation remains unexplained.

Eduardo Porter, NYT: Nudges Aren’t Enough for Problems Like Retirement Savings. Why don’t Americans save more for old age? Even when their employers promise to match their savings, workers often fail to salt away their earnings for the future, inexplicably leaving money on the table. Psychology has offered an answer: procrastination. And it has suggested a cure: rather than giving workers the choice to sign up for a 401(k), sign them up automatically and give them the choice to opt out.

Alistair Nolan, Dirk Pilat, OECD Benefiting from the Next Production Revolution: These new production technologies will be able to significantly boost productivity, particularly if they can be diffused across less productive firms and support an inclusive growth process. New technologies could also make production safer, as robots replace humans in the most dangerous manufacturing tasks. New production technologies also hold the promise of cleaner production and the creation of an array of products that could help meet global challenges. But there is still a low level of digital technology adoption in most businesses, preventing realisation of their full potential. Benefiting from new technology also rests on the ability of firms, workers and society to adjust to change, and on government policies that ensure that this transformation is inclusive and yields broad-based gains across the population

Wolfgang Dauth, Sebastian Findeisen, Jens Südekum, VOX: Globalisation and the nature of German manufacturing jobs. A common theme of recent trade theory models is that globalisation-related shocks induce worker sorting across industries, labour markets, and plants. However, there is little empirical evidence of shocks causing such endogenous mobility responses. This column explores how rising international trade exposure affected the job biographies and earnings profiles of German manufacturing workers since the fall of the Berlin Wall. Individuals are found to systematically adjust to globalisation, with a notable asymmetry in the individual labour market responses to positive and negative shocks. Critically, the push effects out of import-competing manufacturing industries are not mirrored by comparable pull effects into export-oriented branches.

Edward Rodrigue, Richard V. Reeves, Brookings: Four ways occupational licensing damages social mobility. It is often rather important that somebody knows what they’re doing. Few of us would board a commercial airplane, for instance, without feeling confident that the pilot was well trained and accredited. Occupational licenses are a way to set a clear competence bar in such activities. But licensing also acts to mute competition by creating barriers to market entry. There are plenty of activities where licensing is unnecessary, or unnecessarily strict, which limits market dynamism and possibly social mobility, too.

Gary Burtless, Brookings: The growing life-expectancy gap between rich and poor. Researchers have long known that the rich live longer than the poor. Evidence now suggests that the life expectancy gap is increasing, at least here the United States, which raises troubling questions about the fairness of current efforts to protect Social Security.

Danielle Paquette, Washington Post:The surprising reason why lesbians get paid more than straight women. Last year, Marieka Klawitter, professor of public policy at the University of Washington, examined 29 studies across the Western Hemisphere on wages and sexual orientation and found a 9 percent earnings premium for lesbians over heterosexual women. (Gay men, meanwhile, faced an 11 percent penalty, compared to straight men.) But another study from the University of Nevada, which used national data from the year 2000, adds a stunning asterisk to Klawitter's findings: Lesbians who had previously lived with male partners made 20 percent less than those who’d never cohabitated with a husband figure. Were men actually the drags on women’s earnings?