April 8 2016

Maurice Obstfeld, Gian Maria Milesi-Ferretti, Rabah Arezki, IMF: Oil Prices and the Global Economy: It’s Complicated. Even though oil is a less important production input than it was three decades ago, that reasoning should work in reverse when oil prices fall, leading to lower production costs, more hiring, and reduced inflation. But this channel causes a problem when central banks cannot lower interest rates. Because the policy interest rate cannot fall further, the decline in inflation (actual and expected) owing to lower production costs raises the real rate of interest, compressing demand and very possibly stifling any increase in output and employment. Indeed, those aggregates may both actually fall. Something like this may be going on at the present time in some economies.

Hans-Werner Sinn, Project Syndicate: Europe’s Emerging Bubbles. But the worst effects of the ECB policy may be yet to come, if the eurozone’s still-sound economies also become credit junkies. There are already some worrying signs of this. Property markets in Austria, Germany, and Luxembourg have practically exploded throughout the crisis, as a result of banks chasing borrowers with offers of loans at near-zero interest rates, regardless of their creditworthiness. In Austria, property prices have risen by nearly half since the Lehman collapse; in Luxembourg, they have risen by almost one-third. Even Germany, Europe’s largest economy, has been experiencing a massive property boom since 2010, with average urban property prices having risen by more than one-third – and by nearly half in large cities. The country is undergoing a construction boom not seen since reunification. Real estate agents have only leftovers on offer.

Judd Cramer, Alan B. Krueger, NBER: Disruptive Change in the Taxi Business: The Case of Uber. In most cities, the taxi industry is highly regulated and utilizes technology developed in the 1940s. Ride sharing services such as Uber and Lyft, which use modern internet-based mobile technology to connect passengers and drivers, have begun to compete with traditional taxis. This paper examines the efficiency of ride sharing services vis-à-vis taxis by comparing the capacity utilization rate of UberX drivers with that of traditional taxi drivers in five cities. The capacity utilization rate is measured by the fraction of time a driver has a fare-paying passenger in the car while he or she is working, and by the share of total miles that drivers log in which a passenger is in their car. The main conclusion is that, in most cities with data available, UberX drivers spend a significantly higher fraction of their time, and drive a substantially higher share of miles, with a passenger in their car than do taxi drivers. Four factors likely contribute to the higher capacity utilization rate of UberX drivers: 1) Uber’s more efficient driver-passenger matching technology; 2) the larger scale of Uber than taxi companies; 3) inefficient taxi regulations; and 4) Uber’s flexible labor supply model and surge pricing more closely match supply with demand throughout the day.

Stefan Bender, Nicholas Bloom, David Card, John Van Reenen, Stefanie Wolter, NBER: Management Practices, Workforce Selection and Productivity. Recent research suggests that much of the cross-firm variation in measured productivity is due to differences in use of advanced management practices. We use a unique data set that combines detailed survey data on the management practices of German manufacturing firms with longitudinal earnings records for their employees to study the relationship between productivity, management, worker ability, and pay.  In our preferred TFP estimates only a small fraction of this correlation is explained by the higher human capital of the average employee at better-managed firms. Overall, we conclude that workforce selection and positive pay premiums explain just under 30% of the measured impact of management practices on productivity in German manufacturing.

Kai Rehwald, Michael Rosholm, Benedicte Rouland, IZA: Does Activating Sick-Listed Workers Work? Evidence from a Randomized Experiment. Using data from a large-scale randomized controlled trial conducted in Danish job centers, this paper investigates the effects of an intensification of mandatory return-to-work activities on the subsequent labor market outcomes for sick-listed workers. Using variations in local treatment strategies, both between job centers and between randomly assigned treatment and control groups within a given job center, we compare the relative effectiveness of alternative interventions. Our results show that the use of partial sick leave increases the length of time spent in regular employment and non-reliance on benefits, and also reduces the time spent in unemployment. Traditional active labor market programs and the use of paramedical care appear to have no effect at all, or even an adverse effect.

Claudia Olivetti, M. Daniele Paserman, Laura Salisbury, NBER: Three-generation Mobility in the United States, 1850-1940: The Role of Maternal and Paternal Grandparents. This paper estimates intergenerational elasticities across three generations in the United States in the late 19th and early 20^th centuries.  We extend the methodology in Olivetti and Paserman (2015) to explore the role of maternal and paternal grandfathers for the transmission of economic status to grandsons and granddaughters.  We document three main findings.  First, grandfathers matter for income transmission, above and beyond their effect on fathers' income. Second, the socio-economic status of grandsons is influenced more strongly by paternal grandfathers than by maternal grandfathers. Third, maternal grandfathers are more important for granddaughters than for grandsons, while the opposite is true for paternal grandfathers.

Meritkotkas. In Estonia you can on streaming camera follow a sea eagle couple with eggs in the windy coast, waiting for their chicks to creep out. Link for Apple