JUNE 23 2016

Greg Kaplan, Sam Schulhofer-Wohl, NBER: Inflation at the Household Level. We use scanner data to estimate inflation rates at the household level. Households' inflation rates are remarkably heterogeneous, with an interquartile range that varies between 6.2 and 9.0 percentage points on an annual basis. Most of the heterogeneity comes not from variation in broadly defined consumption bundles but from variation in prices paid for the same types of goods — a source of variation that previous research has not measured. The entire distribution of household inflation rates shifts in parallel with aggregate inflation. Deviations from aggregate inflation exhibit only slightly negative serial correlation within each household over time, implying that the difference between a household's price level and the aggregate price level is persistent. Together, the large cross-sectional dispersion and low serial correlation of household-level inflation rates mean that almost all of the variability in a household's inflation rate over time comes from variability in household-level prices relative to average prices for the same goods, not from variability in the aggregate inflation rate. We provide a characterization of the stochastic process for household inflation that can be used to calibrate models of household decisions.

Wolfgang Keller, Hâle Utar, NBER:International Trade and Job Polarization: Evidence at the Worker-Level. This paper examines the role of international trade for job polarization, the phenomenon in which employment for high- and low-wage occupations increases but mid-wage occupations decline. With employer-employee matched data on virtually all workers and firms in Denmark between 1999 and 2009, we use instrumental-variables techniques and a quasi-natural experiment to show that import competition is a major cause of job polarization. Import competition with China accounts for about 17% of the aggregate decline in mid-wage employment. Many mid-skill workers are pushed into low-wage service jobs while others move into high-wage jobs. The direction of movement, up or down, turns on the skill focus of workers’ education. Workers with vocational training for a service occupation can avoid moving into low-wage service jobs, and among them workers with information-technology education are far more likely to move into high-wage jobs than other workers.

Angus Deaton, Project Syndicate: Rethinking Robin Hood. Huge strides have undoubtedly been made in reducing global poverty, more through growth and globalization than through aid from abroad. While impressive and wholly welcome, poverty reduction has not come without a cost. The globalization that has rescued so many in poor countries has harmed some people in rich countries, as factories and jobs migrated to where labor is cheaper. This seemed to be an ethically acceptable price to pay, because those who were losing were already so much wealthier (and healthier) than those who were gaining. Globalization is less splendid for those who not only don’t reap its benefits, but suffer from its impact. We have long known that less-educated and lower-income Americans, for example, have seen little economic gain for four decades, and that the bottom end of the US labor market can be a brutal environment. But just how badly are these Americans suffering from globalization? Are they much better off than the Asians now working in the factories that used to be in their hometowns?

Jonas Helgertz, Kirk Scott, Christopher D. Smith,  IZA: Parents’ years in Sweden and children’s educational performance. This paper assesses the intergenerational effect of immigrant parents’ incorporation experiences, measured as time in Sweden, on the educational performance of their children, using full Swedish population registry data for 22 cohorts. Employing family fixed-effects, we examine final course grades and national standardized test scores in Swedish and math by parents’ country of origin. Results show a positive effect of parents’ time in Sweden on their children’s performance in Swedish, but not for math performance. These results demonstrate the importance of parents’ linguistic acculturation on their children’s educational performance.

OECD: Equations and Inequalities - Making Mathematics Accessible to All. More than ever, students need to engage with mathematical concepts, think quantitatively and analytically, and communicate using mathematics. All these skills are central to a young person’s preparedness to tackle problems that arise at work and in life beyond the classroom. But the reality is that many students are not familiar with basic mathematics concepts and, at school, only practice routine tasks that do not improve their ability to think quantitatively and solve real-life, complex problems. One way forward is to ensure that all students spend more “engaged” time learning core mathematics concepts and solving challenging mathematics tasks. The opportunity to learn mathematics content – the time students spend learning mathematics topics and practising maths tasks at school – can accurately predict mathematics literacy. Differences in students’ familiarity with mathematics concepts explain a substantial share of performance disparities in PISA between socio-economically advantaged and disadvantaged students. Widening access to mathematics content can raise average levels of achievement and, at the same time, reduce inequalities in education and in society at large.

Valerie Wilson, EPI: People of color will be a majority of the American working class in 2032. This estimate, based on long-term labor force projections from the Bureau of Labor Statistics and trends in college completion by race and ethnicity, is 11 years sooner than the Census Bureau projection for the overall U.S. population, which becomes “majority-minority” in 2043. Wage stagnation is a universal problem for the working class, regardless of race, ethnicity, or gender. This is an area of immense common ground, because in order to deal with class inequality (a cause of wage stagnation), we have to deal with racial disparities. At the same time, reducing racial inequality means also addressing class inequality.