OCTOBER 20 2016

Etienne Gagnon, Benjamin K. Johannsen, David Lopez-Salido, FED: Understanding the New Normal: The Role of Demographics. Since the Great Recession, the U.S. economy has experienced low real GDP growth and low real interest rates, including for long maturities. We show that these developments were largely predictable by calibrating an overlapping-generation model with a rich demographic structure to observed and projected changes in U.S. population, family composition, life expectancy, and labor market activity. The model accounts for a 1¼{percentage-point decline in both real GDP growth and the equilibrium real interest rate since 1980|essentially all of the permanent declines in those variables according to some estimates. The model also implies that these declines were especially pronounced over the past decade or so because of demographic factors most-directly associated with the post-war baby boom and the passing of the information technology boom. Our results further suggest that real GDP growth and real interest rates will remain low in coming decades, consistent with the U.S. economy having reached a “new normal."

Alan B. Krueger, Princeton University: Where Have All the Workers Gone? The labor force participation rate in the U.S. has declined since 2007 primarily because of population aging and ongoing trends that preceded the recession. The participation rate has evolved differently, and for different reasons, across demographic groups. A rise in school enrollment has largely offset declining participation for young workers since the 1990s. Participation in the labor force has been declining for prime age men for decades, and about half of prime age men who are not in the labor force (NLF) may have a serious health condition that is a barrier to work. Nearly half of prime age NLF men take pain medication on a daily basis, and in nearly two-thirds of cases they take prescription pain medication. The labor force participation rate has stopped rising for cohorts of women born after 1960. Prime age men who are out of the labor force report that they experience notably low levels of emotional well-being throughout their days and that they derive relatively little meaning from their daily activities.

The Economist: The superstar company. A giant problem. There are some worrying similarities to a much earlier era. In 1860-1917 the global economy was reshaped by the rise of giant new industries (steel and oil) and revolutionary new technologies (electricity and the combustion engine). These disruptions led to brief bursts of competition followed by prolonged periods of oligopoly. The business titans of that age reinforced their positions by driving their competitors out of business and cultivating close relations with politicians. The backlash that followed helped to destroy the liberal order in much of Europe. So, by all means celebrate the astonishing achievements of today’s superstar companies. But also watch them. The world needs a healthy dose of competition to keep today’s giants on their toes and to give those in their shadow a chance to grow.

Peter Coy, Businessweek: How to Raise the Retirement Age for People Who Want to Work. Most Americans are healthy enough to work longer than they actually do. The economists look at the health of those men and what share of them is working and compare them with men at older ages. The study finds that health declines slowly with age, but work declines rapidly. The pattern is the same for women. Poor health, in other words, isn't what's pushing most people into retirement. Unfortunately, there's no way to raise the retirement age that's problem-free.

Jennifer Doleac, Benjamin Hansen, TIME: How Hiding Criminal Records Hurts Black and Hispanic Men. If we want to reduce incarceration rates, we must help ex-offenders build stable lives outside prison walls. One common method is to “Ban The Box,” which amounts to preventing employers from asking about applicants’ criminal records until late in the application process. (The policy gets its name from the box that applicants are asked to check if they’ve been convicted of a crime.) This seems like a good idea. But recent evidence suggests that BTB laws do more harm than good. They actually decrease employment for young, low-skilled black and Hispanic men overall, a group that already struggles to get work even when they have committed no crime.

Carl Gornitzki, Agne Larsson, Bengt Fadeel, BMJ: Freewheelin’ scientists: citing Bob Dylan in the biomedical literature. In September 2014 it emerged that a group of scientists at the Karolinska Institute in Sweden had been sneaking the lyrics of Bob Dylan into their papers as part of a long running bet. Was this Dylan citing unique to the Karolinska Institute? A 2015 analysis published in The BMJ found 727 potential references to Dylan songs in a search of the Medline biomedical journals database; the authors ultimately concluded that 213 of the references could be “classified as unequivocally citing Dylan.” The earliest article the authors identified appeared in 1970 in The Journal of Practical Nursing. The title? “The Times They Are a-Changin’.