JANUARY 19 2017

Larry Summers Blog: Public Infrastructure Investment in the National Interest. The Trump campaign proposals are wholly ill conceived, I remain convinced that an increased and improved program of public infrastructure investment would be very much in the American national interest.  The case for public investment today rests largely on grounds of long run policy and microeconomic efficiency given the sub-5 percent unemployment rate. Improved infrastructure has benefits that go well beyond what is picked up in standard rate of return on investment calculations. There is a particularly compelling case for maintenance investment. There are important new infrastructure investment projects that almost certainly have high rates of return. While the case for expanded infrastructure investment does not depend on Keynesian stimulus or aggregate demand considerations, secular stagnation risks reinforce the argument for increased public investment.

Martin Wolf, FT: The economic peril of aggrieved nationalism. Theresa May, the UK’s Conservative prime minister, condemns its believers as “citizens of the world”, who are citizens of nowhere. The resentment she evokes is, to a degree, justified. Those who did well out of globalisation and post-communist transition paid far too little attention to those who did not. They assumed that a rising tide lifts all boats. They prospered hugely, often with little apparent justification. They created a financial crisis that devastated their reputation for probity and competence, with dire political results. They assumed that bonds of belonging which meant little to themselves meant little to those left behind. It is not surprising that those who find the world transformed by social and economic change succumb to aggrieved nationalism and protectionism.

Torben M. Andersen, Journal of European Labor Studies: Automatic stabilizers—the intersection of labour market and fiscal policies. The Great Recession has revived aggregate demand management policies. Automatic stabilizers are not a result of macro design but the structure of the social safety net and the taxation system. The participation tax is a key determinant of the strength of the automatic stabilizers. Paradoxically, the disincentive effects of high participation taxes are often discussed at the same time as automatic stabilizers are praised. The paper considers the sources of automatic stabilizers and whether they (un)intentionally have been weakened via structural reforms to strengthen work incentives. It is considered whether it is possible to maintain strong automatic stabilizers without jeopardizing incentives via the design of the social safety net (workfare) or business cycle-dependent unemployment insurance. The criticism that automatic stabilizers may prolong downturns is also considered.

Stephan Kampelmann, François Rycx, Journal of Migration: Wage discrimination against immigrants: measurement with firm-level productivity data. This paper is one of the first to use employer-employee data on wages and labor productivity to measure discrimination against immigrants. We build on an identification strategy proposed by Bartolucci (Ind Labor Relat Rev 67(4):1166–1202, 2014) and address firm fixed effects and endogeneity issues through a diff GMM-IV estimator. Our models also test for gender-based discrimination. Empirical results for Belgium suggest significant wage discrimination against women and (to a lesser extent) against immigrants. We find no evidence for double discrimination against female immigrants. Institutional factors such as firm-level collective bargaining and smaller firm sizes are found to attenuate wage discrimination against foreigners, but not against women.

Guido Alfani, VOX: The top rich in Europe in the long run of history (1300 to present day). Recent research into the share of wealth owned by the richest households has given us important insights into trends in inequality. This column shows how we can now estimate the share of wealth owned by the richest households in Europe, and how many they numbered, from 1300 to the present day. Throughout this time, the only significant declines in inequality were the result of the Black Death and the World Wars.

Ernesto Dal Bo, Frederico Finan, Olle Folke, Torsten Persson, Johanna Rickne, IIES: Who Becomes a Politician? Can a democracy attract competent leaders, while attaining broad representation? Economic models suggest that free-riding incentives and lower opportunity costs give the less competent a comparative advantage at entering political life. Also, if elites have more human capital, selecting on competence may lead to uneven representation. We examine patterns of political selection among the universe of municipal politicians in Sweden using extraordinarily rich data on competence traits and social background for the entire population. We document four new facts: First, politicians are on average signicantly smarter and better leaders than the population they represent. Second, the representation of social background, whether measured by intergenerational earnings or social class, is remarkably even. Third, there is at best a weak tradeoff in selection between competence and representation. Fourth, both material and intrinsic motives matter in selection, as does screening by political parties.

EurekAlert: Think chicken -- think intelligent, caring and complex. Chickens are not as clueless or "bird-brained" as people believe them to be. They have distinct personalities and can outmaneuver one another. They know their place in the pecking order, and can reason by deduction, which is an ability that humans develop by the age of seven. Chicken intelligence is therefore unnecessarily underestimated and overshadowed by other avian groups. So says Lori Marino, senior scientist for The Someone Project, a joint venture of Farm Sanctuary and the Kimmela Center in the USA, who reviewed the latest research about the psychology, behavior and emotions of the world's most abundant domestic animal.