Mai Chi Dao et al., IMF: Drivers of Declining Labor Share of Income. After being largely stable in many countries for decades, the share of national income paid to workers has been falling since the 1980s. Chapter 3 of the April 2017 World Economic Outlook finds that this trend is driven by rapid progress in technology and global integration. In advanced economies, about half of the decline in labor shares can be traced to the impact of technology. The decline was driven by a combination of rapid progress in information and telecommunication technology, and a high share of occupations that could be easily be automated. Global integration—as captured by trends in final goods trade, participation in global value chains, and foreign direct investment—also played a role. Its contribution is estimated at about half that of technology

Andreas Lichter, IZA: Benefit Duration and Job Search Effort: Evidence from a Natural Experiment. The results of this study provide substantial support for strategic job search behavior in response to the generosity of the benefit scheme: the extension of the benefit duration caused job search effort to significantly decrease, lowering the number of filed applications and the probability of applying for a job that requires moving. In line with theory, it is shown that the reduction in search effort is accompanied by a significant decrease in the short-run job-finding rate. Instrumental variables estimates further provide causal evidence on the direct relationship between search effort and unemployment duration: a 10 percent increase in the number of filed job applications is found to increase the short-run job-finding probability by 1.3 percentage points.

Edwin Leuven, Sturla Andreas Løkken, IZA: Long Term Impacts of Class Size in Compulsory School. How does class size in compulsory school affect peoples' long run education and earnings? We use maximum class size rules and Norwegian administrative registries allowing us to observe outcomes up to age 48. We do not find any indication of beneficial effects of class size reduction in compulsory school. For a 1 person reduction in class size we can rule out effects on income as small as 0.087 percent in primary school and 0.12 percent in middle school. Population differences in parental background, school size or competitive pressure do not appear to reconcile our findings with previous studies.

Fatih Guvenen, Greg Kaplan, University of Chicago: Top Income Inequality in the 21st Century: Some Cautionary Notes. Since 2000, different measures of top income inequality have exhibited very different trends. Top income shares based on measures of total income show a continued rise, whereas top income shares based on wage and salary income show no increase in inequality post-2000. The most important difference between these two measures of income is the income that accrues to S-corporations…But interpreting trends in the S-corporation component is extremely difficult. Feenberg and Poterba (1993), Gordon and Slemrod (2002), and Cooper et al. (2016) warn that much of the recent increase in S-corporation income is income that previously accrued to C-corporations. Such income is not “new” income earned by top earners but is simply income that was previously labeled as corporate income rather than household income.

Jon Kleinberg, NBER: Human Decisions and Machine Predictions. We examine how machine learning can be used to improve and understand human decision-making. We focus on when judges must decide where defendants will await trial—at home or in jail. Our results suggest potentially large welfare gains: a policy simulation shows crime can be reduced by up to 24.8% with no change in jailing rates, or jail populations can be reduced by 42.0% with no increase in crime rates. Moreover, we see reductions in all categories of crime, including violent ones. Importantly, such gains can be had while also significantly reducing the percentage of African-Americans and Hispanics in jail. We find similar results in a national dataset as well.