NOVEMBER 2 2017

David Byrne, Dan Sichel, VOX: The productivity slowdown is even more puzzling than you think. One explanation given for the apparent recent slowdown in labour productivity growth in advanced economies is poor measurement. This column argues that while the available evidence on mismeasurement does not in fact provide an explanation for the slowdown, innovation is much more rapid than would be inferred from official measures, and on-going gains in the digital economy make the productivity slowdown even more puzzling. At the same time, this continued technical advance could provide the basis for a future pickup in productivity growth.

James J. Heckman, John Eric Humphries, Gregory Veramendi, IZA: The Non-Market Benefits of Education and Ability. This paper analyzes the non-market benefits of education and ability. Using a dynamic model of educational choice we estimate returns to education that account for selection bias and sorting on gains. We investigate a range of non-market outcomes including incarceration, mental health, voter participation, trust, and participation in welfare. We find distinct patterns of returns that depend on the levels of schooling and ability. Unlike the monetary benefits of education, the benefits to education for many non-market outcomes are greater for low-ability persons. College graduation decreases welfare use, lowers depression, and raises self-esteem more for less-able individuals.

Alana Semuels, The Atlantic: Why Does Sweden Have So Many Start-Ups? Studies have found that the more a country’s government spends per capita, the smaller the number of start-ups it tends to have per worker—the idea being that high income taxes reduce entrepreneurs’ expected gains and thus their incentive to launch new companies. And yet Sweden excels in promoting the formation of ambitious new businesses, on a level that’s unexpected for a country whose population of roughly 10 million puts it at 89th in the world in population size. Global companies like Spotify, the music-streaming service; Klarna, the online-payment firm; and King, the gaming company, were all founded here. Stockholm produces the second-highest number of billion-dollar tech companies per capita, after Silicon Valley, and in Sweden overall, there are 20 start-ups—here defined as companies of any size that have been around for at most three years—per 1,000 employees, compared to just five in the United States.

Richard Sutch, Social Science History: The One Percent across Two Centuries: A Replication of Thomas Piketty's Data on the Concentration of Wealth in the United States. This exercise reproduces and assesses the historical time series on the top shares of the wealth distribution for the United States presented by Thomas Piketty in Capital in the Twenty-First Century. I conclude that Piketty's data for the wealth share of the top 10 percent for the period 1870 to 1970 are unreliable. The values he reported are manufactured from the observations for the top 1 percent inflated by a constant 36 percentage points. Piketty's data for the top 1 percent of the distribution for the nineteenth century (1810–1910) are also unreliable. They are based on a single mid-century observation that provides no guidance about the antebellum trend and only tenuous information about the trend in inequality during the Gilded Age. The values Piketty reported for the twentieth century (1910–2010) are based on more solid ground, but have the disadvantage of muting the marked rise of inequality during the Roaring Twenties and the decline associated with the Great Depression. This article offers an alternative picture of the trend in inequality based on newly available data and a reanalysis of the 1870 Census of Wealth. This article does not question Piketty's integrity.

OECD: Preventing Ageing Unequally. Income at the same age used to increase from one generation to the next. Figure 1.15 shows real average income by age groups for cohorts born from the 1910s to the 1980s.13 Each successive cohort has been enjoying higher incomes than previous ones at the same age: for example, each birth decade between the 1910s and the 1950s had an income at age 60-64 that was on average 15% higher than that of the previous cohort. But the situation has changed: people born in the 1960s, who are now in their early fifties, have incomes which are not higher at the same age than those of the cohort born ten years earlier. The same applies to those born in the 1970s at age 40-44. This new pattern may well reflect the impact of the Great Recession, and the verdict is still out on whether this will result in persistently lower incomes of the affected cohorts.

The Economist, Why Finland wants the EU to abolish daylight saving time. After listening to several experts, a Finnish parliamentary committee concluded that the transition between times is anything but smooth. Changing the clocks causes short-term sleeping disorders, poorer work performance and potentially serious health problems, as well as hassle for transport and industry. Moreover, it does little to help those, like the Finns, who live at very high latitudes. In northern Finland, the sun does not set at all during the summer, and does not rise in the winter. A citizen’s initiative against time-turning deemed it a waste of time and effort, and clocked up 70,000 signatures. Despite an increasingly fragmented political landscape, this temporal topic has united the country’s politicians of all ideological orientations, from the left to the far-right. All 13 Finnish Members of European Parliament have pledged to work to abolish daylight saving time. Turkey and Russia have already scrapped it, and some American states are also questioning its usefulness. Yet Finnish MEPs will struggle to push up the agenda an issue that is both contentious and seemingly trivial. Coming from a country that gets only a few hours of sunlight a day during wintertime, they will need intense lobbying to convince EU bigwigs that every second counts.

Christopher S. Ruebeck, Joseph E. Harrington, Jr., Robert Moffitt, NBER: Handedness and Earnings. We examine whether handedness is related to performance in the labor market and, in particular, earnings. We find a significant wage effect for left-handed men with high levels of education. This positive wage effect is strongest among those who have lower than average earnings relative to those of similar high education. This effect is not found among women.