DECEMBER 7 2017

Almog Adir, Simon Whitaker, BoE: Do rich countries lend to poor countries? In the last few years there has been a small net overall flow of capital from advanced to emerging market economies (EMEs), in contrast to the ‘paradox’ prevailing for much of this century of capital flowing the ‘wrong’ way, uphill from poor to rich countries.  In this post we show the ‘paradox’ in the aggregate flows actually concealed private capital flowing the ‘right’ way for much of the time.  And even during recent turbulence, foreign direct investment (FDI) flows, likely to be particularly beneficial to growth, have persisted.  But EMEs could still benefit more from harnessing capital from advanced economies and Argentina has set a useful precedent as it prepares to take over the Presidency of the G20 in 2018.

 

Amanda Bayer, David Wilcox, FED: The Unequal Distribution of Economic Education: A Report on the Race, Ethnicity, and Gender of Economics Majors at US Colleges and Universities. The distribution of economic education among US college graduates is quite unequal: female and underrepresented minority undergraduates, collectively, major in economics at 0.36 the rate that white, non-Hispanic male students do. This paper makes a four-part contribution to address this imbalance. First and foremost, we provide detailed comparative data at the institution level to provoke and inform the attention of economists and senior administrators at colleges and universities, among others. Second, we establish a definition of full inclusion in economic education on college and university campuses and use that definition to evaluate the status quo and to compare institutions. Third, we illuminate the reasons why the need to improve the distribution of economic education is urgent, including the imperative to support economic policymaking. Lastly, we point the way forward, identifying both currently available resources and reasonable next steps for all involved parties to take.

 

Joshua Hyman, AEA: Does Money Matter in the Long Run? Effects of School Spending on Educational Attainment. This paper measures the effect of increased primary school spending on students’ college enrollment and completion. Using student-level panel administrative data, I exploit variation in the school funding formula imposed by Michigan’s 1994 school finance reform, Proposal A. Students exposed to $1,000 (10 percent) more spending were 3 percentage points (7 percent) more likely to enroll in college and 2.3 percentage points (11 percent) more likely to earn a postsecondary degree. The effects were concentrated among districts that were urban and suburban, lower poverty, and higher achieving at baseline. Districts targeted the marginal dollar toward schools serving less-poor populations within the district.

 

Elizabeth Dhuey, David Figlio, Krzysztof Karbownik, Jeffrey Roth, NBER: School Starting Age and Cognitive Development. We present evidence of a positive relationship between school starting age and children’s cognitive development from age 6 to 15 using a regression discontinuity design and large-scale population-level birth and school data from the state of Florida. We estimate effects of being relatively old for grade (being born in September versus August) that are remarkably stable – always just around 0.2 SD difference in test scores – across a wide range of heterogeneous groups, based on maternal education, poverty at birth, race/ethnicity, birth weight, gestational age, and school quality. While the September-August difference in kindergarten readiness is dramatically different by subgroup, by the time students take their first exams, the heterogeneity in estimated effects effectively disappears. We document substantial variation in compensatory behaviors targeted towards young for grade children. While the more affluent families tend to redshirt their children, young for grade children from less affluent families are more likely to be retained in grades prior to testing. School district practices regarding retention and redshirting are correlated with improved outcomes for the groups less likely to use those remediation approaches (i.e., retention in the case of more-affluent families and redshirting in the case of less-affluent families.) We also study college and juvenile detention outcomes using administrative data from a large Florida school district, and show that being an older age at school entry increases children’s college attainment and reduces the likelihood of being incarcerated for juvenile crime.

 

Matthew Smith et al: US Treasury Department. Capitalists in the Twenty-First Century. Have passive rentiers replaced the working rich at the top of the U.S. income distribution? Using administrative data linking 10 million firms to their owners, this paper shows that private business owners who actively manage their firms are key for top income inequality. Private business income accounts for most of the rise of top incomes since 2000 and the majority of top earners receive private business income most of which accrues to active owner-managers of mid-market firms in relatively skill-intensive and unconcentrated industries. Profit falls substantially after premature owner deaths. Top-owned firms are twice as profitable per worker as other firms despite similar risk, and rising profitability without rising scale explains most of their profit growth. Together, these facts indicate that the working rich remain central to rising top incomes in the twenty-first century.

 

Federica Liberini, Andrew J. Oswald, Eugenio Proto, Michela Redoano, IZA: Was Brexit Caused by the Unhappy and the Old? This paper uses newly released information, from the Understanding Society data set, to examine the characteristics of individuals who were for and against Brexit. Two key findings emerge. First, unhappy feelings contributed to Brexit. However, contrary to commonly heard views, the key channel of influence was not through general dissatisfaction with life. It was through a person's narrow feelings about his or her own financial situation. Second, despite some commentators' guesses, Brexit was not caused by old people. Only the very young were substantially pro-Remain.

 

Trenton G. Smith, Steven Stillman, Stuart Craig, IZA: 'Rational Overeating' in a Feast-or-Famine World: Economic Insecurity and the Obesity Epidemic. Obesity rates have risen dramatically in the US since the 1980s, but well-identified studies have struggled to explain the magnitude of the observed changes. In this paper, we estimate the causal impact of economic insecurity on obesity rates. Specifically, we construct a synthetic panel of demographic groups over the period 1988 to 2012 by combining the newly developed Economic Security Index (ESI) with data from the National Health and Nutrition Examination Surveys (NHANES). According to our estimates, increased economic insecurity over this time period explains 50% of the overall population-level increase in obesity.

 

Phoebe Weston, Mail: Lefties are good at fast-paced sports such as tennis and cricket because their technique confuses opponents. Greater the time pressures in a game, the greater the number of lefties. In sports like cricket and table tennis it was a great advantage to be left-handed. In slower games like distribution of left-handers mirrored the general population. Dr Florian Loffing believes his findings are supported by the 'fighting hypothesis'. This suggests unfamiliarity gives people an edge in combat.