Atif Mian, Amir
Sufi, NBER: Who Bears the Cost of Recessions? The Role of House Prices and
Household Debt. This chapter reviews
empirical estimates of differential income and consumption growth across
individuals during recessions. Most existing studies examine the variation in
income and consumption growth across individuals by sorting on ex ante or
contemporaneous income or consumption levels. We build on this literature by
showing that differential shocks to household net worth coming from elevated
household debt and the collapse in house prices play an underappreciated role.
Using zip codes in the United States as the unit of analysis, we show that the
decline in numerous measures of consumption during the Great Recession was much
larger in zip codes that experienced a sharp decline in housing net worth. In
the years prior to the recession, these same zip codes saw high house price
growth, a substantial expansion of debt by homeowners, and high consumption
growth. We discuss what models seem most consistent with this striking pattern
in the data, and we highlight the increasing body of macroeconomic evidence on
the link between household debt and business cycles. Our main conclusion is
that housing and household debt should play a larger role in models exploring
the importance of household heterogeneity on macroeconomic outcomes and
policies.
Roger Backhouse,
Beatrice Cherrier, University of Birmingham: 'It's Computerization, Stupid!'
The Spread of Computers and the Changing Roles of Theoretical and Applied
Economics. This paper
challenges the widely held notion that the developments in computing are
sufficient to explain the recent turn to applied economics. Developments in
computer hardware were undoubtedly important. Yet, economists' appropriation of
the new techniques allowed by computerization were highly selective, and
influenced by the development of software and ties with other scientific
communities, by the availability of business and governmental data, by
salesmanship to policy-makers, and by how epistemologically acceptable these
approaches were made to other economists. In particular, theoretical work was
not be transformed by computers the way it was in physics or biology. We
conjecture that the most profound effect of the increased availability of
computers may have been to challenge the demarcation between theory and applied
work.
Tomi Kyyrä, Juha Tuomala, IZA: Does Experience Rating
Reduce Disability Inflow? This study
explores whether the experience rating of employers’ disability insurance premiums
affects the inflow of older employees to disability benefits in Finland. To
identify the causal effect of experience rating, we exploit a pension reform
that extended the coverage of the experience-rated premiums. The results show
that a new disability benefit claim can cause substantial cost to the former
employer through an increased premium. Nonetheless, we find no evidence of the
significant effects of experience rating on the disability inflow. The lack of
the behavioral effects may be due to the complexity of experience rating
calculations and/or limited employer awareness.
Scott E. Carrell,
Mark Hoekstra, Elira Kuka, NBER: The Long-Run Effects of Disruptive Peers. A large and growing literature has documented the
importance of peer effects in education. However, there is relatively little
evidence on the long-run educational and labor market consequences of childhood
peers. We examine this question by linking administrative data on elementary school
students to subsequent test scores, college attendance and completion, and
earnings. To distinguish the effect of peers from confounding factors, we
exploit the population variation in the proportion of children from families
linked to domestic violence, who were shown by Carrell and Hoekstra (2010,
2012) to disrupt contemporaneous behavior and learning. Results show that
exposure to a disruptive peer in classes of 25 during elementary school reduces
earnings at age 26 by 3 to 4 percent. We estimate that differential exposure to
children linked to domestic violence explains 5 to 6 percent of the rich-poor
earnings gap in our data, and that removing one disruptive peer from a
classroom for one year would raise the present discounted value of classmates' future
earnings by $100,000.
Mark Leonard,
Project Syndicate: Last Man Standing. Much of modern geopolitics seems to be following the plot from Game of
Thrones, with many countries under so much political and economic stress that
their only hope is that their rivals collapse before they do. So their
governments cling to power while exploiting rivals’ internal weaknesses.
Russian President Vladimir Putin is the prime example. His recent campaigns in
Syria and Ukraine may look like the actions of a geopolitical buccaneer. But
the root of his adventurism is domestic weakness. Russia’s annexation of
Crimea, for example, was in large part an attempt to provide Putin’s regime
with renewed legitimacy following a winter of discontent, during which
demonstrators took to the streets to protest his return to the presidency.
Greg Ip WSJ: It’s
Not the Economy, Stupid. Social disarray
or cohesion are not always driven by economic ups and downs, as the 1960s
attest. Economics cannot really explain why rapid growth in living standards
coincided with so much political upheaval, just as it cannot explain why long
periods of stagnation, as Japan has endured since the 1990s, are met with
relative equanimity. Economics can’t explain why Britons may leave the European
Union when the preponderance of evidence is that membership has made them
richer. There is no way to predict the effect of so many different forces on
the political choices that voters make. And even if there were, you would
probably still not predict the rise of Mr. Trump, who got where he is by
breaking every rule of conventional political and economic wisdom. Ultimately,
the best explanation may be that he isn’t the product of larger economic
forces: he’s the product of Donald Trump.
Eileen Moery,
Robert J. Calin-Jageman, Social Psychological and Personality Science (2016):
Direct and Conceptual Replications of Eskine (2013). Organic Food Exposure Has
Little to No Effect on Moral Judgments and Prosocial Behavior. Is there a dark side to organic food? Eskine reported
that participants exposed to organic food became much more morally judgmental
and much less prosocial relative to participants exposed to neutral or comfort
foods. This research sparked tremendous media interest, but was based on one
experiment with a small sample size. We report three attempts to replicate
Eskine using samples conferring high power, preregistered analysis plans, and
original materials. Across two direct replications and an online conceptual
replication, we found that organic food exposure has little to no effect on
moral. Mere exposure to organic food is probably not sufficient to
substantially change moral behavior.
Barry Ritholtz,
The Bic Picture: 10 Cognitive Biases That Affect Your Everyday Decisions. Bandwagon effect, Availability Heuristic….
Kishore Mahbubani,
Lawrence H. Summers, Foreign Affairs: The Fusion of Civilizations. The Case for Global Optimism. To put it simply, the
great world civilizations, which used to have detached and separate identities,
now have increasingly overlapping areas of commonality. Most people around the
world now have the same aspirations as the Western middle classes: they want
their children to get good educations, land good jobs, and live happy,
productive lives as members of stable, peaceful communities. Instead of feeling
depressed, the West should be celebrating its phenomenal success at injecting
the key elements of its worldview into other great civilizations.
Ghazala Azmat et al. IZA: What You Don't Know... Can't
Hurt You? A Field Experiment on Relative Performance Feedback in Higher
Education. This paper studies the
effect of providing feedback to college students on their position in the grade
distribution by using a randomized control experiment. This information was
updated every six months during a three-year period. In the absence of treatment,
students' underestimate their position in the grade distribution. The treatment
significantly improves the students' self-assessment. We find that treated
students experience a significant decrease in their educational performance, as
measured by their accumulated GPA and number of exams passed, and a significant
improvement in their self-reported satisfaction, as measured by survey
responses obtained after information is provided but before students take their
exams. Those effects, however, are short lived, as students catch up in
subsequent periods. Moreover, the negative effect on performance is driven by
those students who underestimate their position in the absence of feedback.
Those students who overestimate initially their position, if anything, respond
positively.
Indivar
Dutta-Gupta et al., Georgetown Center
on Poverty and Inequality: Lessons Learned From 40 Years of Subsidized
Employment Programs. Subsidized
employment programs have a wide range of potential benefits. First, these
programs provide an important source of income to participating workers.
Second, a number of experimentally-evaluated subsidized employment programs
have successfully raised earnings and employment, with some programs providing
lasting labor market impacts.4 Such programs have also decreased family public
benefit receipt, raised school outcomes among the children of workers, boosted
workers’ school completion, lowered criminal justice system involvement among
both workers and their children, improved psychological well-being, and reduced
longer-term poverty. There may be additional positive effects, such as increased
child support.
Jutta
Viinikainen et al., IZA: Born Entrepreneur? Adolescents' Personality Characteristics and
Self-Employment in Adulthood. Is there an
entrepreneurial personality and does it appear early in life? We provide a new
answer on this question by using the so-called Type A behavior traits
(Aggression, Leadership, Responsibility, and Eagerness-Energy), measured in
childhood and adolescence, and examining their relationship to self-employment
propensity in adulthood. Using data from the Young Finns Study linked to the
Finnish Longitudinal Employer-Employee Data and the Longitudinal Population
Census of Statistics, our results show that the early-life Leadership-dimension
is significantly associated with a higher likelihood 1) of becoming
self-employed later in life and 2) of being more successful as an entrepreneur,
as approximated by sales. Our results also reinforce the prior evidence on the
intergenerational transmission of entrepreneurship.
David Andolfatto:
How old were the inventors of major inventions? I came across this fun column the other day listing a number of Famous
Inventions, like the airplane, the camera, electricity, the car, etc, along
with their inventors. A thought crossed my mind: how old were these inventors
when they invented these inventions? Were they young like Marconi, who invented
the radio in his early 20s? Or were they old like Gutenberg, who invented the
printing press in his early 50s? In short, is there an age demographic that is
responsible for producing major innovations? I have to admit, I was a little
surprised--the median age is 40 (I was expecting younger).
Dan Nixon, BoE:
Less is more: what does mindfulness mean for economics? Economic theory generally assumes that more
consumption means greater happiness. This post puts forward an alternative,
“less is more” perspective based around the concept of mindfulness. It argues
that we may achieve greater happiness by seeking to simplify our desires,
rather than satisfy them. The result – less consumption but greater wellbeing –
could be especially important for debates around secular stagnation and
ecological sustainability.
Holger Kirchmann, Lars Bergström,Thomas Kätterer, Rune
Andersson, Fri tanke (2014): Den ekologiska drömmen. Myter och sanningar om
ekologisk odling. Föreställningar om
att ekologisk odling är klimatsmart och ger bättre livsmedel är felaktiga. Hundra
procent ekologisk odling skulle vara en katastrof för framtida
livsmedelsförsörjning och innebär större belastning på miljön till en hög
kostnad. Konsumenterna får varken bättre livsmedel eller en bättre miljö om de
köper ekologiskt odlad mat. Ekologiska livsmedel är inte giftfria. Ekomaten är
inte heller nyttigare än konventionellt odlad mat. Ökad ekologisk odling
försämrar allvarligt livsmedelsförsörjningen, både i Sverige och globalt. Ekoodling
ger inte ett lägre utsläpp av näringsämnen till yt- och grundvatten. Ekoodling
är inte klimatsmart.
Fernando
Eguren-Martin, BoE: Friedman was right: flexible exchange rates do help
external rebalancing. Do exchange rate
regimes matter for the formation of countries’ external imbalances? Economists
have thought so for over sixty years, and policymakers have made countless
recommendations based on that presumption. But this had not been tested
empirically until very recently, so it remained an opinion rather than a
fact. In this post I show that having a
flexible exchange rate regime leads to the correction of external imbalances in
developing countries, offering some empirical support to a widely held belief.
In contrast, this does not seem to be the case for advanced economies.
Yi Che et al.,
NBER: Does Trade Liberalization with China Influence U.S. Elections? This paper examines the impact of trade liberalization on
U.S. Congressional elections. We find that U.S. counties subject to greater
competition from China via a change in U.S. trade policy exhibit relative
increases in turnout, the share of votes cast for Democrats and the probability
that the county is represented by a Democrat. We find that these changes are
consistent with Democrats in office during the period examined being more
likely than Republicans to support legislation limiting import competition or
favoring economic assistance.
Maria De Paola, Giorgio Brunello, IZA: Education as a
Tool for the Economic Integration of Migrants. We examine the role of education in fostering the economic integration
of immigrants. Although immigrants in Europe are – on average – slightly less
educated than native individuals, there is a large heterogeneity across
countries. We discuss evidence on student performance in international tests
showing that children with an immigrant background display worse results than
natives. While in some countries, such as Denmark and France, this gap is almost
entirely explained by differences in socio-economic background, in others
(Finland, Austria, Belgium and Portugal) the factors driving the gap are more
complex and have roots also outside socio-economic conditions. We investigate
how educational policies in the host count can affect the educational outcomes
of immigrants. We focus our attention on pre-school attendance, school
tracking, the combination of students and teacher characteristics, and class
composition.
Maria Caridad Araujo et al., IZA: Teacher Quality and
Learning Outcomes in Kindergarten. We assigned two cohorts of kindergarten students, totaling more than
24,000 children, to teachers within schools with a rule that is
as-good-as-random. We collected data on children at the beginning of the school
year, and applied 12 tests of math, language and executive function (EF) at the
end of the year. All teachers were filmed teaching for a full day, and the
videos were coded using a well-known classroom observation tool, the Classroom
Assessment Scoring System (or CLASS). We find substantial classroom effects: A
one-standard deviation increase in classroom quality results in 0.11, 0.11, and
0.07 standard deviation higher test scores in language, math, and EF,
respectively. Teacher behaviors, as measured by the CLASS, are associated with
higher test scores. Parents recognize better teachers, but do not change their
behaviors appreciably to take account of differences in teacher quality.
GAO: Shorter Life
Expectancy Reduces Projected Lifetime Benefits for Lower Earners. According to studies GAO reviewed, lower-income men
approaching retirement live, on average, 3.6 to 12.7 fewer years than
higher-income men. GAO developed hypothetical scenarios to calculate the
projected amount of lifetime Social Security retirement benefits received, on
average, for men with different income levels born in the same year. In these
scenarios, GAO compared projected benefits based on each income groups' shorter
or longer life expectancy with projected benefits based on average life
expectancy, and found that lower-income groups' shorter-than-average life
expectancy reduced their projected lifetime benefits by as much as 11 to 14
percent. Effects on Social Security retirement benefits are particularly
important to lower-income groups because Social Security is their primary
source of retirement income.
Allison Master et
al., Washington Post: Researchers explain how stereotypes keep girls out of
computer science classes. Despite valiant
efforts to recruit more women, the gender gap in the fields collectively known
as STEM — science, technology, engineering, and math — is not getting any
better. The gaps in computer science and engineering are the largest of any
major STEM discipline. Nationally, less than 20% of bachelor’s degrees in these
fields go to women. Women are missing out on great jobs, and society is missing
out on the innovations women could be making in new technology. Stereotypes are
a powerful force driving girls away from these fields. Even though stereotypes
are often inaccurate, children absorb them at an early age and are affected by
them.
Kacey Deamer,
Livescience: Time to Change Your Sheets? Bedbugs Have Favorite Colors. Do bedbugs prefer their hiding places to be a
certain color? Researchers conducted a series of tests in a lab to see if
bedbugs (Cimex lectularius) would favor different-colored harborages, or places
where pests seek shelter. The scientists found that bedbugs strongly prefer red
and black, and typically avoid colors like green and yellow.
Stanley Fischer,
FED: Reflections on Macroeconomics Then and Now. There is an old joke about our field--not the one
about the one-handed economist, nor the one about "assume you have a can
opener," nor the one that ends, "If I were you, I wouldn't start from
here." Rather it's the one about the Ph.D. economist who returns to his
university for his class's 50th reunion. He asks if he can see the most recent
Ph.D. generals exam. After a while it is brought to him. He reads it carefully,
looking perplexed, and then says, "But this is exactly the same as the
exam I wrote over 50 years ago." "Ah yes," says the professor.
"It is the same, but all the answers are different."
Gabriel
Chodorow-Reich, Loukas Karabarbounis, NBER: The Limited Macroeconomic Effects
of Unemployment Benefit Extensions. By how much does an extension of unemployment benefits affect macroeconomic
outcomes such as unemployment? Answering this question is challenging because
U.S. law extends benefits for states experiencing high unemployment. We use data revisions to decompose the
variation in the duration of benefits into the part coming from actual
differences in economic conditions and the part coming from measurement error
in the real-time data used to determine benefit extensions. Using only the variation coming from
measurement error, we find that benefit extensions have a limited influence on state-level
macroeconomic outcomes. We use our
estimates to quantify the effects of the increase in the duration of benefits
during the Great Recession and find that they increased the unemployment rate
by at most 0.3 percentage point.
Steven D. Levitt,
John A. List, Sally Sadoff, NBER: The Effect of Performance-Based Incentives on
Educational Achievement: Evidence from a Randomized Experiment. We test the effect of performance-based incentives on
educational achievement in a low-performing school district using a randomized field
experiment. High school freshmen were
provided monthly financial incentives for meeting an achievement standard based
on multiple measures of performance including attendance, behavior, grades and
standardized test scores. Within the
design, we compare the effectiveness of varying the recipient of the reward
(students or parents) and the incentive structure (fixed rate or lottery). While the overall effects of the incentives
are modest, the program has a large and significant impact among students on
the threshold of meeting the achievement standard. These students continue to outperform their
control group peers a year after the financial incentives end. However, the program effects fade in longer
term follow up, highlighting the importance of longer term tracking of incentive
programs.
Richard Blundell,
Michael Grabera, Magne Mogstad, JPE: Labor income dynamics and the insurance
from taxes, transfers, and the family. What do labor income dynamics look like over the life-cycle? We use
rich Norwegian population panel data to answer these important questions. We
find that the income processes differ systematically by age, skill level and
their interaction. To accurately describe labor income dynamics over the
life-cycle, it is necessary to allow for heterogeneity by education levels and
account for non-stationarity in age and time. Our findings suggest that the
redistributive nature of the Norwegian tax–transfer system plays a key role in
attenuating the magnitude and persistence of income shocks, especially among
the low skilled. By comparison, spouse's income matters less for the dynamics
of inequality over the life-cycle.
Jeffrey Sparshott,
WSJ: Do Cheaters Ever Prosper? A Lesson
From N.Y. Student Tests. A 2011 analysis
for The Wall Street Journal showed a bulge in New York City students’ test
scores right over the passing mark. The evidence strongly suggested teachers
were manipulating grades on statewide Regents Exams and helped spur changes to
testing procedures. Thomas Dee, a professor at Stanford University, updated the
numbers from his initial analysis after the state took steps to eliminate grade
inflation. The findings: Teachers who manipulated scores appear to have been
motivated by altruism, score manipulation was eliminated by 2012, and the
graduation gap between black and white students is about 5% larger in its
absence.
David Downs,
Scientific American: The Science behind the DEA's Long War on Marijuana. Experts say listing cannabis among the world’s
deadliest drugs ignores decades of scientific and medical data. But attempts to
delist it have met with decades of bureaucratic inertia and political
distortion. Speculation is growing about the possibility that the U.S. Drug
Enforcement Administration (DEA) will review by summer its “Schedule I”
designation of marijuana as equal to heroin among the world’s most dangerous
drugs.
Lawrence Summers,
Washington Post: What’s behind the revolt against global integration? The core of the revolt against global integration,
though, is not ignorance. It is a sense — unfortunately not wholly unwarranted
— that it is a project being carried out by elites for elites, with little
consideration for the interests of ordinary people. They see the globalization
agenda as being set by large companies that successfully play one country
against another. They read the revelations in the Panama Papers and conclude
that globalization offers a fortunate few opportunities to avoid taxes and
regulations that are not available to everyone else. And they see the kind of
disintegration that accompanies global integration as local communities suffer
when major employers lose out to foreign competitors.
Peter Dizikes, MIT
News: How network effects hurt economies. “Relatively small shocks can become magnified and then become shocks
you have to contend with [on a large scale],” says MIT economist Daron
Acemoglu. Study reveals how woes in one industry can harm others, too. The
findings run counter to “real business cycle theory,” which became popular in
the 1970s and holds that smaller, industry-specific effects tend to get swamped
by larger, economy-wide trends. More precisely, Acemoglu and his colleagues
have found cases where industry-specific problems lead to six-fold declines in
production across the U.S. economy as a whole. For example, for every dollar of
value-added growth lost in the manufacturing industries because of competition
from China, six dollars of value-added growth were lost in the U.S. economy as
a whole.
Roland G. Fryer,
Jr, NBER: The Production of Human Capital in Developed Countries: Evidence from
196 Randomized Field Experiments. Randomized field experiments designed to better understand the production
of human capital have increased exponentially over the past several
decades. This chapter summarizes what we
have learned about various partial derivatives of the human capital production function,
what important partial derivatives are left to be estimated, and what -
together - our collective efforts have taught us about how to produce human
capital in developed countries. The chapter
concludes with a back of the envelope simulation of how much of the racial wage
gap in America might be accounted for if human capital policy focused on best
practices gleaned from randomized field experiments.
Simen Markussen,
Knut Roed, IZA: The Market for Paid Sick Leave. In many countries, general practitioners (GPs) are assigned the task
of controlling the validity of their own patients' insurance claims. At the
same time, they operate in a market where patients are customers free to choose
their GP. Are these roles compatible? Can we trust that the gatekeeping
decisions are untainted by private economic interests? Based on administrative
registers from Norway with records on sick pay certification and GP-patient
relationships, we present evidence to the contrary: GPs are more lenient
gatekeepers the more competitive is the physician market, and a reputation for
lenient gatekeeping increases the demand for their services.
Raj Chetty, JAMA:
The Association Between Income and Life Expectancy in the United States. In the United States between 2001 and 2014, higher
income was associated with greater longevity, and differences in life
expectancy across income groups increased over time. However, the association
between life expectancy and income varied substantially across areas;
differences in longevity across income groups decreased in some areas and
increased in others. The differences in life expectancy were correlated with
health behaviors and local area characteristics.
Noah Smith,
Bloombergs: Decline of the U.S. Middle Class. The percentages of Americans who consider themselves working class has
stayed relatively stable. But the self-identified middle class has plunged by
about 10 percentage points, matched by an even larger increase in the
percentage of Americans who label themselves lower class. The self-identified
lower class should probably be included in the working class that gets
discussed in articles about Trump and Sanders.
Osea Giuntella, Fabrizio Mazzonna, IZA: If You Don't
Snooze You Lose: Evidence on Health and Weight. Most economic models consider sleeping as a pre-determined and
homogeneous constraint on individuals' time allocation neglecting its potential
effects on health and human capital. Several medical studies provide evidence
of important associations between sleep deprivation and health outcomes
suggesting a large impact on health care systems and individual productivity.
Yet, there is little causal analysis of the effects of sleep duration. This
paper uses a spatial regression discontinuity design to identify the effects of
sleep on health status, weight, and cognitive abilities. Our results suggest
that delaying morning work schedules and school start times may have
non-negligible effects on Health.
Maurice Obstfeld,
Gian Maria Milesi-Ferretti, Rabah Arezki, IMF: Oil Prices and the Global
Economy: It’s Complicated. Even
though oil is a less important production input than it was three decades ago,
that reasoning should work in reverse when oil prices fall, leading to lower
production costs, more hiring, and reduced inflation. But this channel causes a
problem when central banks cannot lower interest rates. Because the policy
interest rate cannot fall further, the decline in inflation (actual and
expected) owing to lower production costs raises the real rate of interest,
compressing demand and very possibly stifling any increase in output and
employment. Indeed, those aggregates may both actually fall. Something like
this may be going on at the present time in some economies.
Hans-Werner Sinn,
Project Syndicate: Europe’s Emerging Bubbles. But the worst effects of the ECB policy may be yet to come, if the
eurozone’s still-sound economies also become credit junkies. There are already
some worrying signs of this. Property markets in Austria, Germany, and
Luxembourg have practically exploded throughout the crisis, as a result of
banks chasing borrowers with offers of loans at near-zero interest rates,
regardless of their creditworthiness. In Austria, property prices have risen by
nearly half since the Lehman collapse; in Luxembourg, they have risen by almost
one-third. Even Germany, Europe’s largest economy, has been experiencing a
massive property boom since 2010, with average urban property prices having
risen by more than one-third – and by nearly half in large cities. The country
is undergoing a construction boom not seen since reunification. Real estate
agents have only leftovers on offer.
Judd Cramer, Alan
B. Krueger, NBER: Disruptive Change in the Taxi Business: The Case of Uber. In most cities, the taxi industry is highly regulated
and utilizes technology developed in the 1940s. Ride sharing services such as
Uber and Lyft, which use modern internet-based mobile technology to connect
passengers and drivers, have begun to compete with traditional taxis. This
paper examines the efficiency of ride sharing services vis-à-vis taxis by
comparing the capacity utilization rate of UberX drivers with that of
traditional taxi drivers in five cities. The capacity utilization rate is
measured by the fraction of time a driver has a fare-paying passenger in the
car while he or she is working, and by the share of total miles that drivers
log in which a passenger is in their car. The main conclusion is that, in most
cities with data available, UberX drivers spend a significantly higher fraction
of their time, and drive a substantially higher share of miles, with a
passenger in their car than do taxi drivers. Four factors likely contribute to
the higher capacity utilization rate of UberX drivers: 1) Uber’s more efficient
driver-passenger matching technology; 2) the larger scale of Uber than taxi
companies; 3) inefficient taxi regulations; and 4) Uber’s flexible labor supply
model and surge pricing more closely match supply with demand throughout the
day.
Stefan Bender,
Nicholas Bloom, David Card, John Van Reenen, Stefanie Wolter, NBER: Management
Practices, Workforce Selection and Productivity. Recent research suggests that much of the cross-firm
variation in measured productivity is due to differences in use of advanced
management practices. We use a unique data set that combines detailed survey
data on the management practices of German manufacturing firms with
longitudinal earnings records for their employees to study the relationship
between productivity, management, worker ability, and pay. In our preferred TFP estimates only a small
fraction of this correlation is explained by the higher human capital of the
average employee at better-managed firms. Overall, we conclude that workforce selection
and positive pay premiums explain just under 30% of the measured impact of
management practices on productivity in German manufacturing.
Kai Rehwald, Michael Rosholm, Benedicte Rouland, IZA:
Does Activating Sick-Listed Workers Work? Evidence from a Randomized
Experiment. Using data from a large-scale
randomized controlled trial conducted in Danish job centers, this paper
investigates the effects of an intensification of mandatory return-to-work
activities on the subsequent labor market outcomes for sick-listed workers.
Using variations in local treatment strategies, both between job centers and
between randomly assigned treatment and control groups within a given job
center, we compare the relative effectiveness of alternative interventions. Our
results show that the use of partial sick leave increases the length of time
spent in regular employment and non-reliance on benefits, and also reduces the
time spent in unemployment. Traditional active labor market programs and the
use of paramedical care appear to have no effect at all, or even an adverse
effect.
Claudia Olivetti,
M. Daniele Paserman, Laura Salisbury, NBER: Three-generation Mobility in the
United States, 1850-1940: The Role of Maternal and Paternal Grandparents. This paper estimates intergenerational elasticities
across three generations in the United States in the late 19th and early 20th
centuries. We extend the methodology in
Olivetti and Paserman (2015) to explore the role of maternal and paternal
grandfathers for the transmission of economic status to grandsons and
granddaughters. We document three main
findings. First, grandfathers matter for
income transmission, above and beyond their effect on fathers' income. Second,
the socio-economic status of grandsons is influenced more strongly by paternal
grandfathers than by maternal grandfathers. Third, maternal grandfathers are
more important for granddaughters than for grandsons, while the opposite is
true for paternal grandfathers.
Meritkotkas. In Estonia you can on streaming camera follow a sea
eagle couple with eggs in the windy coast, waiting for their chicks to creep
out. Link for Apple
U.S. Department of
Energy: Impact of Extended Daylight Saving Time on National Energy Consumption. The total electricity savings of Extended Daylight
Saving Time were about 1.3 Tera Watt-hour (TWh). This corresponds to 0.5
percent per each day of Extended Daylight Saving Time, or 0.03 percent of
electricity consumption over the year. In reference, the total 2007 electricity
consumption in the United States was 3,900 TWh.
Myriam B.C. Aries,
Guy R. Newsham, Energy Policy: Effect of daylight saving time on lighting
energy use: A literature review. The principal reason for introducing (and extending) daylight saving
time (DST) was, and still is, projected energy savings, particularly for
electric lighting. Simple estimates suggest a reduction in national electricity
use of around 0.5%, as a result of residential lighting reduction. Several
studies have demonstrated effects of this size based on more complex
simulations or on measured data. However, there are just as many studies that
suggest no effect, and some studies suggest overall energy penalties,
particularly if gasoline consumption is accounted for. There is general
consensus that DST does contribute to an evening reduction in peak demand for
electricity, though this may be offset by an increase in the morning.
Nevertheless, the basic patterns of energy use, and the energy efficiency of
buildings and equipment have changed since many of these studies were conducted.
Ryan Kellogg, Hendrik Wolff, IZA: Does Extending
Daylight Saving Time Save Energy? Evidence from an Australian Experiment. Several countries are considering extending Daylight
Saving Time (DST) in order to conserve energy, and the U.S. will extend DST by
one month beginning in 2007. However, projections that these extensions will
reduce electricity consumption rely on extrapolations and simulations rather
than empirical evidence. This paper, in contrast, examines a quasiexperiment in
which parts of Australia extended DST in 2000 to facilitate the Sydney Olympics.
Using detailed panel data and a triple differences specification, we show that
the extension did not conserve electricity, and that a prominent
simulation model overstates electricity savings when it is applied to
Australia.
Christopher M.
Barnes David T. Wagner, NYT: The Economic Toll of Daylight Saving Time. In a study of mining injuries across the U.S., we
found a spike in workplace injuries of nearly 6 percent on the Monday following
the shift to daylight saving time. In a follow-up study we found that workers
tend to “cyberloaf” – that is, they use their computers and internet access to
engage in activities that are not related to work – at a substantially higher
rate on the Monday following the shift to daylight saving time than on other
Mondays. What’s more, we found that for every hour of interrupted sleep the
previous night, participants in our lab cyberloafed for 20 percent of their
assigned task. When extrapolated to a full day’s work, that would mean daylight
saving time and lost sleep can result in substantial productivity losses. In
fact, a recent estimate of this effect put the cost to the American economy at
over $434 million annually, simply from a subtle shift of the clocks.
Mark J. Kamstra,
Lisa A. Kramer, Maurice D. Levi, York University: Losing Sleep at the Market:
The Daylight-Savings Anomaly. We explore
the connection between equity returns and sleep disruptions following
daylight-savings time changes. In international markets, the average
Friday-to-Monday return on daylight-savings weekends is markedly lower than
expected, with a magnitude 200 to 500 percent larger than the average negative
return for other weekends of the year. This ``daylight-savings anomaly'' in
financial markets is consistent with desynchronosis research which has
identified the effects of changes in sleep patterns on judgment, anxiety, reaction
time, problem solving and accidents. This paper suggests sleep effects of
daylight-savings time changes may be impacting market participants
internationally.
Jin, L., Nicolas
Ziebarth, University of York: Sleep and Human Capital: Evidence from Daylight
Saving Time. This paper is one of the
first to test for a causal relationship between sleep and human capital. It
exploits the quasi-experimental nature of Daylight Saving Time (DST), up to 3.4
million BRFSS respondents from the US, and all 160 million hospital admissions
from Germany over one decade. We find evidence of mild negative health effects
when clocks are set forward one hour in spring. When clocks are set back one
hour in fall, effectively extending sleep duration for the sleep deprived by
one hour, sleep duration and selfreported health increase and hospital
admissions decrease significantly for four days.
Daniel Kuehnle,
Christoph Wunder, Friedrich-Alexander-University Erlangen-Nuremberg: Using the
life satisfaction approach to value daylight savings time transitions. Evidence
from Britain and Germany. Daylight savings
time (DST) represents a public good with costs and benefits. We provide the
first comprehensive examination of the welfare effects of the spring and autumn
transitions for the UK and Germany. Using individual-level data and a
regression discontinuity design, we estimate the effect of the transitions on
life satisfaction. Our results show that individuals in both the UK and Germany
experience deteriorations in life satisfaction in the first week after the spring
transition. We find no effect of the autumn transition. We attribute the
negative effect of the spring transition to the reduction in the time endowment
and the process of adjusting to the disruption in circadian rhythms. The
effects are particularly strong for individuals with young children in the
household. We conclude that the higher the shadow price of time, the more difficult
is adjustment. Presumably, an increase in flexibility to reallocate time could
reduce the welfare loss for individuals with binding time constraints.
Stanley Coren,
University of British Columbia: Daylight Savings Time and Traffic Accidents. We used data from a tabulation of all traffic
accidents in Canada as they were reported to the Canadian Ministry of Transport
for the years 1991 and 1992 by all 10 provinces. A total of 1,398,784 accidents
were coded according to the date of occurrence. The spring shift to daylight
savings time, and the concomitant loss of one hour of sleep, resulted in an
average increase in traffic accidents of approximately 8 percent, whereas the
fall shift resulted in a decrease in accidents of approximately the same
magnitude immediately after the time shift.
Tuuli Lahti, Esa
Nysten, Jari Haukka, Pekka Sulander, Timo Partonen, National Institute for
Health and Welfare: Daylight Saving Time Transitions and Road Traffic
Accidents. Circadian rhythm disruptions
may have harmful impacts on health. Circadian rhythm disruptions caused by jet
lag compromise the quality and amount of sleep and may lead to a variety of
symptoms such as fatigue, headache, and loss of attention and alertness. Even a
minor change in time schedule may cause considerable stress for the body.
Transitions into and out of daylight saving time alter the social and
environmental timing twice a year. According to earlier studies, this change in
time-schedule leads to sleep disruption and fragmentation of the circadian
rhythm. Since sleep deprivation decreases motivation, attention, and alertness,
transitions into and out of daylight saving time may increase the amount of
accidents during the following days after the transition.We studied the amount
of road traffic accidents one week before and one week after transitions into
and out of daylight saving time during years from 1981 to 2006. Our results
demonstrated that transitions into and out of daylight saving time did not increase
the number of traffic road accidents.
Cathleen D. Zick,
ISPAH: Does Daylight Savings Time Encourage Physical Activity? Extending Daylight Savings Time (DST) has been
identified as a policy intervention that may encourage physical activity.
However, there has been little research on the question of if DST encourages
adults to be more physically active. Data from residents of Arizona, Colorado,
New Mexico, and Utah ages 18–64 who participated in the 2003–2009 American Time
Use Survey are used to assess whether DST is associated with increased time
spent in moderate-to-vigorous physical activity (MVPA). The analysis
capitalizes on the natural experiment created because Arizona does not observe
DST. Both bivariate and multivariate analyses indicate that shifting 1 hour of
daylight from morning to evening does not impact MVPA of Americans living in
the southwest.
Jennifer L.
Doleac, Nicholas J. Sanders, University of Virginia: Under the Cover of
Darkness: How Ambient Light Influences Criminal Activity. We exploit daylight saving time (DST) as an exogenous
shock to daylight, using both the discontinuous nature of the policy and the
2007 extension of DST, to consider the impact of light on criminal activity.
Regression discontinuity estimates show a 7% decrease in robberies following
the shift to DST. As expected, effects are largest during the hours directly
affected by the shift in daylight. We discuss our findings within the context
of criminal decision making and labor supply, and estimate that the 2007 DST
extension resulted in $59 million in annual social cost savings from avoided
robberies.
Yvonne Harrison,
Sleep Medicine: The impact of daylight saving time on sleep and related
behaviours. Daylight saving time is
currently adopted in over 70 countries and imposes a twice yearly 1 h change in
local clock time. Relative ease in adjustment of sleep patterns is assumed by
the general population but this review suggests that the scientific data
challenge a popular understanding of the clock change periods. The start of
daylight saving time in the spring is thought to lead to the relatively
inconsequential loss of 1 h of sleep on the night of the transition, but data
suggests that increased sleep fragmentation and sleep latency present a cumulative
effect of sleep loss, at least across the following week, perhaps longer. The
autumn transition is often popularised as a gain of 1 h of sleep but there is
little evidence of extra sleep on that night. The cumulative effect of five
consecutive days of earlier rise times following the autumn change again
suggests a net loss of sleep across the week. Indirect evidence of an increase
in traffic accident rates, and change in health and regulatory behaviours which
may be related to sleep disruption suggest that adjustment to daylight saving
time is neither immediate nor without consequence.
Imre Janszky et
al., Sleep Medicine: Daylight saving time shifts and incidence of acute
myocardial infarction – Swedish Register of Information and Knowledge About
Swedish Heart Intensive Care Admissions (RIKS-HIA). Daylight saving time shifts can be looked upon as
large-scale natural experiments to study the effects of acute minor sleep
deprivation and circadian rhythm disturbances. To identify AMI incidence on
specific dates, we used the Register of Information and Knowledge about Swedish
Heart Intensive Care Admission, a national register of coronary care unit
admissions in Sweden. We compared AMI incidence on the first seven days after
the transition with mean incidence during control periods. To assess effect
modification, we calculated the incidence ratios in strata defined by patient
characteristics. Overall, we found an elevated incidence ratio of 1.039 (95%
confidence interval, 1.003–1.075) for the first week after the spring clock
shift forward. The higher risk tended to be more pronounced among individuals
taking cardiac medications and having low cholesterol and triglycerides. There
was no statistically significant change in AMI incidence following the autumn
shift.
Imre Janszky,
Rickard Ljung: Karolinska Institute: Shifts to and from Daylight Saving Time
and Incidence of Myocardial Infarction. The incidence of acute myocardial infarction was significantly
increased for the first 3 weekdays after the transition to daylight saving time
in the spring. The incidence ratio for the first week after the spring shift,
calculated as the incidence for all 7 days divided by the mean of the weekly
incidences 2 weeks before and 2 weeks after, was 1.051 (95% confidence interval
[CI], 1.032 to 1.071). In contrast, after the transition out of daylight saving
time in the autumn, only the first weekday was affected significantly.
Rasmussen Report:
Just 33% See the Purpose of Daylight Saving Time. Only 33% of American Adults think DST is worth the
hassle, according to a 2014 national telephone survey. That is down from 37%
last year at this time and 45% in 2012. Forty-eight percent (48%) do not think
the clock changing ritual is worth it, but 19% are not sure.
Erika Hallhagen, SvD: Våga vägra sommartid. Så är den här.
Morgonmänniskornas högtid nummer ett. Dagen då de får beröva oss ännu en timme
skönhetssömn, trots att vi redan dansar efter deras pipa och börjar jobbet
långt innan vi är vakna. Här är sju argument som klargör varför ett
maktövertagande är det enda rätta. Det enda argumentet du behöver. Donald Trump
är morgonmänniska.
David Andolfatto,
Macromania: Secular stagnation then and now. Secular stagnation refers to a prolonged and indefinite period of slow
growth and high unemployment (or subnormal factor utilization). When was the
last time this happened in the United States? Most people are likely to say the
1930s. In fact, it was the 1970s.
Reuven
Glick, Andrew K. Rose, San Francisco Fed: How Much Does the EMU Benefit Trade? The economic benefits of sharing a currency like the
euro continue to be debated. In theory, countries that use the same currency
face lower trade costs and exchange rate risk and are able to compare prices
across borders more easily. These advantages should help increase trade among
the economies involved. New estimates suggest that this has been the case in
Europe, though perhaps to a lesser degree than previously thought.
George J. Borjas,
LaborEcon: Employment of Undocumented Immigrants. Using newly developed methods that attempt to
identify undocumented status for foreign-born persons sampled in the Current
Population Surveys, the empirical analysis documents a number of findings,
including the fact that the work propensity of undocumented men is much larger
than that of other groups in the population; that this gap has grown over the
past two decades; and that the labor supply elasticity of undocumented men is
very close to zero, suggesting that their labor supply is almost perfectly
inelastic.
OECD:
Low-Performing Students. Why They Fall Behind and How To Help Them Succeed. Analyses show that poor performance at age 15 is not
the result of any single risk factor, but rather of a combination and
accumulation of various barriers and disadvantages that affect students throughout
their lives. Who is most likely to be a low performer in mathematics? On
average across OECD countries, a socio-economically disadvantaged girl who
lives in a single-parent family in a rural area, has an immigrant background,
speaks a different language at home from the language. Among low performers the
combination of risk factors is more detrimental to disadvantaged than to
advantaged students. Low performers tend to have less perseverance,
motivation and self-confidence in mathematics than better-performing students,
and they skip classes or days of school more. Students whose teachers have low
expectations for them and are absent more often are more likely to be low
performers in mathematics, even after accounting for the socio-economic status
of students and schools.
Erik Bengtsson, Daniel Waldenström, IZA: Capital
Shares and Income inequality: Evidence from the Long Run. This paper investigates the relationship between the
capital share in national income and personal income inequality over the long
run. Using a new historical cross-country database on capital shares in 19
countries and data from the World Wealth and Income Database, we find strong
long-run links between the aggregate role of capital in the economy and the
size distribution of income. Over time, this dependence varies; it was strong
both before the Second World War and in the early interwar era, but has grown
to its highest levels in the period since 1980. The correlation is particularly
strong in Anglo-Saxon and Nordic countries, in the very top of the distribution
and when we only consider top capital incomes. Replacing top income shares with
a broader measure of inequality (Gini coefficient), the positive relationship
re-mains but becomes somewhat weaker.
Erzo F.P. Luttmer,
Andrew A. Samwick, NBER: The Welfare Cost of Perceived Policy Uncertainty:
Evidence from Social Security. Policy
uncertainty can reduce individual welfare when individuals have limited
opportunities to mitigate or insure against consumption fluctuations induced by
the policy uncertainty. For this reason, policy uncertainty surrounding future
Social Security benefits may have important welfare costs. We field an original
survey to measure the degree of policy uncertainty in Social Security and to
estimate the impact of this uncertainty on individual welfare. On average, our
survey respondents expect to receive only about 60 percent of the benefits they
are supposed to get under current law. We document the wide variation around
the expectation for most respondents and the heterogeneity in the perceived
distributions of future benefits across respondents. This uncertainty has real
costs. Our central estimates show that on average individuals would be willing
to forego around 6 percent of the benefits they are supposed to get under
current law to remove the policy uncertainty associated with their future
benefits. This translates to a risk premium from policy uncertainty equal to 10
percent of expected benefits.
Madhumita Murgia,
The Telegraph: Algorithm can predict your marital success from your voice. A new computer algorithm can predict whether a
married couple's relationship improved or worsened over time, based on their
tone of voice when speaking to each other. In fact, the algorithm - which was
correct 79 per cent of the time - was more accurate than session notes provided
by therapists, when predicting marital success of couples with serious
relationship issues.
Lizzie Drapper,
Hasdeep Sethi, BoE: Houses: who has stopped buying them? In 2006, 64 English houses in every 1000 changed
hands. Three years and a credit crunch later, this had halved to only 32
transactions per 1000 houses. Since 2009, transactions have recovered, but
remain well below their pre-crisis level. Transactions are a key metric of the
health of the UK housing market and can be seen as a measure of “liquidity”.
The reasons behind low transactions levels may also provide further insight
into people’s behaviour and view of housing in the UK. In the work set out
below, we conclude that it is unlikely that transactions regain their
pre-crisis level any time soon, because of affordability constraints for
first-time buyers and fewer discretionary moves by existing owners.
Valeria
Pellegrini, Alessandra Sanelli, Enrico Tosti, VOX: Unreported assets held
abroad and tax evasion: Hints from external statistics. Balance of payments statistics suggest that assets
held abroad are greatly underestimated – particularly for mutual fund shares
and bank deposits. This column looks into the role played by tax havens and
estimates that unreported financial assets amount to between $6 and $7
trillion. On this figure, the related tax evasion is between $19 and $38
billion a year on capital income, and between $2 and $2.6 trillion on personal
income. Recent policy initiatives such as automatic information exchanges
constitute real progress, but some critical aspects might jeopardise their
effectiveness.
Bruno Van der
Linden, IZA: Do in-work benefits work for low-skilled workers? Permanent in-work benefits (IWB) often increase labor
force participation by single mothers and reduce in-work poverty. In the UK and
the US, these effects appear to be accompanied by improved indicators of health
and life satisfaction for the beneficiaries, as well as some positive effects
detected on their children. There is also a broad consensus that IWB can
improve the redistribution of income. Still, IWB have a negative impact on low
wages in the absence of downward wage rigidities, which reduces their redistribution
effects.
Jane Waldfogel,
Columbia University: The role of preschool in reducing inequality. Preschool improves child outcomes, especially for
disadvantaged children. Evidence on the potential of preschool programs to
reduce inequality in child development is quite strong. It has been clear for
some time that small model preschool programs can lead to substantial
improvements in school readiness for children from disadvantaged backgrounds
who would otherwise have little access to high-quality early childhood care or
education and who have the most to gain from high-quality programs. This early
evidence suggested that preschool might be an effective way to reduce
inequality.
Joao Pedro Jerico
et al., Cornell: When does inequality freeze an economy? Inequality and its consequences are the subject of
intense recent debate. We address the relation between inequality and
liquidity, i.e. the frequency of economic exchanges in the economy. We do that
within an intentionally simplified model of the economy, where all exchanges
that are compatible with agents' budget constraints are possible. Assuming a
Pareto distribution of capital for the agents, that is consistent with
empirical findings, we find an inverse relation between inequality and
liquidity. By quantifying the amount of inequality in the system by the
exponent of the Pareto distribution, we show that an increase in inequality of
capital results in an even sharper concentration of financial resources,
leading to congestion of the flow of goods and the arrest of the economy when
the Pareto exponent reaches one.
Branko Milanovic,
VOX: Introducing Kuznets waves: How income inequality waxes and wanes over the
very long run. The Kuznets
curve was widely used to describe the relationship between growth and
inequality over the second half of the 20th century, but it has fallen out of
favour in recent decades. This column suggests that the current upswing in
inequality can be viewed as a second Kuznets curve. It is driven, like the
first, by technological progress, inter-sectoral reallocation of labour,
globalisation, and policy. The author argues that the US has still not reached
the peak of inequality in this second Kuznets wave of the modern era.
Paul Krugman, NYT:
Return of the Undeserving Poor. When I
was growing up, there was a great deal of alarm over the troubles of the
African-American community, where social disorder was on the rise even as
explicit legal discrimination (although not de facto discrimination) was coming
to an end. What was going on? William Julius Wilson argued that the underlying
cause was economic: good jobs, while still fairly plentiful in America as a
whole, were disappearing from the urban centers where the A-A population was
concentrated. And the social collapse, while real, followed from that
underlying cause. This story contained a clear prediction — namely, that if
whites were to face a similar disappearance of opportunity, they would develop
similar behavior patterns. And sure enough, with the hollowing out of the
middle class, we saw what Kevin Williamson describes as the welfare dependency,
the drug and alcohol addiction, the family anarchy.
Jessica Tyrrell,
BMJ: Height, body mass index, and socioeconomic status: mendelian randomisation
study in UK Biobank. These data
support evidence that height and BMI play an important partial role in
determining several aspects of a person’s socioeconomic status, especially
women’s BMI for income and deprivation and men’s height for education, income,
and job class. These findings have important social and health implications,
supporting evidence that overweight people, especially women, are at a
disadvantage and that taller people, especially men, are at an advantage.
