10 October 2012
Over the past 30 years the U.S. labor market has been characterized by job polarization -- the loss of middle-skill, routine jobs -- and jobless recoveries following recessions. Nir Jaimovich
and Henry Siu
show that job polarization is most pronounced in economic downturns and is therefore a business cycle phenomenon. They also show that job polarization explains jobless recoveries: almost all of the contraction in aggregate employment during recessions can be attributed to job losses in middle-skill, routine occupations.
9 October 2012
, Sari Pekkala Kerr
, and Bill Kerr
investigate the connection between historical mineral and coal deposits and modern entrepreneurship. They demonstrate that a city's proximity to mineral and coal deposits in the year 1900 is strongly positively correlated with its average manufacturing establishment size in 1963 and later years. Cities with such proximity have fewer smaller firms and startups, which are characteristic of entrepreneurship. Having mineral deposits near the city is also associated with larger average establishment size in quite unrelated industries in the 1970s and 1980s. In fact, the authors conclude that proximity to mines in 1900 predicts larger establishments, less entry, and less urban growth in trade, services, and finance today.
5 October 2012
Using data from 1980 through 2009 from more than 50 emerging and developed economies, Kristin Forbes
and Frank Warnock
document a number of episodes of extreme capital flow movements: surges, stops, flight, and retrenchment. They uncover an unprecedented incidence of stops and retrenchment during the recent Global Financial Crisis, as investors around the world liquidated foreign investment positions and brought money home. The vast majority of these extreme capital flow episodes - 80 percent of inflow episodes (surges and stops) and 70 percent of outflow episodes (flight and retrenchments) - were fueled by debt, not equity, flows. Risk measures are important in explaining debt-led episodes; when risk aversion is high, debt-led surges are less likely and debt-led stops are more likely. Contagion, especially regional, is also important for debt-led episodes.
4 October 2012
Jessica Wolpaw Reyes
analyzes data on children born between 1991 and 2000 who were attending third and fourth grade between 2000 and 2009 at more than 1,000 public elementary schools in Massachusetts. She finds that elevated levels of blood lead in early childhood adversely affect standardized test performance, even when she controls for both community and school characteristics. Her results imply that public health policy, which reduced levels of childhood lead in the 1990s, was responsible for some improvement in test performance in the 2000s. She estimates that such policies lowered the share of children scoring "unsatisfactory" on standardized tests by 1 to 2 percentage points.
3 October 2012
Using data from the Current Population Survey's Tobacco Use Supplements covering 1995-2007, Kevin Callison
and Robert Kaestner
estimate that among adults, increases in cigarette taxes are associated with only small decreases in cigarette consumption. They conclude that it would take sizable tax increases, on the order of 100 percent, to decrease adult smoking by as much as 5 percent.
2 October 2012
and Motohiro Yogo
find that life insurers reduced the price of long-term insurance policies in January 2009 when historically low interest rates implied that they should have raised prices instead. The price reductions were larger for policies with looser statutory reserve requirements and among those companies whose balance sheets had deteriorated prior to January 2009. The researchers conclude that there were two reasons for this pricing behavior: first, the financial crisis had an adverse impact on insurance companies’ balance sheets, so insurance companies had to quickly recapitalize to contain their leverage ratio and to avoid a rating downgrade; and second, statutory reserve regulation in the United States allowed life insurers to record far less than a dollar of reserve per dollar of future insurance liability in January 2009. Analyzing nearly 35,000 insurance prices from January 1989 through July 2011, Koijen and Yogo find that the shadow cost of financial frictions is essentially zero for most of the sample but was nearly $5 per dollar of excess reserve for the average insurance company in January 2009.
1 October 2012
Using data from Bangladesh, India, Nepal, and Pakistan, Tom Vogl
examines one of the effects of arranged marriage: the rivalry that it cultivates among sisters. In countries where arranged marriages are common, parents typically want to marry off their oldest daughter first. Because girls in these countries leave school when they marry and thus face limited earnings opportunities when they reach adulthood, the number of sisters one has, and whether they are older or younger, has consequences for a woman's well-being over her life time. Vogl finds that having younger sisters is correlated with a girl leaving school earlier, leading to lower literacy, and to being matched to a husband with less education and a less-skilled occupation. He finds that these cross-sister pressures on marriage age are common throughout the developing world, although their effect on schooling costs varies by country.
28 September 2012
, Kathryn Shaw
, and Christopher Stanton
analyze measures of daily productivity for over 23,000 workers, matched to nearly 2,000 bosses (supervisors) over the five years from June 2006 through May 2010. The workers' productivity is measured by computer for a single "technology-based service" job -- such jobs include retail sales clerk, movie theater concession stand employee, in-house IT specialist, airline gate agent, call center worker, technical repair worker, or other jobs in which an employee is logged into a computer while working. The researchers find that bosses vary in quality, in terms of their effect on workers' productivity: replacing a boss who is in the lower 10 percent of quality with one who is in the upper 10 percent of quality increases a team’s total output by about the same amount as adding one worker to a nine member team. The results imply that the average boss is about 1.75 times as productive as the average worker.
27 September 2012
Patent pools allow competing firms to combine their patents for the same technology as if they are a single firm. Ryan Lampe
and Petra Moser
analyze over 75,000 patent applications across 20 industries between 1921 and 1948, encompassing the period when New Deal regulations made it easier for firms to pool their patents. They find a 16 percent decline in patenting in response to the creation of a patent pool, which occurred in fields where competing firms were combining patents for substitute technologies.
26 September 2012
asks whether it is reasonable to assume that economic growth will continue, especially for the United States, at a pace similar to that of the past 250 years, which encompassed the Industrial Revolution, various advances in transportation, and the rise of the computer and related inventions. He concludes that even if innovation were to continue at the rate of the two decades before 2007, six "headwinds" -- demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt -- would reduce long-term growth to half or less of its 1860-2007 annual rate of 1.9 percent. His estimates suggest that for all but the top one percent of the income distribution, future growth in consumption per capita could fall below 0.5 percent per year for decades to come.