Women’s employment has shaped the course of recent business cycles

This paper studies the impact of changing trends in female labor supply on productivity, TFP growth and aggregate business cycles. We find that the growth in women’s labor supply and relative productivity added substantially to TFP growth from the early 1980s, even if it depressed average labor productivity growth, contributing to the 1970s productivity slowdown. We also show that the lower cyclicality of female hours and their growing share can account for a large fraction of the reduced cyclicality of aggregate hours during the great moderation, as well as the decline in the correlation between average labor productivity and hours. Finally, we show that the discontinued growth in female labor supply starting in the 1990s played a substantial role in the jobless recoveries following the 1990-1991, 2001 and 2007-2009 recessions. Moreover, it depressed aggregate hours, output growth and male wages during the late 1990s and mid 2000s expansions. These results suggest that continued growth in female employment since the early 1990s would have significantly improved economic performance in the United States.

That is the abstract of a new NBER working paper by Stefania Albanesi.

The great retrogression average is over

White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men’s wages declined more than women’s. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. Their shorter life expectancy reduced their retirement savings but the increase in out-of-pocket medical expenses increased them by more. Welfare losses, measured a one-time asset compensation are 12.5%, 8%, and 7.2% of the present discounted value of earnings for single men, couples, and single women, respectively. Lower wages explain 47-58% of these losses, shorter life expectancies 25-34%, and higher medical expenses account for the rest.

That is from a new NBER working paper by Margherita Borella, Mariacristina De Nardi, and Fang Yang.

Women in the economics profession

Nearly 100 female economists say a peer or a colleague has sexually assaulted them. Nearly 200 say they were the victim of an attempted assault. And hundreds say they were stalked or touched inappropriately, according to a far-reaching survey of the field.

The results, compiled by the American Economic Association, also reveal deep evidence of gender and racial discrimination within the field. Half of the women who responded to the survey said they had been treated unfairly because of their sex, compared with 3 percent of men. Nearly half of women said they had avoided speaking at a conference or a seminar to guard against possible harassment or “disrespectful treatment.” Seven in 10 women said they felt their colleagues’ work was taken more seriously than their own.

Here is more from Ben Casselman and Jim Tankersley at NYT.

Alan Krueger, RIP

You probably all know by now that Alan Krueger has passed away, nonetheless it seems appropriate to offer tribute and condolences.  Alan and I were together in the same year at Harvard in the economics Ph.D program, and although he was on track to win a Nobel Prize and I have read most of his papers and books, I always associate him more with those years in the mid-1980s.  I am very saddened by the news.

A reverse Austrian business cycle theory

Did tight money from the Fed place too high a penalty on deposit funding of mortgages?:

Between 2003 and 2006, the Federal Reserve raised rates by 4.25%. Yet it was precisely during this period that the housing boom accelerated, fueled by rapid growth in mortgage lending. There is deep disagreement about how, or even if, monetary policy impacted the boom. Using heterogeneity in banks’ exposures to the deposits channel of monetary policy, we show that Fed tightening induced a large reduction in banks’ deposit funding, leading them to contract new on-balance-sheet lending for home purchases by 26%. However, an unprecedented expansion in privately-securitized loans, led by nonbanks, largely offset this contraction. Since privately-securitized loans are neither GSE-insured nor deposit-funded, they are run-prone, which made the mortgage market fragile. Consistent with our theory, the re-emergence of privately-securitized mortgages has closely tracked the recent increase in rates.

Here is the full NBER working paper by Itamar Drechsler, Alexi Savov, and Philipp Schnabl.

Monday assorted links

Density is Destiny: Economists Predict the Far Future

In a paper that just won the JPE’s Robert Lucas Prize, Desmet, Krisztian Nagy and Rossi-Hansberg model the evolution of the world economy over the next 400-600 years! Is it laughable or laudatory? I’m not entirely sure. The paper does have an insight that I think is very important, in addition to a number of methodological advances.

If we look around the world today we see that the places with the densest populations, such as China and India, are poor. But in the long-run of history that doesn’t make sense. As Paul Romer, and others, have emphasized, ideas are the ultimate source of wealth and more people means more ideas. As a result, innovation and GDP per capita should be higher in places and times with more people. The fact that China and India are poor today is an out-of-equilibrium anomaly that happened because they were slower than the West to adopt the institutions of free markets and capitalism necessary to leverage ideas into output. China and India weren’t relatively poor in the past, however, and they won’t be relatively poor in the future. With that in mind, a key long-run prediction of Desmet, Krisztian Nagy and Rossi-Hansberg becomes clear. If people are not allowed to migrate then the places that are densest today will not only equal the West, they will overtake the West in innovation and productivity.

One of the key determinants of these patterns is the correlation between GDP per capita and population density. As we mentioned above, the correlation is negative and weak today, and our theory predicts that, consistent with the evidence across regions in the world to-day, this correlation will become positive and grow substantially over the next six centuries, as the world becomes richer. Two forces drive this result. First, people move to more productive areas, and second, more dense locations become more productive over time since investing in local technologies in dense areas is, in general, more profitable. Migration restrictions shift the balance between these two mechanisms. If migration restrictions are strict, people tend to stay where they are, and today’s dense areas, which often coincide with developing countries, become the most developed parts of the world in the future…. In comparison, most of today’s high-productivity, high-density locations in North America, Europe, Japan, and Australia fall behind in terms of both productivity and population.

Thus, if migration restrictions are strict, density is destiny and the dense parts of the world will rule. But what if migration restrictions are loosened?

… if migration restrictions are lifted, then people today move to the high-productivity regions such as Europe and the United States and these regions become denser and so remain the high-productivity regions in the future. World welfare in this scenario goes up by a factor of three.

It’s much better to remove migration restrictions today because we get to a much richer world, faster. In addition, population is better distributed in accordance with natural amenities. All is not perfectly rosy, however, in the free migration scenario. So let’s conclude with a few sentences that would make Hari Seldon proud.

[in the free migration scenario]…growth in utility drops substantially in the short run as many people move to areas with high real GDP; hence these areas be-come more congested and become worse places to live (lower amenities). This initial loss in growth is, however, compensated in the long run by a large surge in productivity growth after year 2200.

British sentences to ponder

But holding the government to account is one thing, setting the agenda another. The Brexit crisis has shown this. In January and February, when MPs tabled amendments that would truly empower backbenchers — by giving them control of what is debated in the Commons, or setting up voting systems for MPs to rank different Brexit options — the majority stepped back. “I think the most remarkable thing is how unsuccessful we’ve been in taking control,” says one shadow minister. Faced with a choice of now or never, MPs generally decided it couldn’t be now. Only this week did they become bolder, rejecting May’s deal for a second time. In response, the government agreed to facilitate a vote on different Brexit options if they rejected it a third time.

“The last two years have thrown into sharp relief the things that parliament is good at and the things it is not good at. It is generally not good at legislating,” says Lisvane. “The things that have gone really well are select committees.”

That is from a long FT piece by Henry Mance, perhaps the best article I have read this week.

What I’ve been reading

1. Aladdin, a new translation by Yasmin Seale.  A wonderful, lively small volume, a good reintroduction to the Arabian Nights, recommended.

2. Shalini Shankar, Beeline: What Spelling Bees Reveal About Generation Z’s New Path to Success.  Not as analytical as I was wanting, but more analytical than I had been expecting.

3. Rowan Ricardo Phillips, The Circuit: A Tennis Odyssey.  Provides a good look at the interior world of tennis competition, with emphasis on very recent times.  A good look at how to think about the game, not only in the abstract, but as it plays out through the logic of particular events and tournaments.

4. Tim Smedley, Clearing the Air: The Beginning and the End of Air Pollution.  Perhaps the best extant introduction to the air pollution issue, one of the world’s most important and underrated crises, and no I am not talking about carbon.

5. Gordon Peake, Beloved Land: Stories, Struggles, and Secrets from Timor-Leste.  Mostly analytical, with real information blended with travelogue.  I can’t judge the content, but I was never tempted to put this one down and throw it away.

6. Roderick Beaton, Greece: Biography of a Modern Nation.  Excellent survey and overview, makes the late 19th century intelligible, among other achievements.  “For Greeks, unlike the concept of the nation, the state had always been an object of popular derision.”

The cinematic culture that is Danish

Some cinema owners do not seem to think that movies without subtitles will have a future in Denmark, and have completely abandoned them, according to the country’s public broadcaster.

But they mean for movies in Danish:

Pedersen blames the necessity for subtitles on the evolution of the use of Danish in movies. Whereas in the past, actors were focused on articulating themselves in a way understandable for everyone, their main emphasis has now shifted to being as authentic as possible. Hence, many actors have chosen not to imitate more common dialects and have stuck to local versions of Danish. “It’s a small country, but there are big differences between the Danish dialects,” Pedersen explained.

But couldn’t Danish actors put at least a bit more emphasis on mumbling less to attract a bigger audience? Well, apparently not.

“It is difficult to ask actors to speak more clearly. … Sometimes, speaking the most common Danish accents would simply make the movies and the characters seem implausible,” Peter Frandsen Siggaard, a journalist for the country’s public broadcaster, explained.

Here is the full WaPo story, via Helen DeWitt.

The rise of the temporary scientist

Here is a new and important piece on the economics of science, from Staša MilojevićFilippo Radicchi, and John P. Walsh:

Contemporary science has been characterized by an exponential growth in publications and a rise of team science. At the same time, there has been an increase in the number of awarded PhD degrees, which has not been accompanied by a similar expansion in the number of academic positions. In such a competitive environment, an important measure of academic success is the ability to maintain a long active career in science. In this paper, we study workforce trends in three scientific disciplines over half a century. We find dramatic shortening of careers of scientists across all three disciplines. The time over which half of the cohort has left the field has shortened from 35 y in the 1960s to only 5 y in the 2010s. In addition, we find a rapid rise (from 25 to 60% since the 1960s) of a group of scientists who spend their entire career only as supporting authors without having led a publication. Altogether, the fraction of entering researchers who achieve full careers has diminished, while the class of temporary scientists has escalated. We provide an interpretation of our empirical results in terms of a survival model from which we infer potential factors of success in scientific career survivability. Cohort attrition can be successfully modeled by a relatively simple hazard probability function. Although we find statistically significant trends between survivability and an author’s early productivity, neither productivity nor the citation impact of early work or the level of initial collaboration can serve as a reliable predictor of ultimate survivability.

As Raghuveer Parthasarathy argues in his excellent blog post: “…small groups may be innovative, but they are the hardest to sustain given the randomness of scientific funding.”

For the pointer I thank Raghuveer Parthasarathy.

Spufford has done a Narnia sequel

The award-winning writer Francis Spufford has spent three years on a new novel for the CS Lewis Chronicles of Narnia series despite not having permission from the Lewis estate….

Spufford, who has printed 75 copies and distributed them free to friends and fellow writers, said it was “not intended to get out into the world unless, long shot, I come to terms with the estate”.

The Lewis estate has resisted all entreaties to continue the Narnia novels, the last of which was published in 1956 by Lewis, who died in 1963. His work remains in copyright until 2034.

In part he did the sequel for his daughter.  Here is the (London) Times link, gated.  This guy has tweeted some of the work.

Has the Tervuren Central African museum been decolonized?

In a word, no.  They shut the place down for five years and spent $84 million, to redesign the displays, and what they reopened still looks and feels incredibly colonial.  That’s not an architectural complaint, only that the museum cannot escape what it has been for well over a century.  Most of the 180,000 art objects there were either stolen or bought under terms of implicit coercion.  There is an Africa Gallery covering the crimes of King Leopold in the Congo, but it is easy enough to be transfixed by the art and not really take it in.  How about a full room near the entrance devoted to the anti-imperialist E.D. Morel?  And while there are now more art works from the post-colonial period, there is no room devoted to the often very impressive art worlds of Central Africa today.  Having more African people talk on screens was nice, but it doesn’t do the trick.  The colonial still seems glorious, and the post-colonial mediocre.

Despite DRC demands, I do understand that the repatriation of the objects themselves would not be wise, given the current state of the DRC.  In 1976-1982, 114 objects were in fact restituted, but most of them ended up stolen (NYT).  For me preserving the art comes first, and furthermore the current DRC government is hardly a legitimate spokesperson for the historic civilizations of the region.  But might the museum at least have presented the issue in some morally conscious manner?

Before you walk into the museum proper, there is a room devoted to all the sculptures and displays now considered too colonial or too racist for the current museum.  Of course this draws more attention to them, and furthermore the dividing lines are by no means always clear.  That said, there is a double irony, namely that some of the items in this room are sufficiently obnoxious that their display represents a better apology than any part of what is intended as apology.

This is still all much better than the past, when at one time a human zoo of 267 enslaved Congolese was put on display here, in fact that was the inaugural exhibit in 1897.  At least there is now a memorial to those of the enslaved who died of influenza.  And the plaque “Belgium Brings Civilization to the Congo” has been taken down.  Yet this:

The rapacious monarch’s monogram dots the walls of the palatial museum on the former royal estate, which he used to drum up investment for his colonial ventures at the 1897 World Exhibition.

Oh, and there are colonial statues built into the walls:

One was of black children clinging to a white missionary. Another was of a topless African woman dancing.

They cannot be removed because of cultural heritage laws in Belgium.

The animal displays also no longer seem of our time, more about size and stuffing and the conquest of nature rather than with much of a notion of environmental or biodiversity or animal welfare awareness.

It is nonetheless a spectacular museum, the best chronicle anywhere for the Central African artistic achievement by an order of magnitude, and one of the best and most interesting places in Europe right now.  It is worth the rather convoluted one hour trip you must take from Brussels, or if you are visiting Waterloo it isn’t far away at all.  For all its flaws (or in part because of them?), go if you can.

The art aside, the other lesson is imperialism and colonialism cast a longer shadow than you might at first think.  The realities of cultural constipation remain underrated.