Category: Data Source
How High-Skill Immigration Restrictions Eroded Regional Productivity: Evidence from the 2017 BAHA Executive Order
This paper estimates the regional economic impact of high-skill immigration restrictions by analyzing the 2017 “Buy American, Hire American” (BAHA) policy as a quasi-experimental policy shock. By significantly tightening H-1B visa adjudication, BAHA caused new employment petition denial rates to double from 7% to 17%, while STEM-specific rejections tripled to 31%. Using a difference-indifferences framework, this study finds that states highly dependent on H-1B talent experienced a statistically significant 2.8% relative decline in value-added output. This implied a productivity loss totaling roughly $218 billion across the most affected regions. While concurrent tax cuts and deregulation likely offset the impact on employment and wages, the loss of specialized STEM expertise adversely impacted total factor productivity. These findings suggest that policies based on conventional employment metrics may overlook the “hidden damage” to productivity and innovation that drives the broader economy, thereby underestimating the true economic cost of immigration restrictions.
That is by Caroline Y. Su of McLean High School. Via the excellent Kevin Lewis.
Is work from home bad for your mental health?
From the “Results” section:
Relative to those in nonremotable jobs, workers in remotable jobs spent approximately one additional hour alone per workday after the pandemic. Those in remotable jobs also differentially increased days spent entirely alone and decreased after-work socializing. The rise in isolation was sharpest for those living alone, whose likelihood of spending the whole day without social contact rose by 7 percentage points (83%).
Mental distress simultaneously increased: Scores on the Kessler (K-6) measure of generalized psychological distress rose by 0.1 standard deviations for those in remotable jobs relative to those in nonremotable jobs. The increase in distress was roughly twice as large for those living alone compared with those living with family. Alternative measures of mental distress—such as the frequency of depression, mental health care utilization, and antidepressant prescriptions—show similar trends. In contrast, workers in remotable jobs did not differentially increase visits to non–mental health care providers or non–mental health prescriptions (statins, for example), suggesting that the change was not merely driven by increased flexibility for doctor visits.
That is from a recently published paper by Natalia Emanuel, Emma Harrington, and Amanda Pallais.
Law professors prefer AI over peer answers
Large language models (LLMs) are increasingly promoted as educational tutors, yet most evaluations focus on domains with a single ground truth. Many disciplines, however, hinge on judgment: reasoning, weighing ambiguity, and reaching defensible conclusions. Law provides a sharp test. We conducted a blinded evaluation of short-answer tutoring in contracts courses with sixteen U.S. law professors. Participants created 40 representative questions, wrote answers, and judged 2,918 anonymized comparisons between human and LLM responses. Professors rated LLMs far higher than their peers (average win rate = 75.33%), with models performing similarly to the best instructor. LLM responses were also rarely flagged as harmful (3.53%, vs 12.06% for professors). Preferences for LLM answers were consistent across evaluators and reflected shared professional standards. Our evaluation can be reliably extended to additional models by employing a separate LLM as a judge, rendering expert agreements an effective, scalable method to evaluate AI tutors in judgment-rich domains.
“far”. That is from a new paper by Alejandro Salinas, et.al. Via Andrew Curran. And via John Chamberlain:
Artificial intelligence (AI) and large language models (LLMs) tools are capable of mass-producing academic finance papers that are nearly indistinguishable from human-authored research, according to a new study published in the Journal of Economic Literature.
C’mon people, get ready. I know it is difficult to admit when your human capital has been devalued, but that time is upon us. In particular, being prolific is no longer such a comparative advantage in academia. You might run to the “but I know what questions to ask” cope, but I implore you to solve for the equilibrium. What is the equilibrium wage for merely asking questions?
Of course academic life and projects will continue, but the real rewards will go to people doing new, innovative, and hitherto impossible projects with AI.
Sentences to ponder
In 2019, there were about 150,000 people working in autism therapy. Six years later, there were 654,000—more than the number of people who work in mining and logging, or telecommunications, or at the US Postal Service.
That is from Derek Thompson. And here is the seven-minute nap story from the NYT:
At Compleat Kidz, a fast-growing chain of autism clinics based in North Carolina, the policy is firm: Naps cannot be longer than seven minutes before children are awakened to resume therapy. The company says this is necessary to prevent fraud since clinics can be paid only when children are awake and getting services. But it also allows the clinic to bill insurers or Medicaid for more hours.
I do not even need to say “model this.”
Consent-based laws and aggregate fertility
This paper examines how expanding the legal definition of sexual assault affects fertility and sexual behavior, using a panel of European countries. I find that switching to tacit consent-based legislation reduces fertility by about 4% relative to the mean. This effect is driven by a decrease in couple formation and an increase in abortion rates. Supporting evidence is consistent with a behavioral channel in which more risk-averse individuals withdraw from dating and partner markets following the reform, altering the composition of those who remain active toward a pool that is less precautionary. Consistent with this compositional shift, contraceptive use rises among younger women but declines among older age groups, while condom use falls among young men. Finally, an analysis of appeals court verdicts in Sweden following the adoption of consent-based legislation shows a decline in unanimous guilty verdicts, indicating challenges in assessing tacit consent. These results are consistent with a simple framework in which heterogeneity in risk perceptions and precautionary behavior in dating and partner markets, including reduced participation by some individuals, helps explain the observed decline in fertility following the reform.
That is by Adrian Mehic in the Journal of Health Economics. tekl.
The chimera of universal coverage in a large, diverse country
Our findings suggest that policies intended to subsidize health insurance of higher income groups, for example, the enhanced premium subsidies, are far less efficient than policies intended to further expand public insurance to low-income groups, for example, in non-expansion states.
That is from a new NBER working paper by
UK facts of the day
At the peak, the year to March 2023, almost 1.5m immigrants came. The Office for National Statistics thinks that far fewer people left, so net migration amounted to 944,000.
…Net migration to Britain last year amounted to 171,000—the lowest level since 2012, if the pandemic years are excluded. The human haul will probably be even lower this year, largely because the number of economic migrants continues to fall fast…James Bowes of Warwick University thinks net migration might even turn negative in 2026…
The government’s attempt to filter for highly desirable immigrants is not working in practice. As expected, the number of visas given to care workers has plunged. But the number of visas given to IT professionals has also fallen, from about 28,000 in 2022 to 10,000 last year.
According to The Economist, most Britons still think immigration to the country is rising. And it seems economically productive immigrants are being restricted too?:
Regardless of whether he or she arrived with a work visa or by other means, the average India-born employee in Britain earns £32,400 a year, whereas the average Nigeria-born employee earns £34,000. British-born people lag behind both, with average earnings of £30,900…
The Migration Observatory, a think-tank, has shown that people who arrive from outside the EU often earn little at first. Yet the wages of recent migrants have quickly exceeded the national average…
One of my fears is that, for informational and public choice reasons, it is unduly hard to crack down on unproductive immigrants only.
Are we undermeasuring inflation for lower earners?
We document a new source of fluctuations in inflation inequality. When the cost of upstream inputs rises, varieties within a product category tend to have similar absolute price increases. However, the same absolute price increase constitutes a larger percentage change for low-price products, resulting in excess inflation at the low end (“cheapflation”). Since low-income households tend to buy lower-priced varieties, the inflation rates they face are disproportionately sensitive to upstream costs. Using data on food-at-home purchases, we show that this mechanism generates cycles in inflation inequality and excessive volatility in inflation for low-income households relative to high-income households. This channel parsimoniously accounts for observed fluctuations in inflation inequality over time, including surges in cheapflation and inflation inequality during both the Great Recession and the 2021–2023 post-pandemic inflation. Official statistics mask these within-category differences in inflation and thus understate the differences in inflation experienced by low- and high-income households by 70–90 percent. We provide evidence that this mechanism applies to a range of consumption categories beyond food at home. The same mechanism also leads to systematic differences in inflation across cities and import price inflation across countries in response to nationwide and global cost shocks.
That is from a new NBER working paper by Kunal Sangani.
How Much Has Shale Gas Saved U.S. Consumers?
It may seem like a distant memory now, but as of the mid-2000s, U.S. natural gas production had been flat for a decade, and the U.S. was importing liquefied natural gas (LNG), with plans to import much more. Then shale gas happened. Advances in hydraulic fracturing and horizontal drilling caused U.S. natural gas production to increase significantly, and the U.S. went from being a net importer of natural gas to being the world’s largest exporter. This paper calculates how much shale gas has saved U.S. natural gas consumers. Using price differences between the United States, Europe and Japan, we calculate that U.S. natural gas consumers have saved $3.1-$4.3 trillion between 2007 and 2025, equivalent to $164-$227 billion annually. Access to low-price U.S. natural gas has been particularly valuable during major supply shocks such as the war in Ukraine, and the benefits of shale gas have been experienced broadly across sectors and states.
That is from a new NBER working paper by Lucas W. Davis.
AI in gdp
- Quality-adjusted AI production in the United States grew at over 2,000 percent per year in 2024 and 2025, driven by three compounding forces: expanding data-center capacity, hardware efficiency gains, and—the largest of the three—algorithmic progress.
- Treating the AI sector as a coherent economic entity yields preliminary estimates of nominal AI GDP at approximately $250 billion in 2025, growing at roughly 2,600 percent per year in quality-adjusted real terms.
- National economic statistics accounts were not designed to track this kind of activity. Statistics agencies should begin developing AI-focused satellite accounts now, before the measurement gap becomes a policy gap.
Here is much more from Anton Korinek and Patrick McKelvey. Via the excellent Samir Varma.
*How to Win a Trade War: An Optimistic Guide to an Anxious Global Economy*
That is the new Soumaya Keynes book, out today. I was happy to have blurbed this book, and here is an essay, on export restrictions, based on the book.
India fertility facts of the day
Ten notable facts from India’s new SRS Statistical Report 2024 published two days ago:
1) India’s total fertility rate (TFR) has dropped to 1.88 (rounded up to 1.9 in the figures) in 2024 from 1.92 in 2023.
2) This drop is roughly the historical speed of the last few decades. India’s TFR was 4.3 in 1985 and it has been falling around 0.06 per year since then.
3) For those who think “smartphones are the reason for the fall of TFR,” there is not much change in India’s TFR after their introduction. Of course, this might only apply to India.
4) India’s sex ratio at birth continues moving toward natural levels. It has grown from 907 girls per 1000 boys in 2018-2020 to 918 in 2022-2024. Without sex selection (e.g., selective abortions), it should be around 952.
5) Nonetheless, this bias still means that India’s replacement rate is around 2.15, not 2.1 as in other advanced economies.
6) Hence, India is already 0.27 children below the replacement rate and the gap continues growing.
7) However, this figure hides large regional differences. Kerala is at 1.3, well below the U.S. and approaching Italian and Spanish levels (Delhi is even lower, at 1.2, but it is a peculiar case), while Bihar remains at 2.9.
8) In terms of the rural/urban divide, rural India is at 2.1 and urban India at 1.5.
9) From everything I can see, India’s TFR will continue to fall, and it should reach 1.57 (the current level of the U.S.) around 2031 unless something significant changes.
10) Having said that, India’s data has a non-trivial margin of error, and a new Census might change our reading of the situation. In summary, India is following the same path as everyone else. No Indian fertility Sonderweg!
That is all from Jesús Fernández-Villaverde.
Tajikistan fact of the day
Tajikistan’s remittances are worth nearly half the country’s GDP—
In Tajikistan, remittances — the money sent or brought back by migrants — amounted to 48% of GDP in 2024. The chart places this figure in context by comparing it with other countries with data for the same year. Nicaragua and Honduras receive remittances worth around a quarter of their GDP — high by global standards, but still far below Tajikistan’s level. Remittances here include two types of flows: money migrants abroad send home to their families, and money cross-border workers bring home from short-term jobs abroad.
Both of these flows play a role in Tajikistan, where most remittances come from labor migrants in Russia. In addition to the roughly 400,000 Tajiks settled there, hundreds of thousands more cross the border for seasonal and short-term work.
According to a report from the International Organization for Migration, about 1.2 million Tajiks were in Russia in mid-2024, which is more than a tenth of Tajikistan’s total population.
The World Bank’s latest Tajikistan Economic Update says that much of the country’s recent rapid economic growth (above 8% since 2021) was supported by these remittance inflows.
That is from Our World in Data, with a picture at the link.
Who is losing out in marriage market competition?
Over the past half-century, U.S. four-year colleges have shifted from enrolling mostly men to enrolling mostly women, while the economic position of non-college men has weakened markedly. We examine how these changes correspond with the evolving structure of marriage markets across cohorts and places. As college men have become increasingly scarce, college women have maintained stable marriage rates by marrying high-earning non-college men. This shift—combined with the broader economic decline of non-college men—has sharply reduced the pool of economically stable partners available to non-college women: the share of non-college men who earn above the national median and are not married to college women has fallen by more than 50%. Cross-area evidence shows that education gaps in marriage are smaller where non-college men face lower rates of joblessness and incarceration. Taken together, the evidence suggests that deteriorating outcomes for men have primarily undermined the marriage prospects of non-college women.
That is from a new NBER working paper by
Why I am skeptical on the relationship between smart phones and fertility
That is from Alex Nowrasteh. And for some country by country graphs:
Here is that link. There might be some connection to smart phones, but it just does not seem that strong? Perhaps the phones give a fillip and a modest acceleration to an already in place trend? And are Kenya’s phones really all that “smart,” even today?