Category: Data Source
China non-fact of the day
China’s economy is about 12 per cent smaller than official figures indicate, and its real growth has been overstated by about 2 percentage points annually in recent years, according to research. The findings in the paper published on Thursday by the Brookings Institution, a Washington think-tank, reinforced longstanding scepticism about Chinese official statistics. They also add to concerns that China’s slowdown is more severe than the government has acknowledged. Even based on official data, China’s economy grew at its slowest pace since 1990 last year at 6.6 per cent.
That is from Gabriel Wildau of the FT — adjust your debt to gdp ratios accordingly.
The Brother Earnings Penalty
This paper examines the impact of sibling gender on adolescent experiences and adult labor market outcomes for a recent cohort of U.S. women. We document an earnings penalty from the presence of a younger brother (relative to a younger sister), finding that a next-youngest brother reduces adult earnings by about 7 percent. Using rich data on parent-child interactions, parents’ expectations, disruptive behaviors, and adult outcomes, we provide a first step at examining the mechanisms behind this result. We find that brothers reduce parents’ expectations and school monitoring of female children while also increasing females’ propensity to engage in more traditionally feminine tasks. These factors help explain a portion of the labor market penalty from brothers.
That is by Angela Cooks and Eleonora Patacchin in Labour Economics. Once again, family niche effects seem to matter. Via the excellent Kevin Lewis.
Work isn’t so bad
Although we spend much of our waking hours working, the emotional experience of work, versus non-work, remains unclear. While the large literature on work stress suggests that work generally is aversive, some seminal theory and findings portray working as salubrious and perhaps as an escape from home life. Here, we examine the subjective experience of work (versus non-work) by conducting a quantitative review of 59 primary studies that assessed affect on working days. Meta-analyses of within-day studies indicated that there was no difference in positive affect (PA) between work versus non-work domains. Negative affect (NA) was higher for work than non-work, although the magnitude of difference was small (i.e., .22 SD, an effect size comparable to that of the difference in NA between different leisure activities like watching TV versus playing board games). Moderator analyses revealed that PA was relatively higher at work and NA relatively lower when affect was measured using “real-time” measurement (e.g., Experience Sampling Methodology) versus measured using the Day Reconstruction Method (i.e., real-time reports reveal a more favorable view of work as compared to recall/DRM reports). Additional findings from moderator analyses included significant differences in main effect sizes as a function of the specific affect, and, for PA, as a function of the age of the sample and the time of day when the non-work measurements were taken. Results for the other possible moderators including job complexity and affect intensity were not statistically significant.
That is from a new paper by Martin J. Biskup, Seth Kaplan, Jill C. Bradley-Geist, and Ashley A. Membere. Such meta-analyses have their problems, but I consider other kinds of analysis, with complementary results, in my forthcoming book Big Business: A Love Letter to an American Anti-Hero.
Via Rolf Degen.
No Urban Wage Premium for Non-College Educated Workers
The Economist has a nice graph and article on the urban wage premium based on David Autor’s work. The graphs shown that in the past both college and non-college educated workers earned higher wages in more densely populated areas but today only college-educated workers experience an urban wage-premium.
Housing costs eat a large share of the college wage-premium so even college educated workers are not as better off in cities as the graphs make it appear. Autor’s point, however, is that wages for the non-college educated aren’t higher in cities so they might not move to cities even with lower housing costs. That could be true but I also suspect that the urban wage premium for the non-college educated is endogenous–firms employing these workers have moved out of the city but could move back in with lower housing and land costs.
CEOs play games cooperatively, and well
We study whether CEOs of private firms differ from other people with regard to their strategic decisions and beliefs about others’ strategy choices. Such differences are interesting since CEOs make decisions that are economically more relevant, because they affect not only their own utility or the well-being of household members, but the utility of many stakeholders inside and outside of the organization. They also play a central role in shaping values and norms in society. We expect differences between both groups, because CEOs are more experienced with strategic decision making than comparable people in other professional roles. Yet, due to the difficulties in recruiting this high-profile group for academic research, few studies have explored how CEOs make incentivized decisions in strategic games under strict controls and how their choices in such games differ from those made by others. Our study combines a stratified random sample of 200 CEOs of medium-sized firms with a carefully selected control group of 200 comparable people. All subjects participated in three incentivized games—Prisoner’s Dilemma, Chicken, Battle-of-the-Sexes. Beliefs were elicited for each game. We report substantial and robust differences in both behavior and beliefs between the CEOs and the control group. The most striking results are that CEOs do not best respond to beliefs; they cooperate more, play less hawkish and thereby earn much more than the control group.
Here is the paper, by Håkan J. Holm, Victor Nee, and Sonja Opper, via the excellent Rolf Degen.
The impact of the Trump trade war
We analyze the short-run impacts of the 2018 trade war on the U.S. economy. We estimate import demand and export supply elasticities using changes in U.S. and retaliatory war tariffs over time. Imports from targeted countries decline 31.5% within products, while targeted U.S. exports fall 9.5%. We find complete pass-through of U.S. tariffs to variety-level import prices, and compute the aggregate and regional impacts of the war in a general equilibrium framework that matches these elasticities. Annual losses from higher costs of imports are $68.8 billion (0.37% of GDP). After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare loss is $6.4 billion (0.03% of GDP). U.S. tariffs favored sectors located in politically competitive counties, suggesting an ex ante rationale for the tariffs, but retaliatory tariffs offset the benefits to these counties. Tradeable-sector workers in heavily Republican counties are the most negatively affected by the trade war.
Here is the full paper, by Pablo D. Fajgelbaum, Pinelopi K. Goldberg, Patrick J. Kennedy, and Amit K. Khandelwal. Full pass-through, of course, means that monopoly in these markets is likely not such a big deal.
The Mormon asymptote?
…compared to some other religions, Mormonism is not doing too badly. Mormonism’s US growth rate of .75 percent in 2017 — kept in positive territory by still-higher-than-average fertility among Mormons — is actually somewhat enviable when compared to, for example, the once-thriving Southern Baptists, who have bled out more than a million members in the last ten years. Mormonism is not yet declining in membership, but it has entered a period of decelerated growth. In terms of congregational expansion, the LDS Church in the United States added only sixty-five new congregations in 2016, for an increase of half a percentage point. In 2017, the church created 184 new wards and branches in the United States, but 184 units also closed, resulting in no net gain at all.
By some estimates (p.7), only about 30 percent of young single Mormons in the United States go to church regularly. The idea of the Mormon mission, however, is rising in import:
More than half of Mormon Millennials have served a full-time mission (55 percent), which is clearly the highest proportion of any generation; among GenXers, 40 percent served, and in the Boomer/Silent generation, it was 28 percent.
In contrast, “returning to the temple on behalf of the deceased” is falling (p.54).
Mormons are about a third more likely to be married than the general U.S. population, 66 to 48 percent. But note that 23 percent of Mormon Millennials admit to having a tattoo, against a recommended rate of zero (p.162).
And ex-Mormon snowflakes seem to be proliferating. For GenX, the single biggest reason giving for leaving the church was “Stopped believing there was one church”. For Millennials, it is (sadly) “Felt judged or misunderstood.”
That is all from the new and excellent Jana Riess, The Next Mormons: How Millennials are Changing the LDS Church.
Oxford University Press also sent me a copy of J. Brian O’Roark Why Superman Doesn’t Take Over the World: What Superheroes Can Tell us About Economics, which I have not yet read.
The effect of banning payday loans
n November 2008, Ohio enacted the Short-Term Loan Law which imposed a 28% APR on payday loans, effectively banning the industry. Using licensing records from 2006 to 2010, I examine if there are changes in the supply side of the pawnbroker, precious-metals, small-loan, and second-mortgage lending industries during periods when the ban is effective. Seemingly unrelated regression results show the ban increases the average county-level operating small-loan, second-mortgage, and pawnbroker licensees per million by 156, 43, and 97%, respectively.
That is from Stefanie R. Ramirez, via the excellent Kevin Lewis.
Are workers exploited in the Chinese manufacturing sector?
Many news outlets and scholars have expressed concerns that workers have been unfairly exploited by employers in the Chinese manufacturing sector. Economic theory suggests that this exploitation, if it exists, is the result of employers in the manufacturing sector having considerable monopsony power. While there is a vast economic literature on monopsony power in the United States and other nations, little monopsony research has been conducted on the Chinese manufacturing market. This paper follows the monopsony research tradition and examines the Chinese manufacturing sector along several likely indicators of monopsony power. These include the turnover rate in the manufacturing sector, the relation between marginal factor cost and average factor cost, the relation between average real labor productivity and real wage in the manufacturing sector, and the comparison of labor costs between China and other countries. This study found that worker exploitation/monopsony in the manufacturing sector is not as severe as previously reported.
Here is the paper, by Linan Peng and Joshua Ingber, both of GMU, via the excellent Kevin Lewis.
Small teams vs. large teams in science
Here we analyse more than 65 million papers, patents and software products that span the period 1954–2014, and demonstrate that across this period smaller teams have tended to disrupt science and technology with new ideas and opportunities, whereas larger teams have tended to develop existing ones.
That is from a new Nature paper by Lingfei Wu, Dashun Wang, and James A. Evans. Here is the NYT write-up by Benedict Carey.
Will insects go extinct?
No, probably not, no matter what you might have read or seen on Twitter. The underlying paper is “Worldwide decline of the entomofauna: A review of its drivers.” Here is a tweet thread by Alex Wild on the paper, here is one bit:
They make a great deal of local extinctions as a sort of proxy for global extinctions. That’s pretty dicey. I mean, bison are locally extinct here in my Austin neighborhood. But their numbers are recovering elsewhere.
They used 73 studies done on different taxa in different places. Those studies must represent tens of thousands of person-hours. Gargantuan. But the input studies weren’t designed for global assessment.
The paper itself has strong evidence on the severe pressure on butterflies and bees, and furthermore the general encroachment of humans on the natural environment probably is going to diminish species numbers and biodiversity, for insects too. At the same time, the remaining species will adapt and evolve to meet the new potential habitats, with many kinds of insects having an easier time adapting than say gorillas.
The paper has some quite non-dramatic sentences such as: “Studies on ant populations and trends are lacking except for a few invasive species.” And: “A single long-term study on grasshoppers and crickets is available…”
So I don’t quite see how the authors arrive at: “The conclusion is clear: unless we change our ways of producing food, insects as a whole will go down the path of extinction in a few decades.” Bryan Caplan, bet away!
Sovereign Bonds since Waterloo — better than you had thought
This paper studies external sovereign bonds as an asset class. We compile a new database of 220,000 monthly prices of foreign-currency government bonds traded in London and New York between 1815 (the Battle of Waterloo) and 2016, covering 91 countries. Our main insight is that, as in equity markets, the returns on external sovereign bonds have been sufficiently high to compensate for risk. Real ex-post returns averaged 7% annually across two centuries, including default episodes, major wars, and global crises. This represents an excess return of around 4% above US or UK government bonds, which is comparable to stocks and outperforms corporate bonds. The observed returns are hard to reconcile with canonical theoretical models and with the degree of credit risk in this market, as measured by historical default and recovery rates. Based on our archive of more than 300 sovereign debt restructurings since 1815, we show that full repudiation is rare; the median haircut is below 50%.
That is from Josefin Meyer, Carmen M. Reinhart, and Christoph Trebesch in a new NBER working paper.
Strict ID Laws Don’t Stop Voters: Evidence from a U.S. Nationwide Panel
U.S. states increasingly require identification to vote – an ostensive attempt to deter fraud that prompts complaints of selective disenfranchisement. Using a difference-in-differences design on a 1.3-billion-observations panel, we find the laws have no negative effect on registration or turnout, overall or for any group defined by race, gender, age, or party affiliation. These results hold through a large number of specifications and cannot be attributed to mobilization against the laws, measured by campaign contributions and self-reported political engagement. ID requirements have no effect on fraud either – actual or perceived. Overall, our results suggest that efforts to reform voter ID laws may not have much impact on elections.
By Enrico Cantoni and Vincent Pons. Rooftops, shout, mood affiliation, etc.
The wisdom of Ramez Naam, on climate change
From his tweetstorm here are a few bits:
Our biggest climate problems – the sectors that are both large and that lack obvious solutions, are: a) Agriculture and land use changes (AFOLU in the graphic) and b) Manufacturing / Industry. Together, these are 45% of global emissions. And solutions are scarce. 11/
I’m not saying that clean electricity or transport are solved. They’re not. But in electricity, we have solar, wind, batteries growing & getting cheaper & on path for 70-80% decarbonization *at least*. Same with electric cars and trucks. We have momentum in those sectors. 12/
We do NOT have momentum in reducing carbon emissions of agriculture or manufacturing. In agriculture, livestock methane emissions + deforestation to graze livestock are biggest problems. And meat consumption is doubling in next 40 yrs. This should scare you more than coal. 13/
In industry, despite progress in recycling steel, *primary* steel production is still incredibly carbon intensive. As is cement. As is much of manufacturing. We haven’t reached the “solar cheaper than coal” or “EVs cheaper than gasoline” tipping points there. We need to. 14/
If the US is serious about climate policy, it ought to focus on these two sectors – agriculture and industry – that are soon to be the two largest emissions sources, and lack solutions. We should press to invent solutions, drive them down in price, and spread them globally. 16/
Do read the whole thing.
Do land use restrictions increase restaurant quality and diversity?
Daniel Shoag and Stan Veuger say yes, but I am not so convinced.
It turns out that metrics of land use restrictions are correlated with restaurant quality, across cities. To cut to the chase, Los Angeles ranks number one on this index, and I can agree with that assessment in terms of food quality and also diversity. (Other good food cities, such as Miami, also rank high on the index.) Yet for the metropolitan area near L.A., food is generally best where the land use restrictions are least binding. Beverly Hills and Santa Monica have some decent fancy restaurants, but the real gems are to be found elsewhere, in fringes such as northeast Hollywood, Silverlake (gentrifying a bit too much these days, however), north Orange County, Monterey Park, and so on. Pasadena has hardly anywhere excellent to eat.
I would suggest an alternative channel of influence: urban areas with high inequality have both better food (see An Economist Gets Lunch, but basically imagine the wealthier people generating demand and the poorer people supplying cheap labor) and more building restrictions. The wealthier people decide to do something to keep the poorer people out of their neighborhoods.
I hate to say “correlation does not prove causation,” but…correlation does not prove causation.