Category: Data Source
Incentives matter, edition #4637
Many developed countries currently both face and resist strong migratory pressure, fueling irregular migration. The Central Mediterranean Sea is among the most dangerous crossings for irregular migrants in the world. In response to mounting deaths, European nations intensified search and rescue operations in 2013. We develop a model of irregular migration to identify the effects of these operations. Leveraging exogenous variation from rapidly varying crossing conditions, we find that smugglers responded by sending boats in adverse weather and shifting from seaworthy boats to flimsy rafts. As a result, these operations induced more crossings in dangerous conditions, ultimately offsetting their intended safety benefits due to moral hazard and increasing the realized ex post crossing risk for migrants. Despite the increased risk, these operations likely increased aggregate migrant welfare; nevertheless, a more successful policy should instead restrict the supply of rafts and expand legal alternatives for migration.
While I agree with that policy recommendation, I say good luck with that one. “Not enough people are dying” is what one of those harsh, old school economists might have said instead. Good thing we got rid of them.
In any case, that article is by Claudio Deiana, Vikram Maheshri, and Giovanni Mastrobuoni, forthcoming in the American Economic Journal (Economic Policy), with the title being “Migrants at Sea: Unintended Consequences of Search and Rescue Operations.”
Democratic Republic of Congo growth estimate of the day
I worry about the distribution, but of course the news could be worse:
The International Monetary Fund said a mining boom helped the Democratic Republic of Congo’s economy perform “significantly stronger” last year than earlier forecast.
The economy of the mining giant is estimated to have grown 8.5%, compared with an earlier projection of 6.6%, the IMF said Wednesday in an emailed statement.
The fund also raised its growth forecast for this year to 8% from 6.7%, as it warned of downside risks “from the armed conflict in the east, uncertainty ahead of the elections, the continued effect of the war in Ukraine, and adverse terms-of-trade shocks.”
Congo produces almost 70% of the world’s key battery mineral cobalt and tied Peru last year as the second-largest copper producer, according to the US Geological Survey. The central African nation also produces significant amounts of gold and tin. Its mining industry as a whole grew 20% last year, the IMF said.
Has the Great Awokening in scholarship peaked?
Here is much more from Musa al-Gharbi. Via John Cunningham.
Should we pay mothers to stay home?
These are Finnish results, and their generality can be questioned, but it is not the first time such results have appeared:
We study the impacts of a policy designed to reward mothers who stay at home rather than join the labor force when their children are under age three. We use regional and over time variation to show that the Finnish Home Care Allowance (HCA) decreases maternal employment in both the short and long term. The effects are large enough for the existence of home care benefit system to explain the higher short-term child penalty in Finland than comparable nations. Home care benefits also negatively affect the early childhood cognitive test results of children, decrease the likelihood of choosing academic high school, and increase youth crimes. We confirm that the mechanism of action is changing work/home care arrangements by studying a day care fee reform that had the opposite effect of raising incentives to work – with corresponding opposite effects on mothers and children compared to HCA. Our findings suggest that shifting child care from the home to the market increases labor force participation and improves child outcomes.
That is from a new NBER working paper by Jonathan Gruber, Thomas Kosonen, and Kristina Huttunen. Note that the results may irritate both some social conservatives and some proponents of extremely generous maternal leave arrangements.
The trajectory of ESG
Russia fact of the day
Less than Nine Percent of Western Firms Have Divested from Russia
And here is part of the abstract:
We gathered extensive data on equity investments made by foreign companies headquartered in the European Union (EU) and G7 nations and checked whether following the outbreak of armed conflict divestment of their Russian subsidiaries could be confirmed. At the end of November 2022, our analysis shows that 8.5% of EU and G7 companies had divested at least one of their Russian subsidiaries. We performed extensive robustness checks that confirm our overall findings while also revealing some notable variation in divestment rates.
That is from a recent paper by EVenett and Pisani, via Charles Klingman.
The plateauing of cognitive ability among top earners
Are the best-paying jobs with the highest prestige done by individuals of great intelligence? Past studies find job success to increase with cognitive ability, but do not examine how, conversely, ability varies with job success. Stratification theories suggest that social background and cumulative advantage dominate cognitive ability as determinants of high occupational success. This leads us to hypothesize that among the relatively successful, average ability is concave in income and prestige. We draw on Swedish register data containing measures of cognitive ability and labour-market success for 59,000 men who took a compulsory military conscription test. Strikingly, we find that the relationship between ability and wage is strong overall, yet above €60,000 per year ability plateaus at a modest level of +1 standard deviation. The top 1 per cent even score slightly worse on cognitive ability than those in the income strata right below them. We observe a similar but less pronounced plateauing of ability at high occupational prestige.
That is from a new paper by Marc Keuschnigg, Arnout van de Rijt3, and Thijs Bol.
Recent economic development stars
And of course all be getting Noah Smith’s Substack…
Did the Covid housing boom induce the Great Resignation?
Following the Covid-19 pandemic, U.S. labor force participation declined significantly in 2020, slowly recovering in 2021 and 2022 — this has been referred to as the Great Resignation. The decline has been concentrated among older Americans. By 2022, the labor force participation of workers in their prime returned to its 2019 level, while older workers’ participation has continued to fall, responsible for almost the entire decline in the overall labor force participation rate. At the same time, the U.S. experienced large booms in both the equity and housing markets. We show that the Great Resignation among older workers can be fully explained by increases in housing wealth. MSAs with stronger house price growth tend to have lower participation rates, but only for home owners around retirement age — a 65 year old home owner’s unconditional participation rate of 44.8% falls to 43.9% if he experiences a 10% excess house price growth. A counterfactual shows that if housing returns in 2021 would have been equal to 2019 returns, there would have been no decline in the labor force participation of older Americans.
That is from a new paper by Jack Y. Favilukis and Gen Li, via Scott Lincicome.
Who is locally influential these days?
Um…um…uh-oh:
Who do people think are influential in their own community? This question is important for understanding topics such as social networks, political party networks, civic engagement, and local politics. At the same time as research on these topics has grown, measurement of public perceptions of local influence has dried up. Years ago, researchers took active interest in the question of community influence. They found that most ordinary Americans could identify a person who they thought had influence in their community. Respondents usually named business leaders. Where does the public stand today? In three different ways, we ask respondents who has local influence. The vast majority of respondents today cannot think of anyone. Those who do identify someone as influential rarely choose a businessperson. This article aims to reintroduce the public opinion of community influence and situate findings in related scholarship.
Here is the new article by Joshua Hochberg and Eitan Hersh. David Brooks, telephone! Don’t even ask how the “religious leaders” fare in the polling…
Gender and tone in recorded economics presentations
You’re going to see a lot more research papers like this one:
This paper develops a replicable and scalable method for analyzing tone in economics seminars to study the relationship between speaker gender, age, and tone in both static and dynamic settings. We train a deep convolutional neural network on public audio data from the computer science literature to impute labels for gender, age, and multiple tones, like happy, neutral, angry, and fearful. We apply our trained algorithm to a topically representative sample of presentations from the 2022 NBER Summer Institute. Overall, our results highlight systematic differences in presentation dynamics by gender, field, and format. We find that female economists are more likely to speak in a positive tone and are less likely to be spoken to in a positive tone, even by other women. We find that male economists are significantly more likely to sound angry or stern compared to female economists. Despite finding that female and male presenters receive a similar number of interruptions and questions, we find slightly longer interruptions for female presenters. Our trained algorithm can be applied to other economics presentation recordings for continued analysis of seminar dynamics.
Some people might just stop going to recorded conferences, of course. That paper is by Amy Handlan and Haoyu Sheng, via the excellent Kevin Lewis.
Ethnic Remoteness Reduces the Peace Dividend from Trade Access
This paper shows that ethnically remote locations do not reap the full peace dividend from increased market access. Exploiting the staggered implementation of the US-initiated Africa Growth and Opportunity Act (AGOA) and using high-resolution data on ethnic composition and violent conflict for sub-Saharan Africa, our analysis finds that in the wake of improved trade access conflict declines less in locations that are ethnically remote from the rest of the country. We hypothesize that ethnic remoteness acts as a barrier that hampers participation in the global economy. Consistent with this hypothesis, satellite-based luminosity data show that the income gains from improved trade access are smaller in ethnically remote locations, and survey data indicate that ethnically more distant individuals do not benefit from the same positive income shocks when exposed to increased market access. These results underscore the importance of ethnic barriers when analyzing which locations and groups might be left behind by globalization.
That is from a new NBER working paper by Klaus Desmet and Joseph F. Gomes.
Gender, competition, and performance: Evidence from chess players
This paper studies gender differences in performance in a male‐dominated competitive environment chess tournaments. We find that the gender composition of chess games affects the behaviors of both men and women in ways that worsen the outcomes for women. Using a unique measure of within‐game quality of play, we show that women make more mistakes when playing against men. Men, however, play equally well against male and female opponents. We also find that men persist longer before losing to women. Our results shed some light on the behavioral changes that lead to differential outcomes when the gender composition of competitions varies.
Here is the full paper by Peter Backus, Maria Cubel, Matej Guid, Santiago Sánchez‐Pagés, and Enrique López Mañas. Via someone who is thanked in any case!
Why has construction productivity been falling?
There is a new NBER working paper on this topic by Austan Goolsbee and Chad Syverson:
Aggregate data show a large and decades-long decline in construction sector productivity. This decline in such a large sector has had a material effect on secular productivity growth for the economy as a whole. Prior work has focused on the role of potential measurement problems in construction, particularly output deflators in the measurement of productivity. This paper brings some new evidence to bear on the industry’s measured productivity problems and suggests that measurement error is probably not the sole source of the stagnation. First, using measures of physical productivity in housing construction, productivity is falling or, at best, stagnant over multiple decades. Second, there has been a noticeable decline over time in the efficiency with which construction firms translate materials inputs into output, and a corresponding shift toward more value-added-intensive production. Third, using state-level data, we do not find evidence of patterns of within-industry reallocation that might be expected of efficiently operating input and output markets. States with more productive construction sectors do not see growth in their shares of total U.S. construction activity; if anything, their shares fall. This may point to frictions in these markets that slow or stop what is in many other markets an important channel for productivity growth.
Here is a useful image:
xDon’t forget the blog/Substack on this issue by Brian Potter.
The decline of religion, and the rise of deaths of despair
In recent decades, death rates from poisonings, suicides, and alcoholic liver disease have dramatically increased in the United States. We show that these “deaths of despair” began to increase relative to trend in the early 1990s, that this increase was preceded by a decline in religious participation, and that both trends were driven by middle-aged white Americans. Using repeals of blue laws as a shock to religiosity, we confirm that religious practice has significant effects on these mortality rates. Our findings show that social factors such as organized religion can play an important role in understanding deaths of despair.
That is from a new NBER working paper by Tyler Giles, Daniel M. Hungerman, and Tamar Oostrom. Ross Douthat, telephone!