Category: Data Source
The Vietnam War and racial integration
The Vietnam draft conscripted hundreds of thousands of young Americans into an integrated military. I combine near-random draft lottery variation with administrative voter data to study the long-run racial integration effects of coerced national service. Black and Native American veterans became more likely to marry white spouses, identify as Republicans, and live in more-integrated neighborhoods. Improved economic standing may partly mediate these effects. Effects are larger for Southerners and are precisely null for white veterans. Coerced military service generates substantial but asymmetric cross-racial political convergence and racial integration: Vietnam-era service caused about 20 percent of affected cohorts’ interracial marriages.
That is from a recent NBER working paper by Zachary Bleemer.
The value of good high schools
Improving education and labor market outcomes for low-income students is critical for advancing socioeconomic mobility in the United States. We use longitudinal data on five cohorts of 9th grade students to explore how Massachusetts public high schools affect the longer-term outcomes of students, with a special focus on students from low-income families. Using detailed administrative and student survey data, we estimate school value-added impacts on college outcomes and earnings. Observationally similar students who attend a school at the 80th percentile of the value-added distribution instead of a school at the 20th percentile are 11% more likely to enroll in college, are 31% more likely to graduate from a four-year college, and earn 25% (or $10,500) more annually at age 30. On average, schools that improve students’ longer-run outcomes the most are those that improve their 10th grade test scores and increase their college plans the most.
That is from a new NBER working paper by
New results on the economic costs of climate change
I promised you I would be tracking this issue, and so here is a major development. From the QJE by Adrien Bilal and Diego R Känzig::
This paper estimates that the macroeconomic damages from climate change are an order of magnitude larger than previously thought. Exploiting natural global temperature variability, we find that 1○C warming reduces world GDP by over 20% in the long run. Global temperature correlates strongly with extreme climatic events, unlike country-level temperature used in previous work, explaining our larger estimate. We use this evidence to estimate damage functions in a neoclassical growth model. Business-as-usual warming implies a present welfare loss of more than 30%, and a Social Cost of Carbon in excess of $1,200 per ton. These impacts suggest that unilateral decarbonization policy is cost-effective for large countries such as the United States.
Here is an open access version. You may recall that earlier estimates of climate change costs were more like a five to ten percent welfare loss to the world. I do not however find the main results here plausible. The estimation is extremely complicated, and based on the premise that a higher global temperature does more harm to a region than a higher local temperature. And are extreme events a “productivity shock,” or a one-time resource loss that occasions some Solow catch-up? Is the basic modeling consistent with the fact that, while the number of extreme storms may be rising, the number of deaths from those same storms is falling over time? Lives lost are not the same as economic costs, but still the capacity for adjustment seems considerably underrated. What about the effects to date? The authors themselves write: “According to our counterfactual, world GDP per capita would be more than 20% higher today had no warming occurred between 1960 and 2019.” I absolutely do not believe that claim.
In any case, here is your update. To be clear, I do absolutely favor the development of alternative, less polluting energy sources.
One measure of economics GOAT
Who is the greatest economist of all time? This paper provides one potential measure that, along with other considerations, can contribute to debates on who the greatest economist of all time is. We build a novel dataset on the percentage of history of economic thought textbooks dedicated to top economists, using 43 distinct textbooks (1st editions, when available) published between 1901 and 2023. As a percentage of total book pages, Adam Smith has the highest share at 6.69%, beating out Ricardo (5.22%), Mill (3.83%), and Marx (4.36%). Just over 32% of all textbooks allocated most of their pages to Adam Smith, followed by Marx with 18.6%, Mill with 13.95%, and Ricardo with 11.3%. While interesting as a history of economic thought project, such an exercise isn’t merely amusing pedantry; it can provide insight into the types of contributions, research questions, and methodologies that have had the most enduring impact in economics. It may also inform future authors of history of economic textbooks.
That is from a new paper by Gabriel Benzecry and Daniel J. Smith. There is of course also my generative book on this topic at econgoat.ai.
“Tough on crime” is good for young men
Using data from hundreds of closely contested partisan elections from 2010 to 2019 and a vote share regression discontinuity design, we find that narrow election of a Republican prosecutor reduces all-cause mortality rates among young men ages 20 to 29 by 6.6%. This decline is driven predominantly by reductions in firearm-related deaths, including a large reduction in firearm homicide among Black men and a smaller reduction in firearm suicides and accidents primarily among White men. Mechanism analyses indicate that increased prison-based incapactation explains about one third of the effect among Black men and none of the effect among White men. Instead, the primary channel appears to be substantial increases in criminal conviction rates across racial groups and crime types, which then reduce firearm access through legal restrictions on gun ownership for the convicted.
That is from a new paper by Panka Bencsik and Tyler Giles. Via M.
The Macroeconomic Effects of Tariffs
We study the macroeconomic effects of tariff policy using U.S. historical data from 1840–2024. We construct a narrative series of plausibly exogenous tariff changes – based on major legislative actions, multilateral negotiations, and temporary surcharges – and use it as an instrument to identify a structural tariff shock. Tariff increases are contractionary: imports fall sharply, exports decline with a lag, and output and manufacturing activity drop persistently. The shock transmits through both supply and demand channels. Prices rise in the full sample but fall post-World War II, a pattern consistent with changes in the monetary policy response and with stronger international retaliation and reciprocity in the modern trade regime.
That is from a new NBER working paper by
GPT as a Measurement Tool
We present the GABRIEL software package, which uses GPT to quantify attributes in qualitative data (e.g. how “pro innovation” a speech is). GPT is evaluated on classification and attribute rating performance against 1000+ human annotated tasks across a range of topics and data. We find that GPT as a measurement tool is accurate across domains and generally indistinguishable from human evaluators. Our evidence indicates that labeling results do not depend on the exact prompting strategy used, and that GPT is not relying on training data contamination or inferring attributes from other attributes. We showcase the possibilities of GABRIEL by quantifying novel and granular trends in Congressional remarks, social media toxicity, and county-level school curricula. We then apply GABRIEL to study the history of tech adoption, using it to assemble a novel dataset of 37,000 technologies. Our analysis documents a tenfold decline of time lags from invention to adoption over the industrial age, from ~50 years to ~5 years today. We quantify the increasing dominance of companies and the U.S. in innovation, alongside characteristics that explain whether a technology will be adopted slowly or speedily.
That is from a new NBER working paper by .
Brazil facts of the day
Pensions cost the government 10% of GDP. If no reforms are made by 2050, Brazil will spend more on pensions as a share of GDP than many richer and greyer countries… Though Brazil’s share of young people is similar to that in Chile or Mexico, its pension spending is already at Japan’s level. That is despite a modest reform in 2019 that introduced a minimum retirement age. The population is ageing rapidly. Without reform, its social-security deficit, or the shortfall between contributions and payments, is set to rise from 2% of GDP today to over 16% by 2060.
Brazil’s courts cost 1.3% of GDP —the second-most expensive in the world—mostly because of generous pensions. The typical soldier retires before turning 55 on a pension equivalent to their full salary.
Here is more from The Economist. By the way, Brazil cannot change its pension system without amending the constitution.
India AI Data MCP
The Government of India’s Ministry of Statistics and Program Implementation has created an impressive Model Context Protocol (MCP) to connect AI’s to Indian datasets. An AI connected to data via an MCP essentially knows the entire codebook and can make use of the data like an expert. Once connected one can query the data in natural language and quickly create graphs and statistical analysis. I connected Claude to the MCP and created an elegant dashboard with data from India’s Annual Survey of Industries. Check it out.
“You see tech and AI everywhere but in the productivity statistics”
How many times have I heard versions of that claim? Erik Brynjolfsson picks up the telephone in the FT:
While initial reports suggested a year of steady labour expansion in the US, the new figures reveal that total payroll growth was revised downward by approximately 403,000 jobs. Crucially, this downward revision occurred while real GDP remained robust, including a 3.7 per cent growth rate in the fourth quarter. This decoupling — maintaining high output with significantly lower labour input — is the hallmark of productivity growth.
My own updated analysis suggests a US productivity increase of roughly 2.7 per cent for 2025. This is a near doubling from the sluggish 1.4 per cent annual average that characterised the past decade.
It is fine to suggest caution in interpreting such statistics, but they hardly push the other way.
Minimum wage hikes and robots
This paper studies how minimum wage policy affects firms’ adoption of automation technologies. Using both state-level measures of robot exposure and novel plant-level data on industrial robot imports linked to U.S. Census microdata from 1992-2021, we show that increases in minimum wages raise the likelihood of robot adoption in manufacturing. Our preferred identification exploits discontinuities at state borders, comparing otherwise similar firms exposed to different wage floors. Across specifications, a 10 percent increase in the minimum wage increases robot adoption by roughly 8 percent relative to the mean.
That is from Erik Brynjolfsson, et.al., including Andrew Wang. Via the excellent Kevin Lewis.
By the way, a photo from our textbook Modern Principles of Economics:
The cocaine problem seems to be getting worse again
Colombian coca cultivation fell dramatically between 2000 and 2015, a period that saw intense U.S.-backed eradication and interdiction efforts. That progress reversed in 2015, when peace talks and legal rulings in Colombia opened enforcement gaps. Coca plantation has since increased to record levels, which coincided with a sharp rise in cocaine-related overdose deaths in the U.S. We estimate how much of that rise can be causally attributed to Colombia’s new coca boom. Leveraging the unforeseen coca supply shock and cross-county differences in pre-shock cocaine exposure, we find that the surge in supply caused an immediate rise in overdose mortality in the U.S. Our analysis estimates on the order of 1,000–1,500 additional U.S. deaths per year in the late 2010s can be attributed to Colombia’s cocaine boom. Implicit annual loss in American statistical life values about $48,000 per hectare of cultivation in Colombia. If left untamed, the current level of coca cultivation (over 230,000 ha in 2022) may impose on the order of $10 billion per year in costs via overdose fatalities.
That is from a new NBER working paper by Xinming Du, Benjamin Hansen, Shan Zhang, and Eric Zou.
Changes in the Gender Wage Gap for Business Professionals
In the United States, much of the gap in earnings between men and women is due to the persistent gap for high wage earners. This paper explores changes in the gender wage gap for MBAs graduating from a large public university over 30 years. We document large gender wage gaps on average, which grow in the course of men’s and women’s careers. Comparing graduates at identical career stages across time periods to address composition concerns, we show that the raw gender wage gap has shrunk by 33 to 50 percent over the last two decades. Additionally, the temporal pattern of the gap has fundamentally shifted: while gaps only emerged over time in earlier decades, significant gaps now emerge immediately. Convergence in labor supply factors, particularly hours worked, explains much of the narrowing gap, alongside shifts in industry composition. However, unexplained wage gaps persist for recent graduates from the very start of their careers, suggesting different underlying mechanisms across cohorts. These findings highlight both progress in gender wage equity among business professionals and concerning patterns that emerge earlier in careers than in previous decades.
That is from a recent NBER working paper by
Past Automation and Future A.I.: How Weak Links Tame the Growth Explosion
From Charles I. Jones and Christopher Tonetti:
How muchof past economic growth is due to automation, and what does this imply about the effects of A.I. and automation in the coming decades? We perform growth accounting using a task-based model for key sectors in the U.S. economy. Historically, TFP growth is largely due to improvements in capital productivity. The annual growth rate of capital productivity is at least 5pp larger than the sum of labor and factor-neutral productivity growth. The main benefit of automation is that we use rapidly-improving machines instead of slowly-improving humans on anincreasing set of tasks. Looking to the future, we develop an endogenous growth model in which the production of both goods and ideas is endogenously automated. We calibrate this model based on our historical evidence. Two key findings emerge. First, automation leads economic growth to accelerate over the next 75 years. Second, the acceleration is remarkably slow. By 2040, output is only 4% higher than it would have been without the growth acceleration, and by 2060 the gain is still only 19%. A key reason for the slow acceleration is the prominence of “weak links” (an elasticity of substitution among tasks less than one). Even when most tasks are automated by rapidly improving capital, output is constrained by the tasks performed by slowly-improving labor.
And an important sentence from the paper itself:
…, the key gain from automation is that it allows production of a task to shift away from slowly-improving human labor to rapidly-improving machines.
The authors stress that those are preliminary results, and the numbers are likely to change. For the pointer I thank the excellent Kurtis Hingl, who is also my research assistant.
Immigration and health for elderly Americans
We measure the impact of increased immigration on mortality among elderly Americans, who rely on the immigrant-intensive health and long-term care sectors. Using a shift-share approach we find a strong impact of immigration on the size of the immigrant care workforce: admitting 1,000 new immigrants would lead to 142 new foreign healthcare workers, without evidence of crowd out of native health care workers. We also find striking effects on mortality: a 25% increase in the steady state flow of immigrants to the US would result in 5,000 fewer deaths nationwide. We identify reduced use of nursing homes as a key mechanism driving this result.
That is from a new NBER working paper by