Francesca Borgonovi, Collin Hitt, Jeffrey A. Livingston, Sally Sadoff, Gema Zamarro, 16 January 2018

The Programme for International Student Assessment is a global standardised test of students’ mathematics, reading, and science skills. This column describes how the results of various studies using different approaches all find evidence that many students who take the PISA do not try as hard as they can, and that the level of effort varies widely across countries. The findings illustrate that a combination of ability and motivation may be more important than ability alone.

Rafael Di Tella, Lucía Freira, Ramiro Gálvez, Ernesto Schargrodsky, Diego Shalom, Mariano Sigman, 16 January 2018

Governments in Latin America seemingly go unpunished at election times for high crime rates. This column examines whether the region’s high tolerance for crime is the result of ‘desensitisation’, with people reacting less to crime the more they are exposed to it. It finds that victims of crime become desensitised compared with non-victims, helping to explain tolerance to crime and a weak relationship between crime and happiness in high-crime areas.

Thomas Hasenzagl, Filippo Pellegrino, Lucrezia Reichlin, Giovanni Ricco, 15 January 2018

The ECB's Survey of Professional Forecasters supports the ECB’s view that inflation in the Eurozone will pick up and will be back within the central bank's target range in 2019.  This column disagrees.  Using a model that formalises the widely held view that inflation dynamics are a function of three components – long-term expectations, the Phillips curve, and oil price movement – it forecasts Eurozone inflation in 2019 at only 1.1%, a rate which is close to that implied by the bond markets.

Bruce Meyer, James Sullivan, 15 January 2018

Concerns about rising inequality inform important debates on some of our most significant policy issues, but the debate over inequality relies almost exclusively on income data. This column argues that consumption data show how changes in inequality in economic wellbeing are more nuanced than a simple story of rising dispersion throughout the distribution. In the bottom half of the distribution there is little evidence rising consumption inequality, and in the top half of the distribution the rise in consumption inequality has been much more modest than the rise in income inequality, particularly since 2000. 

Brian Kovak, Lindsay Oldenski, Nicholas Sly, 15 January 2018

The impact of offshoring on domestic employment is hotly debated as the US looks to renegotiate trade treaties, but the existing literature is conflicting in its conclusions. This column employs the variation in the timing of US treaties to infer the causal effect of tax treaty-induced changes in foreign affiliate employment on changes in US domestic employment. Employment declines at some firms are offset by expanded employment at others, yielding a modest positive net effect of offshoring on US employment, albeit with substantial employment dislocation and reallocation of workers.

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