David Neumark, 08 October 2017

Studies of the employment effects of minimum wages have been wide-ranging, but a consensus proves elusive. This column summarises the existing literature and proposes some key questions to better inform policy in the context of minimum wages across different states in the US. Future areas for research should include understanding why different approaches yield different answers, as well as a recognition that there is not one minimum wage effect, but several across different contexts.

Gordon Hanson, Chen Liu, Craig McIntosh, 04 October 2017

Rising inequality and stagnating manufacturing wages have many in the Western world questioning whether immigration may be responsible. This column takes a close look at data for the US, and reveals that tighter immigration controls are unlikely to improve the fortunes of low-skilled workers. Long-term demographic changes in the Americas imply that the pressure from illegal immigrants on US labour markets is already abating and will continue to do so.

Justin Cook, Jason Fletcher, 17 September 2017

While diversity can lead to more innovation and better problem solving, it can also cause competition and conflict. This column examines the effect of genetic diversity among high school students in Wisconsin on their socioeconomic outcomes later in life. Genetic diversity is associated with more years of schooling, and higher job prestige and income. Students from more genetically diverse schools score higher on indexes of openness and extraversion.

Nadav Ben Zeev, Evi Pappa, 06 September 2017

Kim Jong Un’s dictatorship has grabbed the attention of the whole world with its nuclear brinkmanship – and global markets have responded with a flight to safe-haven assets. This column reports research showing that such an escalation in international tensions can also have real effects for the US economy in the short to medium run. According to the authors’ analysis of the macroeconomic effects of anticipated increases in defence spending, North Korea’s insistent and rapid test-firing of missiles could boost the US economy.

Antoine Bouët, David Laborde, 06 September 2017

During his election campaign, Donald Trump repeatedly announced that he would impose tariffs on imports from China, Mexico, and Germany. This column evaluates the likely outcomes should the US instigate trade wars by imposing such tariffs. In all scenarios, the net effect on US welfare and GDP is either zero or negative. Such trade wars would also have wider negative effects for the trading partners, and potentially, the world economy.

Antonin Bergeaud, Gilbert Cette, Rémy Lecat, 04 September 2017

Over the 20th century, GDP growth was mainly driven by total factor productivity growth. Since the mid-2000s, however, productivity growth has been in decline. This column explores the history and future of growth focusing on four developed economies: the US, the Eurozone, the UK, and Japan. Simulated scenarios for the 21st century show a wide range of potential growth outcomes, dependent on whether total factor productivity growth stays indefinitely low, and whether the digital economy delivers a new productivity growth wave.

David Byrne, Dan Sichel, 22 August 2017

One explanation given for the apparent recent slowdown in labour productivity growth in advanced economies is poor measurement. This column argues that while the available evidence on mismeasurement does not in fact provide an explanation for the slowdown, innovation is much more rapid than would be inferred from official measures, and on-going gains in the digital economy make the productivity slowdown even more puzzling. At the same time, this continued technical advance could provide the basis for a future pickup in productivity growth.

Philippe Aghion, Antonin Bergeaud, Timo Boppart, Peter Klenow, Huiyu Li, 16 August 2017

Slowing growth of total factor productivity has led some to suggest that the world is running out of ideas for innovation. This column suggests that the way output is measured is vital to assessing this, and quantifies the role of imputation in output measurement bias. By differentiating between truly ‘new’ and incumbent products, it finds missing growth in the US economy. Accounting for this missing growth will allow statistical offices to improve their methodology and more readily recognise the ready availability of new ideas, but also has implications for optimal growth and inflation targeting policies.

Carol Graham, 28 July 2017

Despite the long-held belief that high levels of inequality in the US signal future opportunity, a number of studies suggest that this is no longer the reality. This column examines trends in inequality from the perspective of well-being and focuses on non-economic aspects of welfare, including hope. The results reveal stark differences across people, races, and places in the US. Poor minorities – and blacks in particular – are much more hopeful than poor whites, while urban places are more hopeful than are rural ones, as are places with higher levels of diversity.

Nicholas Crafts, Terence Mills, 17 July 2017

Estimates of trend total factor productivity growth in the US have been significantly reduced, contributing to fears that the slowdown is permanent. This column provides an historical perspective on the relationship between estimated trends in total factor productivity growth and subsequent outcomes. It argues that In the past, trend growth estimates have not been a good guide for future medium-term outcomes, and ‘techno-optimists’ should not be put off by time-series econometrics.

Ross Levine, Chen Lin, Zigan Wang, 26 June 2017

While the causes and consequences of mergers have received a lot of scholarly attention, geographic factors have thus far been neglected. Using US data, this column argues that greater geographic overlap of the subsidiaries and branches of two bank holding companies increases the likelihood of the two merging, and also boosts the cumulative abnormal returns of the acquirer, target, and merged companies. It also discusses how network overlap can affect synergies and value creation.

Alberto Alesina, Stefanie Stantcheva, Edoardo Teso, 21 June 2017

Americans are generally thought to view the economic system as fair and see wealth as a reward for ability and effort, while Europeans tend to believe that the economic system is unfair, and that wealth is the result of circumstances. This column tests this using new evidence on beliefs about intergenerational mobility in four European countries and the US, and confirms that Europeans do indeed tend to be overly pessimistic about moving up the social ladder compared to reality, while Americans are overly optimistic. These perceptions have important implications for how redistribution and equal opportunity policies will be received.

Hidemichi Fujii, Shunsuke Managi, 16 June 2017

Patent applications are a good indicator of the nature of technological progress. This column compares trends in applications for artificial intelligence patents in Japan and the US. One finding is that the Japanese market appears to be less attractive for artificial intelligence technology application, perhaps due to its stricter regulations on the collection and use of data.

Nezih Guner, Remzi Kaygusuz, Gustavo Ventura, 10 June 2017

Childcare subsidy provision in the US remains substantially lower than in many other developed economies. This column compares the potential effects of expanding three existing subsidy programmes in the US. It also argues, however, that amassing majority support for the expansion of any of the programmes would be difficult given the relatively few number of households the transfers benefit. 

Caroline Freund, 07 June 2017

In assessing the underlying causes of the US’ significant trade deficits, the Trump administration’s focus appears to be on alleged unfair trade practices of foreign countries. This column argues that international trade policy has a negligible effect on trade balances. The aggregate US trade deficit results from macroeconomic pressures, while bilateral deficits are due to structural factors, supply chains, and how trade is measured. 

Lubos Pastor, Pietro Veronesi, 25 May 2017

Since 2000, political uncertainty has had a strong influence on market volatility in the US. Since Donald Trump became president, however, high policy uncertainty has not translated into high market volatility. Building on a theoretical framework linking stock prices and political news, this column argues that the US market does not respond to political uncertainty because political news coming from the new administration has been unreliable and difficult for investors to interpret. 

Scott Ross Baker, Nicholas Bloom, Steven Davis, 15 December 2015

Daron Acemoğlu, David Autor, David Dorn, Gordon Hanson, Brendan Price, 28 September 2014

Christiane Baumeister, Lutz Kilian, 18 May 2017

The sluggish growth of the US economy after the 2014-2016 decline in the oil price surprised many economists. This column argues that it should have been expected. The modest stimulus to private consumption and non-oil business investment was largely offset by a large decline in investment by the oil sector. Growth was further slowed by a simultaneous global economic slowdown, reflected in lower US exports. 

Nicholas Bloom, Erik Brynjolfsson, Lucia Foster, Ron Jarmin, Megha Patnaik, Itay Saporta Eksten, John Van Reenen, 17 May 2017

Disentangling the relationship between management practices and productivity has been hampered by the absence of large sample data across plants and firms. This column exploits a new survey covering US manufacturing to show that management practices vary both among and within companies. Furthermore, management practices are just as important for productivity as a number of other factors associated with successful businesses, such as technology adoption. 

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