Emilia Simeonova, Randall Akee, John Holbein, William E. Copeland, E. Jane Costello, 15 July 2018

Political scientists have shown conclusively, at least in the US, that richer people vote more, which has troubling implications. Using data from a government cash transfer programme, this column shows that children who grew up in households in the bottom half of the income distribution that received extra income were more likely to vote as adults compared to their counterparts who did not receive the transfers. The results suggest that efforts to reduce income inequality may have the unexpected side effect of reducing gaps in civic participation.

Christoph Albert, Joan Monras, 29 June 2018

Immigrants usually spend part of their time, savings, and income in their country of origin and not where they currently live. This column uses US data to argue that the resulting difference in consumption patterns relative to natives has profound implications for the types of cities that immigrants are attracted to. It shows that immigrants redistribute economic activity towards large, expensive cities. These cities tend to be more productive, so immigrants have a positive effect on overall output.

Raj Chetty, Nathaniel Hendren, Maggie R. Jones, Sonya R. Porter, 27 June 2018

The sources of racial disparities in income have been debated for decades. This column uses data on 20 million children and their parents to show how racial disparities persist across generations in the US. For instance, black men have much lower chances of climbing the income ladder than white men even if they grow up on the same block. In contrast, black and white women have similar rates of mobility. The column discusses how such findings can be used to reduce racial disparities going forward.

Loukas Karabarbounis, Brent Neiman, 22 June 2018

Comparing US GDP to the sum of standard measures of payments to labour and imputations of payments to capital results in a large and volatile residual term. Using US data, this column argues that this ‘factorless income’ does not entirely reflect economic profits or unmeasured investment flows. Instead, it likely emerges due to a gap between the cost of capital that firms actually face and the Treasury yields typically used to calculate capital rental rates. These results are important for policy and for understanding historical macroeconomic trends. 

Jason Furman, Wilson Powell, 15 June 2018

The fraction of Americans employed fell between 2007 and 2017, during which time employment rates rose in many other advanced economies despite these countries also facing a similar headwind of an ageing population. This column shows how the biggest driver of this was employment among women, which stagnated in the US while increasing in most of the other advanced economies.

Arna Olafsson, Michaela Pagel, 07 June 2018

A large literature analyses whether individuals save adequately for retirement and plan properly. This column uses a detailed panel of individual spending, income, account balances, and credit limits from a personal finance management software provider to investigate how expenditures, liquid savings, and consumer debt change around retirement. It finds that, upon retirement, individuals reduce their spending in both work-related and leisure categories. In addition, individuals reduce their consumer debt and increase their liquid savings, which is inconsistent with existing models of insufficient planning. 

Fabio Cerina, Alessio Moro, Michelle Rendall, 30 May 2018

The polarisation of employment by skill level is a phenomenon that has emerged in several industrialised economies in the last decades. This column argues that a substantial fraction of the phenomenon in the US is due to women’s increasing participation in the labour market during a period of sustained skill-biased technological change.

Theo Nyreröd, Giancarlo Spagnolo, 28 May 2018

The European Commission has recently proposed a directive that provides horizontal protection for whistleblowers in the EU. This could put the EU on a par with the US with respect to protection, but recent episodes of retaliation suggest that it may not be enough. This column compares the whistleblower protection policies in the EU and the US and argues that reward programmes are particularly appropriate for specific regulatory areas where wrongdoing can cause substantial harm.

Alexandra L. Cermeño, 23 May 2018

Knowledge hubs are generally located in large and dynamic population clusters, but there is little empirical evidence on what has driven the location of services in the economy, particularly the knowledge-intensive ones that form these hubs. This column describes how the geography of services across the US has been influenced by the interaction between county and industry characteristics. The presence of large markets enhanced the agglomeration of services mainly through linkages with other services and manufacturing firms. 

Alan de Bromhead, Alan Fernihough, Markus Lampe, Kevin O'Rourke, 22 May 2018

The literature has identified several stylised facts which characterise the nature and causes of the collapse in international trade during 2008 and 2009. This column uses detailed, commodity-specific information on UK imports between 1929 and 1933 to document several similarities between the trade collapses of the Great Depression and the Great Recession. The findings are in line with theories emphasising the composition of expenditure changes during major economic crises, or the relative sizes of firms operating closer to or further away from the margin between exporting or not.

Georg Duernecker, Berthold Herrendorf, Akos Valentinyi, 16 May 2018

Baumol argued that structural change may lead to a productivity slowdown due to a reallocation of production to service industries with low productivity growth. This column uses a new framework to estimate the effects of Baumol’s disease on future productivity growth in the US. The results suggest that future structural change will not reduce productivity much further thanks to substitutability within the broader service sector.

Kevin Lansing, Agnieszka Markiewicz, 21 April 2018

The increase in US income inequality since 1970 largely reflects gains made by households in the top 20% of the income distribution. The framework presented in this column shows that households outside of this group have suffered significant losses from forgone consumption, measured relative to a scenario that holds inequality constant. A substantial mitigating factor for these losses has been the dramatic rise in government redistributive transfers, which have doubled as a share of US output over the same period.

Hélène Rey, 23 April 2018

There are significant commonalities between the movements of credit aggregates, credit flows, and asset prices - referred to as the global financial cycle. Helene Rey explains how this cycle is impacted by US monetary policy. Raising interest rates by the Fed will tighten credit in dollar-dependent economies, leading to capital outflows. To withstand such impact, policymakers must employ macroprudential tools to hit their domestic targets.

Stéphanie Brunelin, Jaime de Melo, Alberto Portugal-Perez, 27 April 2018

Rules of origin play a crucial role in preferential trade agreements, and they can also deny intended market access for preference receivers. This column examines a relaxation by the EU of the origin requirements for selected products from Jordan, which is intended to create 200,000 job opportunities for Syrian refugees. While the relaxation decision may have an effect on the refugee crisis in Jordan, further simplifications in RoO requirements are called for.

Jihad Dagher, 22 March 2018

Three hundred years of financial regulation offer a cautionary tale to today’s push against yesterday’s regulations. This column revisits the political economy of financial crises and documents a consistent pattern of politically driven procyclical regulations. These regulatory cycles have a poor track record.  

Anna Stansbury, Lawrence H. Summers, 20 February 2018

Since 1973, there has been divergence between labour productivity and the typical worker’s pay in the US as productivity has continued to grow strongly and growth in average compensation has slowed substantially. This column explores the causes and implications of this trend. Productivity growth appears to have continued to push workers’ wages up, with other factors to blame for the divergence. The evidence casts doubt on the idea that rapid technological progress is the primary driver here, suggesting rather that institutional and structural factors are to blame.

Jonathan Parker, Nicholas S Souleles, Aaron Goodman, 04 February 2018

The most accurate way to determine how people respond to an economic policy is to observe how they did in fact respond to that policy, but this approach is not always possible. This column uses a 2008 tax rebate in the US to compare the traditional revealed preference approach and a reported preference approach where people are simply asked how they would, or did, behave. The results suggest that reported spending data are valuable in predicting behaviour and in estimating population aggregates, but are not sufficiently accurate to provide reliable quantitative measurements of household-level spending responses.

Colin Mayer, 24 January 2018

Following the 2008 financial crisis, investments recovered quicker in the US than in Europe. Colin Mayer discusses how taxation and regulation have exacerbated companies' long-term debt problem. This video was recorded at the RELTIF book launch held in London in January 2018.

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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