Raj Chetty, John Friedman, Nathaniel Hendren, Maggie R. Jones, Sonya R. Porter, 06 November 2018

Economic mobility varies dramatically across the US. This column introduces a new interactive mapping tool that traces the roots of outcomes such as poverty and incarceration back to the neighbourhoods in which children grew up. Among the insights the data reveal are that children who grow up a few miles apart in families with comparable incomes have very different life outcomes, and that moving in early childhood to a neighbourhood with better outcomes can increase a child’s income by several thousands of dollars later in life.

Joshua S. Goodman, Oded Gurantz, Jonathan Smith, 04 November 2018

Retaking college entrance exams can only improve students’ chances of being admitted to a college, yet little is known about students’ decisions to retake them and the impact of retaking. This column uses data on over 10 million SAT takers from the high school classes of 2006-2014 to show that the increases resulting from retaking are large enough to drive substantial improvements in college enrolment outcomes, and that retaking appears to close college enrolment gaps by income and race.

John Ameriks, Joseph Briggs, Andrew Caplin, Minjoon Lee, Matthew D. Shapiro, Christopher Tonetti, 29 October 2018

As countries such as the US face increasingly ageing populations, policymakers face the question of whether to encourage workers to work beyond historical retirement age. Using strategic survey questions, this column gauges whether older Americans stop working due to their lack of interest in working longer or due to lack of opportunity, and finds that it may be the latter. The revealed strong willingness to work implies that job opportunities with flexible schedules are hard for older Americans to find. 

William Kerr, 26 October 2018

The US has held a very special place in terms of absorbing global talent. This column brings together various data sources to demonstrate how high-skilled immigration has transformed US innovation over the past five decades. Among the trends identified are rates of international migration rising by skill level, a huge share of skilled immigration going to the US, and a disproportionate immigration impact on the US at higher skill levels. Not surprisingly, these changes have had enormous economic impact.

Ian Goldin, Benjamin Nabarro, 24 October 2018

Anti-migration sentiment has been rising across Europe. This column shows that the economic impact of migration is positive, but depends almost entirely on the policies implemented to ensure that migrants can be productive and the extent to which the positive economic consequences of migration are distributed across individuals. Unless the rhetoric of a perceived cultural and economic threat posed by migrants is countered effectively, economies stand to lose out substantially from the implementation of anti-immigration policies.

David Jacks, John Tang, 21 October 2018

Foreign goods and workers are regularly blamed when the national economy is performing poorly. Economic theory suggests that trade and migration are substitutes – one can import cheaper products from a trade partner, or one can import the foreign workers themselves to narrow the difference in international factor prices. Yet, empirically this is not obvious. Based on available long-run data for international trade and migration since the late 19th century for the US and Canada, this column finds that during the interwar period, trade and immigration did in fact appear to be substitutes.

Esteban Rossi-Hansberg, Pierre-Daniel Sarte, Nicholas Trachter, 19 October 2018

Recent literature has documented increasing US product-market concentration at the national level. This column argues that when measured at the more relevant local level, concentration has actually decreased over the last 25 years on average and in all major sectors. In the many industries with diverging national and local trends, top firms are bringing down local concentration even as they increase national concentration. These findings support the idea that top firms expand their national market share by opening establishments in new locations, thereby increasing local competition. 

Massimiliano Calì, 16 October 2018

The US-China trade war has rapidly escalated, promising to disrupt trade flows between the two countries and beyond. This column provides the first estimates of trade and investment effects of the trade war on East Asia, one of the most exposed regions. By combining trade and tariff data, it provides some order of magnitude of the expected effects and identifies the possible winners and losers from the trade war in the region.

Ufuk Akcigit, John Grigsby, Tom Nicholas, Stefanie Stantcheva, 16 October 2018

Understanding how taxation influences innovation is of central importance to create investment incentives for R&D, yet our knowledge remains limited due to a lack of data, especially covering a long period of time. This column uses newly constructed datasets from the 20th century to examine the effects of both personal and corporate income taxation on inventors, as well as on firms that do R&D. It finds consistently negative effects of high taxes on innovation over time as well as on individual inventors and firms. 

Menzie Chinn, 08 October 2018

Peter Koudijs, Laura Salisbury, Gurpal S. Sran, 06 October 2018

In order to protect the financial system from excessive risk-taking, many argue that bank managers need to have more personal liability. However, whether the liability of bank managers has a significant effect on risk-taking is an open question. This column studies a unique historical episode in which similar bankers, operating in similar institutional and economic environments, faced different degrees of personal liability, depending on the timing of their marriages, and finds that limited liability induced bankers to take more risks.

Peter Karadi, Marek Jarociński, 03 October 2018

Central bank announcements simultaneously convey information about monetary policy and the economic outlook. This column uses changes in interest rate expectations and stock prices around the time of policy announcements of the Federal Reserve to disentangle the impact of news about monetary policy from that of news about the economic outlook. It finds that both pieces of information play a significant role in the dynamics of inflation and economic growth. Controlling for news about the economy provides a more accurate measure of the transmission of monetary policy.

Lubos Pastor, Pietro Veronesi, 28 September 2018

The vote for Brexit and the election of protectionist Donald Trump to the US presidency – two momentous markers of the ongoing pushback against globalisation – led some to question the rationality of voters. This column presents a framework that demonstrates how the populist backlash against globalisation is actually a rational voter response when the economy is strong and inequality is high. It highlights the fragility of globalisation in a democratic society that values equality.

Maria Ferreira, 21 September 2018

Despite a considerable premium on equity compared to risk-free assets, many households do not own any financial investments. Personal risk preferences play a crucial role in understanding this economic behaviour. This column analyses financial risk attitudes across 15 countries and identifies relevant factors that affect the willingness to take risky investment decisions. The results reveal a significant heterogeneous attitude of risk-aversion in all countries and suggest that standard portfolio-investment theory does not always hold. 

Haris Tabakovic, Thomas Wollmann, 13 September 2018

When public sector employees end up working for the private firms which they monitored, regulated, and even disciplined, a clear conflict of interest arises. However, little is known about the the scale and scope of this ‘revolving door’ problem. This column presents evidence from patent examiners employed by the US Patent and Trademark Office, and shows that examiners grant considerably more patents to the firms that ultimately hire them, and that the most likely explanation is that examiners are ‘captured’. This leniency lowers the quality of patents coming out of the agency. 

Meredith Crowley, 03 September 2018

Meredith Crowley, International Trade Economist at the University of Cambridge, looks at the US response to Brexit.

Martin Nybom, Kelly Vosters, 15 October 2018

In 2014, Gregory Clark proposed a ‘simple law of mobility’ suggesting that intergenerational mobility is much lower than previously believed, and relatively uniform across countries. This column tests this law using US and Swedish data. The results show, in contrast to the simple law of mobility, no evidence of a rise in intergenerational persistence and no evidence of uniformity across countries.

Yi Huang, Chen Lin, Sibo Liu, Heiwai Tang, 10 August 2018

Tariffs intended to reduce competition from foreign firms can backfire by also raising the costs of imported inputs for domestic firms. This column examines the market responses to the Trump administration’s initial and subsequent announcements of tariffs on imports from China. US firms that are more dependent on exports to and imports from China experienced lower stock and bond returns but higher default risks around the date of the announcement. Firms’ indirect exposure to US-China trade through domestic input-output linkages affects their responses to the announcements. 

Moritz Kuhn, Moritz Schularick, Ulrike Steins, 09 August 2018

Recent work examining the evolution of the wealth distribution has tended to not paid much attention to the role of asset prices. This column uses a new US dataset to explore the role that asset price movements have in the US wealth distribution. Asset prices matter because portfolio composition differs systematically along the wealth distribution. The data further show that no progress has been made in reducing wealth inequalities between white and black households over the past 70 years. 

Brian Nolan, 03 August 2018

The narrative that globalisation and technological change have been the central forces hollowing out the jobs market, squeezing ‘the middle’, driving up inequality, and undermining growth is frequently taken to apply across the rich countries. This column presents a set of country case studies of the US alongside nine other rich countries that highlights just how varied their experiences since the 1980s have actually been.  Country contexts really matter, and policy responses must be framed in light of the institutional point of departure and distinctive challenges each country faces.

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