Tiziano Arduini, Alberto Bisin, Onur Ozgur, Eleonora Patacchini, 27 November 2019

Smoking and alcohol use are widespread among adolescents in the US and are linked to negative socioeconomic effects.While existing research has separately looked at the dynamic choice and the social interactions that shape adolescent risky behaviours, this column considers both components in a dynamic social interactions model. Looking at alcohol and smoking use in a school environment, it finds that addiction and peer effects are more than twice as important as the effect of individual preferences in shaping risky behaviour and that students take into account the amount of time they have left in the school system.

Michael Roach, Henry Sauermann, John D. Skrentny, 24 November 2019

The propensity of foreign STEM talent to found or join startups in the US is widely recognised but little understood. Using unique longitudinal data from over 5,600 STEM PhDs, this column reveals that during graduate school, foreign students exhibit more entrepreneurial personality traits and career preferences than their native peers. After graduation, however, they are less likely to found companies or work in startups. These results suggest that US immigration policies may deter newly minted PhDs from participating in entrepreneurship.

Margherita Borella, Mariacristina De Nardi, Fang Yang, 23 November 2019

In the US, both taxes and social security benefits depend on one’s marital status and tend to discourage the labour supply of the secondary earner. Using information on US cohorts born in 1945 and 1955, this column shows that eliminating marriage-related provisions drastically increases the participation of married women over their entire life cycle and reduces the participation of married men after age 60. If the resulting government surplus were used to lower income taxation, there would be large welfare gains for the vast majority of the population.

Menzie Chinn, Hiro Ito, 21 November 2019

Global imbalances have reappeared, somewhat transformed, and relocated. Using data from developing and industrialised countries covering 1972-2016, this column shows that fiscal factors, rather than savings glut variables, have accounted for a noticeable share of the recent variation in imbalances, including in the US and Germany. The contribution of demographic factors is large for industrialised countries but not for emerging markets. Net official flows shape global imbalances in both developing and industrialised countries. 

Milena Djourelova, Ruben Durante, 17 November 2019

It is often suspected that politicians time announcements of controversial policies strategically to avoid public scrutiny. This column reports evidence from a systematic analysis of executive orders issued by US presidents, showing that their timing is consistent with strategic behaviour. Presidents tend to issue executive orders, and specifically ones that are likely to generate negative publicity, in coincidence with other important events that distract the media and the public.

Mark Harrison, 14 November 2019

Economic warfare was widely used in WWII. When one country blockaded another’s supply of essential goods or bombed the industries producing them, why did the adversary’s economy fail to collapse? This column, part of the Vox debate on the economics of WWII, reviews Mançur Olson’s insights, which arose from the elementary economic concept of substitution. He concluded that there are no essential goods; there are only essential uses, which can generally be supplied in many ways.

Tetsuji Okazaki, 13 November 2019

During World War II aircraft production in Japan increased sharply. This column, part of the Vox debate on the economics of WWII, examines the reasons for this ‘production miracle’, focusing on an aircraft manufacturing plant of Mitsubishi Heavy Industries Co., one of the two largest aircraft producers in Japan. The key to the production increase was the expansion of the supplier network. Mitsubishi Heavy Industries organized many suppliers to provide aircraft parts to its plants. However, in the final stage of the war, destruction of the supplier network by strategic bombing and an earthquake caused the collapse of the company’s aircraft production.

Price Fishback, 12 November 2019

The US became the ‘arsenal of democracy’ by producing a massive amount of military goods that raised real GDP by 72% between 1940 and 1945. Yet, multiplier estimates for this expansion in government spending are less than one. Long-range studies at subnational levels show that military spending was associated with small effects on per capita activity. Military spending in the context of a quasi-command economy crowded out private consumption and investment and forced people into the military. In essence, Americans sacrificed heavily to win the war, while their Allies sacrificed even more.  

Yuqing Xing, 11 November 2019

In order to pursue ‘fair trade’, the Trump administration has imposed a punitive 25% tariff on $250 billion’s worth of Chinese goods. However, conventional trade statistics greatly exaggerate the US trade deficit with China. This column uses the iPhone as an example to demonstrate how the trade deficit is inflated and why value-added should be used to assess the bilateral trade balance. If multinational enterprises, including Apple, shift part of their value chains out of China, China may no longer play a central role in global value chains targeting the US market. Depreciation of the yuan will be insufficient to counter the effect. 

Sergey Alexeev, 09 November 2019

Despite the extensive literature on intergenerational mobility, few studies have investigated the effects of non-monetary income from housing, or ‘imputed rent’, on intergenerational income mobility. This column demonstrates the significance of such an omission. Using national panel data sets for Australia, the US, and Germany, it finds that only Australia sees a noticeable reduction in mobility when imputed rent is accounted for in the measure of income. The findings challenge Australia’s basic claim of providing equality of opportunity. 

Willem Thorbecke, 06 November 2019

As the trade surpluses of East Asian countries have continued to exist in regional value chains despite the US-China trade war, one possible tool such economies could employ are currency appreciations. This column shows how exchange rates in upstream countries affect China’s exports. No single economy wants to appreciate its currency against the US dollar for fear of losing competitiveness, but a concerted effort to prioritise regional currencies could benefit the set of countries as a whole.

Owen Thompson, 01 November 2019

Fertility rates among African American women have exceeded those of white women for as long as fertility statistics have been collected, while disparities in the economic outcomes of black and white Americans have persisted. This column investigates the relationship between racial inequality and fertility differentials. It finds that not only were fertility choices responsive to changes in discriminatory policies made during the Civil Rights era, but that African Americans born in the years immediately following, when the relative fertility of black southern women declined markedly, exhibited rapid improvements in test scores and adult outcomes.

Anil Kashyap, Benjamin King, 28 October 2019

There are still remarkable gaps in the data available on the overall structure of the financial systems of major economies. This column presents rough estimates for the UK and the US that suggest some surprising structural differences between the two systems and which point to areas where better measurement is needed. The authors note that there is a strong case for policymakers to think about the system as an interconnected whole, rather than as a set of distinct sectors to be regulated in isolation.

Jennifer Hunt, Ryan Nunn, 17 October 2019

Over the last five decades, middle-wage jobs diminished in the US as wage inequality increased. This column investigates the relationship between these two phenomena, and finds no evidence that either computerisation or automation (often cited as a source of both trends) produced employment polarisation or increased wage inequality. By examining wages at the individual level (rather than occupation-average wages), the column suggests that the evolution of wages can be better explained by distinct causes—ranging from changing labour market institutions to globalisation—than by observable demographic factors. 

Xavier Jaravel, Erick Sager, 16 October 2019

International trade creates both winners and losers. Using comprehensive price data, this column estimates the US price effects of the China shock from 2000 to 2007. It finds that US consumers benefited from large price declines in product categories in which imports from China increased, as increased trade with China eroded the market power of US producers. The positive impact of the China shock on the purchasing power of US consumers is large in comparison to its negative impact on US jobs.

Stefania Garetto, Lindsay Oldenski, Natalia Ramondo, 08 October 2019

Multinational enterprises play an important role in coordinating production around the globe. This column presents a dynamic quantitative model of multinational enterprise expansion that can be used to analyse the effects of policies that affect the cost of the operations of such firms. It uses this model to estaimte the impact of potential implementations of Brexit.

David Keiser, Joseph S. Shapiro, 05 October 2019

The Trump administration recently repealed the US Clean Water Rule, which sought to extend federal water quality protection to cover most rivers and streams. This column seeks to better understand the effectiveness of such laws that govern US surface and drinking water quality, the efficiency of these laws, and the state of economic research on water quality. It finds that regulations governing surface water quality are more likely to fail cost-benefit tests compared to drinking water and air pollution regulations, possibly due to an underestimation of the benefits of surface water pollution control.

Fabian Eckert, Sharat Ganapati, Conor Walsh, 26 September 2019

In recent years, wages for highly skilled workers have grown rapidly. Using US data between 1980 and 2015, this column studies a group of service industries that are skill-intensive, widely traded, and have recently seen explosive wage growth. It shows that, unlike any other sector, the wage growth in these industries was strongly biased toward the densest local labour markets and the highest-paying firms. These developments alone explain 30% of the increase in inequality between the 50th and 90th percentiles of the wage distribution. 

Kacie Dragan, Ingrid Gould Ellen, Sherry Glied, 19 September 2019

The pace of gentrification in US cities has accelerated, but little evidence exists on its impact on low-income children. This column uses Medicaid claims data to examine how gentrification affects children’s health and wellbeing in New York City. It finds that low-income children born in areas that gentrify are no more likely to move than those born in areas that don't gentrify, and those that do move tend to end up living in areas of lower poverty. Moreover, gentrification does not appear to dramatically alter the health status or health-system utilisation of children by age 9–11, although children growing up in gentrifying areas show somewhat elevated levels of anxiety and depression.

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