“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
“A full-throated defense of economic dynamism.” - The Wall Street Journal
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
AI Summary.Census Bureau microdata analysis finds that in Illinois annual out-migration by households earning under $50K fell by 104K while out-migration by households earning over $200K rose by 54K. Across the Midwest, adults with a bachelor's degree or higher now make up 57% of out-migrants, up from around 40%.
Aziz SunderjiHome Economics
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The “Brain Drain” is ongoing in the Midwest. The fraction of adult out-migrants with at least a bachelor’s degree is now 57%, up from ~40% in 2005. “It’s the most educated and highest-earning that are still leaving in droves.”
Are the most educated and highest-earning residents leaving the Midwest?
Core argument: Annual out-migration by Illinois households earning over $200K rose by 54K between 2014–15 and 2023–24, according to the author's analysis of Census Bureau microdata.
Take Illinois, the most populous Midwestern state: my analysis of Census Bureau microdata shows that between 2014–15 and 2023–24, annual out-migration by households earning under $50K fell by 104K. Out-migration by Illinois households earning over $200K rose by 54K over the same period. Across the region, the trend along educational lines is the same: the bachelor’s-or-higher share of adult out-migrants is now 57%, up from around 40% in 2005. It’s the most educated and highest-earning that are still leaving in droves.
Takeaways by Macro Roundup® AI
Annual out-migration by Illinois households earning over $200K rose by 54K between 2014–15 and 2023–24, according to the author's analysis of Census Bureau microdata.
Annual out-migration by Illinois households earning under $50K fell by 104K between 2014–15 and 2023–24, according to the author's analysis of Census Bureau microdata.
Adults with a bachelor's degree or higher make up 57% of out-migrants from the Midwest, up from around 40% in 2005.
Related Articles:
Housing and the American Worker— Wages net of housing costs were once substantially higher in high-density areas than low-density areas for workers both with and without college education, but over the past half-century that urban wage premium has persisted only for college-educated workers, not for those with a high school degree or less.
Where is Standard of Living the Highest? Local Prices and the Geography of Consumption— The authors estimate that geographical differences in cost of living are especially large for low-income US households, and that expensive cities offer college graduates a standard of living similar to affordable cities while offering less-educated households a lower one. A high school dropout household moving from the most affordable to the most expensive commuting zone would see consumption fall 18.5%.
The Determinants Of Declining Internal Migration— A 10% increase in wages where people live is associated with 3.5% less migration, while a 10% increase in destination wages is associated with 7.8% more migration; a 10% rise in destination home prices is associated with 2.6% less migration. The authors find wage responses alone would have raised migration rates, but housing-related factors more than offset them.
AI Summary.The authors argue Japan's prolonged recession reflected the interplay of slowing returns to investment, weak consumption, and negative sentiment, and that China is in the middle stages of a multi-year real estate correction under more difficult macroeconomic and demographic conditions. They note China retains advantages, including a state-dominated financial system with implicit government guarantees capable of large-scale intervention.
Kenneth Rogoff and Yuanchen YangBrookings Papers On Economic Activity
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The deep recession after Japan’s 1990–1991 real estate crash saw low returns on investment, soft consumption and weak sentiment. After its property bust, China shows many parallels, but strong productivity and state-backed finance are potential cushions.
Is China's property correction following Japan's post-bubble path?
Core argument: China appears to be in the middle stages of a multi-year real estate correction, with structural and cyclical features resembling Japan's pre- and post-bubble conditions, though China's adjustment is unfolding in a more difficult macroeconomic and demographic context.
Japan’s prolonged recession was likely driven by the interplay of slowing returns to investment, soft consumption, and negative sentiment that reinforced these weaknesses. With some structural and cyclical characteristics closely resembling Japan’s pre- and post-bubble conditions, China appears to be in the middle stages of a multi-year correction. China’s post-boom adjustment is unfolding in a more difficult macroeconomic and demographic context than Japan’s. That said, China still possesses several economic and institutional advantages that could help cushion the blow of a prolonged real estate downturn. In Japan’s post-bubble era, the country’s productivity growth was considered a binding constraint, a factor that does not appear to limit China in the same way. Most crucially, China possesses a state-dominated financial system backed by implicit government guarantees and a highly proactive policymaking apparatus capable of large-scale interventions, which have thus far prevented the crisis from precipitating a financial sector breakdown.
Takeaways by Macro Roundup® AI
China appears to be in the middle stages of a multi-year real estate correction, with structural and cyclical features resembling Japan's pre- and post-bubble conditions, though China's adjustment is unfolding in a more difficult macroeconomic and demographic context.
China's state-dominated financial system, backed by implicit government guarantees and a proactive policymaking apparatus capable of large-scale interventions, has thus far prevented its real estate crisis from precipitating a financial sector breakdown.
Japan's prolonged recession was likely driven by the interplay of slowing returns to investment, soft consumption, and negative sentiment, with productivity growth considered a binding constraint that does not appear to limit China in the same way.
Related Articles:
Peak China Housing— Real estate and related industries account for roughly 29% of China's GDP, a level of dependence the authors estimate exceeds that of Ireland and Spain before their financial crises. A 20% decline in housing activity could reduce economic output by 5-10%.
China Debt Overhang Leads To Rising Share Of ‘Zombie’ Firms— Firm-level data indicate the share of Chinese non-financial firms' assets held by "zombie" companies — those whose operating earnings fall short of their interest expenses — rose from 5% to 16% between 2018 and 2024, with real estate highest at 40%, services at 17% and manufacturing at 11%.
China’s Economy: Rightsizing 2025, Looking Ahead to 2026— The authors argue China's official growth figures are inconsistent with ten consecutive quarters of deflation, estimating that real GDP is around 11% below official levels, with most of the adjustment in investment. That would imply a drop of roughly 9 percentage points in China's share of global investment, helping explain its export surge.
AI Summary.An analysis of the University of Michigan's Panel Study of Income Dynamics, which has tracked 85,000 individuals from 5,000 families since 1968, finds that first-time US home buyers are on average 35 years old — three years older than a decade earlier and eight years older than in the 1970s.
Aziz SunderjiHome Economics
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The median age of American first-time home buyers was 35 years old in 2025, up from 32 in 2015.
Are Americans buying their first homes at older ages?
Core argument: First-time U.S. home buyers are on average 35 years old, three years older than a decade ago and eight years older than in the 1970s, according to an analysis of the University of Michigan's Panel Study of Income Dynamics.
At what age do people buy their first home? My analysis of data from the University of Michigan’s Panel Study of Income Dynamics (PSID) shows that, on average, they’re 35—three years older than a decade ago, and eight years older than in the 1970s. The PSID is a remarkable dataset. Like wildlife researchers tagging a pod of whales, the researchers at the University of Michigan have tracked 85,000 individuals from 5,000 families they began studying in 1968. This ‘longitudinal’ data allows us to observe the kids in these families as they leave home, form their own households, rent their first apartments, and eventually become first time buyers (FTBs) of homes. And because specific individuals are tracked over time, we can pinpoint the exact moment someone transitions from renting to owning for the first time, and how old they were when it happened. No other U.S. dataset can do this, and none go as far back as the 1960s.
Takeaways by Macro Roundup® AI
First-time U.S. home buyers are on average 35 years old, three years older than a decade ago and eight years older than in the 1970s, according to an analysis of the University of Michigan's Panel Study of Income Dynamics.
The Panel Study of Income Dynamics has tracked 85,000 individuals from 5,000 families first studied in 1968, allowing observation of when specific people leave home, rent, and first buy a home.
No other U.S. dataset can pinpoint the exact moment an individual transitions from renting to owning, and none extends back as far as the 1960s.
Related Articles:
What Explains Low Millennial Home Ownership?— At age 30, 31% of Millennials still live with parents or roommates versus 19% of Boomers, and only 61% of Millennial household heads are married versus 77% of Boomers; the analysis attributes most of the 18-percentage-point home ownership gap (25% versus 43%) to these two differences. Among married household heads, the ownership gap narrows to 8 points.
Has Intergenerational Progress Stalled? Income Growth Over Five Generations of Americans— Using post-tax, post-transfer income data, the authors find each of the past four US generations was better off than the prior one, with Millennials' real median household income at ages 36–40 18% above the previous generation's, versus 34% for the Silent Generation, 27% for Baby Boomers, and 16% for Generation X.
Why Are Young Adults in the English-Speaking World So Unhappy?— The share of young adults regularly experiencing stress and anger has risen sharply in the US, Canada, UK, Ireland, Australia and New Zealand while remaining largely stable elsewhere in the West. Real house prices since 1995 are up 85% in the US and over 200% in the other five countries.
AI Summary.New US homeowners spent 26% of their income on housing in 2024 versus 20% for existing homeowners, a six-percentage-point gap that is the widest in nearly 40 years. Historically the two groups' costs moved together, with the gap holding at roughly two to four percentage points.
Jess RemingtonAgglomerations
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As of 2024, American homeowners who bought a house within the last year were spending 26% of their income on housing, relative to 20% for existing homeowners – the largest gap in almost 40 years.
How wide is the housing cost gap between new and existing homeowners?
Core argument: New homeowners spent 26% of their income on housing in 2024 versus 20% for existing homeowners, a six-percentage-point gap, the largest in nearly 40 years.
Historically, monthly housing costs for new and existing homeowners have tended to move in tandem. From 1990 through the aftermath of the Great Recession, both groups saw costs rise during booms and fall during downturns, with the gap between them remaining relatively stable at two to four percentage points. That pattern briefly reversed during the Great Recession, when new buyers were able to purchase homes at depressed prices and consequently spent slightly less of their income on housing than existing owners. By 2017, the typical two-point gap had returned. The current divergence began in earnest in 2022. By 2024, new homeowners were spending 26% of their income on housing, compared to 20% for existing homeowners — a six-percentage-point gap, the largest in nearly 40 years. Although new homeowners spent a slightly larger share of their income on housing at the peak of the housing bubble in 2007 (28%), the gap with existing homeowners was smaller (four percentage points).
Takeaways by Macro Roundup® AI
New homeowners spent 26% of their income on housing in 2024 versus 20% for existing homeowners, a six-percentage-point gap, the largest in nearly 40 years.
From 1990 through the aftermath of the Great Recession, housing cost burdens for new and existing homeowners moved together, with the gap holding at two to four percentage points; the current divergence began in earnest in 2022.
At the 2007 housing bubble peak, new homeowners spent a slightly larger 28% of income on housing, but the gap with existing homeowners was four percentage points.
Related Articles:
The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly— Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
NAR Says the Typical First-Time Homebuyer Age Was 40 This Year, Up from 33 in 2021—but Is This Accurate?— The National Association of Realtors' mail survey, with a 3.5% response rate, puts the typical first-time homebuyer at age 40, while New York Federal Reserve credit-report data for the same period show an average of 36.2 years and a median of 33. The survey underrepresents buyers under 35 by 17 percentage points.
Affordability, Part II— Home ownership functions as the modern marker of full participation in American society, and while most people's incomes have risen faster than the cost of a broad basket of consumer goods, housing has become substantially less affordable over the past generation. The author argues encouraging more housing construction is the most important element of a long-run affordability agenda.
AI Summary.A young K-12 teacher in New York City earns $62,000 versus $37,000 in Jackson, Mississippi, where teacher pay is the nation's lowest. After adjusting for housing, commuting, taxes, and other cost-of-living differences, the New York City teacher is worse off, suggesting salaries are not a source of savings.
Aziz SunderjiHome Economics
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A young teacher in NYC earns $62,000 dollars, compared to the $37,000 earned by a peer teacher in Jackson, Mississippi. Aziz Sunderji finds that “after housing, commute, taxes, and other cost-of-living differences, the NYC teacher is actually worse off.”
Do higher big-city teacher salaries leave teachers better off after costs?
Core argument: A young K-12 teacher in New York City, the country's most expensive school district, earns $62,000, versus $37,000 for a comparable teacher in Jackson, Mississippi, where teacher pay is the nation's lowest.
A young K-12 teacher in New York City—the most expensive school district in the country—earns $62,000. A comparable teacher in Jackson, Mississippi, where teacher pay is the nation’s lowest, earns $37,000. Could salaries be a source of savings, helping to bring school costs here closer to the national average? The chart suggests not: after housing, commute, taxes, and other cost-of-living differences, the NYC teacher is actually worse off.
Takeaways by Macro Roundup® AI
A young K-12 teacher in New York City, the country's most expensive school district, earns $62,000, versus $37,000 for a comparable teacher in Jackson, Mississippi, where teacher pay is the nation's lowest.
After housing, commute, taxes, and other cost-of-living differences, the New York City teacher is worse off than the Jackson, Mississippi teacher despite the $25,000 higher salary.
Teacher salaries appear unlikely to be a source of savings for bringing New York City school costs closer to the national average.
Related Articles:
Where is Standard of Living the Highest? Local Prices and the Geography of Consumption— The authors estimate that geographical differences in cost of living are especially large for low-income US households, and that expensive cities offer college graduates a standard of living similar to affordable cities while offering less-educated households a lower one. A high school dropout household moving from the most affordable to the most expensive commuting zone would see consumption fall 18.5%.
Housing and the American Worker— Wages net of housing costs were once substantially higher in high-density areas than low-density areas for workers both with and without college education, but over the past half-century that urban wage premium has persisted only for college-educated workers, not for those with a high school degree or less.
The Determinants Of Declining Internal Migration— A 10% increase in wages where people live is associated with 3.5% less migration, while a 10% increase in destination wages is associated with 7.8% more migration; a 10% rise in destination home prices is associated with 2.6% less migration. The authors find wage responses alone would have raised migration rates, but housing-related factors more than offset them.
AI Summary.Homeownership among married 30-year-olds has changed little (63% to 60%), and rose from 25% to 29% among single 30-year-olds living alone, while 30-year-olds living with parents are mostly male, never-married, and without a college degree. Among men without a college degree, the marriage rate fell from 58% to 36%.
Aziz SunderjiHome Economics
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The share of American 30-year-olds living with their parents or roommates nearly doubled btw 1990 and 2025, from 17% to 32%. Aziz Sunderji finds that this group is largely responsible for the age cohort’s 15pp decline in homeownership over that period.
Do falling marriage rates explain more 30-year-olds living with parents?
Core argument: Among men without a college degree, the group most likely to live with their parents, the marriage rate has fallen from 58% to 36%.
Among married 30-year-olds, the homeownership rate has barely budged—63% in 1990, 60% today. Among single 30-year-olds living alone, the homeownership rate actually rose, from 25% to 29%. The typical 30-year-old living at home is male (61%), has never been married (89%), and doesn’t have a college degree (73%). Only 27% have a bachelor’s, compared to 42% of all 30-year-olds. In the early 1990s the profile of those living at home at 30 looked nearly identical: 64% male, 77% never married, and less educated than average. [However], in the ’90s, a greater proportion of young, less educated men would have gotten married and moved out. Among men without a college degree—the group most likely to be living with their parents—the marriage rate has plunged from 58% to 36%.
Takeaways by Macro Roundup® AI
Among men without a college degree, the group most likely to live with their parents, the marriage rate has fallen from 58% to 36%.
Homeownership among married 30-year-olds has barely moved, from 63% in 1990 to 60% today, while among single 30-year-olds living alone it rose from 25% to 29%.
The typical 30-year-old living at home is male (61%), never married (89%), and without a college degree (73%), with only 27% holding a bachelor's versus 42% of all 30-year-olds.
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Changes in Milestones of Adulthood— Among US young adults aged 25–34, the share completing a high school or college degree rose 9 percentage points to 83%, while the share ever married fell 18 points to 44% and the share living with a child fell 16 points to 39%. Economic milestones became more common as family formation milestones became less common.
What Explains Low Millennial Home Ownership?— At age 30, 31% of Millennials still live with parents or roommates versus 19% of Boomers, and only 61% of Millennial household heads are married versus 77% of Boomers; the analysis attributes most of the 18-percentage-point home ownership gap (25% versus 43%) to these two differences. Among married household heads, the ownership gap narrows to 8 points.
Young Adults Are Growing Increasingly Economically Dislocated— The share of young adults who are neither in education, employed, seeking work, nor caring for children is rising in many countries, among both young men and young women. Including stay-at-home parents in the standard "not in education, employment or training" measure obscures this increase.
AI Summary.The authors estimate that tighter land use regulation accounts for 40% of the gap in productivity growth between US construction and the rest of the economy, with weak innovation and quality mismeasurement each accounting for 20%. Across major economies, regulation and mismeasurement explain most of US construction's underperformance.
Elsie PengGoldman Sachs
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Post-1965, measured labor productivity in US construction averaged ~ -0.6% per year, compared to +1.6% economy-wide. GS attributes ~40% of the gap to tighter land-use rules, ~20% to weak innovation, and ~20% to mismeasurement of quality improvements.
Why has construction productivity growth lagged the rest of the economy?
Core argument: The authors estimate that tightening US land use regulations accounts for 40% of the productivity growth gap between construction and the rest of the US economy since 1965.
Our analysis shows that, within the US, the tightening of land use regulations has accounted for 40% of the gap in productivity growth between construction and the rest of the economy since 1965, and the lack of innovation and quality mismeasurement have each accounted for 20%. Looking across countries, we find that more severe tightening of land use regulations and greater quality mismeasurement account for most of the underperformance of the US construction industry since 1991, relative to other major G10 countries.
Takeaways by Macro Roundup® AI
The authors estimate that tightening US land use regulations accounts for 40% of the productivity growth gap between construction and the rest of the US economy since 1965.
Lack of innovation and quality mismeasurement each account for 20% of the US construction productivity growth gap relative to the rest of the economy since 1965, according to the authors' analysis.
Across countries, the authors find that more severe tightening of land use regulations and greater quality mismeasurement account for most of the US construction industry's underperformance since 1991 relative to other major G10 countries.
Related Articles:
Stagnant Construction Productivity Is a Worldwide Problem— Construction labor productivity has been roughly flat or declining since the 1990s across most of Western Europe, Japan, and Korea, a pattern consistent with the flat US trend. Countries often held up as models — Sweden and Japan for prefabrication, China for infrastructure — show little or unremarkable construction productivity improvement.
Five Decades of Decline: U.S. Construction Sector Productivity— U.S. construction labor productivity in 2023 was essentially unchanged from 1948, with real output per worker in 2020 more than 30% below its 1970 level, even as aggregate U.S. labor productivity tripled between 1950 and 2020. Construction accounted for about 4.5% of U.S. GDP in 2024.
The Strange and Awful Path of Productivity in the U.S. Construction Sector— U.S. construction sector labor productivity and total factor productivity grew faster than the whole economy in the 1950s and 1960s, then fell, ending 2020 below their 1950 levels while economywide labor productivity and total factor productivity were 290% and 230% higher. Construction labor productivity fell about 1% a year from 1970 to 2020.
AI Summary.The authors estimate that the HOPE VI program, which revitalized high-poverty US public housing projects, raised adult household income by 2.77% per childhood year spent in a revitalized project, implying a 50% gain from birth, exceeding the program's up-front taxpayer costs. They attribute the gains largely to increased interaction with higher-income peers in surrounding neighborhoods.
Raj Chetty, Rebecca Diamond, Thomas Foster, Lawrence Katz, et al.Harvard University
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Btw 1993 and 2010, children who moved into revitalized public housing that mixed market-rate and subsidized units, stayed a mean 5 years, and earned ~17% higher income as of their late 20s/early 30s. One key channel was exposure to higher-income peers.
Does revitalizing high-poverty public housing raise children's adult incomes?
Core argument: Each year a child spent growing up in a HOPE VI revitalized public housing project raised adult household income by 2.77%, implying a 50% income gain for a child living there from birth.
This paper has shown that the largest effort to revitalize high-poverty public housing projects in the United States—the HOPE VI program—succeeded in increasing economic mobility. Each year a child spent growing up in a revitalized public housing project increased their household income in adulthood by 2.77%, implying that growing up from birth in a revitalized public housing project would increase income by 50%. These income gains are substantially larger than the program’s up-front costs to taxpayers, demonstrating that it is possible to create higher-opportunity neighborhoods in a cost-effective manner even without changing broader determinants of outcomes such as labor market conditions or schools. The potential for change in short time frames is particularly notable given the historical roots of differences in opportunity across neighborhoods. The gains from HOPE VI are largely explained by changes in social interaction: children in revitalized projects interact more with peers in surrounding neighborhoods and gain more when they have higher-income peers.
Takeaways by Macro Roundup® AI
Each year a child spent growing up in a HOPE VI revitalized public housing project raised adult household income by 2.77%, implying a 50% income gain for a child living there from birth.
The income gains from HOPE VI are substantially larger than the program's up-front costs to taxpayers, indicating that higher-opportunity neighborhoods can be created cost-effectively without changing labor market conditions or schools.
The gains from HOPE VI are largely explained by changes in social interaction, as children in revitalized projects interact more with peers in surrounding neighborhoods and gain more when those peers have higher incomes.
ZIP Code Is Destiny? Turns Out That’s Bunk— The authors argue that research crediting neighborhoods with causing better child outcomes confuses causation with parental self-sorting, since more affluent, better-educated, and more stable families tend to move to good neighborhoods before their children are born. Their analysis of Danish population data found the same sorting pattern as in the United States.
The Economics of Income Mobility— In interviews with 1,000 adults in Memphis, Tulsa, and New Orleans who self-identified as having grown up poor, the authors found human capital was the strongest predictor of escaping poverty, followed by noncognitive skills such as resilience, self-esteem, and conscientiousness. Trusted adults in childhood, early police encounters, mental health, and adverse experiences also mattered.
