Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, April 8, 2016

AI Summary. Public investment in advanced OECD countries declined from an average of 4.5% of GDP in the 1970s to about 3% by the late 1990s, while selected Latin American countries were more volatile, peaking near 6% in the early 1980s before falling to roughly 2.5% by 2000.

IMF Staff International Monetary Fund
Date Posted:
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Public investment as a percentage of GDP in advanced OECD countries declined from 4.5% in the 1970s to 3% by the late 1990s, while selected Latin American countries experienced more volatility.

Has public investment declined as a share of GDP across advanced economies?

Core argument: Public investment in advanced OECD countries fell from an average of 4.5% of GDP in the 1970s to 3% by the late 1990s.

From 1970 to 2000, public investment as a percentage of GDP in advanced OECD countries showed a declining trend, dropping from an average of 4.5% in the 1970s to 3% by the late 1990s. In contrast, selected Latin American countries experienced more volatility, with public investment peaking at 6% of GDP in the early 1980s before falling to around 2.5% by 2000. This divergence highlights differing fiscal policy approaches and economic conditions, with OECD nations focusing on fiscal consolidation and efficiency, while Latin American countries faced economic instability and debt crises. The data underscores the importance of stable fiscal policies in maintaining sustainable investment levels, which are crucial for long-term economic growth and infrastructure development.

Takeaways by Macro Roundup® AI

  1. Public investment in advanced OECD countries fell from an average of 4.5% of GDP in the 1970s to 3% by the late 1990s.
  2. Selected Latin American countries saw public investment peak at 6% of GDP in the early 1980s before falling to roughly 2.5% by 2000, a more volatile path than the OECD's.
  3. The divergence is attributed to OECD nations focusing on fiscal consolidation and efficiency while Latin American countries faced economic instability and debt crises.

See: Figure 1. Investment Trends in Advanced OECD and Selected Latin American Countries, 1970-2000 (In percent of GDP). (Page 7)

International Monetary Fund, "Public Investment and Fiscal Policy," March 12, 2004.https://www.imf.org/external/np/fad/2004/pifp/eng/pifp.pdf

Wednesday, September 21, 2016

AI Summary. Large refugee inflows can have sizable distributional effects on host-country wages, lowering pay for some skill groups while raising it for others. The Mariel boatlift raised Miami's population 8% and the number of male workers without a high school diploma 32%, coinciding with wage declines for that group and gains for more educated workers.

Jeffrey Sparshott Wall Street Journal
Date Posted:
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Refugee supply shocks can have complex & sizable impacts on labor markets, benefiting some while disadvantaging others. @JeffreySparshott

How do large refugee inflows affect wages across different skill groups?

Core argument: The Mariel boatlift raised Miami's population by 8% and the number of male workers without a high school diploma by 32%, and wages for that group declined while wages for workers with high-school or college degrees rose.

The arrival of refugees can have significant distributional effects on wages in host countries, impacting different skill groups in varied ways. For instance, the Mariel boatlift increased Miami's population by 8% and the number of male workers without a high school diploma by 32%, leading to wage declines for this group. Conversely, wages for workers with high-school or college degrees rose, possibly due to reduced costs for services provided by low-wage workers, enhancing productivity for higher-skilled workers. Similarly, the influx of Soviet Jews to Israel, which increased the population by over 13%, negatively affected wages for high- and intermediate-skill natives but boosted earnings for the lowest education group due to increased demand for their services. These examples illustrate that refugee supply shocks can have complex and sizable impacts on labor markets, benefiting some while disadvantaging others.

Takeaways by Macro Roundup® AI

  1. The Mariel boatlift raised Miami's population by 8% and the number of male workers without a high school diploma by 32%, and wages for that group declined while wages for workers with high-school or college degrees rose.
  2. The influx of Soviet Jews to Israel increased the population by over 13%, lowering wages for high- and intermediate-skill natives while raising earnings for the lowest education group as demand for their services increased.
  3. Refugee supply shocks can produce sizable distributional effects across skill groups in host labor markets, benefiting some workers while disadvantaging others, with higher-skilled workers possibly gaining from cheaper services provided by low-wage workers.

Borjas. the influx of Soviet Jew's to Isreal is a good data point to reinforce the "upside" of inequality"...Refugees damaged the prospects of natives with similar skill levels, the study found, but benefited natives with complimentary skill sets.For example, the Mariel boatlift brought about 120,000 refugees, mainly to Miami. Messrs. Borjas and Monras write that more than 60% lacked a high school diploma. “Even though the Marielitos increased Miami’s population by only 8%, they increased the number of male workers without a high school diploma by 32%,” the authors wrote. And that was the group that saw wages fall. By contrast, workers with a high-school or college degree saw wages rise. (That may be because the higher-skilled workers paid less for services filled by low-wage workers, like landscaping or housekeeping, making the wealthier workers more productive.)

In the case of Soviet Jews emigrating to Israel, most were college-educated. The influx, which increased the country’s population by more than 13%, hurt wages of high- and intermediate skill natives. But the earnings of the lowest education group increased, possibly because demand for the services they provide rose...."Jeffrey Sparshott, "What Happens to Wages When Refugees Arrive? More Than You Might Think,"Wall Street Journal, September 21, 2016, http://blogs.wsj.com/economics/2016/09/21/what-happens-to-wages-when-refugees-arrive-more-than-you-might-think/

What Happens to Wages When Refugees Arrive? More Than You Might Think An influx of refugees can hurt the economic prospects of natives with similar skills, but benefit other workers The U.S. is accepting 85,000 refugees this fiscal year and the Obama administration plans to raise that figure to 110,000 next year. The plan is controversial amid worries that terrorists could slip through a rigorous screening process. But what about the economic implications? A study by Harvard University’s George Borjas and the Center for Monetary and Financial Studies’s Joan Monras looks at evidence from four earlier refugee surges and finds they worsen prospects for one segment of the population while bettering the lot of another. “In short, refugee supply shocks have sizable distributional consequences in the labor markets of receiving countries,” the authors said. Mr. Borjas is generally considered an immigration skeptic, though his work is careful to avoid political judgement or policy prescriptions. His work is often cited as evidence that immigration erodes wages for lower skilled U.S. natives. His latest work is surprising because it shows clear benefits as well—though not for everyone. The new study looks at the Mariel boatlift, which brought Cubans to Miami in 1980; an influx of French and Algerians into France as Algeria gained independence in 1962; a surge in Jewish emigres to Israel when the Soviet Union collapsed in the early 1990s; and the tide of Balkan refugees as Yugoslavia splintered through the 1990s. Refugees damaged the prospects of natives with similar skill levels, the study found, but benefited natives with complimentary skill sets. For example, the Mariel boatlift brought about 120,000 refugees, mainly to Miami. Messrs. Borjas and Monras write that more than 60% lacked a high school diploma. “Even though the Marielitos increased Miami’s population by only 8%, they increased the number of male workers without a high school diploma by 32%,” the authors wrote. And that was the group that saw wages fall. By contrast, workers with a high-school or college degree saw wages rise. (That may be because the higher-skilled workers paid less for services filled by low-wage workers, like landscaping or housekeeping, making the wealthier workers more productive.) In the case of Soviet Jews emigrating to Israel, most were college-educated. The influx, which increased the country’s population by more than 13%, hurt wages of high- and intermediate skill natives. But the earnings of the lowest education group increased, possibly because demand for the services they provide rose. Mr. Borjas’ work isn’t without controversy. University of California, Berkley, economist David Card studied the Mariel boatlift and found no impact on wages or employment rates in Miami. In a paper earlier this year, he said Mr. Borjas’ work lacks nuance and offers a “one‐sided view of immigration.” So perhaps it is striking that Mr. Borjas finds such clear economic benefits from the arrival of refugees. To be sure, the U.S. is accepting a relatively small number of refugees relative to its population, and they tend to be distributed widely across the country. By comparison, the European Union is struggling to handle more than one million migrants, including many Syrians escaping civil war, who have settled in Germany, Austria and elsewhere. But even a small number of new entrants in the labor market can have an effect. “A couple of hundred refugees in a town with a thousand workers can have an effect,” Mr. Borjas said.