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
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, March 8, 2019

AI Summary. Goldman Sachs data indicate that companies earning the highest returns on assets are the ones investing most in growth capital spending and research and development, while firms with lower asset returns find returning cash to shareholders more economically viable. Growth investment is accelerating, suggesting buybacks are not displacing capital spending.

Joanna Ossinger Bloomberg
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High-return firms invest significantly in growth capex and R&D, while those with lower asset returns may find returning cash to shareholders more viable. @JoannaOssinger

Do share buybacks come at the expense of business investment?

Core argument: Goldman Sachs finds that companies achieving the highest returns on assets are those prioritizing growth capex and R&D, and argues that corporates are efficient capital allocators.

Firms that achieve the highest returns on assets are those that prioritize investment in growth capex and R&D. Data from Goldman Sachs indicates that companies with EPS-linked incentive compensation allocate more cash to dividends, yet this does not hinder capital investment. In fact, the pace of growth investment is accelerating, suggesting that buybacks are not detracting from capital allocation. Corporates are efficient capital allocators, with evidence showing that high-return firms invest significantly in growth capex and R&D. Conversely, firms with lower asset returns may find returning cash to shareholders more economically viable than investing for growth. This highlights a strategic divergence in capital allocation based on asset return performance, underscoring the importance of targeted investment in driving superior financial outcomes.

Takeaways by Macro Roundup® AI

  1. Goldman Sachs finds that companies achieving the highest returns on assets are those prioritizing growth capex and R&D, and argues that corporates are efficient capital allocators.
  2. Goldman Sachs data indicate firms with EPS-linked incentive compensation allocate more cash to dividends without hindering capital investment, and the pace of growth investment is accelerating, suggesting buybacks are not detracting from capital allocation.
  3. Goldman Sachs argues that for firms with lower returns on assets, returning cash to shareholders may be more economically viable than investing for growth.

Bloomberg quotes from a David Kostin (GS) note on buybacks,

"...Goldman found that firms with EPS-linked incentive compensation actually spent a greater portion of their cash on dividends than those without, even though executives in the first category would have had financial incentives to prefer repurchases. Further, the report said, evidence suggests buybacks aren’t crowding out capital investment. The pace of growth investment may even be accelerating. “Corporates are generally efficient allocators of capital,” Goldman wrote. “We find some evidence that the companies that are able to generate the highest returns on assets are also those that invest the most in growth capex and R&D,” while “firms that generate lower asset returns may find the economics of cash return to shareholders to be superior to investing for growth.”..."

Joanna Ossinger, "Goldman Rips Into U.S. ‘Misconceptions’ About Share Buybacks,"Bloomberg, March 8, 2019, https://www.bloomberg.com/news/articles/2019-03-08/goldman-says-public-discourse-gets-it-wrong-about-buybacks

AI Summary. The decline in labor force participation among less-educated men is partly attributed to greater willingness to be supported by family income, with participation falling despite stable wages, pointing to factors beyond labor demand. Changes in family structure, including fewer stable marriages and more men living with relatives, reduce incentives to work.

Ariel Binder and John Bound National Bureau of Economic Research
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Less-educated men’s labor force participation decline is partly driven by a new willingness to be supported by family, rather than labor demand shocks.

Does reliance on family income explain less-educated men leaving the workforce?

Core argument: Labor force participation among less-educated men has declined despite stable wages, which the authors attribute partly to a new willingness to be supported by family rather than to weaker labor demand.

The decline in male LFP [Labor Force Participation] among less-educated men is partly due to a new willingness to be supported by family. Despite stable wages, LFP has decreased, suggesting factors beyond labor demand are at play. Rising DI [Disability Insurance] participation accounts for some decline in men aged 45-54, but not in the 25-44 group. Many non-participating men rely on family income rather than their own disability benefits. Changes in family structure since the 1960s, such as fewer stable marriages and more men living with relatives, reduce labor supply incentives. This shift allows men to exit the labor force by drawing support from relatives, altering the impact of labor demand shocks on LFP.

Takeaways by Macro Roundup® AI

  1. Labor force participation among less-educated men has declined despite stable wages, which the authors attribute partly to a new willingness to be supported by family rather than to weaker labor demand.
  2. Rising Disability Insurance participation accounts for some of the participation decline among men aged 45–54 but not among those aged 25–44, and many non-participating men rely on family income rather than their own disability benefits.
  3. Changes in family structure since the 1960s, including fewer stable marriages and more men living with relatives, reduce labor supply incentives and alter how labor demand shocks affect participation.

"...we examine possible explanations for the decline in labor-force participation among less-educated men.....wages have not declined consistently over the sample period while labor-force participation has. Moreover, the uncompensated elasticity of labor supply necessary to align wage changes with participation changes, during periods when both were declining, is implausibly large. We then examine two oft-discussed developments outside of the labor market: rising access to Social Security disability insurance (DI), and the growing share of less-educated men with a prison record. Rising DI program participation can account for a non-trivial share of declining labor-force participation among men aged 45-54, but appears largely irrelevant to declining participation in the 25-44-year-old group. Additionally, we document that most non-participating men support themselves primarily on the income of other family members, with a distinct minority depending primarily on their own disability benefits.The literature has not progressed far enough to admit a reasonable quantification of the impact of rising exposure to prison on the labor-force participation rate, but recent estimates suggest that sizable effects are possible. We flag this as an important area for further research. The existing literature, in our view, has not satisfactorily explained the decline in less-educated male labor-force participation. This leads us to develop a new explanation. As others have documented, family structure in the United States has changed dramatically since the 1960s, featuring a tremendous decline in the share of less-educated men forming and maintaining stable marriages. We additionally show an increase in the share of less-educated men living with their parents or other relatives. Providing for a new family plausibly incentivizes a man to engage in labor market activity: a reduction in the prospects of forming and maintaining a stable family, then, removes an important labor supply incentive. At the same time, the possibility of drawing income support from existing relatives creates a feasible labor-force exit.We suspect that changing family structure not only shifts male labor supply incentives independently of labor market conditions, but also moderates the effect of a male labor demand shock on labor-force participation. Since male earning potential is an important determinant of new marriage formation, a persistent labor demand shock which reduces male earning potential exerts an impact on male labor-force participation which operates through the marriage market....'

Ariel Binder and John Bound, "The Declining Labor Market Prospects of Less-Educated Men,"National Bureau of Economic Research, February 2019, https://www.nber.org/papers/w25577.pdf

AI Summary. The article argues that the U.S. trade deficit stems less from domestic budget deficits than from foreign producers' reliance on U.S. consumers to absorb excess output, with shifts in U.S. household and business saving often offsetting changes in the budget deficit. On this view, the imbalance reflects weak spending abroad rather than Americans living beyond their means.

Matthew Klein Barron's
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The US trade deficit isn’t driven by domestic budget deficits but by global economic environment where foreign producers rely on US consumers to absorb excess output.

Does weak spending abroad, not budget deficits, drive the trade deficit?

Core argument: The author argues the U.S. trade deficit stems not from domestic budget deficits but from a global environment in which foreign producers depend on American consumers to absorb their excess output.

The U.S. trade deficit is not primarily driven by domestic budget deficits but rather by the global economic environment, where foreign producers depend on U.S. consumers to absorb excess output. Changes in America's budget deficit are often offset by shifts in the saving behavior of U.S. households and businesses. The trade balance is significantly influenced by foreign economic behavior, as seen in Europe and Asia, where producers rely on U.S. demand while their own consumers face shortages. This dynamic results in idle workers and machines abroad, highlighting that the issue lies with the rest of the world's reluctance to spend, rather than Americans living beyond their means. Despite ample spare capacity and no signs of excess inflation in the U.S., the global reliance on American consumption exacerbates trade imbalances.

Takeaways by Macro Roundup® AI

  1. The author argues the U.S. trade deficit stems not from domestic budget deficits but from a global environment in which foreign producers depend on American consumers to absorb their excess output.
  2. Changes in the U.S. budget deficit are often offset by shifts in the saving behavior of American households and businesses.
  3. In Europe and Asia, producers rely on U.S. demand while their own consumers face shortages, leaving workers and machines idle abroad, which the author attributes to the rest of the world's reluctance to spend.

"... This consensus is wrong: The budget deficit does not cause the trade deficit. In fact, changes in America’s budget deficit have historically been canceled out by changes in the saving behavior of U.S. households and business. The U.S. trade balance is affected by foreign behavior at least as much as by the saving and spending decisions of the government and domestic private sector. (The same holds true for the current account balance, which is a broader measure of cross-border payments that is less affected by corporate tax avoidance.) Yet many hold the unreasonable assumption that America’s external economic relationships are “wholly determined by domestic forces,” as the economist Michael Pettis has put it.....Americans are not “living beyond their means”—there is ample spare capacity and no sign of excess inflation. The problem is that the rest of the world refuses to spend. Producers in Europe and Asia rely on U.S. consumers to absorb their excess output, even as their consumers suffer from shortages of goods, services, and investment. Workers and machines lay idle even as material needs remain unmet...."

Matthew Klein, "Who’s Really to Blame for America’s Trade Deficit,"Barron's, March 8, 2019, https://www.barrons.com/articles/whos-really-to-blame-for-americas-trade-deficit-51552048201

Monday, March 11, 2019

AI Summary. African-Americans are the Democratic Party's most loyal voting bloc, with no Democratic presidential candidate winning less than 80% of the black vote since 1964, support attributed to shared policy priorities such as criminal justice reform and expanding health care access. Some black voters express the sentiment that their votes are taken for granted.

Economist Staff The Economist
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Black Americans have consistently been the Democrats’ most loyal voting bloc, with no Democratic presidential candidate receiving less than 80% of the black vote since 1964.

Why are African-Americans the Democratic Party's most loyal voting bloc?

Core argument: No Democratic presidential candidate has received less than 80% of the black vote since 1964, support rooted in shared values and policy priorities such as criminal justice reform and expanding access to health care.

African-Americans have consistently been the Democrats' most loyal voting bloc, with no Democratic presidential candidate receiving less than 80% of the black vote since 1964. This unwavering support is rooted in shared values and policy priorities, such as criminal justice reform and expanding access to health care, which resonate deeply with black voters. Despite this loyalty, there is a growing sentiment among African-Americans that their votes are taken for granted, prompting calls for more active engagement from Democratic candidates. The strategic focus on mobilizing untapped black voters, as seen in campaigns by Stacey Abrams and Andrew Gillum, highlights the potential for cost-efficient voter activation within this community. However, this approach must balance the risk of alienating other voter demographics, as evidenced by mixed electoral outcomes in recent gubernatorial races.

Takeaways by Macro Roundup® AI

  1. No Democratic presidential candidate has received less than 80% of the black vote since 1964, support rooted in shared values and policy priorities such as criminal justice reform and expanding access to health care.
  2. A growing sentiment among African-Americans that their votes are taken for granted has prompted calls for more active engagement from Democratic candidates.
  3. Campaigns by Stacey Abrams and Andrew Gillum focused on mobilizing untapped black voters as a cost-efficient form of voter activation, an approach that must balance the risk of alienating other voter demographics.

Economist Staff, "African-Americans are the Democrats’ most loyal constituency,"The Economist, March 7, 2019, https://www.economist.com/united-states/2019/03/09/african-americans-are-the-democrats-most-loyal-constituency

African-Americans are the Democrats’ most loyal constituency

“There is no such thing as a base voter,” says Stacey Abrams, who last year came closer than any Democrat this century to becoming Georgia’s governor. Ms Abrams embraced identity politics—she contributed an article to the current issue of Foreign Affairs entitled “Identity politics strengthens democracy”—and made registration and mobilisation of young and non-white voters central to her campaign. “To win we had to activate voters communities that had been discounted because they were seen as not viable. Republicans didn’t worry about them because they could never win. And Democrats didn’t engage because they didn’t vote.”

In purely strategic terms, it is not obvious that Democrats need make a special effort to court black voters. The last Republican to win a majority of their votes was Herbert Hoover, in 1932. No American ethnic group is as reliably and deeply partisan. Since 1964—when Republicans nominated Barry Goldwater, who voted against that year’s Civil Rights Act—no Democratic presidential candidate has captured less than 80% of the black vote.

This loyalty leaves many African-Americans feeling taken for granted, as though Democrats have not so much courted their votes as assumed they will show up. “What we’ve seen in the past,” explains DeJuana Thompson, whose group Woke Vote helped propel Doug Jones to victory in Alabama’s Senate race in 2017, is “candidates who show up in black churches two weeks before” election day, expecting parishioners to “trust, vote, and get out and work for their campaigns for free.”

Things are different as the Democratic Party’s marathon primary gets under way. Not only are two African-American senators, Cory Booker and Kamala Harris, among the top tier of Democratic candidates. Both they and their rivals have discussed racism and racial inequities openly, in ways that previous Democratic candidates have shied away from. The Democrats’ directness about race reflects both shifting priorities within their coalition and a tactical bet on how to best mobilise and expand their base.

African-Americans are the Democrats most loyal constituency: Extended Excerpt Image 1


As recently as the primaries of 2008, when Barack Obama was picking up delegates thanks to his strength with African-Americans and white progressives, Hillary Clinton was appealing to “hard-working Americans, white Americans”. Such rhetoric would be immediately disqualifying for a Democrat today. As whites without a college degree have left the party, the Democratic coalition of well-educated whites with members of ethnic minorities has grown more unified around questions of racism. In 2009 just 28% of Democrats agreed with the statement “Racial discrimination is the main reason why black people can’t get ahead these days”; by the summer of 2017, that share had risen to 64% (see chart).

Rhetoric from the party’s candidates reflects that consensus. Elizabeth Warren mentioned racial wealth gaps in the first minute of her campaign announcement. Soon after Kirsten Gillibrand announced, she acknowledged “systemic, institutional and daily individual acts of racism”, and decried racial income gaps, as did Ms Harris in her announcement speech, along with the state of criminal justice and police killings of young black men. Cory Booker backs “baby bonds”—a plan to give each child $1,000 at birth, followed by annual payments, tailored to family wealth, until the child turns 18—as a way to narrow the racial wealth gap. Ms Harris, Ms Warren and Julián Castro, a former mayor and cabinet secretary also seeking the nomination, have all endorsed some form of reparations for slavery, but have all stopped short of calling for direct financial transfers.

Some might consider these positions pandering. But as Leah Wright-Rigueur, a Harvard professor who wrote “The Loneliness of the Black Republican” notes, voters might ask, “Do I really care that they’re pandering? Maybe I want to be pandered to. Republicans pander to their base all the time.”

The tactical bet, that lots of people who have not voted before can be led to the polls, is one that Ms Abrams and Andrew Gillum made in their governors’ races, in Georgia and Florida respectively. According to this theory, the limited time and energy of a campaign is better spent mining untapped black voters than trying to win back wavering white ones. Some fear this strategy may turn off white voters, who still comprise a majority of the electorate. After all, both Ms Abrams and Mr Gillum lost—the latter in a swing state, in a year that was otherwise favourable to Democrats.

That suggests the bet may be mistaken. It may also be a category error. When it comes to issues, black Democrats are not very different from Democrats of other hues. Criminal-justice reform, investing in public education and expanding access to health care all have particular appeal to black voters, who bear the brunt of mass incarceration and poor schools. They also appeal to Democratic voters of all stripes. Ultimately, says Gilda Cobb-Hunter, a state representative from South Carolina, black Democrats are looking for the same thing as every other Democrat. “In the past it’s been kind of like a beauty contest: who’s speaking to your heart. But what I’m picking up now is a real sense of, ‘I want a winner’. And the winner is going to be the candidate who can beat 45.”

That candidate need not be black to win black votes. But he or she will need to court their support more vigorously than in past cycles. That is not only an acknowledgment of past oversight. Ms Abrams argues it will, be “cost-efficient. These communities are already tilted toward the value system and policies of Democrats. The mission isn’t to get someone to change their ideology. The mission is to get them to act on their beliefs.”

AI Summary. The authors find the effects of import competition from China on U.S. manufacturing were concentrated in industries late in their product cycle by 1990, marked by high wages and low education levels, where local unemployment rose beyond the shock's direct effects. Regions with higher educational attainment proved more resilient, a pattern not seen with earlier Japanese import competition.

Katherine Eriksson National Bureau of Economic Research
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China shocks impacted US manufacturing most in late product cycle industries by 1990, with 0.25% higher unemployment rates in areas with low education & high wages.

Does education level determine local resilience to import competition?

Core argument: U.S. industries in the late stage of their product cycle by 1990, marked by high wages and low education levels, saw unemployment rise an additional 0.25 basis points beyond the China shock's direct effects.

The impact of China shocks on U.S. manufacturing was most pronounced in industries that were in the late stage of their product cycle by 1990, characterized by high wages and low education levels. These areas experienced a 0.25 basis point additional increase in unemployment rates beyond the shock's direct effects. The resilience of local labor markets to such shocks depends on the phase of the product cycle, education levels, and manufacturing wages. Regions with higher educational attainment showed better resilience, suggesting that a skilled workforce can mitigate adverse outcomes through innovation or sectoral shifts. In contrast, areas with lower educational attainment and incomes faced higher unemployment rates, highlighting the distinct nature of the China shock compared to earlier trade shocks like the Japan shock, which did not exhibit similar patterns.

Takeaways by Macro Roundup® AI

  1. U.S. industries in the late stage of their product cycle by 1990, marked by high wages and low education levels, saw unemployment rise an additional 0.25 basis points beyond the China shock's direct effects.
  2. Local labor market resilience to China trade shocks depends on the product cycle phase, educational attainment, and manufacturing wages, with higher-education regions showing better resilience, possibly through innovation or sectoral shifts.
  3. Areas with lower educational attainment and incomes faced higher unemployment rates from the China shock, a pattern the earlier Japan shock did not exhibit.

"...: Using data over more than a century, we show that shifts in the location of manufacturing industries are a domestic reflection of what the international trade literature refers to as the product cycle in a cross-country context, with industries spawning in high-wage areas with larger pools of educated workers and moving to lower-wage areas with less education as they age or become “standardized.” We exploit the China shock industries as a set of industries that were in the late-stage product cycle by 1990 and show how the activity in those industries shifted from high-innovation areas to low-education areas over the 20th century.... the analysis in this paper suggests that the resilience of local labor markets to manufacturing shocks depends on local industries’ phase in the product cycle, on their education levels, and their manufacturing wages, with the greatest risk of unemployment and detachment from the labor force occurring when a shock hits areas where an industry already is phasing out, wages are high, or education levels are low. The results are consistent with the belief that there are long-term, secular trends in U.S. industrial structure driving the movement of industries, which shocks may mitigate or accelerate....The analysis also suggests that the resilience of local labor markets to manufacturing shocks depends on local industries’ phase in the product cycle, on local education levels, and on local manufacturing wages....Areas where the shock-affected industries had been reducing employment the most between 1960 and 1980— which we interpret as a characteristic of local industries being in a late stage of the product cycle—experienced a roughly 0.25 basis point additional increase in the unemployment rate above that attributable to the shock by itself. Locations with high manufacturing wages also felt more pain conditional on their level of exposure. This could occur if firms had been holding on in a location due to sunk costs as in Fillat and Garreto (2015) or adjustment costs as in Rodriguez- Lopez (2014) amidst increasing pressures to move or exit, then a large shock jolted them out of the range of inaction. Areas with a greater fraction of workers with college degrees had somewhat less adverse labor-market outcomes conditional on the shock, suggesting that a highly educated workforce may be better able to achieve resilience through innovation or expansion in different sectors along the lines of Feenstra, Ma, and Xu (2017), for instance.....The risk of unemployment and detachment from the labor force rises most when a shock hits in areas where an industry already has begun phasing out, wages are high, or education levels are low. The results are consistent with the belief that there are long-term, secular trends in U.S. industrial structure driving the movement of industries, which shocks may mitigate or accelerate.... As points of comparison, we compute an analogous “Japan shock" for the period from 1975- 1985 and “Tiger shock” from 1975-1988 and find that the regions most directly affected were quite different from those hit by the China shock. In particular, exposure to the China shock is correlated with lower educational attainment, lower incomes, and higher unemployment rates. In contrast, exposure to the Japan shock shows no such pattern, nor do areas with high concentrations in China-Shock industries in 1910 through 1960. Thus, the China shock was concentrated in areas that look distinctly different from regions hit by earlier shocks to manufacturing. We argue that the China shock hit industries late in their product cycle, while the Japan shock did not...."

Katherine Eriksson, Katheryn Russ, Jay C. Shambaugh, Minfei Xu, "Trade Shocks and the Shifting Landscape of U.S. Manufacturing," National Bureau of Economic Research, March 8, 2019, https://katherynruss.weebly.com/uploads/4/5/1/7/45179109/mfgshifts_ersx.pdf

AI Summary. The authors estimate that opioids account for 44% of the decline in prime-age male labor force participation, with a 10% increase in local opioid prescription rates associated with a 0.50 percentage point drop in prime-age male employment rates. The effect is more pronounced among white men without a bachelor's degree.

Dionissi Aliprantis, Kyle Fee, and Mark E. Schweitzer Federal Reserve Bank Of Cleveland
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Opioids account for 44% of the decline in male labor force participation btw 2001-2015. A 10% increase in local opioid prescription rates correlates with a 0.50 percentage point drop in employment rates for prime-age men.

How much of falling prime-age male labor participation do opioids explain?

Core argument: Opioids accounted for 44% of the decline in male labor force participation from 2001 to 2015, and a 10% rise in local opioid prescription rates is associated with a 0.50 percentage point drop in prime-age male employment rates.

From 2001 to 2015, opioids significantly impacted male labor force participation [LFP], accounting for 44% of the decline. A 10% increase in local opioid prescription rates correlates with a 0.50 percentage point drop in employment rates for prime-age men. This trend is more pronounced among white men with less than a BA, although minority men show larger coefficients despite lower national abuse rates. The disparity arises from higher local prescription exposure for whites. If opioid exposure increases among minority men, their LFP could further decline. These findings underscore the causal link between opioid prescriptions and labor market outcomes, highlighting the need for targeted policy interventions to mitigate the adverse effects on LFP.

Takeaways by Macro Roundup® AI

  1. Opioids accounted for 44% of the decline in male labor force participation from 2001 to 2015, and a 10% rise in local opioid prescription rates is associated with a 0.50 percentage point drop in prime-age male employment rates.
  2. The employment effect of opioid prescriptions is more pronounced among white men without a BA, while minority men show larger coefficients despite lower national abuse rates, a disparity attributed to higher local prescription exposure among whites.
  3. Rising opioid exposure among minority men could further reduce their labor force participation, indicating a need for targeted policy interventions.

"...We have three main empirical results. First, we find that opioid prescription rates and labor force statuses are strongly correlated for both prime-age men and women. We find that increasing the local opioid prescription rate decreases employment rates for both prime-age men and women by lowering labor force participation rates and increasing unemployment. Specifically, increasing the local prescription rate by one-tenth of a log point (roughly 10%) decreases the employment rate of prime age men by 0.50 percent percentage points for men and 0.17 percentage points for prime age women.Examining the growth of national average prescription rates between 2000 to 2016, our estimates imply that opioid prescriptions can account for an important share of the change in labor force participation rates in recent years. For prime age men, they would imply a reduction in the labor force participation rate of 1.3 percentage points, or 44 percent of the decline from 2001 to 2015.For prime age women, our estimates would imply a reduction in the labor force participation rate of 0.5 percentage points, or 17 percent of the decline. Our estimates are larger for men, but smaller for women, than those reported in Krueger (2017). Second, inspired by Case and Deaton (2017)’s finding of demographic heterogeneity related to mortality, we use our data set to investigate heterogeneity across demographic groups. Consistent with Case and Deaton (2017), we find that opioids have a strong effect on the labor market outcomes of white men with less than a BA. However, we find that coefficients are actually largest for minority men with less than a BA. While NSDUH data indicate lower abuse rates of minority men nationally, we reconcile this seemingly contradictory finding by showing that the exposure to opioids, in terms of local prescription rates, is considerably higher for whites than minorities. The policy implications of this finding are clear: If exposure were to spread and increase for minority men, their labor force participation would likely decline from today’s levels. Third, we also provide evidence in favor of giving our results a causal interpretation. We begin by reviewing other recent literature that tends to provide support for a causal link between opioid prescription rates and labor market outcomes...."
Dionissi Aliprantis, Kyle Fee, and Mark E. Schweitzer, "Opioids and the Labor Market,"The Federal Reserve Bank of Cleveland, March 1, 2019, https://www.clevelandfed.org/newsroom-and-events/publications/working-papers/2019-working-papers/wp-1807r-opioids-and-labor-market

AI Summary. US companies returned just under $8tn to shareholders through buybacks and dividends over a decade, a sum sufficient to buy every major listed company in the UK, France, Germany, Spain, Italy and Sweden at current prices. That total is nearly 5x Russia's annual GDP and almost equals the value of all gold ever mined.

Robin Wigglesworth Financial Times
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US firms engaged in a $8tn buyback and dividend spree from 2009-2018, enough to buy all major listed firms in the UK, France, Germany, Spain, Italy, and Sweden.

How much cash have US companies returned to shareholders over a decade?

Core argument: US firms returned just under $8tn to investors through buybacks and dividends from 2009 to 2018, a sum sufficient to buy all major listed companies in the UK, France, Germany, Spain, Italy, and Sweden at current prices.

From 2009 to 2018, US firms engaged in a buyback and dividend spree totaling just under $8tn, a sum sufficient to purchase all major listed companies in the UK, France, Germany, Spain, Italy, and Sweden at current prices. This amount is nearly five times Russia's annual GDP and almost equals the total value of all gold ever mined, highlighting the unprecedented scale of cash returns to investors. This massive capital distribution reflects a significant shift in corporate financial strategies, emphasizing shareholder value and potentially impacting global investment patterns. The scale of these buybacks and dividends underscores the robust financial health of US corporations during this period, raising questions about long-term investment in innovation and growth versus immediate shareholder returns.

Takeaways by Macro Roundup® AI

  1. US firms returned just under $8tn to investors through buybacks and dividends from 2009 to 2018, a sum sufficient to buy all major listed companies in the UK, France, Germany, Spain, Italy, and Sweden at current prices.
  2. The just-under-$8tn in US buybacks and dividends is nearly five times Russia's annual GDP and almost equals the total value of all gold ever mined.
  3. The scale of US cash returns to shareholders from 2009 to 2018 raises questions about long-term corporate investment in innovation and growth relative to immediate shareholder returns.

"....The 2018 buyback and dividend spree brings the total since 2009 up to just under $8tn. That would, at current prices, be more than enough to buy all the major listed companies of the UK, France, Germany, Spain, Italy and Sweden. It is nearly five times the size of Russia’s annual economic output, and almost equal to the current value of all gold ever mined through history, according to the World Gold Council...."

Robin Wigglesworth, "US investor cash return bonanza breaks records,"Financial Times, March 5, 2019, https://www.ft.com/content/e1d53cc2-3f92-11e9-9bee-efab61506f44