Macro Roundup

counterintuitive study using data from 30 European countries looks at the impact of relative decline in social status on both an individual, and a macro level finds that an individual's downward social mobility is not linked to increased hostility towards immigrants on a personal level.

However people living in macro environments of overall negative social mobility are more hostile to immigrants and marco environments of upward mobility have more positive attitudes towards immigrants.

"... Our central question is: Are downwardly mobile individuals less supportive of immigration than the upwardly mobile or immobile individuals?.....We interpret a failure to keep up with parental social class (i.e. downward mobility) as an indicator that individual’s status achievements lag behind expectations and contribute to subjective feelings of loss and decline....The findings show that more downward mobility is associated with more hostile attitudes towards immigration, upward mobility is linked with more positive attitudes. When there is more downward mobility relative to upward mobility, anti-immigration attitudes are stronger…. Our findings show that there is little evidence that the experience of downward social class mobility, in itself, has a particular influence on attitudes towards immigration, apart from in a few countries.Generally, a failure to do better than one’s parents does not make people more hostile towards immigration. Furthermore, we find little evidence in line with the narrative that blocked opportunities in a context as a whole—in terms of low relative mobility rate— are at the heart of attitudes towards immigration. However, people living in contexts with high downward mobility rates and low upward mobility rates, in absolute terms, are indeed more negative towards immigration. This suggests that limited opportunities for upward mobility might contribute to the feelings of frustration and hostility towards outsiders....Our results show that the working classes hold stronger anti-immigration attitudes and parental class continues to exert an effect on attitudes in adulthood even after accounting for individual’s own social class position. Being downwardly mobile from parental class does not appear to be associated with more hostility towards immigrants, except in a few European countries like Italy, Poland, and Greece. Our random-effects meta-regression models show, however, thatpeople living in contexts of high downward mobility are more hostile towards immigrants compared to people in contexts with high upward mobility.....”

Marii Paskov, Patrick Prag, and Lindsay Richards, "Does Downward Social Mobility Make People More Hostile towards Immigrants?" Nuffield College and University of Oxford, December 8, 2019, https://osf.io/preprints/socarxiv/yxe7u/

"… How can you avoid missing the best seed deal? The simplest way is to put money into every credible deal. Maybe you have a crystal ball that gives you perfect foresight, in which case you can pick only the best winners. Even then, if your crystal ball is even a little cloudy eventually you will miss a winning deal—and that winning deal might have been the best-performing investment.... Simulations on 10-year investing windows for seed-stage deals suggest fewer than 10% of investors will beat the index, even if those investors have skill in picking deals.....Our research provides a principled quantitative underpinning for a broadly indexed “spray and pray” model of investing at a company’s earliest stages. This is a controversial and contrarian point of view because this kind of investing has been maligned, or at least misunderstood, by traditional venture capitalists.... We have contextualized money-losing investments in this way because in the presence of an α < 2 power law for returns the opportunity cost of missing a single winning investment is theoretically infinite, and investors without perfect foresight that select from a static pool of potential investments achieve their highest expected return by investing in every seed-stage deal..... Our results suggest that after five years a winning seed-stage investment begins to draw its return multiple distribution from an α < 2 (i.e., unbounded mean) power law. This means that the regret an investor could have for missing a winning seed-stage investment is theoretically infinite, a phenomenon that does not appear to hold for later-stage investments. The implication is thatinvestors increase their expected return by indexing as broadly as possible at the seed stage (i.e., by putting money into every credible deal),because any selective policy for seed-stage investing—absent perfect foresight—will eventually be outperformed by an indexing approach.... This difference in approaches aligns with one of our most intriguing results: that over time the fundamental nature of the stock of startup companies changes, so that winning investors in a Series D round can expect very different returns than the winning investors in the Seed round of that same company, to the point that the two investors are in a qualitative sense investing in different asset classes.This result explains why VCs partition themselves primarily by company stage; there is no firm that will make new fintech investments from Seed to Series F, but there are many VC firms that will do the Seed round of a hardware, a biotech, and a fintech company. (Consider the intra-corporation split between GV, the entity formerly known as Google Ventures, which advertises their diverse early-stage investments in“Consumer”,“Enterprise”,“LifeScience”, and “Frontier Tech” companies, and CapitalG, the entity formerly known as Google Capital, which does later-stage investing.)..."

Later fundraising rounds (post-seed), so presumably after investors have reduced information asymmetries, the benefits of indexing decline.

Study of VC returns at the seed stage finds efforts to pick winners underperform simple indexing, ":....Conventional investing wisdom tells us that VCs should pass on most deals they see. But our research indicates otherwise:At the seed stage, investors would increase their expected return by broadly indexing into every credible deal...."

Penn Wharton Budget Model forecats that if implemented Warren’s wealth tax would reduce GDP by about 1 to 2 percent by 2050 and raise between $2.3 trillion (including macroeconomic effects) and $2.7 trillion (not including macroeconomic effects) in additional revenue in the 10-year window 2021 - 2030 (That’s 1 trillion under Warren’s team’s estimate) Note attached short WSJ writeup of paper.

“…. PWBM projects that the proposal would reduce GDP by 0.9 percent in 2050 under the standard budget scoring convention that additional revenues reduce the deficit.If the revenues were instead spent on public investments, PWBM projects GDP in 2050 would fall between 1.1 and 2.1 percent, depending on the productivity of the investment. Average hourly wages in the economy in 2050, including wages earned by households not directly subject to the wealth tax, would fall between 0.8 and 2.3 percent due to the reduction in private capital formation…”

John Ricco, Zheli He and Jon Huntley, "Senator Elizabeth Warren's Wealth Tax: Projected Budgetary and Economic Effects," University of Pennsylvania, https://budgetmodel.wharton.upenn.edu/issues/2019/12/12/senator-elizabeth-warrens-wealth-tax-projected-budgetary-and-economic-effects

FRBNY uses a natural experiment of a UI duration cut in Missouri (2011) and finds the cut significantly increased job finding rates through two mechanism: 1) an uptick in the search effort of unemployed workers and 2) availability of jobs (labor market tightness).

Workers reacted to the cut in UI durations by raising their search effort. FRBNY found the numbers imply a sizable increase in the job finding rate of 11.1%; the elasticity of the job finding rate with respect to UI durations was around -0.45. Under their most conservative estimate of the increase in the job finding rate they concluded that at least 1/3 is due to market-level effects through tightness and ~ 2/3 part is due to higher search effort.

These two effects accounts for 55% of the full percentage point decline in the unemployment rate caused by the policy change in Missouri.

They also note that"...over this episode, labor force participation fell in Missouri and applications for disability insurance spiked..." reinforcing Casey Mulligan point that disability had become a substantiate for UI as workers aged out of it though they don’t explore this angle in the paper.

....Following the policy change, the vacancy filling rate dropped immediately by 5% relative to the synthetic control—signifying a tightening of the labor market in Missouri, as the vacancy-filling rate is inversely related to labor market tightness....The tightening of the labor market and the increase in search effort led to a higher job finding rate in Missouri. We find that this increase induced by the policy change was 11.1%. Under our most conservative estimate of the increase in the job finding rate, we conclude that at least one third is due to market-level effects through tightness and the remaining part is due to higher search effort...We find that about 50% of the decline in unemployment following this policy change is attributable to higher exits from unemployment. Importantly, we estimate market level effects to be sizable—about 36% of the total effect according to our most conservative estimate and up to 100%...."

Fatih Karahan, Kurt Mitman and Brendan Moore, "Individual and Market-Level Effects of UI Policies: Evidence from Missouri," Federal Reserve Bank of New York, December 2019, https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr905.pdf