Macro Roundup

DeBoer, "...mobility of individual students in quantitative academic metrics relative to their peers over time is far lower than popularly believed. Students sort themselves into an ability hierarchy at a very early age and tend to stay in their position in that hierarchy for the remainder of their lives, to a remarkable degree. The children identified as the smart kids early in elementary school will, with surprising regularity, maintain that position throughout schooling. Do some kids transcend (or fall from) their early positions? Sure. But the system as a whole is quite static. Most everybody stays in about the same place relative to peers over academic careers. The consequences of this are immense, as it is this relative position, not learning itself, which is rewarded with economic gain by our society....."

He makes the point that it’s an individual’s relative position, not absolute that matters in terms of our ability to use education to address social problems, “…If Harvard (or Caltech or whoever) selected an incoming freshman class, and then aliens came to earth and abducted every one of them, Harvard would just reach into their bag of valedictorians and admit the next rung of students on their list. Those students would presumably have meaningfully lower ability in absolute learning compared to their abducted peers, if Harvard’s selection process means anything3. But they’d be the best relative to who was left. Correspondingly, would that reduced level of absolute learning mean that they wouldn’t receive the advantage that a Harvard degree confers in the labor market? Of course not. They would still be perceived as the cream of the crop relative to labor market peers. You sell your academic credentials in a market; their value is a function of their supply and their demand. We know that the college wage premium is to a large degree a simple function of the ratio between the number of jobs that require a college degree and the number of applicants who have one. (Duh.) The absolute learning represented by that degree is not the relevant criterion. The position of the student in the hierarchy is….”

Freddie on why this is the case, “…Now it seems to me that the most likely, most parsimonious explanation for all of this is genes. I’m not going to try and summarize the entire field of behavioral genetics/social genomics, nor am I qualified to argue in its defense. But there is a very large body of research that lends credence to that idea. (And, as I have said, a very large body of criticism against it.) Again, I consistently find it hard to understand how genetics, which influences absolutely every other part of who we are as organisms, would have literally no impact on cognition and the mind. That this idea is not just prevalent but rigidly enforced as a matter of social dogma is baffling to me. But I am not at all a genetics partisan. I have always said I am mechanism agnostic when it comes to why intrinsic academic aptitude exists. Any manner of explanations could apply to why some of us are intrinsically better at school than others. I am however quite partisan about the fact that intrinsic academic aptitude exists, because both overwhelming evidence and common sense insist that it exists. If the genetic explanation is conclusively disproven tomorrow I will not suddenly start believing that we are all 100% the product of our environments and our teachers, as many liberals believe. I will instead say “OK, what’s the mechanism creating innate ability then?” Because that is the only sensible approach given the evidence. The alternative is the hand-waving mysterianism of referring to shadowy hidden variables no one has thought to measure in the past 150 years of education research. The first step to answering the question of why this happens is to acknowledge that it happens, the overwhelming evidence for a construct of innate academic ability….”

Freddie deBoer, "Education Doesn't Work,"Freddie deBoer Substck, April 12, 2021, https://freddiedeboer.substack.com/p/education-doesnt-work

More, “…Consider this large meta-analysis of techniques attempting to help low-SES students succeed… The dots are the mean weighted effect sizes9 of a given intervention. The red lines are the error bars, which help to tell you if the observed effect is statistically meaningful. If the red line cross the vertical dotted line, we can’t say with statistical confidence that the effect is greater than zero. Which means that of 14 major studied interventions only 6 have statistically meaningful effects at all, and of those 3 are less than.2 of a standard deviation, which means they have very limited practical effects10….”

This is a great chart, “…The persistence of relative academic performance is remarkable. Standardized test scores collected at the age of thirteen are strong predictors of not just future high school and college educational performance but adult outcomes like academic career milestones and economic position, even after adjusting for parental income:…”

Evidence, “..If you’re a college administrator, what is the best predictor of how your incoming freshman class will perform as college seniors on a standardized test of college learning? Their performance on the SAT as high school seniors, of course. What else?The distance between the blue and red regression lines represents absolute learning, how the students at the average college have improved over the course of their college careers7. The relationship between the variables, the tight grouping and angle of the data pattern shows that the relationship between the mean SAT score your students got near the end of high school and the mean Collegiate Learning Assessment8 score your students got near the end of college is quite strong.If your admissions process screened out weaker students coming in, your reward was stronger students going out. Obviously. Were individual student outcomes as elastic as people in the policy and politics world assume, you wouldn’t predict this kind of relationship. Students would go to different colleges and the supposedly dominant environmental variables would overwhelm prior advantage to create very different relative performance. That simply doesn’t happen. What, you think Harvard is going to risk its reputation on something as illusory and intangible as “school quality”?If you’re an administrator at a college that is not selective (the kind of college I went to), you can take heart in the fact that even though your student body is likely on the lefthand side of the plot due to low incoming SAT scores, you can move your institutional average northwards over the course of a class’s career by producing absolute learning gains. Your students will leave knowing more than they did when they came in. But what you probably can’t do - what there’s simply no reason to believe you can do - is teach your students so well that they catch the student bodies of the schools on the right half of the plot. Because those students not only started out ahead, they’re learning at college too, inconveniently. There is no evidentiary basis for the conventional wisdom that schooling can change the performance of students relative to their peers, with any consistency at anything like scale - and it is change at scale that would be required to “fix our education system.” Wonks should perhaps ask themselves why they believe otherwise…”

Using evidence from France new Borjas looks at immigrations impact on wages in terms of composition of labor force, argues that due to selection bias we miss the impact of supply shocks on labor.

For example the wage change found in a labor market after an immigrant supply shock is a function of not only the number of natives who “switched” markets, but which native workers switched. “…Immigrant supply shocks are typically expected to reduce the wage of comparable workers. Natives may respond to the lower wage by moving to markets that were not directly targeted by immigrants and where presumably the wage did not drop. This paper argues that the wage change observed in the targeted market depends not only on the size of the native response, but also on which natives choose to respond. A non-random response alters the composition of the sample of native workers, mechanically changing the average native wage in affected markets andbiasing the estimated wage impact of immigration. We document the importance of this selection bias in the French labor market, where women accounted for a rapidly increasing share of the foreign-born workforce since 1976. The raw correlations suggest that the immigrant supply shock did not change the wage of French women, but led to a sizable decline in their employment rate. In contrast, immigration had little impact on the employment rate of men, but led to a sizable drop in the male wage. We show that the near-zero correlation between immigration and female wages arises partly because the native women who left the labor force had relatively low wages. Adjusting for the selection bias results in a similar wage elasticity for both French men and women (between -0.8 and -1.0)….”

The evidence. “…Our sample is restricted to persons aged 18-64 living in European France. We exclude all persons who are self-employed, are in military occupations, are enrolled in school, or do not report their educational attainment. In our wage analysis, we will exclude observations that have extreme values of the hourly wage. Specifically, we exclude workers who are either in the top 0.5% or bottom 0.5% of the hourly wage distribution. Table 1 summarizes some of the key characteristics of our data. Perhaps the most striking trend is the rapid increase in the employment rate of native women between 1962 and 2016, almost doubling from 37.2 to 70.1 percent. At the same time, the employment rate of French men declined noticeably, from 89.4 to 73.6 percent. The data also indicate that the size of the supply shock was roughly similar for low and high-educated native women. The immigrant share rose from 3.2 to 9.2 percent for women with a baccalaureate degree and from 5.7 to 14.1 percent for women without the degree. In contrast, immigration had a larger impact on the number of high-educated men, where the immigrant share rose from 5.3 to 10.0 percent while the immigrant share among the low-educated men was roughly constant (between 12 and 14 percent)…The raw data in the French labor market reveals a striking gender asymmetry in how immigration correlates with wages and employment. The correlation between immigration and wages (across cities and over time) is negative for native men, but essentially zero for native women. At the same time, the correlation between immigration and employment rates is negative for native women, but essentially zero for native men….Our empirical application of this framework in the context of the French labor market shows that the orthogonality between immigration and wages for French women is partly an artifact of selection bias. The native women who exited (or did not enter) the labor market after the supply shock tended to be low-wage women, mechanically increasing the average wage in those cities targeted by immigrants and making it seem as if immigration had no impact on the female wage. After adjusting for selection, our evidence indicates that the wage elasticity for native women is also negative and roughly the same size as that found for native men (where labor supply was much more inelastic). The gender asymmetry in the labor market impact of immigration can thus be reconciled by jointly examining how immigration affects wages and labor supply, and by accounting for the size and the inevitable selection bias in the native response…”

George J. Borjas and Anthony Edo, "Gender, Selection into Employment, and the Wage Impact of Immigration," National Bureau Of Economic Research, April 2021, https://www.nber.org/papers/w28682

The dynamics, “…We document the empirical relevance of this type of selection bias by examining how immigration differentially affected the employment and wages of men and women in the French labor market. The French context is particularly suitable for exploring the central hypothesis proposed in this paper for a simple reason:France experienced a remarkable “feminization” of its immigrant labor force in the past few decades, witnessing a very rapid rise in the female share of foreign workers. Because men and women could be imperfect substitutes, the rising number of immigrant women relative to immigrant men could affect the labor market outcomes of native men and women differentially…..Moreover, female labor supply tends to be more elastic than that of men at the extensive margin….As a result, the supply shock may have had a considerable impact on the labor force participation rate of native women, potentially producing a sizable selection bias in the measurement of the wage impact of immigration….”

Obviously small flows (as of today) not large but ~ rhymes with the 2000s with equity in place of debt, "...In suburban neighborhoods near cities such asAtlanta, Las Vegas and Phoenix, blocks of families are sending monthly rent checks to ventures backed by Canadian pension funds, European insurers, and Asian or Middle Eastern government-run funds.... Foreign investors barely registered in these markets a few years ago. Now, they account for nearly a third of institutional investment in single-family rental homes, said Alex Foshay, head of international capital markets at real-estate services firm Newmark…German insurerAllianz SE last month said it is investing in a venture to buy more than $4 billion of U.S. rental homes. Singapore’s sovereign-wealth fund GICis backing plans by Quinn Residences to buy single-family rental homes across the southeastern U.S., according to people familiar with matter. Canada’s Public Sector Pension Investment Board, meanwhile, said in January it agreed to a $700 million rental-home venture in partnership with Pretium Partners LLC. The venture has bought around 2,000 homes, said Pretium Chief Executive Donald Mullen. Foreign institutions have also invested in the Pretium’s funds targeting single-family rental homes, he added….”
Konrad Putzier, "That Suburban Home Buyer Could Be a Foreign Government,"Wall Street Journal, April 13, 2021, https://www.wsj.com/articles/that-suburban-home-buyer-could-be-a-foreign-government-11618306380