Edward Conard

Top Ten New York Times Bestselling Author

  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “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
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, October 30, 2023

AI Summary. British graduates' median hourly pay of £21 (just over $26) trails the almost $36 earned by US graduates, a 27% gap that has widened from 8% roughly 15 years earlier, while non-graduates in both countries earn similar amounts. Across most of Britain, more than a third of graduates work in jobs that do not require a degree.

John Burn-Murdoch Financial Times
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US college graduates earn 40% more than their British counterparts despite comparable skill levels. @jburnmurdoch argues that this is driven by “much higher and more lucrative demand” for talent in the US economy relative to the UK.

Why do British graduates earn far less than American graduates?

Core argument: British graduates earned median hourly pay of £21 (just over $26) last year versus almost $36 for US graduates, a 27% gap that has widened from 8% on the eve of the global financial crisis 15 years ago.

Britons who left the education system at 18 without a degree were paid an average of £14 an hour in 2022 (about $18 after adjusting for price differences). Their US counterparts earned only marginally more, at $19 an hour. Last year [British graduates’] median hourly earnings were £21, or just over $26. US graduates pocketed almost $36 an hour. On the eve of the global financial crisis 15 years ago, British graduates made just 8% less than US grads; that gap has ballooned to 27%. Across most of Britain, more than a third of graduates are working in jobs that do not require a degree — even in London, the figure is 25%. America has mountains of highly lucrative and skilled jobs chasing the best candidates, while Britain has mountains of skilled candidates chasing a small number of world-class graduate employment opportunities.

Takeaways by Macro Roundup® AI

  1. British graduates earned median hourly pay of £21 (just over $26) last year versus almost $36 for US graduates, a 27% gap that has widened from 8% on the eve of the global financial crisis 15 years ago.
  2. Britons who left education at 18 without a degree were paid an average £14 an hour in 2022, about $18 after adjusting for price differences, only marginally below the $19 earned by their US counterparts.
  3. More than a third of graduates across most of Britain work in jobs that do not require a degree, a figure that stands at 25% even in London.

Related Articles:

  • Why Do Wages Grow Faster for Educated Workers? — College graduates sort into professional, non-routine occupations where wages rise much more with job tenure, and the author estimates this occupational sorting explains at least half of the life-cycle growth in the college wage premium. That premium is estimated at 22% at age 26, 49% at age 40, and 56% at age 60.
  • Falling College Wage Premiums by Race and Ethnicity — The college wage premium is largest for Asian workers, whose college graduates earn more than twice what high school graduates earn — about a 120% premium versus roughly 70–80% for Black, Hispanic, and White workers. The premium has edged down slightly for all groups except Hispanic workers since the pandemic recession.
  • The Economics of Inequality in High-Wage Economies — United States Income, Wealth, Consumption, and Inequality Diana Furchtgott-Roth

AI Summary. Declining balances in the Federal Reserve's reverse repurchase facility are projected to eventually outweigh the Fed's balance-sheet runoff and produce a net increase of money in the financial system. As money market funds lend to the Treasury, that cash flows through government spending into the banking system, mechanically increasing bank reserves and deposits.

Joseph Wang Fed Guy Blog
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.@FedGuy12 notes that the rising level of reserve and Treasury General Account balances will ease financial conditions over the next several months.

Can falling reverse repo balances offset the Fed's balance-sheet runoff?

Core argument: The Federal Reserve's quantitative tightening program is draining bank reserves at roughly $240bn a quarter, while declining reverse repo balances push in the opposite direction, with the interaction producing a modest increase in bank reserves.

Declining RRP [reverse repo] balances will eventually overwhelm QT and lead to a net increase of money in the financial system. After [money market funds] lend money to the Treasury, the money moves from the RRP to the Treasury General Account [TGA] and then into the banking system through fiscal spending. In our two-tiered monetary system, this mechanically increases reserves (money for banks) and deposits (money for non-banks) in a manner similar to QE. However, the Fed’s QT program has also been pushing in the opposite direction and draining reserves at a rate of around $240b a quarter. The interaction between the two forces has resulted in a modest increase in bank reserves.

Takeaways by Macro Roundup® AI

  1. The Federal Reserve's quantitative tightening program is draining bank reserves at roughly $240bn a quarter, while declining reverse repo balances push in the opposite direction, with the interaction producing a modest increase in bank reserves.
  2. When money market funds lend to the Treasury, funds move from the reverse repo facility to the Treasury General Account and then into the banking system via fiscal spending, mechanically raising both reserves and deposits in a manner similar to quantitative easing.
  3. Declining reverse repo balances will eventually overwhelm quantitative tightening and produce a net increase of money in the financial system.

Related Articles:

  • A Beautiful Replenishment — Money market funds buying Treasury bills lets bank reserves be replenished as cash moves from the Federal Reserve's overnight reverse repo facility into the Treasury's account and back out through government spending. The author argues reserves should stay abundant, allowing the Federal Reserve's balance sheet runoff to continue about two more years.
  • Probing LCLoR — Bank reserves stand around $3.2t versus a common Federal Reserve estimate of roughly $2.2t (8% of GDP) for the lowest comfortable level, and reserves are on track to approach that level within months. Growth in reverse repo balances and rebuilding of the Treasury's cash account would draw reserves down.

AI Summary. Post-pandemic excess savings and core consumer price inflation one year later track each other closely, with inflation rising, peaking, and declining roughly a year after excess savings did. The author argues fiscal stimulus that boosted disposable income and excess savings contributed to this inflation episode, alongside monetary policy and supply chain problems.

Jesper Rangvid Rangvid's Blog
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Jesper Rangvid notes that inflation has broadly tracked excess savings in the US with a one-year lag and suggests “fiscal stimulus has been an important driver of inflation, at least in the US.”

Does excess household savings track inflation a year later?

Core argument: Core CPI inflation has tracked accumulated excess savings, measured against the 2016–2019 trend, with a one-year lag: excess savings rose in 2020 and inflation rose a year later.

Inflation and excess savings have followed remarkably similar trends after the pandemic. Figure 6 shows excess savings (based on the 2016-2019 trend) and core CPI inflation one year later (note that inflation refers to the 2nd y-axis and the upper x-axis). The correlation is striking. Core inflation follows accumulated excess savings with a lag of one year. One year after excess savings started rising in 2020, inflation rose. Excess savings peaked in autumn 2021, as mentioned, and inflation peaked a year later. Since then, excess savings have declined and so has inflation with a one-year lag. It is tempting to conclude that excess savings caused this inflation episode. As you may recall, I agree that fiscal stimulus (which increased people’s disposable income and thus caused the accumulation of excess savings) contributed to this inflation episode, although I also believe that monetary policy and supply chain challenges played a role.

Takeaways by Macro Roundup® AI

  1. Core CPI inflation has tracked accumulated excess savings, measured against the 2016–2019 trend, with a one-year lag: excess savings rose in 2020 and inflation rose a year later.
  2. Excess savings peaked in autumn 2021 and core inflation peaked a year later, with both declining since then on the same one-year lag.
  3. The author argues fiscal stimulus raised disposable income and drove the accumulation of excess savings, contributing to the inflation episode alongside monetary policy and supply chain challenges.

Related Articles:

  • Accumulated Savings During the Pandemic: An International Comparison with Historical Perspective — The authors construct measures of excess household savings accumulated during the COVID-19 pandemic and find they have been unwound in the United States, declined in advanced foreign economies, and slowed in emerging market economies. Past recessions featured smaller increases in excess savings and greater persistence in the accumulated stock.
  • Excess No More? Dwindling Pandemic Savings — Research on U.S. household savings after the pandemic recession points to rapid accumulation and then drawdown of excess savings, with cumulative drawdowns exceeding $1.9tn and less than $190bn of excess savings remaining in the aggregate economy. The authors estimate that if recent drawdown rates persist, aggregate excess savings would be depleted.
  • Spending Down Pandemic Savings Is an “Only-in-the-U.S.” Phenomenon — Household saving rose in the United States and other high-income economies during the COVID-19 pandemic, but only in the U.S. and Canada did income-support measures push incomes well above pre-pandemic trajectories, while consumption fell everywhere. The divergence between U.S. and foreign saving behavior has no clear explanation.

AI Summary. Foreign direct investment into China is falling across multiple measures, with one month showing a 34% year-on-year drop to Rmb72.8bn ($10bn), the steepest decline since monthly figures became available in 2014. After rising 15% year on year early in the year, inflows have posted double-digit percentage declines each month since.

Thomas Hale, Ryan McMorrow, and Andy Lin Financial Times
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.@Brad_Setser notes that FDI into China is at a two-decade low, as “foreign companies are no longer reinvesting back in China…they are getting [their] profits out of the country as fast as they can.”

Is foreign direct investment into China declining sharply?

Core argument: Foreign direct investment into China fell 34% year on year to Rmb72.8bn ($10bn) in September, the biggest decline since monthly figures became available in 2014, according to Financial Times calculations based on Chinese commerce ministry data compiled by Wind.

Foreign direct investment into China is falling across multiple measures, adding to pressure on Beijing and local governments as they seek to counter an economic slowdown. Financial Times calculations based on Chinese commerce ministry data compiled by Wind show that FDI fell 34% to Rmb72.8bn ($10bn) year on year in September, the biggest decline since monthly figures became available in 2014. The weakness in FDI has been part of a steady march of disappointing economic readings since China lifted pandemic restrictions at the start of the year. While FDI leapt 15% in January on the previous year, it has recorded double-digit percentage declines every month since May.

Takeaways by Macro Roundup® AI

  1. Foreign direct investment into China fell 34% year on year to Rmb72.8bn ($10bn) in September, the biggest decline since monthly figures became available in 2014, according to Financial Times calculations based on Chinese commerce ministry data compiled by Wind.
  2. China's foreign direct investment rose 15% year on year in January but has posted double-digit percentage declines every month since May, part of a run of disappointing economic readings since Beijing lifted pandemic restrictions at the start of the year.
  3. Falling foreign direct investment across multiple measures adds to pressure on Beijing and local governments as they seek to counter China's economic slowdown.

Related Articles:

  • The Rise & Fall of Foreign Direct Investment in China — Net foreign direct investment into China has been negative for four consecutive quarters, as foreign investors shifted from reinvesting earnings from their Chinese operations to repatriating them. Whether this reflects cash management or signals a future slowdown in foreign direct investment is unclear, but the repatriation of profits is negative for China's currency.
  • China’s Brain Drain Threatens Its Future — United Nations data show net emigration from China has risen from a low of about 125,000 a year to more than 300,000. Private data on individuals with over $1m in assets show a similar pattern, with net outflows of the wealthy climbing from around 9,000 a year to over 15,000.
  • China’s Age Of Malaise — More than 300,000 Chinese people emigrated in a single year, more than double the pace of a decade earlier, with some traveling overland through a half-dozen countries to reach the US. US authorities at the southern border recorded 17,894 encounters with Chinese migrants over ten months, a thirteenfold increase from the prior year.

AI Summary. United Nations forecasts project Africans will rise from 8% of the world's people in 1950 to one-quarter by 2100, with the continent holding the world's largest workforce within a decade. McKinsey & Company estimates Africa's per-person economic growth has averaged 1% annually since 1990, against India's 5% and China's 9%.

Declan Walsh New York Times
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Analysis by the UN projects that by 2050, 35% of the world’s population aged 15-24 will live in Africa, up from 23% in 2023.

Is Africa becoming a larger share of the world's population?

Core argument: Africans made up 8% of the world's people in 1950 and will account for one-quarter of humanity and at least one-third of all people aged 15 to 24 a century later, according to United Nations forecasts.

In 1950, Africans made up 8% of the world’s people. A century later, they will account for one-quarter of humanity, and at least one-third of all young people aged 15 to 24, according to United Nations forecasts. The median age on the African continent is 19. In India, the world’s most populous country, it is 28. In China and the United States, it is 38. Within the next decade, Africa will have the world’s largest work force, surpassing China and India. By the 2040s, it will account for two out of every five children born on the planet. Adjusted for population size, Africa’s economy has grown by 1 percent annually since 1990, according to the global consulting firm McKinsey & Company. Over the same period, India’s grew 5% per year and China’s grew 9%.

Takeaways by Macro Roundup® AI

  1. Africans made up 8% of the world's people in 1950 and will account for one-quarter of humanity and at least one-third of all people aged 15 to 24 a century later, according to United Nations forecasts.
  2. Africa's median age is 19, compared with 28 in India and 38 in China and the United States, and Africa will have the world's largest work force within the next decade, surpassing China and India.
  3. Adjusted for population size, Africa's economy has grown 1% annually since 1990, against 5% per year in India and 9% in China, according to McKinsey & Company.

Related Articles:

  • Demography Is Destiny in Africa — Sub-Saharan Africa is projected to account for half of global population growth through 2050 and to hold a third of the world's people by the end of the century, up from 14%. Its population is growing 3x faster than the rest of the world, concentrating rapid growth in countries where nearly half have gross national income per person below $1,135.
  • Giorgia Meloni Calls For EU Help To Deal With Surge In Migrant Arrivals — Italy has appealed for greater European Union support as more than 12,000 people arrived from north Africa in a single week, most reaching the island of Lampedusa. Arrivals on Italian shores have surged to more than 128,600 so far this year, up from about 66,200 a year earlier.
  • Saudi Forces Accused of Killing Hundreds of Ethiopian Migrants — Human Rights Watch alleges in a 73-page report that Saudi border forces killed hundreds of Ethiopian migrants attempting to cross into the kingdom from Yemen, firing explosive weapons at them and in some cases asking migrants which limb they would prefer to be shot. Saudi Arabia hosts hundreds of thousands of Ethiopian workers.

AI Summary. The Federal Reserve has steadily raised its estimate of the long-run federal funds rate, which suggests it views the cost of capital as permanently higher. A permanent increase in the risk-free rate carries implications for firms, households, and asset allocation across stocks and bonds.

Torsten Sløk Apollo
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Torsten Sløk @apolloglobal argues that a steady increase in FOMC estimates of the long-run fed funds rate since early 2023 implies “the Fed is beginning to see the costs of capital as permanently higher.

Has the cost of capital shifted permanently higher?

Core argument: The Federal Reserve has steadily raised its estimate of the long-run fed funds rate since the start of 2023, which the author reads as the Fed beginning to see the costs of capital as permanently higher.

The Fed has since the beginning of 2023 steadily increased its estimate of the long-run fed funds rate. The implication for investors is that the Fed is beginning to see the costs of capital as permanently higher. A permanent increase in the risk-free rate has important implications for firms, households, and asset allocation across equities and fixed income.

Takeaways by Macro Roundup® AI

  1. The Federal Reserve has steadily raised its estimate of the long-run fed funds rate since the start of 2023, which the author reads as the Fed beginning to see the costs of capital as permanently higher.
  2. A permanent increase in the risk-free rate carries important implications for firms, households, and asset allocation across equities and fixed income, according to the author.

Related Articles:

  • Global Natural Rates in the Long Run: Postwar Macro Trends and the Market-Implied r* in 10 Advanced Economies — Estimates for 10 advanced economies show natural interest rates have declined over the long run, though not steadily: as recently as the 1990s they ranged from 100 to 600 basis points, while by the end of the sample 4 of 10 countries had a negative natural rate and most others fell between 0 and 50 basis points.
  • The Price of Money Is Going Up, and It’s Not Because of the Fed — Bloomberg Economics estimates that the inflation-adjusted natural rate of interest on 10-year US government notes fell from 5% in 1980 to under 2%, and projects it will rise about a percentage point from a trough of 1.7% to 2.7% in the 2030s, implying nominal 10-year yields of 4.5%–5%.
  • What Have We Learned About the Neutral Rate? — Analysts estimate that if inflation is brought down without a recession, the Federal Reserve's policy rate will stabilize nearer 3–3.25% than the 2.5% longer-run median projection of Federal Reserve officials. Projected shifts in government debt and demographics imply a roughly 0.5 percentage point net increase in the neutral rate over the next decade.

AI Summary. Denmark's law requires neighborhoods where at least half of residents are of non-Western origin and that show at least two markers of low income, low education, high unemployment, or high criminal convictions to cut social housing to no more than 40% by 2030. More than 4,000 public housing units must be emptied or demolished.

Emma Bubola New York Times
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Denmark is seeking to better integrate non-Danes into Danish society by demolishing social housing in neighborhoods with low income, low education, high unemployment, and high criminal convictions where at least half of the population is non-Western.

Denmark is seeking to better integrate non-Danes into Danish society by demolishing social housing in neighborhoods with low...

Is Denmark demolishing public housing to break up immigrant neighborhoods?

Core argument: Denmark's law requires neighborhoods where at least half of residents are of non-Western origin or descent, plus at least two of low income, low education, high unemployment, or high criminal-conviction rates, to cut social housing to no more than 40% by 2030.

The housing plan was announced in 2018 by a conservative government, but it only started to take a tangible form more recently. It was part of a broader package signed into law that its supporters vowed would dismantle “parallel societies” by 2030. Among its mandates is a requirement that young children in certain areas spend at least 25 hours a week in preschools where they would be taught the Danish language and “Danish values.” The law mandates that in neighborhoods where at least half of the population is of non-Western origin or descent, and where at least two of the following characteristics exist — low income, low education, high unemployment, or a high percentage of residents who have had criminal convictions — the share of social housing needs to be reduced to no more than 40% by 2030. That means more than 4,000 public housing units will need to be emptied or torn down. At least 430 already have been demolished.

Takeaways by Macro Roundup® AI

  1. Denmark's law requires neighborhoods where at least half of residents are of non-Western origin or descent, plus at least two of low income, low education, high unemployment, or high criminal-conviction rates, to cut social housing to no more than 40% by 2030.
  2. More than 4,000 public housing units in Denmark must be emptied or torn down under the plan, and at least 430 have already been demolished.
  3. The Danish package, announced in 2018 by a conservative government and signed into law with supporters vowing to dismantle "parallel societies" by 2030, also requires young children in certain areas to spend at least 25 hours a week in preschools teaching Danish language and "Danish values.".

Related Articles:

  • Progressives Are Winning the Immigration Debate — But It Doesn’t Feel Like It — Survey data indicate anti-immigration views across Western countries have declined since their 2016 peak, with the sharpest shifts in the US, Canada and Britain, where the share favoring strict limits or a ban on immigration more than halved from 66% to 31%. Reported discomfort with other races and faiths is also low.
  • Giorgia Meloni Calls For EU Help To Deal With Surge In Migrant Arrivals — Italy has appealed for greater European Union support as more than 12,000 people arrived from north Africa in a single week, most reaching the island of Lampedusa. Arrivals on Italian shores have surged to more than 128,600 so far this year, up from about 66,200 a year earlier.
  • French Riots Show How Entrenched Inequalities Have Become — In the US, unemployment is roughly equal for the native-born and the foreign-born, at about 5.5%, and Black and white employment rates are close to even. In France, unemployment is 7% for the native-born but 12% for immigrants and over 17% for recent arrivals.

AI Summary. Illegal crossings at the U.S.-Mexico border exceeded 2m for a second consecutive year, historic highs, according to government data, and rose after the expiration of a policy that allowed rapid expulsion of migrants. Families, no longer subject to detention, grew from about a fifth of border apprehensions to about half.

Ashley Wu New York Times
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For the second year in a row, the number of illegal crossings at the U.S.-Mexico border surpassed two million.

Why do illegal border crossings remain at historic highs?

Core argument: Illegal crossings at the U.S.-Mexico border exceeded two million for the second consecutive year, historic highs, according to government data.

For the second year in a row, the number of illegal crossings at the U.S.-Mexico border surpassed two million, historic highs, according to government data released this month. Title 42, passed during the Trump Administration, had been used to quickly expel illegal migrants. The policy expired in May. Since then, the number of illegal border crossings has increased. Historically, most migrants have come from Mexico, Guatemala, Honduras, and El Salvador. More recently, migrants from other countries have accounted for nearly half of illegal border crossings. The Biden administration also ended the practice of detaining families in 2021. Families may be responding. Families crossing the border made up about a fifth of total border apprehensions. In both August and September, that share rose to about half.

Takeaways by Macro Roundup® AI

  1. Illegal crossings at the U.S.-Mexico border exceeded two million for the second consecutive year, historic highs, according to government data.
  2. Title 42, enacted under the Trump administration to quickly expel illegal migrants, expired in May, and illegal border crossings have risen since then.
  3. Families made up about a fifth of total border apprehensions, a share that rose to about half in both August and September; the Biden administration ended the detention of families in 2021.

Related Articles:

  • Monopsony, Efficiency, and the Regularization of Undocumented Immigrants — A study of France's amnesty program, which regularized undocumented workers making up 2.0% of workers in Paris and nearly 1% nationwide, finds positive effects on employment and wages, particularly for male, low-skill workers. The authors argue regularization reduces employers' wage-setting power in the undocumented labor market, and estimate a rise in total French GDP of around 1%.
  • Immigrants & Their Kids Were 70% of U.S. Labor Force Growth Since 1995 — U.S. labor force data show immigrants accounted for 49% of labor force growth over roughly the past three decades and their children another 21%, together about 70% of an increase of nearly 32.8m workers. Immigrants rose from about 10% to 18% of the labor force, and immigrants plus their children from 18% to 29%.
  • The Hard Truth About Immigration — Immigration has not been the dominant cause of wage stagnation since the 1970s, as the regions attracting the most immigrants are not those with the worst wage stagnation. The same evidence suggests immigration has played a meaningful but secondary role in holding wages down, since the availability of immigrant workers lets employers offer lower wages.

AI Summary. Rates of self-harm episodes among adolescents in the U.S., UK, Canada, Australia, and New Zealand have increased since 2010, especially for girls, reaching record-high levels in all five countries. The author links this to a five-year period in which adolescents shifted from basic phones to smartphones with continuous internet and social media access.

Zach Rausch and Jon Haidt After Babel
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Rates of self-harm among young girls have increased since 2010 across the U.S., UK, Canada, Australia, and New Zealand. @JonHaidt @ZachMRausch note that this coincides with the transition of adolescent social life to smartphones and social media.

Did the shift to smartphones raise adolescent self-harm rates, especially for girls?

Core argument: Self-harm episode rates among adolescents in the U.S., UK, Canada, Australia, and New Zealand have risen since 2010, with the increase especially pronounced for girls, reaching record-high levels in all five countries by 2015.

After examining data from the Anglosphere (U.S., UK, Canada, Australia, and New Zealand), I’ve found that one trend stands out above all others: the spike in anxiety, depression, and self-harm among adolescent girls that began in the early 2010s. Since 2010, rates of self-harm episodes have increased for adolescents in the Anglosphere countries, especially for girls. By 2015, self-harm episodes were at record-high levels in all five countries. I have added a shaded area on all graphs from 2010 to 2015, which is the period that Jon calls “The Great Rewiring of Childhood” in his forthcoming book, The Anxious Generation. It’s the five-year period when adolescence changed to a phone-based form; adolescents went from nearly all owning flip phones (or other basic phones) to nearly all owning smartphones with high-speed data plans and continuous (and nearly unlimited) access to the internet and social media.

Takeaways by Macro Roundup® AI

  1. Self-harm episode rates among adolescents in the U.S., UK, Canada, Australia, and New Zealand have risen since 2010, with the increase especially pronounced for girls, reaching record-high levels in all five countries by 2015.
  2. The spike in anxiety, depression, and self-harm among adolescent girls that began in the early 2010s stands out above all other trends in the Anglosphere data examined.
  3. The 2010–2015 period, called "The Great Rewiring of Childhood" in the forthcoming book The Anxious Generation, is when adolescents shifted from basic phones to smartphones with high-speed data plans and continuous access to the internet and social media.

Related Articles:

  • Chinese Youth Suicide Rate Quadruples In Over A Decade — A study in the Chinese Center for Disease Control and Prevention's official journal found the suicide rate among children aged 5 to 14 in China rose from about 0.2 to about 0.8 per 100,000 people over 11 years. Among 15- to 24-year-olds, the rate fell 6.8% annually before rising 19.6% annually through 2021.
  • Suicide Rates for Girls Are Rising. Are Smartphones to Blame? — Across 17 countries, suicide rates among girls aged 10-19 rose from an average of 3.0 per 100,000 people to 3.5, while the higher rate among boys, at 6.1 per 100,000, barely changed. Hospitalisations for self-harm among teenage girls climbed in all 11 countries with data, by an average of 143%, versus 49% for boys.
  • Is There Really a Generational Difference in Identifying as Lesbian, Gay, or Bisexual — General Social Survey data show that increases among young American adults appear in same-sex sexual behavior as well as in identification, with 20% reporting a same-sex partner versus 18.5% identifying as lesbian, gay, or bisexual. The increases are larger among 27- to 41-year-olds.

Tuesday, October 31, 2023

AI Summary. A study of 1,993 cities in France, Germany, Italy, Japan, the UK and the US finds former manufacturing hubs lost employment on average after each country's manufacturing peak, though a large share fully recovered. After the peak, hubs with a higher initial share of college-educated workers grew significantly faster.

Luisa Gagliardi, Enrico Moretti and Michel Serafinelli University of California
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Enrico Moretti, Michel Serafinelli and @GagliarL show that, among cities worldwide that were hit by shocks that caused a decline in manufacturing, those that had a high share of college-educated workers recovered faster.

Why do some former manufacturing hubs recover employment while others decline?

Core argument: Across 1,993 cities in France, Germany, Italy, Japan, the UK, and the US, former manufacturing hubs lost employment on average after their country's manufacturing peak, yet a surprisingly large share in each country fully recovered.

We study the employment consequences of deindustrialization for 1,993 cities in six countries: France, Germany, Italy, Japan, the United Kingdom, and the United States. We focus on former manufacturing hubs—defined as Local Labor Markets that in the year of their country’s manufacturing peak have a manufacturing employment share in the top tercile of their country’s distribution. While on average former manufacturing hubs lost employment after their country’s manufacturing peak, a surprisingly large share in each country was able to fully recover. We find that in the two decades before the relevant country’s manufacturing peak, cities with a high share of college-educated workers experienced a similar rate of employment growth as those with a low share of college-educated workers. By contrast, in the decades after the manufacturing peak, the employment trends diverge: cities with a high initial share of college-educated workers experience significantly faster employment growth.

Takeaways by Macro Roundup® AI

  1. Across 1,993 cities in France, Germany, Italy, Japan, the UK, and the US, former manufacturing hubs lost employment on average after their country's manufacturing peak, yet a surprisingly large share in each country fully recovered.
  2. In the two decades before each country's manufacturing peak, cities with high and low shares of college-educated workers grew employment at similar rates, with trends diverging only after the peak.
  3. After their country's manufacturing peak, cities with a high initial share of college-educated workers experienced significantly faster employment growth than those with a low share.

Related Articles:

  • Are Manufacturing Jobs Still Good Jobs? An Exploration of the Manufacturing Wage Premium — Manufacturing average hourly wages, once about 3% above private-sector wages, have grown more slowly than private-sector wages, erasing the manufacturing wage premium for most manufacturing jobs. The authors estimate that declining unionization accounts for more than 70% of that drop, an effect that remains significant after controlling for worker and sector characteristics.
  • Bottlenecks: Sectoral Imbalances and the US Productivity Slowdown — The authors estimate that greater dispersion in productivity growth among an industry's input and idea suppliers has a strong negative effect on that industry's own productivity growth, using data on 462 US manufacturing industries and 42 non-manufacturing industries. Their evidence implies most of the US productivity slowdown can be explained by rising cross-industry variance in productivity growth.
  • The Economics of Inequality in High-Wage Economies — United States Income, Wealth, Consumption, and Inequality Diana Furchtgott-Roth

AI Summary. Tentative United Auto Workers agreements with Detroit automakers include a 25% general wage increase over four years, which with cost-of-living adjustments would lift top production-worker pay to about $42 an hour and most unionized workers' annual pay into the mid-$80,000s before overtime. Ford says the contract would add $850–$900 in costs per vehicle.

Mike Colias Wall Street Journal
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All of the Big Three have reached tentative agreements with the UAW which will boost the top pay for production workers to about $42 an hour. A Ford executive estimated the contract would raise costs by $850-900 per vehicle.

How much will new labor agreements raise automakers' costs per vehicle?

Core argument: The tentative UAW agreements include a 25% general wage increase over four years that, with cost-of-living increases, would lift top production-worker pay to about $42 an hour.

The tentative agreements, to be voted on in the coming weeks, include a 25% general wage increase over four years, which with cost-of-living increases would boost the top pay for production workers to about $42 an hour. By the end of the contract’s term in 2028, most of the Detroit companies’ unionized workers would make in the mid-$80,000s annually, before overtime pay. Ford executives are already talking about the need to offset the higher expenses in this latest deal. The automaker has said the UAW contract would add $850 to $900 per vehicle in additional costs. “We have work to do,” Ford Chief Financial Officer John Lawler said last week. “We have to identify efficiencies. We have to increase productivity. It is a record contract.”

Takeaways by Macro Roundup® AI

  1. The tentative UAW agreements include a 25% general wage increase over four years that, with cost-of-living increases, would lift top production-worker pay to about $42 an hour.
  2. Ford says the UAW contract would add $850 to $900 per vehicle in additional costs, and CFO John Lawler said the company must identify efficiencies and increase productivity, calling it a record contract.
  3. By the end of the contract's term in 2028, most unionized workers at the Detroit automakers would earn in the mid-$80,000s annually before overtime pay.

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  • Autoworkers Have Good Reason to Demand a Big Raise — Inflation-adjusted average hourly pay for US production and nonsupervisory workers has risen 13% over 20 years, about 0.6% a year, while the average hourly wage for auto production-line workers has fallen 30%. General Motors, Ford and Stellantis earned a combined $42bn in net income over 12 months.
  • Union Workers Score Big Pay Gains As Labour Action Sweeps US — The Bureau of Labor Statistics reports year-on-year wage growth for union members reached 4.6%, catching up with the larger pay rises non-union workers had been receiving. Analysis of 425 newly ratified union contracts by Bloomberg Law found first-year pay increases of 7% and 6.1%, against a 3% average over the preceding 10 years.

AI Summary. Comparing consumption at each age with the average labor income of people ages 30–49 shows how resources are distributed across age groups. When a larger share of resources is held by the elderly, who are eager to spend sooner rather than later, the economy's saving rate — the source of funds for new investment — drops.

Peter Coy New York Times
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Since 1960, older Americans have increased their consumption relative to younger Americans. @petercoy, citing arguments by @Kotlikoff, writes that this has likely lowered domestic investment.

Does a larger share of resources held by the elderly lower saving?

Core argument: Americans age 40 in 2021 consumed about 0.7 times the average labor income of people ages 30 to 49 that year, on charts plotting consumption by age against that benchmark.

The horizontal axis is age, from birth to 85-plus. The vertical axis compares consumption at each age with the average labor income of people ages 30 to 49 in that year. So, for example, people age 40 in 2021 had total consumption of 0.7, which is to say around 70 percent of average labor income for people ages 30 to 49. The last data point in each chart covers all ages 85 and up, not just age 85. (That’s why there’s such a jump in 2021 from age 84.) Here’s why that matters for the economy: When a larger share of resources are in the hands of the elderly — those eager to spend sooner rather than later — the economy’s saving rate, which provides funds for new investment, drops.

Takeaways by Macro Roundup® AI

  1. Americans age 40 in 2021 consumed about 0.7 times the average labor income of people ages 30 to 49 that year, on charts plotting consumption by age against that benchmark.
  2. When a larger share of resources sits with the elderly, who are eager to spend sooner rather than later, the economy's saving rate, which provides funds for new investment, drops.
  3. The final data point in each chart covers all ages 85 and up rather than age 85 alone, which produces the jump from age 84 in the 2021 series.

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  • The US Capital Glut and Other Myths — The US capital-output ratio remains close to its postwar average and the real return to capital has stayed roughly constant near 6%, at 5.84% in the 2000s and 6.42% in the 2010s. Market-based real returns averaged 5.52% from 1950-1989 versus 6.95% from 1990-2019, a rise rather than the decline a capital glut implies.

AI Summary. China has led record global central bank purchases of gold, as countries seek to hedge against inflation and reduce reliance on the dollar. The buying has helped bullion prices trade just under $2,000 a troy ounce despite rising bond yields and a strong dollar, even as gold demand excluding bilateral over-the-counter flows was 6% lower year-on-year at 1,147 tonnes.

Harry Dempsey Financial Times
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So far this year central banks have purchased 800 metric tons of gold, up 14% y/y. The People’s Bank of China has bought 181 metric tons taking gold to 4% of its reserves.

Are central banks buying record gold to hedge inflation and dollar reliance?

Core argument: China led record global central bank gold purchases in the first nine months of the year, as countries sought to hedge against inflation and reduce reliance on the dollar.

China has spearheaded record levels of central bank purchases of gold globally in the first nine months of the year, as countries seek to hedge against inflation and reduce their reliance on the dollar. The “voracious” rate of buying has helped bullion prices defy surging bond yields and a strong dollar to trade just shy of $2,000 a troy ounce. Overall, gold demand excluding bilateral over-the-counter flows was 6% weaker year-on-year at 1,147 tonnes.

Takeaways by Macro Roundup® AI

  1. China led record global central bank gold purchases in the first nine months of the year, as countries sought to hedge against inflation and reduce reliance on the dollar.
  2. Central banks' "voracious" gold buying helped bullion trade just shy of $2,000 a troy ounce despite surging bond yields and a strong dollar.
  3. Gold demand excluding bilateral over-the-counter flows fell 6% year-on-year to 1,147 tonnes.

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  • Shadow Reserves — How China Hides Trillions of Dollars of Hard Currency — Institutions reporting to China's central government likely hold closer to $6tn in foreign assets than the $3.12tn officially reported as reserves, with the state banking system the main vehicle for holding these uncounted foreign currency assets. China remains a massive global creditor whose foreign exchange accumulation is felt worldwide.
  • Setser On Chinese “De-Dollarizing” — There is no good evidence that China has reduced its dollar exposure; accounting for the higher dollar share of its hidden reserves, China's dollar holdings have likely increased. Rather than shifting out of dollars, China has moved from US-custodied Treasuries to offshore custodians and risk assets such as agency bonds and equities.

AI Summary. Analysis of Current Population Survey data finds that underpayment relative to the legal minimum rises for workers across all racial and ethnic groups following minimum wage increases, especially among those aged 16 to 21, offsetting the equivalent of 10–20% of realized wage gains. Among young workers, the authors find the burden falls disproportionately on African American workers.

Jeffrey Clemens and Michael Strain National Bureau of Economic Research
Date Posted:

Underpayment of workers relative to the minimum wage increases in the aftermath of minimum wage increases and disproportionately impacts workers aged 16-21. @MichaelRStrain @AEIecon

Do minimum wage increases lead to more underpayment for some groups?

Core argument: Using Current Population Survey data, the authors find that the rise in underpayment following minimum wage increases is equivalent to between 10 and 20% of realized wage gains across the full sample.

Using Current Population Survey data, we find evidence that the incidence of underpayment rises substantially for workers across all racial and ethnic groups, in particular among the young, in the wake of minimum wage increases. The overall rise in the underpayment in the wake of minimum wages is equivalent to between 10 and 20% of realized wage gains across the full sample. In addition, we find evidence of two sources of heterogeneity in the rise in underpayment experienced by members of different racial and ethnic groups. Among young workers (those ages 16 to 21), we find evidence that the burden of underpayment falls disproportionately on African American workers. Underpayment may thus blunt the impact of minimum wage increases on wage gaps between young African American workers and other groups of young workers.

Takeaways by Macro Roundup® AI

  1. Using Current Population Survey data, the authors find that the rise in underpayment following minimum wage increases is equivalent to between 10 and 20% of realized wage gains across the full sample.
  2. The authors find evidence that the incidence of underpayment rises substantially for workers across all racial and ethnic groups after minimum wage increases, particularly among young workers.
  3. Among workers ages 16 to 21, the authors find evidence that the burden of underpayment falls disproportionately on African American workers, which may blunt the impact of minimum wage increases on wage gaps among young workers.

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AI Summary. Times/Siena survey data indicate that Democrats and Biden voters were somewhat more likely than Republicans and Trump voters to skip the midterm election, implying the presidential electorate was more Democratic. Yet the same data indicate higher turnout would not help Biden now, even though it would bring more Democratic and Biden voters to the polls.

Nate Cohn New York Times
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The Democrats’ success in 2022 and 2023 special elections was driven by high-propensity voters. Currently, Trump is leading with lower-propensity voters who will likely vote in 2024. @Nate_Cohn

Does higher turnout still help Democrats in a presidential election?

Core argument: Times/Siena data indicate the 2020 general electorate was probably more Democratic and more supportive of Biden than the 2022 midterm electorate, as a slightly higher share of Democrats and Biden '20 voters skipped the midterms than Republicans or Trump '20 voters.

According to the Times/Siena data, the 2020 general electorate was probably more Democratic and more supportive of Mr. Biden in 2020 than the 2022 midterm electorate, since a slightly higher proportion of Democrats and Biden ’20 voters skipped the midterms than Republican or Trump ’20 voters. On that basis, one would ordinarily assume that a higher-turnout election in 2024 would help Mr. Biden and Democrats, by drawing those drop-off voters back to the polls. Yet according to the same data — the same survey respondents — a higher-turnout election would not help Mr. Biden today, even though it would draw more Biden ’20 and more Democratic voters to the polls.

Takeaways by Macro Roundup® AI

  1. Times/Siena data indicate the 2020 general electorate was probably more Democratic and more supportive of Biden than the 2022 midterm electorate, as a slightly higher share of Democrats and Biden '20 voters skipped the midterms than Republicans or Trump '20 voters.
  2. That turnout pattern would ordinarily imply that a higher-turnout 2024 election helps Biden and Democrats by drawing drop-off voters back to the polls.
  3. The same Times/Siena respondents indicate a higher-turnout election would not help Biden today, even though it would bring more Biden '20 and more Democratic voters to the polls.

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