The Unassuming Economist

An interesting paper by Jan Brůha and Jiří Polanský on labor markets and business cycles:

“The goal of this paper is to document and summarize the main cyclical features of labor market macroeconomic data in advanced countries. We report the second moments (correlations, coherences and volatility) of labor market variables for various data transformations (growth rates and cycles). Then we use dynamic factor models to inquire about the number of orthogonal shocks that drives labor market data dynamics. We also investigate the time-varying nature of these features: we ask whether they are stable over time, especially at times of severe crises such as the Great Recession. Finally, we compare these features across countries to see whether there are groups of countries characterized by similar features, such as labor market institutions. We find that certain features are stable over time and across countries (such as Okun’s Law), while others are not. We also confirm that labor market institutions influence selected characteristics, but to a limited degree only. We find that one or at most two orthogonal shocks seem to drive the cyclical dynamics of labor market variables in most countries. The paper concludes with our interpretation of these findings for structural macroeconomic models”

From an ILO paper by Antonia Asenjo and Clemente Pignatti:

“We conduct a comparative analysis of unemployment insurance (UI) schemes in advanced and emerging economies. We find that almost all countries complement UI with severance payments, although emerging (advanced) economies rely relatively more on severance payments (UI). As a result, UI coverage rates are substantially higher in advanced than emerging economies. We also find that most countries finance their UI collectively (i.e. by workers, employers and the government), but contribution rates are higher in advanced than emerging economies. Turning to entitlement conditions, UI schemes are generally accessible only by dependent employees and formal sector workers and the stringency of qualifying conditions is similar in advanced and emerging economies. We also find that unemployment benefit generosity (i.e. in terms of both benefit level and duration) is higher in advanced than emerging economies. Finally, the integration of active measures within UI schemes is observed across most emerging and advanced economies. However, emerging economies present weaker job-search requirements but stronger sanctions for job refusal compared to advanced economies.”

An interesting new blogpost by Andrew Batson on the Nobel Prize in Economics and China:

“The awarding of the Nobel Prize in economics to three academics “for their experimental approach to alleviating global poverty” has prompted some caustic commentary about how much, or little, global poverty has actually been reduced by the highly targeted, small-scale policy interventions evaluated by such experiments.

It’s well known that most of the reduction in global poverty in recent decades, however it is measured, is accounted for by rapid economic growth in big Asian economies. On the World Bank’s numbers, China alone accounts for about 60% of the decline in the number of people living in extreme poverty worldwide (China’s poor population declined by 742 million people, while the world’s declined by 1.16 billion people).

The contribution of randomized controlled trials to China’s poverty reduction has been, to a first approximation, zero. Yao Yang, the dean of the National School of Development at Peking University, wrote in an English-language op-ed that “Experiments might help policymakers improve existing welfare programs or lay the foundation for new ones, but they cannot tell a poor country how to achieve sustained growth.” In a similar vein, Harvard professor Dani Rodrik tweeted: “Remarkable how little today’s development economics has to say about the most impressive poverty reduction in history ever.”

A Brookings piece based on a new paper by Carol Graham and Sergio Pinto:

“There is much to be troubled about in the state of America today. We boast booming stock markets and record low levels of unemployment, yet significant sectors of our society are dying prematurely from preventable deaths (deaths of despair) and almost 20% of prime aged males are out of the labor force.1 Americans have higher levels of well-being inequality and report more pain on average than countries of comparable and even lower levels of income. There are other signs of decline, ranging from falling levels of civic trust to viscerally divided politics.

These trends have already received significant scholarly attention. Yet we provide a different perspective by tracking the reported well-being and ill-being of individuals and places. We find large differences in these trends across education levels, races, and places. Desperation – and the associated trends in premature mortality – are concentrated among the less than college educated and are much higher among poor whites than poor minorities, who remain optimistic about their futures. The trends are also geographically dispersed, with racially and economically diverse urban and coastal places much more optimistic and with much lower incidences of premature mortality (on average). Both death and desperation are higher in the heartland and in particular in areas that were previously hubs for the manufacturing and mining jobs which have long since disappeared.

Our earlier work shows that the geographic patterns in lack of hope, worry, reported pain, reliance on disability insurance, and deaths of despair are remarkably consistent across these places. Monnat and Brown (2017) find that counties with higher levels of poverty, obesity, deaths due to drugs, alcohol, and suicide, more non-Hispanic whites, individuals on disability or other safety nets, and smokers were the same places where Trump “over-performed” in terms of predicted votes 2016.3

In this paper, we supplement what we know about these race and place-based trends with new research on the role of inter-generational mobility, prime aged individuals out in the labor force, and rural and micropolitan versus urban differences. We explore how patterns across these cohorts, races, and places associate with the worrisome trends in lack of hope and premature death. We also add in new indicators which assess financial, social, purpose, and community level well-being”

From VOX post by Caroline Freund, Alen Mulabdic, and Michele Ruta:

“The conventional wisdom is that 3D printing will shorten supply chains and reduce world trade. This column examines the trade effects of the shift to 3D printing in the production of hearing aids. It shows that adopting the new technology in production increased trade by roughly 60% as production costs came down. An analysis of 35 other products that are increasingly produced using 3D printing also finds positive effects but suggests that product characteristics such as bulkiness can affect the relationship between 3D printing and trade.

Will 3D printing disrupt world trade? The new technology has been accompanied by predictions of a future where goods will be printed locally, global supply chains will be shortened, and international trade will be dramatically reduced. Firms (and perhaps even consumers) will be able to create a solid three-dimensional object from a digital file and will no longer need to import printable goods and components. One study calculates that as much as 40% of trade could be eliminated by 2040 (Leering 2017). Other studies acknowledge that the impact of 3D printing on trade may be complex but still find that 3D printing and automation could lower world trade by 10% by 2030 (Lund and Bughin 2019).

In contrast, many earlier improvements in production processes that have reduced real costs have boosted international trade. The industrial revolution is perhaps the best example, where a transformation in technology and management practices brought huge productivity gains, output growth, and expanding trade. The digital revolution of the 1990s had a similar boosting effect on world trade through the rise of global supply chains (Baldwin 2016). The impact of 3D-printing technology on world trade is, therefore, an empirical question.

We address this question in a new paper (Freund et al. 2019), focusing on hearing aids, a product that since the mid-2000s has almost exclusively been produced with 3D printing. We then extend the analysis to 35 other products that are increasingly using 3D printing. The evidence suggests that firms (and countries) will continue to specialise and 3D printing will stimulate rather than hamper trade growth.

The 3D printing revolution in hearing aids

The good where 3D printing is most prevalent is hearing aids. Nearly 100% of all hearing aids consumed in the world are produced using 3D printing.  3D printers transformed the hearing aid industry in less than 500 days in the mid-2000s, which makes it a unique natural experiment to assess the trade effects of this technology (Figure 1).”

 

Figure 1 Adoption of 3D printing for custom hearing aids at Phonak

Source: Brans (2013)

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