The impacts of the U.S. – China trade war. Gordon Hanson, February 5, 2020, Paper, “The trade war has received an enormous amount of attention. Its impacts today have been limited because the U.S. and China have been a bit restrained. Lots of firms have gotten exceptions to these tariffs and there have been lots of delays in their full implementation. It’s also been the case that U.S. firms have been delaying making adjustments to their global value chains. What has been striking is that the impact of tariffs on U.S. prices has been one-for-one. These tariffs are unlikely to have a significant impact on manufacturing employment in the United States: the job loss that we observed as a consequence of import competition from China came primarily from factory closure, furthermore U.S. tariffs didn’t target all U.S. imports. They targeted imports from China. Looking forward, to the extent the trade war is dampening GDP growth in China, it could happen political consequences at home. As for us, this is a defining moment in which we’re going to see whether the U.S. is willing to maintain its commitments to more open borders.Link

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Why Backstage Capital Invests in “Underestimated” Entrepreneurs. Laura Huang, February 4, 2020, Audio, “Harvard Business School professor Laura Huang, whose new book “Edge” explores methods for turning adversity into professional advantage, is joined by Venture Capitalist Arlan Hamilton to discuss her strategy of backing entrepreneurs who have been ignored because of stereotypes, biases, and preconceptions. This episode is based off Huang and Sarah Mehta’s case, “Arlan Hamilton and Backstage Capital.”Link

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Europe’s Green Future Starts in Ethiopia. Ricardo Hausmann, February 3, 2020, Opinion, “The European Union’s ambitious new Green Deal promises to make the bloc carbon-neutral by 2050, while creating new jobs and raising living standards. But, given that Europe accounts for only 10% of global carbon emissions, the true test of its green agenda lies in its willingness to help others with their own sustainable development.Link

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Fantasy Fiscal Policy. Kenneth Rogoff, February 3, 2020, Opinion, “Many leading central bankers now argue that, instead of just playing its traditional role of deciding the allocation of government spending, investment, taxes, and transfers, fiscal policy must substitute for monetary policy in economic fine-tuning and fighting recession. That would be a big mistake.Link

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Tax Reform for Progressivity: A Pragmatic Approach. Lawrence Summers, 2020, “Trends in demographics, national security, economic inequality, and the public debt suggest an urgent need for progressive approaches to raising additional revenue. We propose a suite of tax reforms targeted at improving tax compliance, rationalizing the taxation of corporate profits earned domestically and abroad, eliminating preferential treatment of capital gains, and closing tax loopholes and shelters of which wealthy individuals disproportionately avail themselves. We estimate that these proposals have the potential to raise over $4 trillion in the coming decade. These proposals are comparable on the basis of both potential revenue raised and progressivity with newer and more radical proposals, like wealth taxation and mark-to-market reforms, that have been the focus of much recent attention. Importantly, our agenda is likely to enhance rather than reduce efficiency, is far less costly in terms of political capital, and hews more closely to basic notions of fairness than alternative approaches.Link

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You Get What You Pay For: Sources and Consequences of the Public Sector Premium in Albania and Sri Lanka. Ricardo Hausmann, 2020, “We study the factors behind the public sector premium in Albania and Sri Lanka, the group heterogeneity in the premium, the sources of public sector wage compression, and the impact of this compression on the way individuals self-select between the public and the private sector. Similar to other countries, the public sectors in Albania and Sri Lanka pay higher wages than the private sector, for all but the most valued employees. While half of the premium of Sri Lanka and two-thirds of it in Albania are explained by differences in the occupation-education-experience mix between the sectors, and the level of private sector informality, the unexplained part of the premium is significant enough to affect the preferences of working in the public sector for different groups. We show that the compressed distributions of public sector wages and benefits create incentives for positive sorting into the public sector among most employees, and negative sorting among the most productive ones.Link

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Validity Test of Implicit Capital Cost Valuation Model —Based on China’s A-Share Market. Hong Luo, 2020, Paper, “Equity capital cost plays an important role in investment strategies and asset valuation, but there is no recognized valuation model and unified model validity test method in academia so far. This paper measures the cost of equity capital of A-share listed companies in China by using five kinds of implicit capital cost valuation models widely used by domestic scholars, and tests the validity of the model from the economic and statistical perspectives. It is found that the estimated values of the five models are significantly positively correlated with the realized returns one to three years in advance. Statistical tests show that OJ, PEG and MPEG models are more effective in explaining the time series of expected returns, while OJ models are more effective in explaining the cross-sectional changes of expected returns. Therefore, OJ model can be used as an effective model to measure the cost of equity capital of A-share listed companies in China.Link

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Status and Mortality: Is there a Whitehall Effect in the United States? Tom Nicholas, January 31, 2020, Paper, “Do white collar workers with lower social status in the occupational hierarchy die younger? The influential Whitehall studies of British civil servants identified a strong inverse relationship between employment rank and mortality, but we do not know if this effect generalizes. Using personnel files, census data and death records, I profile the lifespan and socioeconomic characteristics of a 1930 cohort of white collar workers employed at a leading American firm— General Electric. All had access to a corporate health and wellness program during a critical period associated with the health transition in the United States. I measure status using position in the managerial hierarchy, attendance at prestigious management training camps, and promotions, none of which is associated with a Whitehall-like rank-mortality gradient. Senior managers and executives appear to be the most susceptible to a mortality penalty. I discuss potential explanations for these contrasting findings.Link

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Using prediction markets to predict the outcomes in DARPA’s Next Generation Social Science program. Yiling Chen, 2020, Paper, “There is evidence that prediction markets are useful tools to aggregate information about researchers’ beliefs about scientific results including forecasting the outcome of replications. In this study, we use prediction markets to forecast the results of novel experimental designs that test established theories. We will set up prediction markets for hypotheses tested in DARPA’s Next Generation Social Science (NGS2) program. We will invite researchers to bet on whether 22 hypotheses will be supported or not. We define support as a test result in the same direction as the hypothesized, with a Bayes Factor of at least 10 (i.e. a likelihood of the observed data being consistent with the tested hypothesis that is at least 10 times greater compared to the null hypothesis). In addition to betting on this binary outcome, we will ask participants to bet on the expected effect size (in Cohen’s d) for each hypothesis. We recruit at least 50 participants that sign up to participate in these markets. Participants will also complete a survey on both the binary result and the effect size. Our goals are to elicit peer beliefs about the outcomes of the hypotheses tested in NGS2, and to test if these peer beliefs can predict the outcomes of novel experimental designs rather than replications. This study will increase our knowledge about the predictability of scientific results and the dynamics of hypothesis testing.Link

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Within Occupation Changes Dominate Changes in What Workers Do: A Shift-Share Decomposition, 2005-2015. Richard Freeman, January 2020, Paper, “Recent analyses of the potential effects of advanced technology on jobs has tended to focus on possible reductions in routine cognitive white-collar jobs due to computer algorithms and in blue-collar jobs due to robots and factory automation. This paper provides a different perspective on the possible future of work by: (1) measuring changes in job attributes/tasks from 2005 to 2015, straddling the boundary between the pre-AI and AI eras; and (2) decomposing those changes via a shift-share analysis into the changes that occurred within occupations and changes in the shares of employment between occupations with different characteristics. Our primary source of information on job characteristics over time is the Occupational Information Network (O*NET) database developed by U.S. Department of Labor’s Employment and Training Administration. While prior research has used O*NET data cross-sectionally, we create a new panel dataset that allows us to analyze changes over time for 170 job characteristics from four O*NET questionnaires completed consistently by workers (job incumbents) since 2003. Per our title, we find that within-occupation changes dominate, raising doubts about the ability of projections based on expected changes in the occupational composition of employment to capture the likely future of work. Indeed, our data show only weak relationships between automatability, repetitiveness, and other job attributes and changes in occupational employment. The results suggest that analysts give greater attention to within-occupation impacts of technology in assessing the future of work.Link

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