Who Benefits From Productivity Growth?

From a new NBER working paper by Richard Hornbeck, Enrico Moretti,  "Who Benefits From Productivity Growth? Direct and Indirect Effects of Local TFP Growth on Wages, Rents, and Inequality"

Abstract:

We estimate the local and aggregate effects of total factor productivity (TFP) growth on US workers' earnings, housing costs, and purchasing power.  Drawing on four alternative instrumental variables, we consistently find that when a city experiences productivity gains in manufacturing, there are substantial local  increases in employment and average earnings.  For renters, increased earnings are largely offset by increased cost of living; for homeowners, the benefits are substantial. 

Strikingly, local productivity growth reduces local inequality, as it raises earnings of local less-skilled workers more than the earnings of local more-skilled workers.  This is due, in part, to lower geographic mobility of less-skilled workers. 

However, local productivity growth also has important general equilibrium effects through worker mobility.  We estimate that 38% of the overall increase in workers' purchasing power occurs outside cities directly affected by local TFP growth.  The indirect effects on worker earnings are substantially greater for more-skilled workers, due to greater geographic mobility of more-skilled workers, which increases inequality in other cities.  Neglecting these general equilibrium effects would both understate the overall magnitude of benefits from productivity growth and misstate their distributional consequences. 

Overall, US workers benefit substantially from productivity growth.  Summing direct and indirect effects, we find that TFP growth from 1980 to 1990 increased purchasing power for the average US worker by 0.5-0.6% per year from 1980 to 2000.  These gains do not depend on a worker's education; rather, the benefits from productivity growth mainly depend on where workers live.

Gated version of paper is available here. 

New NBER Working Paper: NAFTA and the Wages of Married Women

A new working paper by Shushanik Hakobyan and John McLaren.

Abstract:

Using US Census data for 1990-2000, we estimate effects of NAFTA on US wages, focusing on differences by gender.  We find that NAFTA tariff reductions are associated with substantially reduced wage growth for married blue-collar women, much larger than the effect for other demographic groups.  We investigate several possible explanations for this finding.  It is not explained by differential sensitivity of female-dominated occupations to trade shocks, or by household bargaining that makes married women workers less able to change their industry of employment than other workers. We find some support for an explanation based on an equilibrium theory of selective non-participation in the labor market, whereby some of the higher-wage married women workers in their industry drop out of the labor market in response to their industry's loss of tariff.  However, this does not fully explain the findings so we are left with a puzzle.

Gated edition of the paper is here. 

Waves of immigration and educational attainment: What progress looks like

From a new NBER Working Paper, "Socioeconomic Integration of U.S. Immigrant Groups over the Long Term: The Second Generation and Beyond," by Brian Duncan and Stephen J. Trejo  

Abstract:

In this chapter, we document generational patterns of educational attainment and earnings for contemporary immigrant groups.  We also discuss some potentially serious measurement issues that arise when attempting to track the socioeconomic progress of the later-generation descendants of U.S. immigrants, and we summarize what recent research has to say about these measurement issues and how they might bias our assessment of the long-term integration of particular groups.  Most national origin groups arrive with relatively high educational attainment and/or experience enough improvement between the first and second generations such that they quickly meet or exceed, on average, the schooling level of the typical American.  Several large and important Hispanic groups (including Mexicans and Puerto Ricans) are exceptions to this pattern, however, and their prospects for future upward mobility are subject to much debate.  Because of measurement issues and data limitations, Mexican Americans in particular and Hispanic Americans in general probably have experienced significantly more socioeconomic progress beyond the second generation than available data indicate.  Even so, it may take longer for their descendants to integrate fully into the American mainstream than it did for the descendants of the European immigrants who arrived near the turn of the twentieth century.

From the U.S. Census, an infographic: An aging nation

More from the U.S. Census.

Foreign-born communities in the European Union

You will find more infographics at Statista

Another China Shock: Economists: "When work disappears"

Another formidable paper by the noted economist David Autor, David Dorn and Gordon Hanson: "When Work Disappears: Manufacturing Decline and the Falling Marriage Market Value of Young Men." 

Abstract: 

We exploit the gender-specific components of large-scale labor demand shocks stemming from rising international manufacturing competition to test how shifts in the relative economic stature of young men versus young women affected marriage, fertility and children’s living circumstances during 1990-2014. On average, trade shocks differentially reduce employment and earnings, raise the prevalence of idleness, and elevate premature mortality among young males. Consistent with Becker’s model of household specialization, shocks to male relative stature reduce marriage and fertility. Consistent with sociological accounts, these shocks raise the share of mothers who are unwed and share of children living in below-poverty, single-headed households.

Hat tip to David Warsh over at Economic Principals.

In migration in the United States, the latest data

You will find more statistics at Statista