China Has Room to Ease and Robots Spur Inequality, New Research Shows

Here's a summary of top research released within the past week

Have you ever wondered whether you'll lose your job to a robot? Do you care about the rise in for-profit colleges? Wonder whether China could successfully ease monetary policy? Then have we got a research summary for you. 

Check out this roundup every week for blurbs on (and links to) interesting global economic research released recently.

Research that matters for fiscal policy

  • ...This week it's inequality-spurring robots.  
    "The productivity impact of robots is already comparable to the contribution of steam engines,'' Harm Bandholz, a UniCredit economist based in New York, writes in a recent research note that reviews top robots-and-productivity research out to date. One paper he cites finds that robots add about 0.37 percentage point to both GDP and productivity growth. He notes that robots may have increased labor demand in Europe by as many as 11.6 million jobs between 1999 and 2010 based on ZEW findings, almost half of the entire employment growth during that period. But there's a negative: the effects aren't distributed evenly, he writes, invoking a White House study.

    "Future advancements in computerization or automation (including robots) are expected to primarily come at the expense of low-skilled workers." Bandholz says that means education and redistribution might be needed to offset the effects. 

    Title: The Rise of the Machines: Economic and Social Consequences of Robotization
    Published: August 31, 2016
    Available: to UniCredit Clients, but for a longer writeup, see this article

  • The Federal Reserve Bank of New York dug into the changing higher-education landscape this week. Among their talking points: In 2015 there were still more than twice as many students enrolled in private for-profit schools as in elite private schools, even though for-profit enrollment has declined. Altogether, for-profit enrollment grew by 66 percent between 2008 and 2011, before declining by 25 percent between 2011 and 2015. This is a timely synopsis of the landscape at a time when for-profit colleges remain under fire – just this week, ITT Educational Services Inc. abruptly shut down its for-profit technical schools, blaming the Department of Education for its downfall. More on that here.

    Title: The Changing Higher Education Landscape
    Published: Sept. 6, 2016
    Available: on the New York Fed website

Monetary policy-important research

  • China has the ability to ease monetary policy should it ever need to do so, Joseph Gagnon at the Peterson Institute argues, regardless of what the U.S. is doing. Why does this matter? Market-watchers are often concerned that in emerging markets, central banks are not able to set monetary policy independently of major advanced economies. China could, Gagnon thinks, thanks in part to its supply of domestic assets available for purchase through quantitative easing.

     Title: Effectiveness and Independence of Monetary Policy in China and Around the World 
    Published: August 2016
    Available: Page 15 here

...and for dinner-table conversation

  • Does corruption make businesses more efficient by greasing the wheels around regulation? To find out, a band of European Central Bank researchers did a case study on nine Central and Eastern European countries. They came back with a resounding "Nope." Where corruption grew, both labor and capital misallocation worsened, and that was associated with worse productivity. The researchers looked specifically at the Czech Republic, Estonia, Hungary, Lithuania, Poland, Slovakia, Slovenia, Romania and Croatia, and worked with firm-level data. The authors say that "targeted action against corruption" would be improve efficiency, particularly in small, politically unstable or more-autocratic economies — where the results were at their worst. 
     
    Title: Is Corruption Efficiency-Enhancing?
    Published: Aug. 29, 2016
    Available: on the ECB website

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