Photographer: Kevin Frayer/Getty Images

Chinese Dragon Children Are a Self-Fulfilling Prophecy

Children born in dragon years come out on top, and it probably has to do with parental investment
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Expectation can become reality, and child-rearing is a case in point. 

Chinese parents’ belief that their kids should be successful because of their zodiac birth year seems to lead to better actual academic performance, and a look into that phenomenon leads off this week’s economic research wrap. We also run through research on China’s gas demand, a look at U.S. job expectations and career-climbing patterns, and a paper on how foreign ownership affects firm productivity in the U.K. Check this column every Tuesday for new and thought provoking research from around the world. 

How to raise a dragon

Chinese superstition says that children born during zodiac “dragon years” grow up to be successful – and it turns out, it’s true, according to a new National Bureau of Economic Research working paper from two Louisiana State University researchers. Parents appear to be trying to have kids during the special years, based on birth data. Children born during dragon years score higher on college entrance exams and are more likely to attain a college education versus their peers of a similar age but different zodiac year. 

So should these kids thank their lucky stars? Probably not. Their better education outcomes might be driven by the fact that their parents have higher expectations of dragon children and invest more money in them, while putting more time into their education. “These expectations create this self-fulfilling prophecy,” the authors write. Interestingly, this isn’t a confidence story. The kids themselves don’t expect to be more skilled, based on survey responses. 

Can Superstition Create a Self-Fulfilling Prophecy? School Outcomes of Dragon Children of China
Published August 2017
Available on the NBER website

China: the new gas guzzler? 

High growth and energy-intensive choices could cause Chinese oil demand to double by 2025. Even with a more moderate expansion and less energy-intensive choices, it could climb by 30 percent, based on a new San Francisco Fed economic letter by Deepa Datta and Robert Vigfusson. The estimates are reached by looking at how other countries around the world saw oil demand vary with income. If oil producers fail to anticipate that surge in Chinese demand, “prices would have to rise, perhaps dramatically.” If supply doesn’t match demand growth, oil prices would have to climb from $90 to $172 per barrel to strike a balance in the high-demand scenario, the authors project. (Though they note that this would be an extreme and less-likely outcome.)

Forecasting China’s Role in World Oil Demand
Published Aug. 21
Available at the San Francisco Fed website

Fewer Americans expect job offers

The New York Fed has released new labor market data that tracks job experiences and expectations. The data show that a smaller share of Americans expect to receive at least one job offer in the next four months than in March or November, even as the proportion of people searching for a job has climbed. Those who do expect a job offer were less optimistic about their salaries, projecting offers of $50,790, down from $54,590 earlier this year. 

Federal Reserve Bank of New York survey

Those findings are somewhat surprising, because they seem out of step with labor-market data: the unemployment rate has continued to fall, job gains continue and openings are up. To be fair, the New York Fed index looks to be pretty volatile and it doesn’t have a lot of historical data yet. 

Just Released: Introducing the SCE Labor Market Survey
Published August 2017
Available on the New York Fed website

The surprising cohort climbing the U.S. job ladder

Less-educated and younger workers are more likely to move from low-productivity, low-paying jobs to high-productivity and better-paying employers, a new working paper by University of Maryland economist John Haltiwanger and co-authors shows. That’s surprising – especially considering that, in general, high productivity companies employ more highly educated workers. It’s probably true because workers with college educations have less turnover, even when they work with less-productive employers. That could be because educated workers are highly specialized, so they may not be able to find a better match than their existing role even at a more productive company. 

Who Moves Up the Job Ladder?
Published August 2017
Available on the NBER website

Foreign owners and productivity

Foreign-owned companies are about twice as productive as domestically-owned businesses in the U.K., Bank of England researchers write in a blog post. As a result, their presence boosts domestic labor productivity. 

The difference arises partly because foreign-owned firms are more often large exporters, which skew more productive, but that isn’t the whole story: even controlling for size, exports, age, and sector of foreign companies in the sample, they are about 50 percent more productive than domestically owned ones. What else is going on here? The gap could exist because foreign-owned companies invest more in research and development, and also because they collaborate with other organizations more than domestically-owned firms. 

Foreign-owned firms and productivity
Published Aug. 17
Available on the Bank of England blog

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