Politico reports the Trump Administration is crafting a bill to halve the rate of legal immigration by 2027. My recent work with Francesc Ortega focuses on unauthorized immigrants and a very different thought experiment: removing all 11 million, of whom about 7 million are workers.
The thought experiment in the draft legislation supposes a less drastic change: halving the rate of legal immigration by 2027.
Any macroeconomist would agree that such a change would probably reduce GDP growth in the long run, but it might also raise GDP per person and wages.
A quick back of the envelope calculation suggests that halving the rate of immigration today would reduce the population growth rate by a perhaps 0.2 percentage point, or about a quarter of what it currently is. (This is also a pretty good estimate of the result that pops out of looking at U.S. Census Bureau population forecasts and simulating a halving policy.)
If immigrants were to have the same skills as natives, then GDP growth would also ultimately slow by about 0.2 percentage point. Compared to a central forecast for real GDP growth around 2 percent, this is a relatively small reduction (ten percent) but far from tiny. Also, a change in the growth rate of GDP is compounding; in our work, we found that removing the stock of unauthorized workers would instead reduce the level of GDP.
Although U.S. GDP would be smaller if population growth were to fall, GDP per person and wages in the U.S. would probably be larger. This viewpoint is reported in the Politico article. The big unknown is whether reducing immigration would lead to reductions in the rate of technological change and productivity growth. If the unlucky targets of the administration’s policy were low-skill immigrants, as seems to be the case based on the quotes in the article, it seems somewhat less likely that U.S. productivity growth would suffer.
Thursday, July 13, 2017
Wednesday, July 12, 2017
DACA not in Sessions?
CNN reports that Homeland Security Secretary Kelly is not sanguine on DACA. Kelly was said to have discussed DACA with Attorney General Jeff Sessions, who was noncommittal on defending it in court. Presumably because the related DAPA program has been officially wound down, there are pending court cases to which states might add complaints about DACA, the article states.
The article also mentioned bipartisan legislation such as the BRIDGE Act, announced in December 2016 but currently in limbo, about which Secretary Kelly was apparently unaware.
The article also mentioned bipartisan legislation such as the BRIDGE Act, announced in December 2016 but currently in limbo, about which Secretary Kelly was apparently unaware.
Fracking boom, kids, but no marriage
Melissa Kearney and Riley Wilson report the fracking boom raised the wages of less educated males and raised fertility, but marriage rates did not rise. Standard economic models of marriage and childbearing suggests that a permanent increase in male wages should raise both.
Kearney and Wilson also find that wages of less educated females rose, but not as fast as male wages. Another interesting but more implicit point is revealed by their comparison of these results, set in the modern-day economy, with those of Black et. al (2013) who examined fertility responses to the Appalachian coal boom of the 70s and 80s. Those authors looked at marital fertility only, and the results were similar to what Kearney and Wilson find.
But this juxtaposition may also be revealing for the following reason. On the one hand, a decade or two of boom might be long enough to influence long-term decision making, like having a child or marrying. But it is hard to forget how coal mining has long been mired in decline. Do young people in the booming fracking industry think the good times will last? Do they care? Anecdotally, it appears that many choose to delay marriage rather than formally forego it entirely. Is this a rational response to a temporary income shock? If it is, why does fertility respond? Do people find biological constraints more compelling?
Kearney and Wilson also find that wages of less educated females rose, but not as fast as male wages. Another interesting but more implicit point is revealed by their comparison of these results, set in the modern-day economy, with those of Black et. al (2013) who examined fertility responses to the Appalachian coal boom of the 70s and 80s. Those authors looked at marital fertility only, and the results were similar to what Kearney and Wilson find.
But this juxtaposition may also be revealing for the following reason. On the one hand, a decade or two of boom might be long enough to influence long-term decision making, like having a child or marrying. But it is hard to forget how coal mining has long been mired in decline. Do young people in the booming fracking industry think the good times will last? Do they care? Anecdotally, it appears that many choose to delay marriage rather than formally forego it entirely. Is this a rational response to a temporary income shock? If it is, why does fertility respond? Do people find biological constraints more compelling?
Mills College and cost disease in higher ed
Mills has fired 5 tenured professors in a bid to reduce costs and close its deficit, and UC Berkeley faculty registered their concerns, as part of the broader response by the American Association of University Professors (AAUP).
As the first article describes, one angle here is whether consumer demand, and thus revenue, can be sufficient at women's colleges or other sites that restrict their focus to a subset of the market. Those more knowledgeable than I about higher education may have some insight about the minimum sustainable enrollment at a college. Presumably every institution faces some fixed costs whose burden shrinks as enrollments rise. Things like structures and the array of extra-curricular activities and events seem like obvious candidates.
But it is hard to see why instruction, a college's primary mission, should not easily scale with enrollments. If a college is small, its ranks of faculty could also be small, with similar outcomes. That Mills is in the Bay Area, a densely populated zone rife with other academics at neighboring institutions, suggests that a small faculty at Mills could function successfully in a low enrollment environment. To me, the argument that a women's college cannot be profitable because it is too small seems suspect, unless there are large fixed costs in higher education.
A more worrisome angle is that higher education, and education in general, is probably subject to Baumol's cost disease, the classic case of which is the rising relative price of attending a concert by a string quartet. Industries like classical music and education, which are probably less able to enhance their productivity with new technologies, are doomed to experience rising costs and prices without some other offsetting change.
Shifting to cheaper part-time labor devoted to instruction is one such change, of course. I suspect that is the real motive behind the moves by Mills College, and they are far from alone in this, although perhaps trailblazing in their replacing through layoffs. Across the industry, there is a monotonic shift toward instruction by adjunct faculty and away from hiring tenure-track professors. One of the big questions is how instruction by part-time, adjunct faculty compares to instruction by full-time, tenure-track faculty.
Declining enrollments would be problematic, and as with the patterns in financial aid at Mills, it is hard to get a clear picture about what is happening. If enrollments were down at Mills, it cannot be because there are fewer women or students who identify as female. (Mills has a fairly open door to students across the identity spectrum except for those who self-identify as male upon admission.) It could be because other suppliers of education are undercutting Mills, or the nature or quality of the Mills experience is changing in such a way as to appeal to fewer demanders. If the latter is true, it is very hard to see how giving pink slips to popular faculty members reverses the situation.
As the first article describes, one angle here is whether consumer demand, and thus revenue, can be sufficient at women's colleges or other sites that restrict their focus to a subset of the market. Those more knowledgeable than I about higher education may have some insight about the minimum sustainable enrollment at a college. Presumably every institution faces some fixed costs whose burden shrinks as enrollments rise. Things like structures and the array of extra-curricular activities and events seem like obvious candidates.
But it is hard to see why instruction, a college's primary mission, should not easily scale with enrollments. If a college is small, its ranks of faculty could also be small, with similar outcomes. That Mills is in the Bay Area, a densely populated zone rife with other academics at neighboring institutions, suggests that a small faculty at Mills could function successfully in a low enrollment environment. To me, the argument that a women's college cannot be profitable because it is too small seems suspect, unless there are large fixed costs in higher education.
A more worrisome angle is that higher education, and education in general, is probably subject to Baumol's cost disease, the classic case of which is the rising relative price of attending a concert by a string quartet. Industries like classical music and education, which are probably less able to enhance their productivity with new technologies, are doomed to experience rising costs and prices without some other offsetting change.
Shifting to cheaper part-time labor devoted to instruction is one such change, of course. I suspect that is the real motive behind the moves by Mills College, and they are far from alone in this, although perhaps trailblazing in their replacing through layoffs. Across the industry, there is a monotonic shift toward instruction by adjunct faculty and away from hiring tenure-track professors. One of the big questions is how instruction by part-time, adjunct faculty compares to instruction by full-time, tenure-track faculty.
Declining enrollments would be problematic, and as with the patterns in financial aid at Mills, it is hard to get a clear picture about what is happening. If enrollments were down at Mills, it cannot be because there are fewer women or students who identify as female. (Mills has a fairly open door to students across the identity spectrum except for those who self-identify as male upon admission.) It could be because other suppliers of education are undercutting Mills, or the nature or quality of the Mills experience is changing in such a way as to appeal to fewer demanders. If the latter is true, it is very hard to see how giving pink slips to popular faculty members reverses the situation.
Monday, July 3, 2017
Video games and male work
NBER working paper 23552 posits that innovation in video games since 2004 might explain half the increase in leisure time for men aged 21-30, among whom work hours fell 12% by 2015. A lot of the change was coincident with the tech bubble contraction of 2001 and the Great Recession, but Aguiar et al. show in this paper that young male labor supply fell by more than other groups. They argue that video games, which appear to uniquely absorb leisure time of young males, were the reason.
Here's a related article from June by Peter Suderman on video games that posit that they "offer a sort of universal basic income for the soul."
And here's an article by Robert VerBruggen laying out this topic alongside a discussion of the effect of competing immigrant labor on this age group. VerBruggen mentions the point that TV watching is still a much larger share of leisure time than video games even for young men.
One could presumably test these competing hypotheses, maybe by looking at geographic variation. Patterns in competing labor surely vary across space, and for that matter, the depth and duration of the Great Recession also varied across space, but prices and quality of video gaming probably only vary across time. It would also be possible although maybe a little dicey to look at classes of labor by education. It is well known that if U.S. immigration has an economic impact, it tends to be felt by less educated natives.
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