Links for 2016-11-13

Three papers of interest on the effects of U.S. trade policy on manufacturing employment, racial discrimination, and the Chinese real estate boom.

Justin Pierce and Peter Schott, The Surprisingly Swift Decline of U.S. Manufacturing Employment:

This paper links the sharp drop in U.S. manufacturing employment after 2000 to a change in U.S. trade policy that eliminated potential tariff increases on Chinese imports. Industries more exposed to the change experience greater employment loss, increased imports from China and higher entry by U.S. importers and foreign-owned Chinese exporters. At the plant level, shifts toward less labor-intensive production and exposure to the policy via input-output linkages also contribute to the decline in employment. Results are robust to other potential explanations of employment loss, and there is no similar reaction in the EU,
where policy did not change.

Dylan Glover, Amanda Pallais, and William Pariente, Discrimination as a Self-Fulfilling Prophecy: Evidence from French Grocery Stores:

Examining the performance of cashiers in a French grocery store chain, we find that manager bias negatively affects minority job performance. In the stores studied, cashiers work with different managers on different days and their schedules are determined quasi-randomly. When minority cashiers, but not majority cashiers, are scheduled to work with managers who are biased (as determined by an Implicit Association Test), they are absent more often, spend less time at work, scan items more slowly, and take more time between customers. Manager bias has consequences for the average performance of minority workers: while on average minority and majority workers perform equivalently, on days where managers are unbiased, minorities perform significantly better than do majority workers. This appears to be because biased managers interact less with minorities, leading minorities to exert less effort.

Edward Glaeser, Wei Huang, Yueran Ma, and Andrei Shleifer, A Real Estate Boom with Chinese Characteristics:

Chinese housing prices rose by over 10 percent per year in real terms between 2003 and 2014, and are now between two and ten times higher than the construction cost of apartments. At the same time, Chinese developers built 100 billion square feet of residential real estate. This boom has been accompanied by a large increase in the number of vacant homes, held by both developers and households. This boom may turn out to be a housing bubble followed by a crash, yet that future is far from certain. The demand for real estate in China is so strong that current prices might be sustainable, especially given the sparse alternative investments for Chinese households, so long as the level of new supply is radically curtailed. Whether that happens depends on the policies of the Chinese government, which must weigh the benefits of price stability against the costs of restricting urban growth.

4 thoughts on “Links for 2016-11-13

  1. PeakTrader

    A lot of manager discrimination is not what people think. I’ve seen a Hispanic manager give the hardest working Hispanics the hardest jobs or tasks, because they can do the work, although they weren’t paid more. The whites, Asians, and blacks, along with other Hispanics, weren’t assigned those jobs, simply because they couldn’t do them (and wouldn’t want them). I’ve seen a Philipino manager keep a short leash on below average workers. They mostly performed better for a while, regardless of race, until the manager stopped the pressure (although, the pressure increased accidents).

    1. PeakTrader

      It could be white managers, for example, are more tolerant of substandard work by minorities to avoid “rocking the boat.” Minority managers wouldn’t be concerned about that.

  2. Rick Stryker

    Thanks JDH. Very interesting and pertinent papers.

    The first paper really explains much of Trump’s victory. Trump saw clearly that the trade issue was an opportunity to break the blue wall of states in the rust belt. Trump got to Clinton’s left on trade the same way Obama did in 2008. There are reports that Bill Clinton warned of the dangers to Hillary in Wisconsin and other rust belt states but was laughed at by the campaign. The Democrats were in denial on the issue.

    The other winning issue for Trump was Obamacare. The failures of Obamacare were very obvious and yet Hillary and the Democrats refused to fully acknowledge the problems. Bill Clinton tried at one point but had to be quiet. Back in 2014, I had thought that wise heads in the Democratic Party would prevail after the shellacking they received during the midterms and they would try to fix Obamacare during 2014. Otherwise, I thought that “If Obamacare is not fixed after 2014, it will damage Hillary’s candidacy in 2016.”

    Amazingly, they did not fix it. Trump and other Republicans pounded on Obamacare during the last few weeks of the campaign, to great success. I can only think the Democratic intransigence on Obamacare was coming from the Whitehouse. The Whitehouse gambled that they’d keep the presidency and one of the President’s key legacies. Not a good gamble–they should’ve have made a deal with the Republicans in 2014. Now Obamacare will be scrapped and Obama’s legacy is in tatters.

    1. 2slugbaits

      the Democratic intransigence on Obamacare was coming from the Whitehouse.

      Huh? What world are you living in? Here on planet earth most of us know that Obama went out of his way to inviting Republicans to offer suggestions to improve the ACA. Or did you forget? Remember when Sen. Coburn from Oklahoma made the mistake of innocently offering up some constructive ideas…with which Obama largely agreed? Remember that? That’s when Sen. McConnell told Sen. Coburn to shut up and sit down. McConnell told him that the GOP didn’t want to improve Obamacare, they wanted to kill it. Do you remember when Sen. Grassley got caught on hidden video bragging to his dimwit supporters about how he faked interest in being interested in improving Obamacare only for the purpose of running out the clock? Remember that?

      As to Obamacare being scrapped…who knows? Trump says that he wants to keep all of the goodies like keeping kids under age 26 on their parent’s plan, no pre-existing condition exclusion, etc. He just wants to get rid of the all the stuff people don’t like. But that’s because Trump has always been a pampered brat who never had to eat his arugula before diving into the crème brulee. And he’s math challenged, so he doesn’t know that you have to take the good with the bad. Candidate Obama was under the same misunderstanding during the 2008 primaries, until President Obama figured out that Hillary was right all along. In any event, if Obamacare fails the next stop is universal Medicare with private health insurance companies settling into the Part D and Part B supplement pieces. I don’t see very many insurance companies signing up for the pre-Obamacare days. That approach was in a death spiral, which is why the country demanded health insurance reform.

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