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06 июня, 19:18

The Higher Ed Market after Floyd

@GlennLoury objects to what university administrators are doing. They are economic actors too, who will not benefit from a repeat of 1968, so it is predictable that their reactions might risk some scholarship, reason, and learning.But there is also competition in the industry and thereby an opportunity for an (aspiring?) administrator who expresses the interests of the many individuals who have not yet reached the fashionable conclusions. Something like the famous Zimmer letter. This competition might play out slowly given that (barring regulatory favors) universities will now compete in another important dimension: whether 2020-21 students are allowed to purchase a college education that does more than Zoom (which would have made 1968 impossible).Moreover the Zimmer letter was not written on a blank tablet. A Uchicago committee led by @stone_geoffrey had already worked on it 2 years before. If this capital does not yet exist for the current situation, it will take time to build it up.

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04 июня, 23:54

Labor Market Recovery Begins when States Begin to Open

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The first chart below is an estimate of weekly US employment per adult.  It suggests that the bottom was the week ending May 7, and that a recovery may have begun.The estimated recovery may not look large on the scale of the current depression, but it is about 7.5 million employees above May 7 and 3 million employees above late April.  Note that the entire recovery from the 2008-9 recession was "only" 7 million employees above population growth and took ten years rather than a week or two.At about the same time, states began ending their stay-at-home orders.  E.g., Texas May 1 and California May 8.  I expect another increase in early June as more reopening occurs.  A big increase will occur when UI bonuses expire, which may be as early as August.The imputation is based on the scatterplot below.

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27 апреля, 07:14

Measuring Employment between Monthly Surveys

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The Employment Situation Report by the Bureau of Labor Statistics comes only monthly.  It measures only the seven-day week (or, with the establishment survey, pay period) including the 12th of the prior month, which means that this month four very interesting weeks will be skipped and that the report on that April week will not be released until May 8.Three data sources provide employment information on at least one of the missing four weeks, with the results shown in the chart below.  The results suggest that employment has fallen more than 20 million and perhaps as much as 36 million by April 11.  This does not begin to count employees who had their hours reduced.One is an attempt by Bick and Blandin (2020) to imitate the BLS household survey for the week of Sunday March 29 to Saturday April 4.  They sampled 1,118 respondents, finding that employment per adult aged 18-64 was 17.8 percent below what it was in February and 17.4 percent below what it was in January.  They find that hours worked per person (including zeros for those not employed) were 27.7 percent below what they were in January and February.Coibion, Gorodnichenko, and Weber (2020) surveyed 18,344 members of the Nielsen HomeScan panel during the days Thursday April 2 through Monday April 6.  The respondents were asked “Do you have a paid job?” which is different from the BLS questions but the same as January surveys of the Nielsen panel.  Their sample shows a 12.5 percent decline from January to April.As a third source, I use the excess of continued UI claims for the week ending April 4 rescaled by 0.4, which is the typical ratio of continued claims to persons unemployed during the 2008-9 recession.[1]  The rescaled amount is 16.1 percent of February employment as measured by the February household survey.  This approach also offers employment estimates for the weeks before and after the week ending April 4.Especially during the pandemic, “employment” and “unemployment” can vary significantly merely due to definitions.  Is a person on the payroll but told not to work considered employed?  The BLS knows from its experience with Federal shutdowns that surveyors and respondents frequently misclassify relative to the technical definition in the survey.  The practical classification grey areas are also presumably sensitive to question wording.  UI claims also have a grey area that presumably changes as new Federal policies increase the financial reward to unemployed rather than out of the labor force.These measurement challenges suggest using hours worked rather than employment and using multiple data sources, which are not entirely congruent approaches because only one of the three sources measures hours worked.[2]  I therefore measure the decline in hours worked by averaging the three employment estimates and then applying the Bick-Blandin estimate of the decline in hours per employee.Regarding initial claims versus continued claims, initial claims may not be granted due to ineligibility and do not show a stable ratio to employment changes during the 2008-9 recession.  Initial claims are reported a week ahead of continued claims.[3][1] The average continued claims was 1.7 million in both January and February, which is the baseline from which I calculate the “excess.”[2] Hours worked are also of interest because many people were under employed in April (Bick and Blandin 2020).[3] In March and April 2020, continued claims may include an abnormal share of ineligible claims due to abnormal delays in state processing, although this effect should disappear over a horizon long enough for states to process the claims.  On the other hand, the CARES Act passed March 27 will begin distorting the relationship between employment and continued claims because the Act included a large UI bonus that will encourage an abnormally large fraction of the eligible unemployed to apply.

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21 апреля, 01:50

Show us the fevers

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By all accounts, hundreds of millions of us are confined to home despite being perfectly healthy.  The purpose of all of this, we're told, is to make sure that we do not bump into people infected with the coronavirus.The wise people forcing us to do so owe us some evidence that in fact the virus is out there in sufficient quantities to merit draconian measures.  They point us to deaths in New York hospitals, and growing numbers of positive test results.  But those presumably were infections that occurred weeks ago (perhaps also some false positives).Smart thermometers suggest that hardly anyone has had a fever for a couple of weeks now.  Perhaps this data is faulty or easily misinterpreted, but the wise people owe at least an explanation to the hundreds of millions of people paying the costs of their policies.The time to be at home is when there is lots of virus outside.  That does not appear to be now.

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21 апреля, 01:33

30+ million out of a job

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A one-size-fits-all policy, even at the state level, has been a mistake from the beginning.  Instead policy should be favoring decentralized mechanisms over direct control and ensuring that the chosen regulations deliver more net benefits than less stringent alternatives.  It is too bad that governments are causing so much harm at this critical moment by ignoring these longstanding principles of government regulation.Expressed at an annual rate, the shutdown is already costing $7 trillion, or about $15,000 per household per quarter.  Employment had already fallen 28 million by April 1 and continues to fall as the shutdown continues.  Not only is the shutdown costly, but it is a cost-ineffective way of reducing the health harms from the virus.  My recommendation is to achieve close to, but somewhat less, of the mortality reduction at dramatically less cost to hundreds of millions of workers, consumers, and business owners.Here's why I think at least 30 million are out of work as of today.  First, that's where I expected we would be headed based on the fact that workdays as we know them have been eliminated.  Second, as of the week of March 29-April 4 (hereafter "April 1"), the employment rate of persons aged 18-64 fell from 0.738 to 0.607.  Assuming conservatively that the same percentage decline (17.8%) also applied to persons 16, 17, or 65+ years old, the decline is 28 million people as of April 1.There is no reason to believe that the decline (an average of 1.3 percent per day for two weeks) was finished by April 1.  The stay at home order for Texas and Maine was not until April 2.  FL, GA, MS: April 3.  AL: April 4.  MO: April 6.  SC: April 7.  Even if the decline were only 0.2 percent per day over the two weeks beginning April 5, that would put the cumulative employment decline past 30 million.

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17 апреля, 14:41

Shutdown reduces the flow of GDP by 28 percent

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New data from Alexander Bick and Adam Blandin suggest that the flow of real GDP is 28 percent less than it would be under normal circumstances.  Using two entirely different methods, I previously forecasted 25 percent and 26 percent.  Below are the details of my calculations from Bick and Blandin.Bick and Blandin (2020) find that working hours per working age adult circa April 1 declined 27 percent from February.  Moreover, among those working in February 2020, between 59 and 61 percent are now absent from their workplaces either due to not working or working at home.  If half of the capital in those workplaces is idle and not replaced by utilizing capital located in home offices, then capital utilization has fallen by 30 percent and GDP by 28 percent.The GDP calculation assumes production-function exponents of 0.3 and 0.7, respectively.This brings my estimate of the welfare cost of shutdown, relative to a normally functioning economy, of $7.1 trillion per year or $233 per household per workday.  For this purpose I use the average GDP estimate from the "input method" cited above and the output method I used earlier.

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05 апреля, 03:39

What's Wrong with this Reasoning?

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FACT: the population density of NYC is 27K per square mileFACT: the population density of Indianapolis is 2K per square mileFACT: COVID-19 was able to be introduced and spread in a city with only 2K susceptible people per square mile (Indianapolis is such a city).Conclusion: COVID-19 will continue to spread in NYC until either (i) the number of susceptible people falls to 2K per square mile or (ii) a vaccine.  i.e., until more than 90% of NYC has contracted and recovered from COVID-19.  [This conclusion says nothing about time frame; i.e., it could be years]Does the conclusion follow from the three facts?

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02 апреля, 21:59

Where did the fevers go?

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This website tracks real time fevers using thermometers connected to the internet.  A first glance at their map suggests to me that:fevers spiked two week ago.The timing of the spike is similar across the country,but magnitude greater in those regions with more COVID-19 deaths.The time difference in the peak across counties is at most a few days.Does this mean that the rest of the country is not significantly lagging NYC?  Or that COVID-19 fevers are a small fraction of all fevers?

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01 апреля, 00:34

What's Happening with Drug Abuse?

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I don't know where to find very recent counts of drug overdoses.  Below is alcohol sales, showing that the sales increase is greater for higher alcohol content (up to 75 percent for spirits).If the increase in drug overdoses were also 75 percent, that would be an increase of about 1000 fatalities per week.

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31 марта, 22:02

Is a Shutdown an Overreaction?

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60,000 - 80,000 Americans died from the 2017-18 flu, without exceeding the capacity of ICU beds.  This flu was experienced around the world.  Not a single country found it worth shutting down their economies in that situation.In 2020 the forecast is that about 90,000 Americans will die from COVID-19, including some deaths due to insufficient ICU capacity.  Shutting down "nonessential" businesses is now the norm.This forecast comes from the Institute for Health Metrics and Evaluation IMHE at the University of Washington.  Unlike me, IMHE are not amateurs with contagious disease time series.  With "about 500 statisticians, computer scientists, and epidemiologists on staff, IHME is a data-crunching powerhouse. Every year it releases the Global Burden of Disease study...."At what point is a reasonable person allowed to ask why the economic policies of 2017-18 and 2020 are so disproportionate?Some people will say that the 90,000 would have been much higher without shutting down the economy.  At what point can a reasonable person follow up with "Why were ALL of the 2020 costs, which were in the $ trillions, taken on the economic (and civil liberty) side of the ledger, and essentially NONE on the mortality side?"

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30 марта, 14:00

An example of 7(a) perversion

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Let's say that you have 700 employees in the prior year, earning an average of $50K.If you continue that between now and the end of Q2, Title I of the 2020 CARES Act will give you nothing.BUT if you fire at last 201 of those employees, and THEN apply for a $10 million 7(a) loan, the entire $10 million will be forgiven at the end of Q2 as long as you keep enough of the 499 employees that remain.  Moreover, you pay no business tax on the forgiven amount.You are eligible for the $10 million loan because your prior year payroll was over $10 million.  You are eligible for $10 million forgiveness because your payroll still exceeds $10 million.In effect, the Federal government has paid you $50K per employee, tax free, to fire people pursuant to a provision called "KEEPING AMERICAN WORKERS PAID AND EMPLOYED ACT."The SBA could fix this problem when it issues guidance around the CARES Act by setting a time frame sufficiently far in the past that it cannot be manipulated.

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30 марта, 04:18

Has Lombardy Reached the Flat Part of the Daily Death Curve?

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From various sources.  I don't have exact numbers before March 15, but the first half of March averaged closed to 100 per day and February's daily average was less than one.[updated through Apr 3]