Studying Deja Vu

How Stuff Works is a fun site. Excerpt below:

"Another theory is based on the way our brain processes new information and how it stores long- and short-term memories. Robert Efron tested an idea at the Veterans Hospital in Boston in 1963 that stands as a valid theory today. He proposed that a delayed neurological response causes deja vu. Because information enters the processing centers of the brain via more than one path, it is possible that occasionally that blending of information might not synchronize correctly."

Find more here.

Is CNN an Irony Free Zone

I'm pretty surprised that no one started cracking up after technology responded to the President.

In the meantime, I really liked this that was posted on Cowen's website. Watch that and read it with this.

John Stewart Takes on .... Kermit

I absolutely love YouTube. Kermit on The Daily Show here.

George Bush vs. Himself ....?

I absolutely love this clip. President George W. Bush debates Governor George W. Bush.

It's pretty amusing how the Republicans can launch such a great "Flip-Flopper" campaign, but the Democrats don't have the brains to come up with material that The Daily Show can.

"I don't think our troops oughta be used for what's called nation building ... Let me say this to you - I wouldn't use force, I wouldn't use force."

More on Rethinking Immigration

I really enjoyed Giovanni Peri and Giamarco Ottaviano's Rethinking the Effects of Immigration on Wages. The argument was fairly straightforward. I'll leave out the math and subtleties, and try to give a reasonably lay abstract. The motivation for the paper comes from the fact that in the last 30 years, the share of immigrant workers in our labor force has increased from 5% to nearly 15%. And political groups left and right are quick to blame immigrants for "stealing our jobs", and so on. Which begs the question - are they?

The paper answers two questions:
(1) What has been the effect of immigration on average wages?
(2) What has the distribution of these effects looked like? i.e. if we partition the population into groups by education level (super low, low, medium, high), how have these wages fared due to immigration?

So let's consider the previous literature on this subject:
(a) The Pre-Moderns: these guys assumed that foreign labor and domestic labor were perfectly substitutable and that labor was homogenous. Pretty shitty.
(b) The Moderns: they began to utilize the argument of imperfect substitution. They split roughly into two groups:
i. Researchers considering foreign vs. native as imperfect substitutes, but disregarding education and experience.
ii. Researchers considering experience and education level in calculating imperfect substitutions, but disregarding weighting this on foreign-ness or national-ness.

Lastly, it is worth noting that almost all moderns regarded capital stock to be fixed in the short run.

What did Peri say in response to all of this?
Well, first, he said that partitioning the levels of imperfect substitution into (b)i or (b)ii was a mistake. Instead, we should use a nested function, that adjusted first for education level, second for experience given an education level, and third on whether or not someone was foreign given an education level and experience.

Second, Peri argued that this notion of a fixed capital stock makes little sense, because we do not magically come up with capital every 10 years (census years) en masse. Instead, firms see that immigrants are entering yearly, and respond to this by continuously investing in more and more capital.

It turns out that these two changes create a rather general analysis of the problem - and in my opinion a reasonably "complete one" relative to what existed before. In particular, I liked the methodology revision.

As for what happens - well it turns out that if immigrants come in with levels of education and experience close to most of society, obviously these guys are too substitutable and so wage rates drop. Conversely, if they have rather different levels of education and experience, obviously they aren't so substitutable and in fact wage rate can potentially go up.

As for empirics, average wage did go up, and in the 4 rough blocks of education levels (college grad, college dropout, high school grad, high school dropout) here is the following order of who did best to who did worst due to immigration:
1. College Dropouts (+++)
2. High School Grads (++)
3. College Grads (+)
4. High School Dropouts (-)

So here is a good question to end on - can anyone give any intuition as to why this ordering makes sense?

Edward Miguel

I thought that Ted Miguel's writings getting some press in the blog-sphere was noteworthy. (I was his RA summer 2005, and it was basically under his guidance that I started working for the various other professors that I have. One of the nicest, most brilliant professors I've met.)

Here is a very cool paper by Miguel estimating the impact of growth shocks on civil conflict.

Comments on In Vitro Meat

I have more thoughts on In Vitro Meat on my post HERE . Thanks. Please Comment with your thoughts

9/11 Alternative Theories

So on the 5th anniversary (if you can call it that) of September 11th, I've been asked a lot about alternative theories.

Here is a rather interesting film, Loose Change. The section on the crash into the Pentagon (approximately min. 12-25) is especially interesting. Of course, it makes tons and tons of errors along the way - many of them chronicled at this guide. Conspiracy theorists will love the movie, debunkers will love the guide. Take what you will from either.

One very common theory seems to be that of a controlled demolition. There is a plethora of structural and civil engineering research on this matter; the consensus seems to be, more or less, that "explosives were not necessary to initiate collapse".

Box Office and Business

When people discuss "highest grossing film of all-time", why do they never (or rarely) inflation-adjust? What good is it talking in nominal terms?

Consider the following world-wide gross ranking, or the following domestic gross ranking. Compare that with the following inflation-adjusted domestic ranking. Makes a difference, no?

Rethinking Immigration

There is a fantastic new paper on immigration out by Giovanni Peri, Professor at UC Davis, available here.

Abstract:
"This paper asks the following important question: what was the effect of surging immigration on average and individual wages of U.S.-born workers during the period 1990-2004?

The impact of immigrants on wages of US born workers can be evaluated only by accounting carefully for labor market and capital market interactions in production.

Using such a general equilibrium approach we estimate that immigrants are imperfect substitutes for U.S.-born workers within the same education and experience group (because they choose different occupations and have different skills). Moreover, accounting for reasonable speed of adjustment of physical capital we show that most of the wage effects of immigration accrue to native workers already within a decade. These two facts, overlooked by the previous literature, imply a positive and significant effect of the 1990-2004 immigration on the average wage of U.S.-born workers overall, both in the short and in the long run. This positive average effect resulted from a positive effect on wages of all US-born workers with at least a high school degree and a small negative effect on wages of U.S. born workers with no high school degree."

Thoughts on this coming soon.