Up Front

Hutchins Roundup: Marriageable men, Fed communication, and more

Anna Malinovskaya and Louise M. Sheiner

Studies in this week’s Hutchins Roundup find that trade with China has reduced men’s economic status relative to women, the sentiment expressed in Fed communication affects interest rate expectations, and more.

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The shrinking supply of marriageable men has had a significant impact on family structure

Over the last three decades, marriage rates for young adults have declined, while the share of children born to unmarried mothers or living in single-headed households has surged. David Autor of MIT, Gordon Hanson of the University of California, San Diego, and David Dorn of the University of Zurich find that the decline in manufacturing is partly responsible for these changes in family structure. In particular, they find that trade shocks to manufacturing industries have had a disproportionate effect on young men by lowering their earnings relative to women and increasing their participation in risky and damaging behaviors. The authors find that this decline in the marriage-market value of men has reduced marriage rates and fertility, and increased the fraction of children born to young and unwed mothers and living in poor single-parent households.

The choice of words by the Federal Open Market Committee has consequences for the economy

Paul Hubert of Sciences Po and Fabien Labondance of Université de Bourgogne Franche-Comté show that the sentiment conveyed by Federal Open Market Committee policymakers affects interest rates expectations, inflation, and output. To measure sentiment, the authors use computational linguistics to quantify the “tone” of FOMC statements and then label as “FOMC sentiment” changes in tone that are not explained by economic fundamentals or investor sentiment. They conclude that a positive shock to FOMC sentiment increases private short-term interest rate expectations primarily at the one-year maturity, and also independently affects inflation expectations, inflation and industrial production.

Firms spread the effects of local shocks to other regions through their internal network of establishments

Using regional variation in house prices during 2006-2009 to measure local shocks, Xavier Giroud of MIT and Holger Mueller of New York University find that the presence of firms that operate in multiple regions mitigates the effects of local demand shocks. In particular, they find that a drop in local house prices reduces non-tradable employment — employment in sectors such as restaurants, supermarkets, and retail stores that rely on local demand – both locally and in other regions in which local firms have establishments. They conclude that firms play an important role in the provision of regional risk sharing and the propagation of local employment shocks across different regions of the US.

Chart of the week: US consumer inflation expectations have been on the rise since last fall

U.S. Consumer Inflation Expectations Rebound

Quote of the week: “Globalization can be made more sustainable if we make it more efficient, enduring and equitable,” says European Central Bank official Benoît Cœuré.

 “More efficient globalization should be on the agenda of even mainstream economists because it would mainly address common market failures, which are well known from the domestic context. For trade flows, it would imply reducing information asymmetries, rents from monopoly power, and dealing with externalities, e.g. by giving better information to importers… Making globalization more enduring means to me making it politically sustainable. As recent political outcomes have shown, this is an area which has been underappreciated, in particular by economists. In practice, it means that we have to enhance the legitimacy of international economic rules, allow for different economic and social models to the extent that fair competition and macroeconomic stability is not impaired, and explain the case for globalization in more nuanced ways… Finally, globalization cannot be enduring if it does not become more equitable. A more equitable globalization would pay more attention to the distributive impact of globalization than in the past… In order to compensate the losers from globalization under a more equitable form of globalization, we would need to reduce tax base erosion and profit shifting along the lines proposed by the OECD and endorsed by the G20.”


Louise M. Sheiner

Policy Director - The Hutchins Center on Fiscal and Monetary Policy

Senior Fellow - Economic Studies at Brookings