Technology adoption, online education and more

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Using novel data on 300,000 companies from the Census Bureau’s Annual Business Survey for the period 2016-2018, MIT’s Daron Acemoglu and co-authors found that companies that adopt advanced technologies, such as artificial intelligence, robotics, and specialized software, tend to to be larger and employ more workers compared to others in their industry. As a result, while only 2-40% of US companies adopt advanced technologies, they expose 12-64% of US employees to such technologies. The authors estimate that the use of advanced technologies is associated with 11.4% higher labor productivity and may explain 16-30% of labor productivity differences between small and large firms in a given industry. Smaller and older companies are less likely to adopt advanced technologies, likely reflecting the large fixed costs and organizational barriers associated with adoption. The authors also find that advanced technologies increase the demand for skilled workers but have limited impacts on overall employment.

Lisa Barrow, Wesley Morris, and Lauren Sartain of the Federal Reserve Bank of Chicago find that the expansion of online courses in the University of North Carolina system had mixed effects on student outcomes. Virtual learning provided flexibility for students whose budgets, work schedules, and childcare responsibilities prevented them from attending in person, and was used primarily by first-generation students, Pell grant recipients, seniors, and women. Despite this added flexibility, students who took a greater proportion of their classes online had lower graduation rates and took fewer credit hours than their in-person counterparts. Additionally, students in online courses received more A’s and more F’s than students who attended in person. The authors point to the high demand for online education as proof that it is “here to stay,” but caution that more counseling and support for non-traditional college students may be needed to make online learning an educational alternative. viable.

Using a new survey measure of managers’ expectations, Nicholas Bloom of Stanford University and co-authors find that a two standard deviation increase in uncertainty about future sales is associated with a 6% decrease in investment. Uncertainty is also negatively correlated with employment and sales growth. The authors show that higher uncertainty is associated with higher use of leased capital and suggest that this practice allows companies to meet shipments while insuring against low demand. Finally, the team compared their results with measures of uncertainty aggregated in the previous literature and concluded that “equity volatility at the industry level can provide a good indicator of uncertainty in both public and private companies.”

Line chart showing quarterly observations of the US personal saving rate from Q1 2015 to Q2 2022 along with the log-linear trend line for data from 2015 to 2019. The rate of Savings remained close to 7 or 8% until the second quarter of 2020, when rates increased to 26.4%.  The first quarter of 2021 had another peak of 20.4%.  Following this second peak, rates fell rapidly to their current level of 3.4%, well below trend.

Chart courtesy of Aditya Aladangady, David Cho, Laura Feiveson, and Eugenio Pinto of the Federal Reserve; data from the Bureau of Economic Analysis

“Japan’s economy is still on its way to recovering from the pandemic and the output gap has remained in negative territory. The bank [of Japan] projects the output gap to turn positive sometime in the second half of this fiscal year with a recovery in the economy. The inflation rate, however, has not increased on the demand side at present. Although it is currently above 2% due to the pass-through of cost increases caused by higher import prices to consumer prices, the rate is expected to fall below 2% beginning in fiscal year 2023 with the effects of this handover waning, as I mentioned earlier,” says Haruhiko Kuroda, Governor of the Bank of Japan.

“In addition… there have been extremely high uncertainties due to the economic and price evolution in the country and abroad and due to the evolution of the financial market. The bank [of Japan] will closely examine the outlook for economic activity and prices, as well as the upside and downside risks to the outlook. Based on the assessments, it will carry out the appropriate monetary policy. Currently, the Bank considers that it should continue with monetary easing and thus firmly support economic activity. In doing so, it aims to provide a favorable environment for companies to increase wages and achieve the objective of price stability in a sustainable and stable manner, accompanied by wage increases.


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