10 Aug 2015
by Jim Rose
in business cycles, human capital, job search and matching, labour economics, labour supply, macroeconomics, politics - New Zealand, unemployment
Tags: equilibrium unemployment rate, hysteresis, long-term unemployment, natural unemployment rate, unemployment duration, unemployment rates
There has been bit of a wild ride in long-term unemployment in New Zealand. Long-term unemployment – longer than one year – ranging from just over 8% of unemployment in 1986 to nearly 40% in 1992 then down to 5% in 2008. Clearly the duration of unemployment in New Zealand is highly sensitive to the business cycle unlike the case in the USA or UK.
Source: OECD StatExtract.
This sensitivity of long-term unemployment to the business cycle does not bode well for the hypothesis of hysteresis where human capital depreciates the longer a jobseeker is out of employment. For this hypothesis to hold, there must be some enduring aspect of long-term unemployment rather than just going up and down with the business cycle rather noticeably.
The rival hypothesis to hysteresis is the long-term unemployed tend to be those who have a lot of trouble getting employment, which is why they end up been unemployed for a long time. Again in New Zealand, these less employable jobseekers appear to be able to find jobs quite easily when the labour market is good.
04 Aug 2015
by Jim Rose
in economics of education, entrepreneurship, human capital, labour economics, labour supply, sports economics
Tags: entrepreneurial alertness, on-the-job training, superstar wages, superstars
Randall McElroy III
FiveThirtyEightSports has a great piece about how much college quarterbacks are really worth in terms of market value. I’m neutral-but-leaning-against on the issue of paying college athletes, but the piece begins with University of Iowa Athletic Director Gary Barta giving a very bad reason to oppose it: it’s too complicated to figure out how much they should be paid. He’s right given how he’s conceiving the issue, he’s just not conceiving the issue in the right way.
Wages are not determined by a person or group of people independently evaluating what a job is “really” worth. That’s what markets do, i.e. that’s what innumerable decisions over time by innumerable anonymous consumers operating within the price system do. The failure to understand how the price system works in allocating resources by preferences is not unique to Barta. Very few people understand it, and lamentably even people who do understand it often…
View original post 619 more words
31 Jul 2015
by Jim Rose
in history of economic thought, human capital, labour economics, personnel economics
Tags: human capital
In a paper I wrote some years ago I explained the origin of that concept of human capital as follows:
The term ‘human capital’ was initially controversial, but the analytical concept was not. The analysis of human capital has many famous parents and grandparents (Kiker 1966).
Sir William Petty published the first analysis of the value of human capital in 1690. There were sophisticated analyses of investments in education and training and their implications for wage differentials, labour productivity and occupational choice by Adam Smith in 1776, Alfred Marshall in 1890 and Milton Friedman and Simon Kuznets in 1945.
Richard Cantillon, John Locke, John Stuart Mill, Adam Smith and Karl Marx all proposed that training rather than natural ability was more important in understanding occupational wage differentials. Adam Smith and Alfred Marshall referred to education and training as capital investments in human beings.
Irving Fisher in 1912 and Arthur Pigou in 1928 pioneered the explicit use of the term ‘human capital’. Jacob Mincer, Theodore Shultz and Gary Becker popularised the use of the term in the mid-20th century. See Kiker (1966) for a history of the concept of human capital.
30 Jul 2015
by Jim Rose
in applied price theory, comparative institutional analysis, economics of bureaucracy, entrepreneurship, financial economics, human capital, industrial organisation, labour economics, managerial economics, occupational choice, organisational economics, rentseeking, survivor principle
Tags: active investing, corporate welfare, efficient markets hypothesis, entrepreneurial alertness, hedge funds, industry policy, passive investing, picking winners, The fatal conceit, The pretence to knowledge
29 Jul 2015
by Jim Rose
in discrimination, gender, human capital, labour economics, labour supply, occupational choice, politics - New Zealand
Tags: employer discrimination, ethnic wage gap, gender wage gap, racial discrimination, racial wage gap
29 Jul 2015
by Jim Rose
in applied price theory, applied welfare economics, entrepreneurship, financial economics, human capital, labour economics, occupational choice
Tags: CEO pay, compensating differentials, entrepreneurial alertness, top 0.1%, top 1%, top income earners, top wage earners
28 Jul 2015
by Jim Rose
in economic history, economics of education, entrepreneurship, financial economics, human capital, labour supply, occupational choice, politics - USA
Tags: creative destruction, entrepreneurial alertness, top 1%, top income earners, top wage earners
24 Jul 2015
by Jim Rose
in business cycles, health and safety, human capital, labour economics, occupational choice, politics - New Zealand, politics - USA, poverty and inequality, welfare reform
Tags: adverse selection, disability insurance, moral hazard, social insurance, welfare state
Previous Older Entries Next Newer Entries
Utopia, you are standing in it! 
Recent Comments