Chinese birth and death rates and the Chinese population since 1950
04 Nov 2015 Leave a comment
in development economics, growth disasters, growth miracles, labour economics, labour supply, population economics Tags: China, economics of fertility, one child policy, The fatal conceit, The pretense to knowledge, unintended consequences
Top incomes and the decline of unions in Canada, France and Italy
03 Nov 2015 Leave a comment
in applied price theory, applied welfare economics, economic history, entrepreneurship, industrial organisation, labour economics, labour supply, Milton Friedman, poverty and inequality, Public Choice, rentseeking, unions Tags: Canada, entrepreneurial alertness, France, Italy, top 1%, union power, union wage premium
The French ruling class is as lazy as their transnational co-conspirators down under. French union membership is in serious decline albeit from a low base. An opportunity lost for the French ruling class. It has not lifted a finger to extract additional labour surplus from the downtrodden French proletariat now stripped of their only line of collective defence against capitalist exploitation.
Source: OECD Stat and Top Incomes Database.
The top 10% and top 1% in France are no better off than two generations ago despite the decline of French unions. The French Left must be most disappointed. No kicking in the rotten door of the permanent revolution anytime soon after the immiserised French proletariat rises up because it has nothing to lose but its chains. The 21st century version of the Marxist call to the barricades would be a proletariat stirred to revolution with nothing to lose but their suburban home, motorcar, IPad and air points
Source: OECD Stat and Top Incomes Database.
The Italian ruling class has had little success in bringing Italian unions down. The top 10% in Italy is earning no more now than back when the Red Brigades were gunning for them.
Source: OECD Stat and Top Incomes Database.
The top 1% in Italy is doing a little bit better than when the Red Brigade was gunning for them, but not much more. Unions don’t figure in explaining that small rise in Italian top 1% incomes over the last 40 years. Italian unions are pretty much a strong as they were 40 years ago in membership. Italian employment protection laws are pretty much as strong as they used to be too.
Source: OECD Stat and Top Incomes Database.
The Canadian ruling classes even more incompetent than their transnational co-conspirators over in Italy. There appears to have been next to no decline in union membership in Canada. The Canadian top 10% is not earning any more than back in the 60s.
Source: OECD Stat and Top Incomes Database.
The Canadian top 1% is doing a little bit better than 25 years ago also but not off the back of unions which are almost as strong as in the past. The Canadian Left will have to look for a different hypothesis than the ravages of the top 1%.
Source: OECD Stat and Top Incomes Database.
All in all, the Economic Policy Institute simply got lucky with a spurious correlation between top incomes and union membership in the USA.
@EconomicPolicy showed gender pay equality when arguing the opposite @CHSommers @Mark_J_Perry
02 Nov 2015 2 Comments
in applied price theory, applied welfare economics, discrimination, gender, human capital, labour economics, labour supply, occupational choice, politics - USA Tags: asymmetric marriage premium, compensating differentials, gender wage gap, marital division of labour, power couples, top 1%, top incomes, Twitter left, union power, union wage premium
The Economic Policy Institute were good enough to dig out unit record data on the unadjusted US gender wage gap by percentiles. In attempting to show there was a persistent gender pay gap, the impeccably left-wing Economic Policy Institute showed that the unadjusted gender pay gap has all but disappeared in the USA.
There is next to no gender wage gap even in unadjusted terms towards the bottom of the labour market. This is despite all the protestations of the Left of an inherent inequality of bargaining power between the bosses and workers.
The low paid are supposed to be powerless unless unionised. Declining unionisation is a leading explanation on the Left of the rising income shares of the top 10%, top 1% in the top 0.1%.
If that inherent inequality of bargaining power trundled out at every opportunity by the Twitter Left explains anything in the labour market, this inequality of bargaining power should be operating with greatest strength at the bottom of the labour market.
Clearly the inherent inequality of bargaining power between the bosses and workers is not doing its job regarding the gender wage gap. The gender wage gap in the USA increases as you move up the income ladder rather than the other way around.
The explanation of the Economic Policy Institute for greater gender pay equality at the bottom is the minimum wage and male wage stagnation:
It is interesting to note that the wage gap between genders is smaller at the 10th percentile than at the 95th. At the 10th percentile, women earn 91 percent of men’s wages while women make only 79 percent of men’s wages at the 95th percentile.
The minimum wage is partially responsible for this greater equality among the lowest earners—it sets a wage floor that applies to everyone, which means that people near the bottom of the distribution are likely to make more equal wages. Also, low-wage workers are disproportionately women, which means that the minimum wage particularly bolsters women’s wages.
…Although women have seen modest wage gains in the last several decades, the main reason the gender wage gap has slowly narrowed is that the vast majority of men’s wages have stagnated or declined.
It is a bit rich for the Economic Policy Institute to praise the minimum wage as a force for increasing incomes after spending so much of its time saying how the minimum wage has fallen way behind wages growth in general.
The gender gap lingers at the top of the labour market despite the quite substantial wage gains for women as compared to men over the past 15 years. The Economic Policy Institute dismissed the substantial gains as modest despite their own documenting of them.
It is even richer for the Economic Policy Institute to start extending the male wage stagnation hypothesis to the top 20% and top 10%.
The top of the income distribution has not been known previously known as victims of wage stagnation.
The gender wage gap remains stubbornly high at the top end of the US labour market at 20% for the last few decades. The gender wage is so large and has stayed large at the top half of the labour market for the past few decades because of compensating differentials. Women on higher incomes are balancing families and careers in choosing the occupations that best suits each individual woman, their talents and educational choices.
Source: OECD Employment Database.
Studies of top earning professionals show that they make quite deliberate choices between family and career. The better explanation of why so many women are in a particular occupation is job sorting: that particular job has flexible hours and the skills do not depreciate as fast for workers who take time off, working part-time or returning from time out of the workforce. Low job turnover workers will be employed by firms that invest more in training and job specific human capital.
- Higher job turnover workers, such as women with children, will tend to move into jobs that have less investment in specialised human capital, and where their human capital depreciates at a slower pace.
- Women, including low paid women, select careers in jobs that match best in terms of work life balance and allows them to enter and leave the workforce with minimum penalty and loss of skills through depreciation and obsolescence.
This is the choice hypothesis of the gender wage gap. Women choose to educate for occupations where human capital depreciates at a slower pace. This gender wage gap for professionals can be explained by the marriage market combined with assortative mating:
- Graduates are likely to marry each other and form power couples; and
- There tends to be an age gap between men and women in long-term relationships and marriages of two years.
This two-year age gap means that the husband has two additional years of work experience and career advancement. This is likely to translate into higher pay and more immediate promotional prospects. Maximising household income would imply that the member of the household with a higher income, and greater immediate promotional prospects stay in the workforce.
This is consistent with the choice hypothesis and equalising differentials as the explanation for the gender wage gap. As Solomon Polachek explains:
At least in the past, getting married and having children meant one thing for men and another thing for women. Because women typically bear the brunt of child-rearing, married men with children work more over their lives than married women. This division of labour is exacerbated by the extent to which married women are, on average, younger and less educated than their husbands.
This pattern of earnings behaviour and human capital and career investment will persist until women start pairing off with men who are the same age or younger than them.
In low-paying jobs, there is little in the way of trade-offs other than full-time or part-time work. Low-paid jobs do not involve choosing majors at university, choosing careers, industries and employers that call for long hours and uninterrupted careers or not so long hours, fewer human capital and promotional penalties for time off and more work-life balance. The choice hypothesis is the far better explanation for the persistence of the unadjusted gender wage gap in the USA as Polachek explains:
The gender wage gap for never marrieds is a mere 2.8%, compared with over 20% for marrieds. The gender wage gap for young workers is less than 5%, but about 25% for 55–64-year-old men and women.
If gender discrimination were the issue, one would need to explain why businesses pay single men and single women comparable salaries. The same applies to young men and young women. One would need to explain why businesses discriminate against older women, but not against younger women. If corporations discriminate by gender, why are these employers paying any groups of men and women roughly equal pay?
Why is there no discrimination against young single women, but large amounts of discrimination against older married women? … Each type of possible discrimination is inconsistent with negligible wage differences among single and younger employees compared with the large gap among married men and women (especially those with children, and even more so for those who space children widely apart)
The main drivers of the gender wage gap are unknown to employers such as whether the would-be recruit or employer is married, their partner is present, how many children they have, how many of these children are under 12, and how many years are there between the births of their children.
Did the New Zealand film industry just eat our lunch? By Jason Potts
01 Nov 2015 Leave a comment
in applied price theory, economics of media and culture, fiscal policy, industrial organisation, job search and matching, labour economics, labour supply, macroeconomics, politics - Australia, politics - New Zealand, Public Choice, rentseeking, survivor principle Tags: film subsidies, Hollywood economics, industry policy, offsetting behaviour, The fatal conceit, The pretense to knowledge, unintended consequences
James Cameron is going to film the next three instalments of the Avatar franchise in New Zealand. He promises to spend at least NZ$500 million, employ thousands of Kiwis, host at least one red-carpet event, include a NZ promotional featurette in the Avatar DVDs, and will personally serve on a bunch of Film NZ committees, and probably even bring scones, all in return for a 25% rebate on any spending he and his team do in the country (up from a 20% baseline to international film-makers) that is being offered by the New Zealand Government.
The implication that many media reports are running with is that this is a loss to the Australian film industry, that we should be fighting angry, and that we should hit back at this brilliantly cunning move by the Kiwi’s by increasing our film industry rebates, which currently are about 16.5% (these include the producer and location offsets, and the post, digital and visual effects offset) to at very least 30%. These rebates cost tax-payers A$204 million in 2012, which hardly even buys you a car industry these days.
So what are the economics of this sort of industry assistance? Is this something we should be doing a whole lot more of? Was the NZ move to up the rebate especially brilliant? First, note that James Cameron has substantial property interests in New Zealand already, so this probably wasn’t as up for grabs as we might think. But if that’s how the New Zealand taxpayers want to spend their money, that’s up to them. The issue is should we follow suit?
The basic economics of this sort of give-away is the concept of a multiplier “”), which is the theory that an initial amount of exogenous spending becomes someone else’s income, which then gets spent again, creating more income, and so on, creating jobs and exports and all sorts of “economic benefits” along the way.
People who believe in the efficacy of Keynesian fiscal stimulus also believe in the existence of (>1) multipliers. Consultancy-based “economic impact” reports do their magic by assuming greater-than-one multipliers (or equivalently, a high marginal propensity to consume coupled with lots of dense sectoral linkages). With a multiplier greater than one, all government spending is magically transformed into “investment in Australian jobs”.
So the real question is: are multipliers actually greater-than-one? That’s an empirical question, and the answer is mostly no. (And if you don’t believe my neoliberal bluster, the progressive stylings of Ben Eltham over at Crikey more or less make the same point.)
But to get this you have to do the economics properly, and not just count the positive multipliers, but also account for the loss of investment in other sectors that didn’t take place because it was artificially re-directed into the film sector, which no commissioned impact study ever does.
This is why economists have a very low opinion of economic impact studies, which are to economics what astrology is to physics.
What does make for a good domestic film industry then? Look again at New Zealand, and look beyond the great Weta Studios in Wellington, for Australia and Canada both have world-class production studios and post-production facilities. Look beyond New Zealand’s natural scenery, for Vancouver is an easy match for New Zealand and Australia pretty much defines spectacular.
No, the simple comparison is that New Zealand is about 20% cheaper than Australia and 30% cheaper than Canada. New Zealand has lower taxes, easy employment conditions and relatively light regulations (particularly around insurance and health and safety). It’s just easier to get things done there.
If Australia really wants to boost its film industry, it might look more closely at labour market restrictions (including minimum wages) and regulatory burden and worry less about picking taxpayer pockets and bribing foreigners.
This article was originally published on The Conversation in December 2013. Read the original article. Republished under the a Creative Commons Attribution No Derivatives licence.
@Greencatherine 1996 US welfare reforms and the employment of single mums who were high school dropouts
31 Oct 2015 Leave a comment
in labour economics, labour supply, politics - USA, poverty and inequality, welfare reform Tags: 1996 US welfare reforms, paternal labour supply, single mothers, single parents, social insurance, welfare state
https://twitter.com/hamiltonproj/status/659776768094547968
There was a step increase in the employment rate of single parents and in particular high school dropouts straight after the implementation of the 1996 US federal welfare reforms.
These single mothers who dropped out of high school were thought to be least employable and most at risk to the 1996 US welfare reform. There was a large increase in their employment and this massive improvement in their rates of employment is enduring to this day.
Creative destruction in routine occupations
29 Oct 2015 Leave a comment
in labour economics, labour supply, occupational choice Tags: creative destruction
Why we should all be creative at #work wef.ch/1NJzBS9 http://t.co/XzfOKWsmxw—
World Economic Forum (@wef) October 16, 2015
The Dutch have taken delivery of the first self-driving shuttle for use on public roads.
28 Oct 2015 Leave a comment
in applied price theory, entrepreneurship, industrial organisation, labour supply
@arindube Vernon Smith on the cruelty of the minimum wage
25 Oct 2015 Leave a comment
in economics of education, human capital, labour economics, labour supply, minimum wage, occupational choice, politics - Australia, politics - New Zealand, politics - USA Tags: living wage, minimum wage, on-the-job training
Great quote on the cruelty of the minimum wage from Nobel economist Vernon Smith, illustrated by Henry Payne https://t.co/Lwch51acEY—
Mark J. Perry (@Mark_J_Perry) October 24, 2015
More evidence on the emergence of the working rich
25 Oct 2015 Leave a comment
in applied price theory, applied welfare economics, economics of education, entrepreneurship, human capital, labour economics, labour supply, Marxist economics, occupational choice Tags: College premium, creative destruction, education premium, entrepreneurial alertness, graduate premium, Leftover Left, superstar wages, superstars, top 1%
South Korean gender pay gap for the 10th, 50th and 90th percentile since 1985
24 Oct 2015 Leave a comment
in development economics, discrimination, economic history, economics of education, gender, growth miracles, human capital, labour economics, labour supply, occupational choice Tags: asymmetric marriage premium, compensating differentials, gender wage gap, marital division of labour, South Korea
The Japanese gender pay gap at the 10th, 50th and 90th percentile since 1975
23 Oct 2015 Leave a comment
in discrimination, economic history, gender, human capital, labour economics, labour supply, occupational choice Tags: compensating differentials, gender wage gap, Japan
The unadjusted gender pay gap is still large in Japan but is declining slowly.
The reverse gender gap in black education
22 Oct 2015 Leave a comment
in discrimination, economics of education, human capital, labour economics, labour supply, occupational choice, poverty and inequality, welfare reform Tags: reversing gender gap
NZ gender pay gap has closed – at the bottom anyway @YWCAAuckland @SFWU @JanLogie @FairnessNZ @ncwnz
21 Oct 2015 2 Comments
in discrimination, economics of education, gender, human capital, labour supply, politics - New Zealand Tags: Claudia Goldin, gender wage gap, pay equity, Solomon Polachek
Good on you @janlogie, @TraceyMartinMP and Louisa Wall, the next 3 MPs to pledge support at equalpay.org.nz http://t.co/D2rh75VjZx—
SFWU (@SFWU) September 07, 2015
The Auckland YMCA has made some strong claims about the persistence of gender wage gap saying that it is stubbornly stuck at 14% (when measured against average earnings).
Source: The gender pay gap needs to start closing.
It is not usual to measure the gender wage gap against average earnings. Median earnings preferably on an hourly basis is the normal measure. Moreover, more long-term data is readily available on the Internet about median earnings rather than average earnings.
For example, as the chart below shows the unadjusted gender wage gap in New Zealand is a little bit less than the 14% claimed by Auckland YMCA when measured against median earnings and has been slowly tapering down for 15 years.
Source: Statistics New Zealand New Zealand Income Survey.
My larger claim is the gender pay gap has been in a long-term decline for generations. More importantly, the gender will pay gap is disappeared at the bottom of the labour market. For the past 5 to 10 years, the unadjusted gender wage gap rounds down to zero at the bottom of the pay structure for full-time employees.
Source: OECD Employment Database.
The gender wage gap remains stubbornly high at the high end of the wage market at 15-20% because of compensating differentials. Women are balancing families and careers in choosing the occupations that best suits each individual woman.
How big is the wage gap in your country? bit.ly/18o8icV #IWD2015 http://t.co/XTdntCRfDQ—
(@OECD) March 08, 2015
Studies of top earning professionals show that they make quite deliberate choices between family and career. The better explanation of why so many women are in a particular occupation is job sorting: that particular job has flexible hours and the skills do not depreciate as fast for workers who take time off, working part-time or returning from time out of the workforce. Low job turnover workers will be employed by firms that invest more in training and job specific human capital.
- Higher job turnover workers, such as women with children, will tend to move into jobs that have less investment in specialised human capital, and where their human capital depreciates at a slower pace.
- Women, including low paid women, select careers in jobs that match best in terms of work life balance and allows them to enter and leave the workforce with minimum penalty and loss of skills through depreciation and obsolescence.
This is the choice hypothesis of the gender wage gap. Women choose to educate for occupations where human capital depreciates at a slower pace. This gender wage gap for professionals can be explained by the marriage market combined with assortative mating:
- Graduates are likely to marry each other and form power couples; and
-
There tends to be an age gap between men and women in long-term relationships and marriages of two years.
This two-year age gap means that the husband has two additional years of work experience and career advancement. This is likely to translate into higher pay and more immediate promotional prospects. Maximising household income would imply that the member of the household with a higher income, and greater immediate promotional prospects stay in the workforce. This is entirely consistent with the choice hypothesis and equalising differentials as the explanation for the gender wage gap. As Solomon Polachek explains:
At least in the past, getting married and having children meant one thing for men and another thing for women. Because women typically bear the brunt of child-rearing, married men with children work more over their lives than married women. This division of labour is exacerbated by the extent to which married women are, on average, younger and less educated than their husbands.
This pattern of earnings behaviour and human capital and career investment will persist until women start pairing off with men who are the same age or younger than them.
Claudia Goldin did a great study of Harvard MBAs using online surveys of their careers. She found that three proximate factors accounted for the large and rising gender gap in earnings:
- differences in training prior to MBA graduation,
- differences in career interruptions, and
- differences in weekly hours.
The greater career discontinuity and shorter work hours for female MBAs are largely associated with motherhood. There are some jobs that are severely penalise any time out of the workforce. A 2014 Harvard Business School study found that 28 percent of recent female alumni took off more than six months to care for children; only 2 percent of men did.
Claudia Goldin has described pharmacy is the most family friendly occupation. She compares it to law. In law, if you work long hours, you are on partnership track and win the top clients. In pharmacy, the only advantage of working longer hours as you earn more money that week. Also, pharmacists are completely interchangeable. Do you care which pharmacist fills out your prescription at your local pharmacy or even know which one fills it out? Lawyers are not interchangeable: they cannot just handover a case. Detailed briefings would be required. You expect your lawyer to show up in court or at meetings on time anywhere without fail.
Claudia Goldin found one counterfactual that cancels out the gender wage gap amongst MBA professionals: hubby earns less! Female MBAs who’ve have a partner who earn less than them earn as much as the average MBA professional on an hourly basis but work a few less hours per week.
The gender wage gap is persisted in high-paying jobs because career women have so many options. They can mix and match career and motherhood in fine detail.
In low-paying jobs, there is little in the way of trade-offs other than full-time or part-time work. Low-paid jobs do not involve choosing majors at university, choosing careers, industries and employers that call for long hours and uninterrupted careers or not so long hours, fewer human capital and promotional penalties for time off and more work-life balance.
The choice hypothesis is the far better explanation for the persistence of the unadjusted gender wage gap in New Zealand, which is small by international standards. As Polachek explains:
The gender wage gap for never marrieds is a mere 2.8%, compared with over 20% for marrieds. The gender wage gap for young workers is less than 5%, but about 25% for 55–64-year-old men and women.
If gender discrimination were the issue, one would need to explain why businesses pay single men and single women comparable salaries. The same applies to young men and young women. One would need to explain why businesses discriminate against older women, but not against younger women. If corporations discriminate by gender, why are these employers paying any groups of men and women roughly equal pay?
Why is there no discrimination against young single women, but large amounts of discrimination against older married women? … Each type of possible discrimination is inconsistent with negligible wage differences among single and younger employees compared with the large gap among married men and women (especially those with children, and even more so for those who space children widely apart)
The main drivers of the gender wage gap are unknown to employers such as whether the would-be recruit or employer is married, their partner is present, how many children they have, how many of these children are under 12, and how many years are there between the births of their children.
In countries such as Sweden, the gender wage gap is no better than the OECD average, despite generous maternity and paternity leave. The reason is obvious. You do not close the gender wage gap for professional women by paying them to stay out of the workforce for a year or more perhaps several times over at critical junctures early in their careers.
Long parental leave in Sweden is responsible for a thick Swedish glass ceiling because of lower levels of human capital investment among women and employers’ responses by placing fewer women in fast-track career. Extensive parental leave makes holding a job easier and more family-friendly, it may not be as effective as some might think in eradicating the gender gap for professional women.
Utopia, you are standing in it! 
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