Thomas Sowell – Robert Bork Hearings (1987)
07 Oct 2016 Leave a comment
in comparative institutional analysis, constitutional political economy, development economics, economic history, economics, labour economics, law and economics Tags: affirmative action, racial discrimination, Robert Bork, Thomas Sowell
Robert Lucas on the voluntary and involuntary unemployment distinction
05 Oct 2016 Leave a comment
in job search and matching, labour economics, labour supply, macroeconomics, Robert E. Lucas, unemployment Tags: involuntary unemployment, job search, search and matching
Robert Lucas in a famous 1978 paper argued that all unemployment was voluntary because involuntary unemployment was a meaningless concept:
“The worker who loses a good job in prosperous time does not volunteer to be in this situation: he has suffered a capital loss. Similarly, the firm which loses an experienced employee in depressed times suffers an undesirable capital loss.
Nevertheless the unemployed worker at any time can always find some job at once, and a firm can always fill a vacancy instantaneously. That neither typically does so by choice is not difficult to understand given the quality of the jobs and the employees which are easiest to find.
Thus there is an involuntary element in all unemployment, in the sense that no one chooses bad luck over good; there is also a voluntary element in all unemployment, in the sense that however miserable one’s current work options, one can always choose to accept them.”
I agree that we all make choices subject to constraints. To say that a choice is involuntary because it is constrained by a scarcity of job-opportunities information is to say that choices are involuntary because there is scarcity. Alchian said there are always plenty of jobs because to suppose the contrary suggests that scarcity has been abolished.
Lucas elaborated further in 1987 in Models of Business Cycles:
A theory that does deal successfully with unemployment needs to address two quite distinct problems. One is the fact that job separations tend to take the form of unilateral decisions – a worker quits, or is laid off or fired – in which negotiations over wage rates play no explicit role.
The second is that workers who lose jobs, for whatever reason, typically pass through a period of unemployment instead of taking temporary work on the ‘spot’ labour market jobs that are readily available in any economy.
Of these, the second seems to me much the more important: it does not ‘explain’ why someone is unemployed to explain why he does not have a job with company X. After all, most employed people do not have jobs with company X either. To explain why people allocate time to a particular activity – like unemployment – we need to know why they prefer it to all other available activities: to say that I am allergic to strawberries does not ‘explain’ why I drink coffee.
Neither of these puzzles is easy to understand within a Walrasian framework, and it would be good to understand both of them better, but I suggest we begin by focusing on the second of the two.
More on is there a Republican in the house?
02 Oct 2016 Leave a comment
in economics of education, occupational choice, politics - USA
Source: Faculty Voter Registration in Economics, History, Journalism, Law, and Psychology · Econ Journal Watch : Voter registration, academia, ideology, political parties, professors via Anti-Dismal: Latest issue of Econ Journal Watch.
Graduate numbers quadruple! Zero economic growth premium?
29 Sep 2016 Leave a comment
in economic growth, economic history, economics of education, human capital, labour economics, macroeconomics Tags: education premium, endogenous growth theory, graduate premium
Some people get quite excited about the growth benefits and externalities from investing in more human capital such as more young people going to university. In New Zealand, the number of graduates quadrupled over the last 30 years but the trend GDP growth rate is unchanged. Please explain?
Source: Educational attainment of the adult population: The Social Report 2016 – Te pūrongo oranga tangata.
Thomas Sowell – Incentives for Ethnic Division on Campus
28 Sep 2016 Leave a comment
in discrimination, liberalism Tags: political correctness, racial discrimination
Homer Simpson: An economic analysis
28 Sep 2016 Leave a comment
in economics, human capital, labour economics, labour supply, occupational choice, television Tags: The Simpsons
Wealth, Poverty, and Politics | Thomas Sowell on the Importance of human capital
28 Sep 2016 Leave a comment
in applied price theory, development economics, economic growth, economic history, economics of education, human capital, labour economics, macroeconomics Tags: Thomas Sowell
Poverty in NZ has been falling steadily for 20 years despite the dead hand of neoliberalism
26 Sep 2016 Leave a comment
in applied welfare economics, economic history, politics - New Zealand, poverty and inequality Tags: family poverty, job poverty, social insurance, The Great Enrichment
House crowding continues long run fall despite the dead hand of neoliberalism
24 Sep 2016 Leave a comment
in applied welfare economics, economic history, politics - New Zealand, poverty and inequality
Callback rate discrimination against female migrants wearing headscarves
24 Sep 2016 Leave a comment
Clinton’s New Ad on @realdonaldtrump Mocking Women’s Appearance #NeverTrump
24 Sep 2016 Leave a comment
in discrimination, economics of media and culture, gender, politics - USA Tags: 2016 presidential election
Utopia, you are standing in it! 
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