Data extracted on 11 Mar 2016 14:08 UTC (GMT) from OECD.Stat.
Hours worked per working age American and French and per American and French workers since 1950
12 Mar 2016 Leave a comment
in economic history, labour economics, labour supply Tags: France, hours worked, social insurance, taxation and labour supply
American workers are working fewer hours per year but more labour has been supplied by the working age population especially in the 1980s and 1990s. In France, there has been a steady decline of hours worked per worker and, up until 1985, hours worked per working age French.
Data extracted on 10 Mar 2016 22:34 UTC (GMT) from OECD.Stat, Data extracted on 10 Mar 2016 22:02 UTC (GMT) from OECD.Stat, and The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/
% male employees aged 25 to 54 working 40 or more hours per week across the OECD
12 Mar 2016 Leave a comment
in labour economics, labour supply Tags: 35 hour week, 40 hour week, hours worked
The 40 hour week is rather rare in some parts of Western Europe.
Data extracted on 11 Mar 2016 13:44 UTC (GMT) from OECD.Stat
Tom Sargent on how jobs are always available
10 Mar 2016 Leave a comment
in economic history, job search and matching, labour economics, labour supply, macroeconomics, unemployment
Source: How Sweden’s Unemployment Became More Like Europe’s, Lars Ljungqvist, Thomas J. Sargent 2010.
Big bills left on the #livingwage sidewalk?
10 Mar 2016 Leave a comment
in applied price theory, entrepreneurship, managerial economics, minimum wage, personnel economics, politics - New Zealand
Living wage activists believe that businesses can profitably pay their low-paid workers a lot more. The living wage pay increase will not jeopardise the survival of the business or jobs because their workers will be more productive because of the living wage increase. Morale will be higher and job turnover will be lower. Both of these will increase productivity perhaps enough to offset the increase in labour costs.
In a nutshell, living wage activists have discovered a hitherto untapped entrepreneurial opportunity for profit. These living wage activists are happy to disclose this secret to lower costs to the world at no fee.
What they are arguing is businesses do not notice a profit opportunity that these political activists have noticed and are now publicising widely. Entrepreneurs are leaving money on the table that could easily be snapped up simply by paying their low-paid employers higher wages.
Source: Mancur Olson (1996) “Distinguished Lecture on Economics in Government: Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor.” Journal of Economic Perspectives 3-24.
This money on the table metaphor is similar to the big bills left on the sidewalk metaphor. There is easy money to be had from paying low-paid workers more because these workers will quickly become more productive because of the higher wages.
Living wage activists do not address why entrepreneurs had not discovered this insight into cost saving themselves. After all, every entrepreneur, every employer knows that if they pay more, they will get a better class of job applicant.
Of course, if this insight by the living wage activists is true, all workers should be given a similar increase in their pay because their productivity will go through the roof as well.
Entrepreneurs profit directly from spotting every new opportunity for profit. They have no reason to turn money down particularly when it is obvious and straight under their nose.
The modern theories of the firm focus, in part or in full on reducing opportunistic behaviour, cheating and fraud in employment relationships. The cost of discovering prices and making and enforcing contracts and getting what you pay for are central to Coase’s theory of the firm put forward in 1937.
The profits of entrepreneurs for running a firm is directly linked from their successful policing of the efforts of employees and sub-contractors to ensure the team and each member perform as promised and individual rewards matched individual contributions (Alchian and Demsetz 1972; Barzel 1987). Alchian and Demsetz’s (1972) theory of the firm focused on moral hazard in team production. As they explain:
Two key demands are placed on an economic organization-metering input productivity and metering rewards.
The main rationale in personnel economics from everything ranging from employer funding of retirement pensions to the structure of promotions and executive pay including stock options is around better rewarding self-motivating employees who strive harder and reducing the costs of monitoring employee effort.
Does a higher minimum wage really reduce employment? econ.st/1gp4Jbs http://t.co/WGMZGLKHmI—
The Economist (@EconBizFin) July 30, 2015
At bottom, the efficiency wage hypothesis is entrepreneurs are unaware of the higher quality and greater self-motivation of better paid recruits for vacancies but wise bureaucrats and farsighted politicians notice these gaps in the market. Bureaucrats and politicians notice these gaps in the market before those who gain from superior entrepreneur alertness to hitherto untapped opportunities for profit do so and instead leave that money on the table.
% employees working more than 50 hours per week in the USA, UK, Japan, France, Germany, Canada, Italy, Australia, New Zealand, Denmark and Sweden
10 Mar 2016 Leave a comment
in labour economics, labour supply Tags: Australia, British economy, Canada, Denmark, France, Germany, Japan, Sweden, taxation and labour supply, working hours
Them Continentals certainly are a bit work-shy especially the Nordics. All of them are pretty much afraid to put in a long week. Then again they do face rather high taxes on labour so what would you expect? The Japanese are still working themselves to death.
Data extracted on 09 Mar 2016 22:25 UTC (GMT) from OECD.Stat – OECD Better Life Index 2015.
The gender pay gap for high school leavers and graduates aged 35-44 in the US, UK, Canada, Denmark, Sweden, Australia and New Zealand
10 Mar 2016 Leave a comment
in discrimination, economics of education, gender, human capital, labour economics, labour supply, occupational choice Tags: compensating differentials, education premium, female labour force participation, gender wage gap, graduate premium, maternal labour force participation
The USA, the gender pay gap gets worse if you go to college. By contrast, in Sweden and especially Canada the gender pay gap is much less for graduates than for those with a high school education.
Data extracted on 09 Mar 2016 22:28 UTC (GMT) from OECD.Stat.
In most countries in the chart above, going on to university and graduating does not reduce the gender pay gap by the time you reach your late 30s and early 40s. Best explanation for that is that part of the graduate wage premium is traded for work-life balance.
#TPPA CTU @FairnessNZ appeals to secretive @ILO committee to challenge NZ sovereignty over employment law
09 Mar 2016 Leave a comment
in constitutional political economy, international economic law, International law, law and economics, unions Tags: Left-wing hypocrisy, union power
The unions are very much against investor state dispute settlement provisions of trade agreements, but are happy to be serial complainants to secretive International Labour Organisation (ILO) committees about employment law amendments they do not like. A fair defeat in the floor of parliament was not good enough for them.
As far back as 1993 the Council of Trade Unions has complained to secretive ILO committees about labour market deregulation in New Zealand. These secretive committees are formed under ILO conventions in New Zealand signed decades go.
The competence of these ILO committees are clearly in question if they hear an appeal under a convention New Zealand has not ratified. Imagine the outrage if an investor state dispute settlement panel heard on appeal despite New Zealand having a carve-out for the topic concerned. An example would be tobacco regulation.
Justice Scalia has a fine critique of those who believe in activist judges and living constitutions that applies just as well as to activist international adjudicators and living international treaties:
You think there ought to be a right to abortion? No problem. The Constitution says nothing about it. Create it the way most rights are created in a democratic society. Pass a law. And that law, unlike a Constitutional right to abortion created by a court can compromise. It can…I was going to say it can split the baby! …A Constitution is not meant to facilitate change. It is meant to impede change, to make it difficult to change.
Rather than use normal democratic means – trying to persuade each other and elections – the union movement threatened to go to a secretive ILO committee made up of members of uncertain competence and impartiality over the recent laws on collective bargaining.
The union movement was outraged at the fact that New Zealand laws it likes could be questioned at international forums. It said this in a recent submission to the Health Select Committee of Parliament.
The unions were equally outraged about dispute settlement procedures in the recent free trade agreement with Korea. The unions were absolutely affronted at the idea that the sovereignty of the New Zealand Parliament could be challenged at a foreign forum.
Source: Submission of the New Zealand Council of Trade Unions Te Kauae Kaimahi to the Foreign Affairs, Defence and Trade Select Committee on the Free Trade Agreement between New Zealand and the Republic of Korea, Wellington 24 April 2015.
These protestations of the union movement would have much more credibility if union did not run off to a UN or ILO committee every time they were on the losing side of a vote in parliament. The unions are happy with those parts of international economic law that serve its interests but behave hypocritical about the other parts that do not. As United States Supreme Court Justice Antonin Scalia said
The virtue of a democratic system [with a constitutionally guaranteed right to free speech] is that it readily enables the people, over time, to be persuaded that what they took for granted is not so and to change their laws accordingly.
Nothing stirs up the impassioned (and most other people as well) more than depriving them of their right to support or oppose what is important to them through political campaigns and at an election.
The losing side, and we all end up on the losing side at one time or another, are much more likely to accept an outcome if they had their say and simply lost the vote at the election or in Parliament. Power to the people as long as I am on the winning side instead is the motto of the union movement.
The unions losing on labour market deregulation is no different from any other political difference within New Zealand. Both sides passionately but respectfully attempt to persuade their fellow citizens to accept their views.
Win or lose, advocates for today’s losing causes can continued pressing their cases, secure in the knowledge that an electoral loss today can be negated by a later electoral win, which is democracy in action as Justice Kennedy explained recently in the US context:
…a democracy has the capacity—and the duty—to learn from its past mistakes; to discover and confront persisting biases; and by respectful, rationale deliberation to rise above those flaws and injustices…
It is demeaning to the democratic process to presume that the voters are not capable of deciding an issue of this sensitivity on decent and rational grounds.
The process of public discourse and political debate should not be foreclosed even if there is a risk that during a public campaign there will be those, on both sides, who seek to use racial division and discord to their own political advantage.
An informed public can, and must, rise above this. The idea of democracy is that it can, and must, mature. Freedom embraces the right, indeed the duty, to engage in a rational, civic discourse in order to determine how best to form a consensus to shape the destiny of the Nation and its people. These First Amendment dynamics would be disserved if this Court were to say that the question here at issue is beyond the capacity of the voters to debate and then to determine.
Inequality is not getting worse and worse says @WJRosenbergCTU!?
09 Mar 2016 Leave a comment
in economic growth, economic history, politics - New Zealand, unions
Bill Rosenberg of the Council of Trade Unions is one of many economists who point out that income inequality has not been getting worse and worse in New Zealand since the 1990s. Inequality rose sharply in the late 1980s and early 90s but has remained high but nevertheless stable since then as he says in his 2014 paper of trends in living standards:
This is another symptom of the sharp rise in income inequality between the mid 1980s and mid 1990s, which remains high.
His employer, the Council of Trade Unions when it was denouncing the Employment Contracts Act 1991 as the reason for low wages growth has also drawn attention to the early 1990s as a turning point in the relationship between inequality, union bargaining power and wages growth.
As the Council of Trade Unions showed in the chart it published during the last election campaign, which I snapshoted below and also annotated, from 1970 to 1975 there was rapid real wages growth, well in excess of real growth in per capita GDP. This wages breakout was followed by some ups and downs but essentially wages in 1995 were no higher per hour from what they were in 1975. Real wages were about $24 per hour in real terms in New Zealand for about 20 years – from 1975 to 1995.
There was no real GDP per capita growth from 1975 until 1979 nor in the five years leading up to the passage of the Employment Contracts Act 1991. The period leading up to 1975 wages breakout wages was the zenith of union membership; nearly 70% of all workers belonging to a union. Less than 20% do now and less than 10% in the private sector.
Source: Income Gap | New Zealand Council of Trade Unions – Te Kauae Kaimahi.
After staying at about $24 per hour for 20 years from 1975 to the early 1990s, following the passage of the Employment Contracts Act in 1991, average wages in New Zealand have increased steadily from $24 an hour to about $28 per hour by 2014 in one of the most deregulated labour markets in the world.
As Rosenberg, who is chief economist at the Council of Trade Unions, and the Council of Trade Unions itself pointed out, there were major changes in the New Zealand economy in terms of inequality of incomes and union bargaining power in the late 80s and early 1990s.
These changes referred to by the unions as an erosion of workers bargaining power, brought an end to wage stagnation. Steady real wages growth returned after two lost decades: next to no growth in either GDP per capita or incomes of workers.
James Heckman on what money cannot buy including a universal basic income
08 Mar 2016 Leave a comment
in economics of education, politics - New Zealand, population economics, poverty and inequality, welfare reform
Source: The Economics of Human Development and Social Mobility, James J. Heckman, Stefano Mosso, NBER Working Paper No. 19925, February 2014.
This @amprog conservative antipoverty dictionary does not add up
08 Mar 2016 Leave a comment
in applied welfare economics, economic history, economics of bureaucracy, labour economics, politics - USA, poverty and inequality, Public Choice, welfare reform Tags: 1996 US welfare reforms, pessimism bias, social insurance, welfare state
From @EugeneSteuerle: Combined tax rates and creating a 21st century social welfare budget tpc.io/1GCdrYF http://t.co/aNRPqz5gAc—
Tax Policy Center (@TaxPolicyCenter) June 28, 2015
The only alternative offered by the Centre for American Progress is send them on a course. This response, which is the standard policy response to any labour market crisis, will not solve poverty, mush less inequality.
Will more education decrease inequality? A simulation provided an answer. nyti.ms/1xw5m9W http://t.co/paQp19BEWc—
The Upshot (@UpshotNYT) March 31, 2015
Utopia, you are standing in it! 
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