Avg hrs worked / wk
Turkey: 49
Mexico: 45
Greece: 39
USA: 39
France: 36
Germany: 35https://t.co/MD1lZBegQw pic.twitter.com/62lEcJnFC8— Max Galka (@galka_max) January 18, 2016
Average hours worked in main job
13 Feb 2016 Leave a comment
in labour economics, labour supply Tags: hours worked
% of workforce requiring license or certification by state– Corrected
13 Feb 2016 2 Comments
in applied welfare economics, economics of regulation, labour economics, occupational regulation, politics - USA
Some American states regulate twice as many occupations as others. This diversity in federalism strains any public interest explanation of occupational regulation.
Source: Reforming Occupational Licensing Policies | The Hamilton Project – Kleiner and Vorotnikov (2015), based on an analysis of data from a Harris poll of 9,850 individuals conducted in the first half of 2013 (Harris Poll Interactive 2013).
The purpose of occupational regulation is to protect buyers from quacks and lemons – to overcome asymmetric information about the quality of the provider of the service.
Adverse selection occurs when the seller knows more than the buyer about the true quality of the product or service on offer. This can make it difficult for the two people to do business together. Buyers cannot tell the good from the bad products on offer so many they do not buy to all and withdraw from the market.
Any entrepreneur who finds ways of providing credible assurances of the quality of this service or work stands to profit handsomely. Brand names and warranties are examples of market generated institutions that overcome these information gaps through screening and signalling.
Screening is the less informed party’s effort, usually the buyer, to learn the information that the more informed party has. Successful screens have the characteristic that it is unprofitable for bad types of sellers to mimic the behaviour of good types. Signalling is an informed party’s effort, usually the seller, to communicate information to the less informed party.
The main issue with quacks in the labour market is whether there is a large cost of less than average quality service, and is there a sub-market who will buy less than average quality products in the presence of competing sellers competing on the basis of quality assurance. This demand for assurance creates opportunities for entrepreneurs to profit by providing assurance.
Mostly disciplinary investigations and deregistrations under the auspices of occupational regulation are for gross misconduct and criminal convictions rather than the shading of quality.
GDP per hour worked across the OECD
13 Feb 2016 Leave a comment
in economic growth, labour economics, labour supply, macroeconomics Tags: labour productivity
The 1996 US federal welfare reforms at 20
12 Feb 2016 Leave a comment
in applied welfare economics, economic history, labour economics, labour supply, politics - USA, welfare reform
Despite the dire predictions, there has been a permanent reduction in child poverty of 25%, a 35% increase in the employment rates of never married mothers and a 16% increase in the employment rates of single mothers.
Minorities benefited the most from the 1996 US federal welfare reforms in terms of higher employment rates and lower child poverty rates.
As part of the 1996 reforms, Medicaid eligibility was not lost when going off welfare and single parents by getting a job qualified for the Earned Income Tax Credit.
Harvard business School survey discovers that workers want more
12 Feb 2016 Leave a comment
in human capital, labour economics, labour supply, occupational choice, personnel economics, poverty and inequality, unions Tags: compensating differentials, union wage premium, unions
F A Hayek – Unemployment And The Free Market
12 Feb 2016 Leave a comment
in applied price theory, Austrian economics, business cycles, economic growth, F.A. Hayek, fiscal policy, job search and matching, labour economics, labour supply, macroeconomics, unemployment, unions Tags: job search, mismatch unemployment, search unemployment, union power, union wage premium, waiting unemployment
Mandatory layoff notice by length of job tenure in the G7, Australia, New Zealand, Ireland, Scandinavia, Greece and Spain
12 Feb 2016 Leave a comment
in labour economics, law and economics, property rights, unemployment Tags: employment law, employment protection laws, employment regulation, mandatory notice, severance pay
Mandatory notice periods for layoffs put the very survival of troubled the business at risk. By having to give long periods of notice, a firm experiencing a downturn is less able to adjust quickly and more likely simply to go out of business because it cannot meet its larger payroll.
Source: Labor Market Regulation – Doing Business – World Bank Group.
Sex differences in the minimum acceptable romantic partner
11 Feb 2016 Leave a comment
in applied price theory, economics of love and marriage, gender, labour economics
Richard McKenzie wrote a couple of papers over the last 10 years pointing out that the connection between the labour market and the marriage market will entrench the gender wage gap.
Across all cultures, good financial prospects influence female choices of a partner. Because income influences the prospects of men more than it does women in the dating and marriage market in all cultures, men have an extra incentive to work hard and an additional reward to that of women when they invest in human capital, riskier jobs and longer hours.
Seinfeld had a simpler explanation of this: men are shallow, it goes with the territory.
The only way that men will stop investing in better economic prospects as a way of winning better girlfriends and wives, is for women to lower their standards.
The response of less educated women to more and more of the better educated men and women pairing off together was to stop marrying what was left in the dating pool and have children on their own rather than drop their standards.
Mandatory severance pay by length of job tenure in the G7, Australia, New Zealand, Ireland, Scandinavia, Greece and Spain
11 Feb 2016 Leave a comment
in human capital, job search and matching, labour economics, labour supply, law and economics, managerial economics, organisational economics, personnel economics, property rights, unemployment Tags: employment law, employment protection laws, employment regulation, firm-specific human capital, job search, labour market regulation, severance pay
There are a wide differences across the OECD in mandatory severance pay in the event of a layoff.
Source: Labor Market Regulation – Doing Business – World Bank Group.
Severance pay makes it more expensive to fire and therefore more expensive to hire. This means fewer job vacancies will be created but they will last longer.
The presence of mandatory severance pay could increase or reduce the unemployment rate but unemployment durations will increase because it takes longer to find a suitable job match among the fewer available vacancies.
Mandating severance pay does not make the job match inherently more profitable. It just redistributes some of the surplus from the job match to the end when it is terminated.
Employers and jobseekers may agree to severance pay where investments in firm specific and job specific human capital for the job is profitable.
Severance pay in these circumstances gives the employer and more reasons to invest in specific human capital. The promise to pay severance pay will make the employer hesitate to lay them off. The employer will instead retain them over a slack period or redeploy them within the company rather than pay them out. This pre-commitment encourages investment in firm specific and job specific human capital by both sides more secure, which makes the job match more profitable overall for both sides.
Of course, if it was possible to negotiate completely around severance pay mandated by law, there would be no effects on hiring, firing and unemployment durations. All it would mean is take-home pay would be less but in the event of a layoff, these employees would get that this wage reduction back as a lump sum.
Bridging the Gender Gap: The Problems with Parental Leave
11 Feb 2016 Leave a comment
in discrimination, gender, labour economics, occupational choice Tags: gender wage gap, maternity leave, Parental leave
@LivingWageUK documents the Achilles heel of the #livingwage
09 Feb 2016 1 Comment
in applied price theory, economics of bureaucracy, economics of regulation, entrepreneurship, managerial economics, minimum wage, organisational economics, personnel economics, politics - New Zealand, Ronald Coase, theory of the firm
Research publicised by a Living Wage UK highlighted the Achilles heel of any living wage proposal. This Achilles heel applies to the voluntary adoption of the living wage and a living wage mandated through minimum wage laws.
The critique to follow accepts pretty much everything claimed by the living wage movement about the benefits of the living wage but simply traces out the consequence of this one promised benefit.
Source: New evidence of business case for adopting Living Wage Living Wage Foundation.
The living wage is substantially above the minimum wage. Offering the living wage will change the composition of the recruitment pool of low-wage employers. This is the Achilles heel of the living wage which Living Wage UK documents in its study it tweeted about and from which I have taken the above snapshot.
Jobseekers would not have considered vacancies by these employers will now apply because of the living wage increase. These better calibre applicants will win those jobs ahead of the jobseekers whose current productivity levels are less than that to justify the cost of the living wage.
Central to the living wage rhetoric is that somehow employees will be more productive because of the adoption of the living wage.
The simplest way of doing that for an employer is to hire more qualified, more productive employers are no longer a hire the type of people you currently hire. They will be unemployed or pushed into the non-living wage sector of the low-wage market.
Best 2 Minimum Wage Cartoons Ever, from Henry Payne, Updated for Seattle's $15 "Economic Death Wish" @HenryEPayne http://t.co/vatUzkHMss—
Mark J. Perry (@Mark_J_Perry) August 18, 2015
A living wage is an exclusionary policy where ordinary workers, often with families who are not productive enough to produce $19.25 per hour living wage plus overheads will never be interviewed.
The workers with the type of skills that currently win those jobs covered by a living wage increase will not be shortlisted because the quality of the recruitment pool will increase because of the living wage.
There will be an influx of more skilled workers attracted by the higher wages for living wage jobs. They will go to the head of the queue and displaced workers who currently apply for and win these jobs before the adoption of the living wage.
Any extra labour productivity from paying a living wage increase is in doubt because low skilled service sectors are notorious for their low potential for productivity gains. They are the bread-and-butter of Baumol’s disease.
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.
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.
It’s kicking the living wage movement when it is down to mention that low paid workers with families will lose a considerable part of the living wage increase because of reductions in family tax credits and in-kind assistance from the government that are linked to their pay.
Their jobs are put at risk because of a large increase in the cost of employing them to their employers. Their take-home pay after taxes, family tax credits and other government assistance increases by much less. This is a pointless gamble with job security because of the much small increase in the take-home pay of many breadwinners on the living wage.
@realdonaldtrump @BernieSanders are equally ignorant and unfit for office
09 Feb 2016 Leave a comment
in applied welfare economics, economic history, labour economics, macroeconomics, politics - USA Tags: 2016 presidential election, antiforeign bias, antimarket bias, Leftover cab left, pessimism bias, rational rationality, The Great Enrichment, Twitter left
New Zealand male labour force participation, ages 50 to 74, 5 year age bands, 1986 – 2014
08 Feb 2016 Leave a comment
in labour economics, labour supply, politics - New Zealand, public economics Tags: old-age pension, older workers, social insurance
Older workers in the past was defined by a drop-off in labour force participation at the age of 55 such as there was in the 1990s. Not only that is no more, New Zealand workers aged 60 to 64 participate in the labour force to the same extent as workers in their 50s, more or less.
Source: OECD Stat.
Workers aged 65 to 69 and aged 70 to 74 also rapidly increased their labour force participation. Nonetheless, in New Zealand they still get an old age pension in these age brackets without an income test or an asset test.
@berniesanders How America’s middle class is disappearing
08 Feb 2016 Leave a comment
in applied welfare economics, economic history, labour economics, politics - USA, poverty and inequality Tags: living standards, rational ignorance, rational irrationality, withering away of proletariat
Both the proletariat and the middle class are withering away these days thanks to capitalism and freedom.
Utopia, you are standing in it! 
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