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.
09 Aug 2015
by Jim Rose
in business cycles, economic history, global financial crisis (GFC), job search and matching, labour economics, labour supply, macroeconomics, unemployment
Tags: British disease, British economy, equilibrium unemployment rate, Margaret Thatcher, natural unemployment rate, unemployment duration, unemployment rates
In contrast to the USA, there is been a long-term decline in long-term unemployment, that is unemployment of more than a year, in the British economy over the 1990s. The situation then stabilised and then increased after the global financial crisis. There is also a rather rapid fall in long-term unemployment in the mid-1980s as the British economy recovered under Thatchernomics
Source: OECD StatExtract.
08 Aug 2015
by Jim Rose
in budget deficits, great recession, job search and matching, labour economics, labour supply, macroeconomics, politics - USA, unemployment, welfare reform
Tags: natural unemployment rate, taxation and labour supply, unemployment duration, unemployment insurance, unemployment rates, welfare state
The Great Recession was the first recession in the USA in a good 40 to 50 years where the composition of employment changed by much. Even the big recession at the beginning of the 1980s did not do much to the composition of unemployment by duration in the USA.
Source: OECD StatExtract.
Those unemployed for more than a year moved from barely double digits even in a bad recession prior to 2008 to coming on one-third of all unemployed. Likewise, those unemployed for less than a month halved from 40% to 20%. Something changed in the US labour market with the Great Recession and the long extensions of unemployment insurance from 26 weeks to 52 weeks and then 99 weeks.
08 Aug 2015
by Jim Rose
in business cycles, economic history, global financial crisis (GFC), great recession, job search and matching, labour economics, labour supply, macroeconomics, unemployment
Tags: Australia, Canada, unemployment rates
Source: OECD StatExtract.
I have no information as to why there is a sudden surge in the Canadian unemployment duration rate in 2001.
08 Aug 2015
by Jim Rose
in Euro crisis, job search and matching, labour economics, macroeconomics, minimum wage, unemployment
Tags: employment law, equilibrium unemployment rates, Eurosclerosis, expressive voting, labour market regulation, natural unemployment rate, offsetting behaviour, rational irrationality, unintended consequences
07 Aug 2015
by Jim Rose
in economic history, global financial crisis (GFC), job search and matching, labour economics, labour supply, macroeconomics, politics - New Zealand, unemployment
Tags: Australia, equilibrium unemployment rate, natural unemployment rate, unemployment duration
As with New Zealand, Australian long-term unemployment seems to go up and down quite a lot with recessions such as those in the early 1980s and early 1990s but not after the global financial crisis.
Source: OECD StatExtract.
07 Aug 2015
by Jim Rose
in applied welfare economics, fiscal policy, labour economics, politics - Australia, politics - New Zealand, politics - USA, poverty and inequality, welfare reform
Tags: Denmark, Finland, life expectancies, Norway, Sweden, welfare state
05 Aug 2015
by Jim Rose
in economic history, Euro crisis, job search and matching, labour economics, labour supply, macroeconomics, unemployment
Tags: employment law, equilibrium unemployment rate, France, labour market regulation, natural unemployment rate, unemployment duration
Nothing really changes in France recently unemployment duration. Italian labour market is notorious for having very low inflows and outflows from employment and unemployment.
Source: OECD StatExtract.
05 Aug 2015
by Jim Rose
in discrimination, economic history, gender, labour economics, law and economics
Tags: France, gender wage gap, Germany, Leftover Left, Norway, Sweden, Twitter left
Our friends on the Left go on about how wonderful place Sweden is despite its gender gap being stuck for 35 years. Not much better in Norway and in Germany and France for that matter.
Figure 1: gender wage, % of median male wage, full-time employees, France, Germany, Sweden and Norway, 1980 – 2012
Source: Earnings and wages – Gender wage gap – OECD Data.
The gender wage gap in figure 1 is unadjusted and defined as the difference between median earnings of men and women relative to median earnings of men. Data refer to full-time employees.
04 Aug 2015
by Jim Rose
in discrimination, gender, labour economics, politics - Australia, politics - New Zealand, politics - USA
Tags: Australia, British economy, gender wage gap
New Zealand does much better than most on the gender wage gap for full-time workers.
Figure 1: gender wage, % of median male wage, full-time employees, USA, UK, Australia and New Zealand, 1970 – 2012
Source: Earnings and wages – Gender wage gap – OECD Data.
The gender wage gap in figure 1 is unadjusted and defined as the difference between median earnings of men and women relative to median earnings of men. Data refer to full-time employees.
I never found it terribly helpful to include part-time workers, such as in an hourly measure of the gender wage gap because of a larger trade-off between cash wages and work life balance in part-time jobs.
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…
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