"The Changing Nature of Middle-Class Jobs" – via @nytimes nyti.ms/17Jzp1N http://t.co/2vRL6idiXt—
PewResearch FactTank (@FactTank) February 22, 2015
Creative destruction in occupations
12 May 2015 Leave a comment
in labour economics, labour supply, occupational choice, personnel economics Tags: creative destruction, innovation, skill biased technological change
Annual hours worked per working age American, German and French, 1950–2013
12 May 2015 Leave a comment
in applied price theory, economic growth, economic history, great depression, labour economics, labour supply, macroeconomics, politics - USA, Public Choice, public economics, taxation Tags: Edward Prescott, Euroclerosis, France, Germany, labour supply, Robert Lucas, taxation and labour supply
Figure 1 shows that Americans work the same hours per year pretty much the entire post-war period. By contrast, there is been a long decline in hours worked in Germany and France. The large drop in 1992 was German unification.
Figure 1: annual hours worked per working age American, German and French, 1950 – 2013
Source: OECD StatExtract and The Conference Board Total Economy Database™,January 2014, http://www.conference-board.org/data/economydatabase/
The long decline seemed to tally with the disproportionately sharp rise in the average tax rate on labour income, including social security contributions in France and Germany. When tax rates on labour income, including social security contributions stabilised in about 1980, hours worked stabilised in all countries.
Figure 2: average tax rate on labour income,USA, Germany and France, 1950 – 2013
Source: Source: Cara McDaniel.
Some pander to the great vacation theory of European labour supply. This is the hypothesis of a large increase in the preference for leisure in the European Union member states. That is, mass voluntary unemployment and mass voluntary reductions and labour supply by choice by Europeans. They just decided to work less.
This is not the first outing for the great vacation theory of labour supply. In the late 1970s, Modigliani dismissed the new classical explanation of Lucas and Rapping (1969) of the U.S. great depression in which the 1930s unemployment was voluntary unemployment – the great depression was just a great vacation – with the following remarks:
Sargent (1976) has attempted to remedy this fatal flaw by hypothesizing that the persistent and large fluctuations in unemployment reflect merely corresponding swings in the natural rate itself.
In other words, what happened to the U.S. in the 1930’s was a severe attack of contagious laziness!
I can only say that, despite Sargent’s ingenuity, neither I nor, I expect most others at least of the non-Monetarist persuasion, are quite ready yet. to turn over the field of economic fluctuations to the social psychologist!
As Prescott has pointed out, the USA in the Great Depression and France since the 1970s both had 30% drops in hours worked per adult. That is why Prescott refers to France’s economy as depressed. The reason for the depressed state of the French (and German) economies is taxes, according to Prescott:
Virtually all of the large differences between U.S. labour supply and those of Germany and France are due to differences in tax systems.
Europeans face higher tax rates than Americans, and European tax rates have risen significantly over the past several decades.
Countries with high tax rates devote less time to market work, but more time to home activities, such as cooking and cleaning. The European services sector is much smaller than in the USA.
Time use studies find that lower hours of market work in Europe is entirely offset by higher hours of home production, implying that Europeans do not enjoy more leisure than Americans despite the widespread impression that they do. Europeans did not work less. They worked more on activities that were not taxed.
The robots are coming, the robots are coming – been there, done that in Japan
12 May 2015 1 Comment
in applied price theory, development economics, economic history, entrepreneurship, growth miracles, industrial organisation, labour economics, labour supply, survivor principle, unemployment Tags: creative destruction, entrepreneurial alertness, innovation, Japan, technological unemployment
When I was a kid, I used to like reading the Encyclopaedia Britannica. I read them from cover to cover.
One of the things I recalled from the Encyclopaedia Britannica was that in 1961 nearly half of the Japanese workforce worked in the agricultural sector.
I notice that anomaly when I was reading the Encyclopaedia Britannica entry on Japan in the 1970s. Japan had undergoing an economic transformation since my Encyclopaedia Britannica’s were written in 1961. It was very much out of date.
Australian manufacturing was being outcompeted in every direction from automobiles to clothing and footwear by the Japanese manufacturing sector back when I was a teenager.
The Japanese economic miracle absorbed the Japanese agricultural labour force without anybody having time to shout "the robots are coming, the robots are coming".
There is a lesson in there somewhere for the current breathless journalism, with far too many academic fellow travellers about "the robots are coming, the robots are coming".
When I was a student at graduate school in Japan, I visited a Japanese factory in 1996 that was completely automated bar one function. Only once did a human hand actually touch the electrical goods they were making. Naturally, at the Q&A session at the end of our visit, I asked when was his job going to be automated.
The primary school teachers union has done very well in New Zealand in recent times
12 May 2015 Leave a comment
in economics of bureaucracy, economics of education, labour economics, labour supply, occupational choice, Public Choice, rentseeking, unions Tags: public sector wage premium, union power, union wage premium
Why is the gender wage gap so big in the public sector that the unions invoiced the government for it?
12 May 2015 1 Comment
in discrimination, gender, human capital, labour economics, politics - New Zealand, unions Tags: employer discrimination, gender wage gap, gender wage gap discrimination, government discrimination, New Zealand Greens, sex discrimination
The unions representing public servants and the Green Party are very excited about the gender wage gap this week. So much so that the public service union presented the Treasury with an invoice for that wage gap in the public sector of 14.1%.
Women in the public service are paid 14.1% less than men. We've invoiced @honbillenglish for the missing $294,827,136 http://t.co/QW5z4tU7bv—
(@NZPSA) May 11, 2015
Oddly enough, despite their concerns with the gender wage gap in the public service, the public service unions are stridently against both privatisation and contracting out.
It is almost trite to note is that one of the earliest analytical results in the labour economics of discrimination was that profit maximising employers are much less likely to discriminate than firms that are not subject to a profit and loss constraint and the discipline of bankruptcy.
A prejudiced employer pays a wage above the competitive wage to attract the particular recruits he or she is prejudiced in favour of and does not hire enough workers because he must pay higher wages. This results in lower output and profits than without discrimination.
@greencatherine Unadjusted NZ gender pay gap is 6%, the best in world. http://t.co/2fYuVbJg9E—
Jim Rose (@JimRose69872629) March 19, 2015
Bureaucrats can indulge their prejudices without putting the survival of their business in jeopardy. Entrepreneurs who don’t hire on merit risk running out of going out of business because their costs are hire and their businesses less productive.
…market mechanisms impose inescapable penalties on profits whenever for-profit enterprises discriminate against individuals on any basis other than productivity. Though bigoted managers may hold sway for a time, in the long run the profit penalty makes profit-seeking enterprises tenacious champions of fair treatment.
Early examples of the greater propensity for discrimination in the public sector and non-profit organisations are by Armen Alchian and Ruben Kessel in Competition, Monopoly, and the Pursuit of Money in 1962 and Gary Becker’s pioneering The Economics of Discrimination in 1957.
Employment and the risk of deep poverty in the USA
12 May 2015 Leave a comment
in labour economics, labour supply, poverty and inequality Tags: child poverty, family poverty, labour force participation
The best defense against deep poverty is a paycheck: brook.gs/1IVXiTo http://t.co/BsermWSDZk—
Brookings (@BrookingsInst) May 10, 2015
Despite being a wealthy nation, extreme & deep poverty has become more prevalent in the U.S.: brook.gs/1IVVI3O http://t.co/cfnlkrXuw6—
Brookings (@BrookingsInst) May 09, 2015
More than 7.1 million U.S. children live in deep poverty. Get the facts on America's poor: brook.gs/1IWlK74 http://t.co/K4Uwrl5TOg—
Brookings (@BrookingsInst) May 08, 2015
The average CEO in America earns about as much as the average dentist
12 May 2015 Leave a comment
in human capital, labour economics, labour supply, occupational choice, politics - USA, poverty and inequality Tags: CEO pay, top 1%
Are 40% of workers on zero hours contracts, almost?
12 May 2015 1 Comment
in labour economics, labour supply, managerial economics, organisational economics, personnel economics, politics - Australia, politics - New Zealand, politics - USA, theory of the firm Tags: zero hours contracts
4 in 10 hourly workers know their schedules just a week or less in advance brook.gs/1wkfkXW http://t.co/6JNkYlftjL—
Richard V. Reeves (@RichardvReeves) December 11, 2014
What’s left of the welfare state after dastardly neoliberalism still lifts most out of poverty
12 May 2015 Leave a comment
in labour economics, labour supply, politics - USA, poverty and inequality Tags: child poverty, family poverty, Leftover Left, neoliberalism, welfare reform, welfare state
How government reduces child poverty (SPM-measured) in the U.S. bit.ly/1D7eXjZ From: @aecfkidscount http://t.co/80m2jjXxvY—
Richard V. Reeves (@RichardvReeves) April 16, 2015
To tackle poverty, the Left says welfare, the Right says work. Guess what? They're both right: brook.gs/1zSabJI http://t.co/E4AZR05CQJ—
Richard V. Reeves (@RichardvReeves) February 13, 2015
The magic of (increasing) redistribution in one @EugeneSteuerle graph blog.metrotrends.org/2015/02/addres… http://t.co/lbtlM3zT5L—
Richard V. Reeves (@RichardvReeves) February 18, 2015
How the welfare state reduces inequality
11 May 2015 Leave a comment
in economic history, labour economics, poverty and inequality Tags: poverty and inequality, top 1%, welfare reform, welfare state
How Gov. transfers (more than Federal taxes) reduce inequality cbo.gov/publication/49… http://t.co/3dMObjsykL—
Richard V. Reeves (@RichardvReeves) November 13, 2014
Women and Social Mobility – Key Facts
11 May 2015 Leave a comment
in discrimination, gender, labour economics, labour supply, occupational choice, politics - USA, population economics Tags: gender wage gap
How are today's baby boomer women faring compared to their #mothers? Check out these 6 facts: brook.gs/1J2Hq1l http://t.co/DMZG536cE3—
Brookings (@BrookingsInst) May 11, 2015
1. Today’s working women (henceforth described as “daughters”) have higher wages than their mothers – but do not have higher wages than their fathers. Men have higher wages than both their fathers and their mothers.
2. The poorest women are doing best. 80% of daughters raised in the bottom quintile have higher wages than their fathers did. (h/t Scott Winship)
3. “Men’s wages remain more important to increasing couples’ family income,” despite “women’s significant generational gains” …
4. Women who grew up in households where their mother did not work actually have the highest family incomes today—but not because they themselves earn more. Daughters’ individual incomes do not vary significantly by mother’s work status, but family income does—suggesting that daughters whose mothers didn’t work have higher earning husbands. (Catherine Rampell discovered this by asking Pew to split out their analyses by mothers’ labor choices.) Perhaps those raised in more traditional settings are more likely to replicate a traditional division of labor?
via via Women and Social Mobility: Six Key Facts | Brookings Institution.
Another gender gap that dare not mention its name
11 May 2015 Leave a comment
in discrimination, economics of education, gender, human capital, labour economics, occupational choice Tags: educational attainment, gender wage gap, reversing gender gap
Prediction: No commencement speaker will mention the huge ‘degree gap’ favoring women. ow.ly/MCiAm http://t.co/kzzNagctAk—
(@AEI) May 06, 2015
Full-time work on the minimum wage is enough to keep a NZ family out of poverty!
10 May 2015 Leave a comment
in labour economics, minimum wage, politics - Australia, politics - New Zealand, politics - USA, poverty and inequality Tags: capitalism and freedom, child poverty, family poverty, Left-wing hypocrisy, living wage, New Zealand Greens, New Zealand Labour Party, Simon Chapple
Where a 40-hour workweek doesn't lift families from poverty: bloom.bg/1AFOD0q http://t.co/eBoJSz1TkX—
Bloomberg VisualData (@BBGVisualData) May 23, 2015
An OECD chart that shows New Zealand parents only need to work a little over 40 hours a week on the minimum wage to lift a family out of poverty in New Zealand.
The figure above shows that a lone parent with two children needs to work about 25 hours a week stay out of poverty in 2013 in New Zealand Once taxes are taken into account as well as additional family benefits such as in-work tax credits. New Zealand is one of the easiest places in the world to get out of poverty by working part-time for a sole mother.
The figure above from the OECD shows that New Zealand couple with two children needs to work about 40 hours a week to stay out of poverty. Of course, what is poverty depends on the definition of the poverty line and in this case by the OECD, it is defined as 50% of the median wage after taxes and family benefits. Another common definition of poverty is earning less than 60% of the median wage
The minimum wage is $14.75 per hour in New Zealand while proposals for a living wage in New Zealand are now $19.25 an hour. The Labour Party wants to increase the minimum wage to $15 per hour.The Greens want to increase the minimum wage to the living wage.
Simon Chapple and Jonathan Boston pointed out in their excellent book last year on child poverty in New Zealand that full-time work by one parent and part-time work by the other in the same household is enough to lift families out of most definitions of poverty:
Sustained full-time employment of sole parents and the fulltime and part-time employment of two parents, even at low wages, are sufficient to pull the majority of children above most poverty lines, given the various existing tax credits and family supports.
The best available analysis, the most credible analysis, the most independent analysis in New Zealand or anywhere else in the world that having a job and marrying the father of your child is the secret to the leaving poverty is recently by the Living Wage movement in New Zealand.
According to the calculations of the Living Wage movement, earning only $19.25 per hour with a second earner working only 20 hours affords their two children, including a teenager, Sky TV, pets, international travel, video games and 10 hours childcare. This analysis of the Living Wage movement shows that finishing school so your job pays something reasonable and marrying the father of your child affords a comfortable family life.
The OECD’s analysis also showed that incentives for New Zealanders to work more and earn more is better than in most countries in terms of what happens if they earn a wage increase.
In New Zealand, when there is a 5% minimum wage increase, four percentage points of that wage increase actually stays in the hands of the worker.
In some countries such as Australia, the USA and UK, 60 to 80%of the minimum wage increase is gobbled up in reductions in benefits and taxes. At the same time, the minimum wage increase makes it less profitable for your employer to retain you so your job is more at risk.
The only explanation I have for why the Labour Party, NZ Greens and the living wage movement don’t highlight the success of the existing minimum wage in reducing family poverty in New Zealand is mass kidnappings.
But for these abductions most fowl, I’m sure the Labour Party, NZ Greens and the living wage movement would be dancing in the street celebrating successes of capitalism and freedom in New Zealand in keeping families out of poverty through the minimum wage.
Utopia, you are standing in it! 
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