
The remainder of the op-ed can be found at http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=11808972
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
18 Mar 2017 Leave a comment

The remainder of the op-ed can be found at http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=11808972
18 Mar 2017 Leave a comment
in labour economics, labour supply, politics - USA, population economics Tags: economics of immigration
10 Mar 2017 Leave a comment
10 Mar 2017 Leave a comment
in liberalism, libertarianism, politics - USA Tags: 2016 presidential election
09 Mar 2017 1 Comment
in international economics, politics - New Zealand

When I first heard of this idea to increase exports by 1/3rd, I immediately thought that the balance of payment balances. Any increase in exports will require a matching increase in imports unless we want to start exporting 10% of our GDP, running a trade surplus of 10% of our GDP relative to where it is now.

Countries do not normally embrace the Dutch disease. This is a large appreciation of the currency after an export boom will deindustrialise the import competing sectors and the non-booming export sectors. The exchange rate appreciation brought on by the export boom and heavy demand for New Zealand foreign exchange by foreigners will cause a large switch in consumer spending towards imports.

If exports are to go up by 10% of GDP, imports must too unless there is a change in incentives to invest and save in New Zealand and abroad. As Barro explains
The current-account balance is the difference between a country’s total income and its spending on consumption and investment (and net transfers abroad).
The current account is the difference between national saving — income not spent on consumption — and domestic investment. To think about why the ratio of the current-account deficit to GDP is large, ask why the ratio of investment to GDP is high or why the national saving rate is low.
Current accounts go into surplus or deficit because there is an international trade in savings. We either import the savings of others or export NZ savings. When net exports are positive, we are exporting our savings, when exports are negative, we are importing the savings of others.
The capital account surplus, otherwise known to scaremongering and export fetish types as the current account deficit, is the extent to which foreigners are willing to lend their savings to New Zealanders to buy imports in excess of export receipts.
When the current account is in surplus as it certainly must if we increased exports by 10 percentage points of GDP, New Zealanders would be lending a substantial amount of their savings to the rest of the world. What is the point of an export boom if we do not spend some of it?
It is just pedantic to point out the few countries outside of the European Union export more than 1/3rd of their GDP. That is just raining on Steven Joyce’s parade. Exports are still less than 30% of GDP in 2016 as the graphic below shows.

Source: OECD Factbook 2016.
09 Mar 2017 Leave a comment
in discrimination, gender, labour economics, labour supply, politics - USA Tags: employer discrimination, gender wage gap, unconscious bias
08 Mar 2017 2 Comments
in applied price theory, economic history, human capital, labour economics, labour supply, occupational choice, politics - New Zealand Tags: Claudia Goldin, gender wage gap
Dear Deputy Prime Minister,
Earlier this week in your capacity as Minister of Women’s Affairs you sponsored research on the causes of the gender wage gap in New Zealand.
That just published research was seriously incomplete. The Ministry of Women’s Affairs advised today that they were aware of the work of Claudia Goldin but did not reference it.
MWA ignored the research of the world’s top female labour economist Claudia Goldin. Her research shows that the causes of the gender wage gap are completely different to what you have suggested in the research you launched earlier this week and calls for novel policy solutions that are in a completely different ballpark to those that you have raised this week.
When education and accumulated job experience faded away as the statistical explanation of the causes of the gender wage gap, which the research you launched confirmed, Goldin explored how the organisation of work drove what remains. She called this the last chapter of the gender wage gap.
She found that jobs where the willingness to work very long hours, very specific hours and/or maintain continuous contact with co-workers or clients are highly prized and disproportionately rewarded was central to explaining the gender wage gap for well-paid workers.
Both her research and that you sponsored this week shows that the gender wage gap is close to zero for the bottom half of the wage distribution but the wage gap is 20% or more for professionals in the top 10% of wage earners.
Rather than hypothesise that employers suddenly develop an unconscious bias against successful career professionals because they are female, Goldin looked deeply into how the organisation of work and design of jobs affected how workers were paid and how women made choices about their careers and what they majored in at university in anticipation of these demanding or rat race jobs.
Goldin referred to pharmacy as the most family friendly occupation in America because pharmacists are completely interchangeable and in America the great majority of them are employed by Walmart and other big companies. Few are self-employed. The only advantage of working long hours in the pharmacy profession is you are very tired at the end of the week.
Goldin contrasted that with law or finance sector jobs which are rat race jobs.
Rat race jobs such as these disproportionately reward people who are willing to work very long hours, work very rigid hours and/or show up whenever the client wants them anywhere in the world. These jobs also severely penalise even the shortest interruption in your career track. You come back reporting to the people you hired 12-24 months ago!
After starting on the same pay, large gender wage gaps in high-powered professional occupations emerge after 5-10 years into a career as successful professionals power up to become partners or highflyers.
Importantly, Goldin found one counterfactual to this large wage gap for high-powered professionals. If your husband earns less, there is no wage gap with your MBA classmates at Harvard but you do work fewer hours per week.
Goldin’s study of the Harvard and Beyond longitudinal study was corroborated by a study she did of the top 100 occupations in the American Community Survey. The gender wage gap is limited to rat race jobs.
Goldin argued that the last chapter of the gender wage gap dependents on changing the way in which we organise work.
That is a profoundly ambitious agenda because much of the way in which high-powered professionals must work long hours and be always on call for clients is from the demands of their clients. For example, you want your lawyer to show up in court on time every time and always be available to you when you are in trouble. The legal system does not work in any other way because of the possibility of urgent applications to court etc.
Women anticipate this because, as an example, female surgeons tend to specialise in areas where they can schedule operations in advance rather than having to rush in to perform emergency surgery.
I suggest to you that you should think more deeply about the quality of advice you have just received from the causes of the gender wage gap in New Zealand.
That advice to you is profoundly at odds with the latest thinking in modern labour economics on what the causes are and what the solutions must now be for the last chapter of the gender wage gap.
A postscript has the key publications of Claudia Goldin to show why she is the world’s leading female labour economist without a doubt. You were not advised of her findings.
Cheers,
Jim Rose
Selected publications of Claudia Goldin on the labour economics of gender
08 Mar 2017 Leave a comment
in economics, politics - USA, television, war and peace
08 Mar 2017 2 Comments
in discrimination, gender, human capital, labour economics, labour supply, politics - New Zealand Tags: compensating differences, gender wage gap, glass ceiling, work life balance
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
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