Black and Hispanic poverty dropped by a third after the 1996 US welfare reforms
13 May 2015 Leave a comment
in labour economics, labour supply, politics - USA, poverty and inequality, welfare reform Tags: 1996 welfare reforms, child poverty, family poverty, welfare state
Just passed 40th anniversary of top climate scientists wanting to melt Arctic ice cap
13 May 2015 Leave a comment
in environmental economics, global warming, politics - Australia, politics - New Zealand, politics - USA Tags: climate alarmism, global cooling, global warming
We have just passed the 40th anniversary of our top climate scientists wanting to melt the Arctic ice cap. http://t.co/2ccvJgBREy—
Steve Goddard (@SteveSGoddard) May 12, 2015
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 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
The economic forces underpinning the housing affordability crisis
12 May 2015 2 Comments
in applied price theory, economics of regulation, politics - Australia, politics - New Zealand, politics - USA, urban economics Tags: housing affordability, land supply, land use regulation, RMA, zoning
The key point is that increases (declines) in demand can bring sharply rising (falling) house prices when supply is constrained. However, when land supply is not regulated, it adjusts to demand and house price volatility is reduced.
As long as commentators focus primarily on the demand side of the housing market, whilst ignoring supply-side constraints, they will never fully understand the drivers of housing bubbles and busts. The resulting incorrect diagnosis will inevitably lead to poor policy prescriptions and outcomes.
Can there be a shy NZ Labour vote when voter turnout is already high?
12 May 2015 Leave a comment
in politics - Australia, politics - New Zealand, politics - USA, Public Choice Tags: a shy Labour voter, shy Tories, voter demographics, voter turnout
The Left over Left truly believes there is a shy Labour vote out there waiting for the call of hard left policies. One flaw in that hypothesis is voter turnout in New Zealand is high by international standards.
Indeed, voter turnout doesn’t seem to vary that much with the political composition of governments. Despite compulsory voting, where those shy Labour voters would have to vote, most of the post-war period in Australia was governed by the Liberal party.
Do violent protests win votes for your cause?
12 May 2015 Leave a comment
in constitutional political economy, economic history, economics of crime, law and economics, politics - Australia, politics - New Zealand, politics - USA, Public Choice Tags: 1960s, activists, civil disobedience, Democratic Party, George Wallace, nonviolent protest, Richard Nixon, riots, Vietnam war, violent protests
Monkey Cage blogged on a very timely study on the impact of violent and nonviolent protests on voting behaviour. Non-violent protest in the 60s enticed sympathy and increased voter support for the Democratic Party in the 1964, 1968 to 1972 presidential elections:
Black-led nonviolent protests… exhibit a statistically significant positive relationship with county-level Democratic vote-share in the same period.
This is not surprising because nonviolent protest acknowledge fidelity to law and democratic equality. No one likes to be bullied and one of the purposes of the secret ballot is to prevent voters from being bullied because no one knows how you voted.
Indeed, there is a long history of anonymous pamphleteering, which has evolved into anonymous trolling as a way of people expressing their political views without facing backlash from both the majority and a vindictive minority.
In a democracy, it’s up to me to persuade you to change your mind – that what you took for granted for so long is not so. That’s how liberal democracies work: by trying to persuade each other and voting.
Violent protests had the exact opposite effect to peaceful protests on Democratic Party voting shares in the 1964, 1968 in 1972 presidential elections. There was a law and order backlash among voters against what were relatively widespread rioting and civil disorder:
…black-led protests in which some violence occurs are associated with a statistically significant decline in Democratic vote-share in the 1964, 1968 and 1972 presidential elections.
This is a roundabout way of saying that a Republican won the 1968 election on a law and order platform, not a Democrat on a peace platform. The country was convinced, including Liberal Democrats, that law and order had broken down and that the Democratic Party could not restore law and order.
In the 1968 presidential election, there is a third party candidate, George Wallace, who won won almost ten million popular votes and 46 electoral votes, including in the electoral college on an even harsher law and order platform than Nixon.
Wallace was a racist Southern Democrat the Democratic Party would prefer us to forget and a nasty political opportunist to boot. His political rhetoric included the only words four letter words the protesters didn’t know was work and soap.
As I recall warmed over Marxism, the idea of violent protests is to provoke a law and order backlash, initially with popular support of the working class. The resulting police repression will overreach and cause the proletariat to breakthrough their false consciousness to see that capitalists for whom they are and rise up to overthrow them.
Rise up ye workers, rise up for you have nothing to lose but your chains. These days that call to the barricades would have to be rise up ye workers, rise up for you have nothing to lose what your smart phone and air points.
The killer air pollution that the Greens never mention
12 May 2015 Leave a comment
4.3 million die every year. Indoor air pollution is the least reported problem of the world. bit.ly/1BfMiZg http://t.co/CDhafWSbj8—
Max Roser (@MaxCRoser) May 07, 2015
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 Taxes Affect Investment Decisions For Multinational Firms
11 May 2015 Leave a comment
in applied price theory, politics - Australia, politics - New Zealand, politics - USA, public economics Tags: company tax rates, foreign investment, multinational corporations, tax competition
How Taxes Affect Investment Decisions For Multinational Firms onforb.es/1Oe5lKu by @ErikCederwall http://t.co/BduZZbHs2n—
Tax Foundation (@taxfoundation) April 15, 2015
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.
A volatile depressed neighbour? Real American and Canadian GDP growth detrended, 1955-2013 – updated
11 May 2015 Leave a comment
in business cycles, economic growth, economic history, macroeconomics, politics - USA Tags: Canada, prosperity and depression
Figure 1: Real GDP per American and Canadian aged 15-64, converted to 2013 price level with updated 2005 EKS purchasing power parities, 1955-2013
Source: Computed from OECD Stat Extract and The Conference Board, Total Database, January 2014, http://www.conference-board.org/economics
Figure 2: Real GDP per American and Canadian aged 15-64, converted to 2013 price level with updated 2005 EKS purchasing power parities, 1.9 per cent detrended, 1955-2013
Source: Computed from OECD Stat Extract and The Conference Board, Total Database, January 2014, http://www.conference-board.org/economics
A rising line in figure 2 is above trend rate growth; a flat line is trend growth of 1.9%; and a falling line is below trend growth.
Canada has a volatile ride in the post-war period after economic success up until 1975. Despite ups and downs the Canadian economy has been in a long-term decline since 1975. Growth as rarely being at trend and was often below, sometimes sharply below trend.
None of these depressed periods in the Canadian economy were long enough to count as a great depression. Instead there was just a long-term decline.
Canada is next door to the USA and a member of the North American Free Trade Area (NAFTA) and its antecedents so its cannot blame distance nor small size for its decline in economic performance as some do in New Zealand.
Relative to the USA, Rao et al. (2006) and Sharp (2003) attributed the gap between the USA and Canada to less capital per Canadian worker, an innovation gap as shown by lower R&D expenditure in Canada, a smaller and less dynamic high technology sector in Canada, less developed human capital at the top end of the Canadian labour market, and more limited scale and scope economies in Canada.
These factors have been put forward, at one time or another, as the proximate causes of the New Zealand productivity gap with the USA. Identifying the barriers to higher Canadian productivity may offer fresh insights into removing similar productivity barriers in New Zealand.
Figure 3 suggests that the increase in tax revenues as a percentage of GDP from 30% to 35% at the same time as the Canadian economic boom came to an end and its economic decline began is worthy of further scrutiny. The strong economic recovery from 1995 onwards also coincided with the decline tax revenues as a percentage of GDP.
Figure 3: tax revenue as a percentage of GDP
Source: OECD StatExtract
Housing affordability and land regulation around the globe
11 May 2015 Leave a comment
in politics - Australia, politics - New Zealand, politics - USA, urban economics Tags: land supply, land use regulation, NIMBYs, RMA, zoning
Auckland is up with London and New York in terms of housing unaffordability relative to median incomes. US cities with responsive land regulation don’t experience housing bubbles.
Glaeser and Gyourko summarised the findings of a number of studies on land supply and housing prices:
Recent research also indicates that house prices are more volatile, not just higher, in tightly regulated markets …. price bubbles are more likely to form in tightly regulated places, because the inelastic supply conditions that are created in part from strict local land-use regulation are an important factor in supporting ever larger price increases whenever demand is increasing.
…. It is more difficult for house prices to become too disconnected from their fundamental production costs in lightly regulated markets because significant new supply quickly dampens prices, thereby busting any illusions market participants might have about the potential for ever larger price increases.
Via The Truth About the U.S. Housing Market | Seeking Alpha.
A short guide to the Middle East conflict
11 May 2015 Leave a comment
in politics - USA, war and peace Tags: Al-Qaeda, Hamas, ISIS, Middle-East politics, Muslim Brotherhood, war on terror
A short guide to the Middle East from @FT. Mind = Blown. http://t.co/kfzJ9b1NM8—
Mina Fayek (@minafayek) August 24, 2013
Utopia, you are standing in it! 
Recent Comments