Marginal tax rate of average earners in USA, UK, Australia and New Zealand since 2000

Interesting to notice that in New Zealand and the USA after these increases in marginal tax rates on single taxpayers, their economies slowed down. What appears to have happened is a number of people reached the next income tax marginal tax rate threshold.

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Source: OECD StatExtract.

Some tax cuts for families! Average tax rates on married couple with one income, 2 kids in USA, UK, Australia and New Zealand since 2000

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Source: OECD StatExtract.

No tax cuts for you? Net personal average tax rate of single American, British, Australian and New Zealander on average earnings, no children, since 2000

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Source: OECD StatExtract.

British life expectancies by age and sex, 1990 to 2013

LE by Age in UK males

LE by Age in UK

via Life Expectancy by Age in selected Country from 1990 to 2013 | Health Intelligence.

..

Over-qualification rates in jobs in the USA, UK and Canada

In the UK, foreign-born are much more likely to be over qualified than native born highly educated not in education with less difference between men and women. More men than women are overqualified for their jobs in the UK. Over qualification is less of a problem in the UK than in the USA and Canada.

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Source: OECD (2015) Indicators of Immigrant Integration 2015: Settling In.

In the USA and Canada, there are few differences between native and foreign born men in over-qualification rates. Foreign-born women tend to be more over-qualified than native born women in the USA  and more so in Canada. Many more workers are overqualified for their jobs in the USA and Canada as compared to the UK.

There are large differences in the percentage of people with tertiary degrees and the education premium between these three countries that are outside the scope of this blog post. These trends may explain differences in the degree of educational mismatch.

It goes without saying that the concept of over-qualification and over-education based mismatch in the labour market is ambiguous, if not misleading and a false construct.

To begin with, under human capital theories of labour market and job matching, what appears to be over-schooling substitutes for other components of human capital, such as training, experience and innate ability. Not surprisingly,  over-schooling is more prominent among younger workers because they substitute schooling for on-the-job training. A younger worker of greater ability may start in a job below his ability level  because he or she  expects a higher probability to be promoted because of greater natural abilities. Sicherman and Galor (1990) found that:

overeducated workers are more likely to move to a higher-level occupation than workers with the required level of schooling

Investment in education is a form of signalling. Workers invest so much education that they appear to be overqualified  in the eyes of officious bureaucrats. The reason for this apparent overinvestment  is signalling superior quality as a candidate. Signalling seems to be an efficient way of sorting and sifting among candidates of different ability. The fact that signalling survives in market competition suggests that alternative measure ways of measuring candidate quality  that a more reliable net of costs are yet to be discovered.

Highly educated workers, like any other worker, must search for suitable job matches. Not surprisingly, the first 5 to 10 years in the workforce are spent in half a dozen jobs as people seek out the most suitable match in terms of occupation, industry and employer. Some of these job seekers who are highly educated will take less suitable jobs while they search on-the-job for better matches. Nothing is free or instantly available in life including a good job match.

A more obvious reason for over qualification is some people like attending university and other forms of education for the sheer pleasure of it.

Anyone who encounters the words over-qualified and over-educated should immediately recall concepts such as the pretence to knowledge, the fatal conceit, and bureaucratic busybodies. As Edwin Leuven and Hessel Oosterbeek said recently:

The over-education/mismatch literature has for too long led a separate life of modern labour economics and the economics of education.

We conclude that the conceptional measurement of over-education has not been resolved, omitted variable bias and measurement error are too serious to be ignored, and that substantive economic questions have not been rigorously addressed.

UK has the lowest company tax rate in the G20

% of unemployment that is more than 12 months, USA, UK, Germany and France

As the British labour market and long-term unemployment was starting to get something like that in the USA, the USA started to have unemployment it was more like the European labour markets in terms of the number of long-term unemployed. Nothing much happened in Germany and France.

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Source: OECD StatExtract.

Union density rates in USA, UK, Australia and New Zealand since 1960

Unions have been in a long-term decline in Australia, New Zealand, the UK and the USA for as far back as survey and administrative data can be collected. There is a bit of a hump in union membership in the mid-1970s in New Zealand, Australia and the UK but that was about it.

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Source: Source: OECD and J.Visser, ICTWSS database (Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts, 1960-2010), version 3.0 (http://www.uva-aias.net/).

British unemployment incidence by duration since 1983

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

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Source: OECD StatExtract.

What happened the last time a Labour PM was elected before Blair

Swedosclerosis, Eurosclerosis and the British disease compared

Figure 1 shows stark differences between Sweden, France, Italy and the UK since 1970 in departures from trend growth rates of 1.9% in real GDP per working age person, PPP. Italy did quite OK until 2000 growing at about the trend growth rate of 1.9% after which it fell into a hole so deep that it barely notice the onset of the global financial crisis. Sweden really had been the sick man of Europe until it turned its back on high taxing, welfare state socialism in the early 1990s. France has been in a long decline so much so that the global financial crisis is hard to pick up in the acceleration in its long decline in the mid-1990s. Figure 1 also shows Britain did very well, both under the neoliberal horrors of Thatcherism and the betrayals by Tony Blair of a true Labour Party platform. The UK grew at above the trend annual growth to 1.9% for most of the period from the early 1980s to 2007. The UK has done not so well since the onset of the global financial crisis.

Figure 1: Real GDP per Swede, French, British and Italian aged 15-64, 2014 US$ (converted to 2014 price level with updated 2011 PPPs), 1.9 per cent detrended, 1970-2013

Source: Computed from OECD StatExtract and The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/

Note: When the line is flat, the economy is growing at its trend annual growth rate. A falling line means below trend annual growth; a rising line means of above trend annual growth. Detrended with values used by Edward Prescott.

German data was not in figure 1 because German unification threw all of its data into disarray for long-term comparison purposes.

Gender wage gap, USA, UK, Australia and New Zealand since 1970

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

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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.

The Great Escape in England 1930 – 2001

Tax rates on labour income across the OECD area

Are there net saving from a British pull-out of the EU?

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