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2015-02-28

• Labor Market Reform and the Cost of Business Cycles
  by Christian Zimmermann in NEP-DGE blog, 2015-02-28 00:48:26 UTC

  By Tom Krebs and Martin Scheffel http://d.repec.org/n?u=RePEc:zbw:vfsc14:100427&r=dge This paper studies the effect of labor market reform on the welfare cost of business cycles. Motivated by the German labor market reforms of 2003-2005, the so-called Hartz reforms, the paper focuses on two labor market institutions: the unemployment insurance system determining search incentives and the system of job placement services affecting matching efficiency. The paper develops a tractable search model with idiosyncratic labor market risk and risk-averse workers, and derives a closed-form solution for [...]

2015-02-27

• Handy Book of Economic Growth
  by dvollrath in The Growth Economics Blog, 2015-02-27 21:13:14 UTC

  I thought it would be nice to post some overview articles of significant research in economic growth. Culture, Entrepreneurship, and Growth . Doepke and Zilibotti Trust, Growth, and Well-Being , Algann and Cahuc Long-term Barriers to Economic Development , Spolaore and Wacziarg Family Ties , Alesina and Giuliano The Industrial Revolution , Clark Twentieth-Century Growth , Crafts and O’Rourke Historical Development , Nunn Institutions and Economic Growth in Historical Perspective , Ogilvie and Carus What Do We Learn from Schumpeterian Growth Theory? Aghion, Akcigit, and Howitt Technology Diff [...]

• Friday Growth Links
  by dvollrath in The Growth Economics Blog, 2015-02-27 18:20:25 UTC

  Things that I pretend I will have smart things to say about in the future: Lemin Wu on whether we are thinking about Malthusianism correctly. A general point from this paper is that once you stop thinking of output as a single homogenous good, how you choose to weight different goods in your GDP/real wage/utility calculation matters a lot for your conclusions. David Autor will take your job . Or something like that. I lost the thread of this article when I came upon this sentence: “Mr. Autor—who always sports a single gecko-shaped silver earring, his trademark symbol also pasted on his iPho [...]

• The "cost" bias
  by chris in Stumbling and Mumbling, 2015-02-27 14:04:22 UTC

  Simon's claim that fiscal austerity has been a disaster reminds me of a big bias in the media - the misuse of the word "cost". Very often, when the press use the word "cost" to describe a policy, what they really mean is a transfer. For example, the BBC says that "offering four weeks paid paternity leave will cost £150m a year". No, it won't. This is a benefit for working fathers but a cost to their employers. This is a transfer, not a cost. Similarly, the Guardian writes : "A cut in the cap on tuition fees would cost just under £2bn." It might cost universities that, but it'll benefit futur [...]

2015-02-26

• Please review the ethics of human ethics review
  by Eric Crampton in Offsetting Behaviour, 2015-02-26 21:51:00 UTC

  Human ethics review panels are the worst. Designed to prevent atrocities like Tuskegee, they then metastasised: any time your research could possibly involve a human subject, there are a billion forms to fill in. So it's usually easiest just to avoid doing field research. U Queensland's Paul Frijters didn't avoid doing field research. He sent actors out onto Brisbane buses with not quite enough money on their fare cards to see whether drivers were more likely to give white passengers a pass. Adam Creighton and Julie Hare write in The Australian on what happened next . Following national media [...]

• Why Miliband is right
  by chris in Stumbling and Mumbling, 2015-02-26 13:43:17 UTC

  Ed Miliband is right . MPs should be banned from having paid directorships and consultancies.  However, I don't say this for the conventional reasons. It's not because such jobs distract MPs from their duties to voters and the country. The way to stop an MP doing a lousy job isn't to stop him doing other jobs but to ensure that he gets either deselected or voted out. In this context, stronger powers of recall would be better than a ban on outside work. Nor is it because such directorships will lead to MPs' votes being swayed by specific commercial interests. As Simon says , the solution to th [...]

• Can helicopter money be democratic?
  by Mainly Macro in Mainly Macro, 2015-02-26 10:07:00 UTC

  Helicopter money started as an abstract thought experiment: money would be created and just distributed to individuals by helicopter. If we think of a consolidated government which includes its central bank, then it is clear that in technical terms this is a combination of monetary policy (the creation of money) and fiscal policy (the government giving individuals money). Economists call such combinations a money financed fiscal stimulus. With the advent of Quantitative Easing (QE), it has also been called QE for the people. Some have tried to suggest that central banks could undertake helicop [...]

2015-02-25

• Modeling Labor Markets in Macroeconomics: Search and Matching
  by Christian Zimmermann in NEP-DGE blog, 2015-02-25 17:31:44 UTC

  By Michael Krause and Thomas Lubik http://d.repec.org/n?u=RePEc:fip:fedrwp:14-19&r=dge We present and discuss the simple search and matching model of the labor market against the background of developments in modern macroeconomics. We derive a simple representation of the model in a general equilibrium context and how the model can be used to analyze various policy issues in labor markets and monetary policy. A very nice introduction to the topic, good for anyone who wants to learn about the topic, read up one some of its major developments, or assign it to students. [...]

• The relative income problem
  by chris in Stumbling and Mumbling, 2015-02-25 13:49:17 UTC

  I probably shouldn't say so in these censorious times, but I have a little sympathy for Sir Malcolm Rifkind's desire "to have the standard of living that my professional background would normally entitle me to have." Of course, an MP's salary of £67,060pa is high from most perspectives; it's more than 94% of us earn. But put yourself in his shoes . He's surrounded by senior journalists, lobbyists, businessmen and lawyers many of whom get six-figure salaries, sometimes on the basis of less than astonishing ability. Mightn't an experienced MP feel underpaid relative to them? In making such comp [...]

2015-02-24

• Stagnation & intergenerational justice
  by chris in Stumbling and Mumbling, 2015-02-24 14:38:02 UTC

  The juxtaposition of David Cameron's claim that we have a "fundamental duty" to care for pensioners with the FT's story that 20-somethings have low incomes after housing costs reminds us that intergenerational justice is now a big issue. But I wonder: is this partly a product of secular stagnation? To see my point, consider a reasonably typical exchange between a youngster and oldster: Oldie: You guys are lucky. You have smartphones, tinder, spotify and free books and music - and less sexism, racism and homophobia than in my day. Youngster: But I can't afford anywhere to live. The oldster is [...]

2015-02-22

• Micro Apartments in NYC
  by Matthew Kahn in Environmental and Urban Economics, 2015-02-22 20:28:00 UTC

  I learned a piece of algebra recently. �Did you know that rent per month = ($/sqft)*sqft? � � Where "sqft" = square feet of the apartment and $/sqft = price per square foot. �In major coastal cities, �price per square foot continues to rise. � This is caused by both supply and demand forces. �One way to continue to have affordable housing units in desirable cities is to allow developers the ability to supply micro-apartments. � This article talks about the demand for 400 square foot apartments. � I recognize that this would be a tight fit for families with kids but increasing the menu of housi [...]

2015-02-21

• How Will NYC Adapt to Sea Level Rise?
  by Matthew Kahn in Environmental and Urban Economics, 2015-02-21 15:14:00 UTC

  Citylab reports s ome great stuff in this blog post. � Such information plays the same role as Paul Revere did a long time ago. �Now that we know that coastal Manhattan has a problem, the efficient markets hypothesis makes some testable predictions about how asset prices will adjust. Investors will see these price signals and adjust their investment patterns. You do not need to be Einstein to predict that Manhattan's future Don Trumps will have strong incentives to identify "higher ground" on the island and to seek zoning law changes to allow them to build high rises there. �This is capitalist [...]

2015-02-20

• Social comparisons, health and well-being
  by maximorossi in NEP-LTV blog, 2015-02-20 16:56:28 UTC

  By: Andrew E. Clark URL: http://d.repec.org/n?u=RePEc:ehl:lserod:59316&r=ltv Health and well-being are socially determined. One of the ways in which this comes about is via social comparisons with other individuals in the same personal, geographic or social networks, with the comparisons referring either to income or other aspects of economic and social life. The existence of such comparison effects with respect to income may help to explain the social gradient in health. Keywords: well-being; comparisons; income; unemployment; divorce; religion; social health gradient JEL: N0 [...]

• Vertical transmission of overweight: evidence from English adoptees
  by maximorossi in NEP-LTV blog, 2015-02-20 16:54:58 UTC

  By: Joan Costa-Font Mireia Jofre-Bonet Julian Le Grand URL: http://d.repec.org/n?u=RePEc:ehl:lserod:60785&r=ltv We examine the vertical transmission of overweight drawing upon a sample of English children, both adopted and non-adopted, and their families. Our results suggest strong evidence of an intergenerational association of overweight among adoptees, indicating transmission through cultural factors. We find that, when both adoptive parents are overweight, the likelihood of an adopted child being overweight is between 10% and 20% higher than when they are not. We also find that the cultura [...]

• Money, well-being and loss aversion: does an income loss have a greater effect on well-being than an equivalent income gain?
  by maximorossi in NEP-LTV blog, 2015-02-20 16:53:34 UTC

  By: James Banks Gordon D.A. Brown Christopher J. Boyce Alex M. Wood Andrew E. Clark URL: http://d.repec.org/n?u=RePEc:ehl:lserod:57997&r=ltv Higher income is associated with greater well-being, but do income gains and losses impact on well-being differently? Loss aversion, whereby losses loom larger than gains, is typically examined with relation to decisions about anticipated outcomes. Here, using subjective well-being data from Germany (N = 28,723) and the UK (N = 20,570), we find that experienced falls in income have a larger impact on well-being than equivalent income gains. The effect is [...]

• The effect of extended unemployment insurance benefits: evidence from the 2012-2013 phase-out
  by maximorossi in NEP-LTV blog, 2015-02-20 16:51:15 UTC

  By: Farber, Henry S. (Princeton University) Rothstein, Jesse (UC Berkeley) Valletta, Robert G. (Federal Reserve Bank of San Francisco) URL: http://d.repec.org/n?u=RePEc%3Afip%3Afedfwp%3A2015-03&r=ltv Unemployment Insurance benefit durations were extended during the Great Recession, reaching 99 weeks for most recipients. The extensions were rolled back and eventually terminated by the end of 2013. Using matched CPS data from 2008-2014, we estimate the effect of extended benefits on unemployment exits separately during the earlier period of benefit expansion and the later period of rollback. In [...]

• Latin American Inequality: Colonial Origins, Commodity Booms, or a Missed 20th Century Leveling?
  by maximorossi in NEP-LTV blog, 2015-02-20 16:48:42 UTC

  By: Jeffrey G. Williamson URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:20915&r=ltv Most analysts of the modern Latin American economy have held the pessimistic belief in historical persistence — they believe that Latin America has always had very high levels of inequality, and that it’s the Iberian colonists’ fault. Thus, modern analysts see today a more unequal Latin America compared with Asia and most rich post-industrial nations and assume that this must always have been true. Indeed, some have argued that high inequality appeared very early in the post-conquest Americas, and that this [...]

• Exploitation in the lab
  by chris in Stumbling and Mumbling, 2015-02-20 14:39:21 UTC

  Experimental evidence suggests that Marx was right. In Capital, Marx describes the selling of labour power thus : He, who before was the money-owner, now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other, timid and holding back, like one who is bringing his own hide to market and has nothing to expect but — a hiding. And here's a recent paper by Nikos Nikiforakis, Jorg Oechssler and Anwar Shah: We have designed a game in which exploitation can result from the hierarchical relati [...]

2015-02-19

• These are Not the (Modeling Assumptions About) Droids You are Looking For
  by dvollrath in The Growth Economics Blog, 2015-02-19 23:37:03 UTC

  Let me start by saying that all future arguments about robots should use the word “droids” instead so that we can use more Star Wars references. Benzell, Kotlikoff, LaGarda, and Sachs (BKLS) have a new NBER working paper out on robots (sorry, I don’t see an ungated version). They are attempting to do what needs to be done: provide a baseline model of economic growth that explicitly accounts for the ability of software in the form of robots to replace human workers. With such a baseline model we could then see under what conditions we get what they call “immiserating growth” where we are actua [...]

• Heritability & the left
  by chris in Stumbling and Mumbling, 2015-02-19 14:31:40 UTC

  Jonah Goldberg asks : Why does the Left get to pick which issues are the benchmarks for “science”? Why can’t the measure of being pro-science be the question of heritability of intelligence? I don't know much force this question has: maybe some lefties do reject the heritability of IQ on ideological grounds. I want to make another point - that there's no need for them to do so. You can accept that IQ (or ability generally) is heritable and still be a strong egalitarian. I say this because of a simple principle: luck egalitarianism . This says that inequalities are unjust if they are du [...]

2015-02-18

• “Identifying Technology Spillovers and Product Market Rivalry,” N. Bloom, M. Schankerman & J. Van Reenen (2013)
  by afinetheorem in A Fine Theorem, 2015-02-18 21:04:01 UTC

  How do the social returns to R&D differ from the private returns? We must believe there is a positive gap between the two given the widespread policies of subsidizing R&D investment. The problem is measuring the gap: theory gives us a number of reasons why firms may do more R&D than the social optimum. Most intuitively, a lot of R&D contains “business stealing” effects, where some of the profit you earn from your new computer chip comes from taking sales away from me, even if you chip is only slightly better than mine. Business stealing must be weighed against the fact that some of the ben [...]

• Improvements in Quality of Life While You Are Hospitalized
  by Matthew Kahn in Environmental and Urban Economics, 2015-02-18 14:11:00 UTC

  The NY Times reports that Harvard and Yale Hospitals have figured out that hospitalized people enjoy sleeping through the night rather than being woken up every couple of hours to be poked and probed! � �While it is amazing that it took these great hospitals 100 years to figure this out, note that competition played a key role here in fostering this learning. A major theme in my life's work is the importance of non-market "quality of life" factors in our overall standard of living. �Yes, income is not a sufficient statistic for your well being but how do you go beyond the "Great Man" studies o [...]

• Worker flows, & occupations
  by chris in Stumbling and Mumbling, 2015-02-18 13:29:19 UTC

  Today's labour market figures didn't just tell us about aggregate employment and wages. They also contain some less-noticed but also important data. First, there are labour market flows - the numbers moving between employment, unemployment and inactivity. These show that:  - 338,000 people moved from employment to unemployment in Q4. This implies that 1.1% of those in work lost their jobs and didn't get another; this of course understates job insecurity to the extent that many who lose a job find another in the same calendar quarter, and because...  - 524,000 moved from employment to inactiv [...]

2015-02-17

• Who knew? People oppose austerity -- because the lump of labour fallacy!
  by Sandwichman in EconoSpeak, 2015-02-17 17:00:00 UTC

  ht "The basic story put forward to justify austerity is that a reduction in debt will generate an economic turnaround, but why have people rejected this narrative? Some economists would say that people have rejected it simply because it is wrong, but the problem is more protracted than this." -- Achim Kemmerling Note: This article gives the views of the author, and not the position of EUROPP – European Politics and Policy, nor of the London School of Economics .Yes, a disclaimer is probably a good idea. Especially when you are publishing nonsense that has been thoroughly discredited. In shor [...]

2015-02-16

• Why Don't Economists Go to Hollywood Parties?
  by pgduarte in History of Economics Playground, 2015-02-16 20:34:27 UTC

  � � � � � � � � � � � � � � � � �Featuring in the cinemas around the world, The Imitation Game offers us a romantic (and dramatic) view of Alan Turing's involvement with the World War II effort. A leading British mathematician, logician and a pioneering computer scientist, Turing was hired by the British government in 1939 (at the Government Code and Cypher School, GC&CS) to eventually lead a group of scientists involved in breaking the code of the German cipher system, which was a critical development in the defeat of the Nazis by the Allies. Turing's homosexuality is a theme that the directo [...]

• The Congressional Reserve Board: A Really Bad Idea
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2015-02-16 13:04:03 UTC

  “We are – I’ll be blunt – audited out the wazoo. Every Federal Reserve Bank has a private auditor. We have our auditor of the system. We have our own inspector general. We are audited. What he’s talking about is politicizing monetary policy.” Richard Fisher, President, Federal Reserve Bank of Dallas, Dallas Morning News , February 9, 2015. What would you think if you were to open your morning newspaper to find the following headline? “Congress Closes Down Fed, Takes Over Monetary Policy” If you’re like us, you’d panic. In short order, you’d think that long-term inflation [...]

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