Category: Equitablog

Should-Read: Economist: Women and economics: Inefficient equilibrium: “Donna Ginther… has found telling evidence that women… in economics… face a thicker glass ceiling…

…tenure… achieve[d]/// at a rate 12 percentage points below that of men…. even after adjusting (as much as possible) for differences in family circumstances and publication record. In American universities women who achieve tenure are promoted to full professor within seven years at a rate of 29% compared to 56% for men. Adjusting for other factors, Ms Ginther still finds a gap of 23 percentage points. In other social and natural sciences such differences are a thing of the past….

There is every chance that that this lack of diversity constrains or distorts the field’s intellectual development…. If, on the other hand, women have a similar range of innate potential and inclination towards the subject as men, but are avoiding or leaving it because it treats them worse, then the burden is on economists to change. And that is the way that the evidence currently points….

The women who graduate in economics go into PhD programmes at roughly the same rate as men; they tend to drop out of them at the same rate, too. But once they move on to seeking tenure, women are much more readily lost…. One common suggestion is that women do not like the famously combative style of economics seminars. Motherhood may also be an issue. American academics usually have the option to pause their tenure clock when they have a child. Heather Antecol of Claremont McKenna College and Kelly Bedard and Jenna Stearns of the University of California, Santa Barbara have found that this family-friendly policy disadvantages female economists. Women in the field taking advantage of the extra time mostly use it for child care; men often use it for focused research undistracted by students. The effect has been to lower the chances of a woman getting tenure in her first job by 22 percentage points….

Because people research things based on their experiences, greater representation of women in the field would change it in a number of ways. For one thing, it would take gender more seriously. Men have not proved particularly interested in understanding gender disparity; almost all of the research on gender discrimination within economics is done by women. There may be deep structural barriers to break through. Historians note that, over the course of the 20th century, economics was butched up. In 1920, 19% of doctorates listed in the American Economic Review were being written by women. By 1940 the number had fallen to 7%. This coincided with a redefinition of the field towards mathematics and the world of paid and thus predominantly male labour. Concerns such as social work and home economics, in which women tended to specialise, were sidelined….

On the basis that economics does have a problem, various interventions might help. Approaches to family leave that don’t privilege men; scrutiny of the higher drop-out rate of female undergraduates; explicit description of each author’s contribution to co-authored papers, as is common in other disciplines; frank discussion of implicit biases. Some such interventions are easier than others. For example, studies show that having more women on the faculty is a powerful encouragement for women seeking postgraduate positions. But if the number of women on faculties could readily be raised, the problem would already have been solved.

Should-Read: Free Exchange: A decade after it hit, what was learnt from the Great Recession?: “The success of those policies, and the relatively bearable recession that resulted, allowed governments to avoid more dramatic interventions…

…of the sort which, after the 1930s, gave the world half a century of (relative) economic calm. By reducing the need for radical innovation, the speed and efficacy of the response left the world economy less reformed and so vulnerable to the same forces that made the crisis possible in the first place. Several shortcomings stand out. In dealing with the Depression, governments ultimately discarded the gold standard, the global currency regime that helped propagate the disaster…. That would be less troubling had the world made itself more robust to future crises…. The stabilisation policies used in the Great Recession were vastly superior to those of the Depression. But today’s governments have done a worse job of learning from experience than did their forebears…. The Depression enabled radical change by discrediting untrammelled capitalism and the elites who supported it…. Ten years on, the hopes of radical reform are all but dashed. The sad upshot is that the global economy may have the opportunity to relearn the lessons of the past rather sooner than hoped.

Should-Read: Nicholas Crafts: The Postwar British Productivity Failure: “British productivity growth disappointed during the early postwar period…

…inadequate investment in equipment and skills but also… inefficient use of inputs. Weak management, dysfunctional industrial relations, and badly-designed economic policy were all implicated. The policy framework was partly the result of seeking low unemployment through wage restraint by appeasement of organized labour. A key aspect was weak competition. This exacerbated corporate governance and industrial-relations problems in the British ‘variety of capitalism’ which sustained low effort bargains and managerial incompetence. Other varieties of capitalism were better placed to achieve fast growth but were infeasible for Britain given its history…

Should-Read: Friedrich von Hayek was very clear that a market distribution of income has little to do with “deserve”, even putting to one side the idea that perhaps we have not done anything to “deserve” our talents and our industriousness. IMHO, the conservative deference to wealth is rooted not in any moral claim to the justice of wealth distributions but rather to a very different claim—that churn is simply bad: Brink Lindsey and Steve Teles: The Conservative Inequality Paradox: “Conservatives have two intellectual commitments that are increasingly incompatible…

…They believe that the American economy is clogged up with crony-capitalist corruption that hands out special favors and protections to organized interests. They also hold that economic inequality—in particular, the surging share of total income earned by those at the very top—is morally justified by the rights of property and the tendency of free markets to raise living standards overall…. If our economy really is riddled with cronyism, then the beneficiaries must have pocketed large amounts of ill-gotten loot. The existing distribution of income and wealth, therefore, does not deserve the deference it would be due if all gains were derived from spontaneous, unregulated market transactions. Call it the conservative inequality paradox: Either conservatives have overstated the amount of crony capitalism, or their dismissal of the concept of inequality as envy is misplaced…

Should-Read: Danny Yagan: EMPLOYMENT HYSTERESIS FROM THE GREAT RECESSION: “This paper uses U.S. local areas as a laboratory to test whether the Great Recession depressed 2015 employment…

..Exposure to a 1-percentage-point-larger 2007-2009 local unemployment shock caused working-age individuals to be 0.4 percentage points less likely to be employed at all in 2015, evidently via labor force exit. These shocks also increased 2015 income inequality. General human capital decay and persistently low labor demand each rationalize the findings better than lost job-specific rents, lost firm-specific human capital, or reduced migration. Simple extrapolation suggests the recession caused most of the 2007-2015 age-adjusted employment decline…

Should-Read: Barry Eichengreen: Two Myths About Automation: “Robots, machine learning, and artificial intelligence promise to change fundamentally the nature of work…

…Everyone knows this. Or at least they think they do… [that] more jobs than ever are threatened… that previously safe jobs are now at risk…. All jobs, even those of doctors, lawyers, and professors, are being transformed. But transformed is not the same as threatened. Machines, it is true, are already more efficient than legal associates at searching for precedents. But an attorney attuned to the personality of her client still plays an indispensable role in advising someone contemplating a messy divorce whether to negotiate, mediate, or go to court. Likewise, an attorney’s knowledge of the personalities of the principals in a civil suit or a criminal case can be combined with big data and analytics when the time comes for jury selection. The job is changing, not disappearing. These observations point to what is really happening in the labor market. It’s not that nurses’ aides are being replaced by health-care robots; rather, what nurses’ aides do is being redefined. And what they do will continue to be redefined as those robots’ capabilities evolve from getting patients out of bed to giving physical therapy sessions and providing emotional succor to the depressed and disabled….

The coming technological transformation won’t entail occupational shifts on the scale of the Industrial Revolution, with its wholesale redistribution of labor between the agricultural and industrial sectors. After all, the vast majority of Americans already work in the service sector. But it will be more important than ever for people of all ages to update their skills and renew their training continuously, given how their occupations will continue to be reshaped by technology. In countries like Germany, workers in a variety of sectors receive training as apprentices and then over the course of their working lives. Companies invest and reinvest in their workers, because the latter can insist on it, possessing as they do a seat in the boardroom as a result of the 1951 Codetermination Law….

So here’s an idea. Instead of a “tax reform” that allows firms to expense their capital outlays immediately, why not give companies tax credits for the cost of providing lifelong learning to their employees?

Should-Read: Nathan Jensen: Exit options in firm-government negotiations: An evaluation of the Texas chapter 313 program: “A unique economic development incentive program in the state of Texas that holds almost all elements of bargaining constant…

…leaving only the ability of firms to walk away from a given location during the bargaining process…. I document the extent to which firms that chose to locate in Texas made their decisions independent of this special economic development program. My findings suggest that only 15% of the firms participating in the program would have invested in another state without this incentive. The majority of these projects, and incentive dollars, were allocated to firms already committed to investing in Texas. Case studies of over 80 projects reveal that in many cases it was an open secret that companies had already committed to their investment locations prior to receiving the incentive. This implies the that structure of the program encourages the overuse of incentives…

Should-Read: James Kwoka: U.S. antitrust and competition policy amid the new merger wave: “This dramatic and well-documented increase in concentration raises the question about its causes…

…Could it simply be the unfortunate side effect of the rise of information technology and network industries that typically do not support numerous firms? It’s certainly the case that those sectors of the economy have grown in visibility and importance, yet consolidation has affected lots of other, more traditional industries as well. Perhaps, then, the decline in competitiveness is due to the increased prevalence of barriers to entry used by incumbent firms to forestall competition by others. There is certainly evidence of this as well—some cited by CEA—but again, this appears to be localized in specific sectors. A third possible explanation is the role of antitrust policy, specifically the ways in which it has changed and permitted the emergence of ever-larger firms….”