Here is a good article by Justin Lahart:
The dismal economy has claimed yet another victim: jobs for the economists who study it.
Columbia University's economics department, for example, isn't
making any new hires this year. That's in stark contrast to last year,
when Columbia poached eight economics professors from other schools,
and hired one economist out of graduate school. The University of North
Carolina at Chapel Hill, Amherst College and the University of
Minnesota all have suspended their searches for economics professors.
And Harvard University has gotten permission to hire just one person –
only after "many rounds of negotiation," according to Harvard economist
Lawrence Katz, who is handling recruiting this year. Typically, Harvard
hires two or three economics professors out of graduate school.
This totally proves the covariance with consumption in asset pricing thing, IMHO.
(I’m currently learning for Asset Pricing and therefore John H. Cochrane and the Stochastic Discount Factor are my only gods.)
I’m not sure if either “fortunately” or “unfortunately” should be added to what comes next, but this is a problem not just for economists. It’s true of pretty much all departments in schools of arts and sciences, and to a lesser degree of “revenue generating” schools such as law schools and business schools. On the other hand, some smart universities are doing counter-cyclical hiring now, realizing that they can now hire someone who would have been out of their league in a better year. A wise choice for any school that can do it, I think.
Overheard on the train this morning:
“If we want a quick stimulus package that will work, we should be asking prostitutes, not economists.”
Nothing new in this. If you’ve been following the economics job market rumors blog, you’ll know it’s a complete bloodbath in the market for junior economists. From what has been told and retold on this blog, a chairman of a breakfast talk at the AEA back in January said that there had been something like a 10-15% reduction in demand, but only a 4% reduction in supply (some PhDs are delaying going onto the market a year, hoping it’ll be better next year). The speaker also said, though, that that is just based on total reduction in net postings to the JOE (includes cancellations), but if you count the number of postings to JOE where a single employer would’ve likely hired 3 people, but this year only hired 1, then the reduction in demand is closer to 20-25%.
The literature on two-sided matching says this will do the following to economists:
1. Increase the probability of unemployment among economists, particularly the least preferred economists
2. Causes those who are hiring to hire (in expectation) more preferred candidates
3. Probably reduces compensation (including non-wage benefits) to new hires
So, increased unemployment, increased under-placement, and decreased pay. Plus, there is a literature on peer effects and productivity that says this underplacement will result in lower research output ceteris paribus. So, a fourth outcome:
4. Reduced research quality/quantity from the underplaced researchers
And, given that a lot of schools were able to get their lines agreed to before the s*** really hit the fan, I think next year is likely to be worse for economists than this year. I’ve heard some numbers about possible budget cuts at schools, because of serious budget shortfalls at the state level, that suggest an even larger reduction in demand next year. It is a real blood bath.
Heh, I remember a joke in which the difference between a recession and a depression was whether the economists were worried about losing their jobs too.
If your neighbour loses his job is downsizing. If your friend loses his job is bankruptcy. If a family member loses his job is recession. If we as economists lose our jobs is depression. Although we may deserve it…
Surely the point of a huge endowment is to allow you to ignore the short-term ups and downs?
dearieme wrote: “Surely the point of a huge endowment is to allow you to ignore the short-term ups and downs?”
Yeah, except that that isn’t happening this year. What is Harvard’s reported losses on their endowment again? I think it’s at least $10 billion down from last year.
Barkley – you should dig into the threads back immediately after the AEA. Roughly one week afterwards, the board was in complete crisis mode. From everything I can see – granted, non-representative and limited – the board indicates an unusually large number of PhDs not placed. If the AEA breakfast is right, the demand shock far exceeds the supply shock on both the intensive and extensive margins. We’ll have to wait until Al Roth or whoever it is that is at the AEA going over the data, but I suspect we’ll see a wider variance in wages than normal, and a lot of unhappy people about their placements considered to previous years (when I placed a few years ago, I filled out a post-placement survey in which they asked about wages, as well as my happiness with my placement).
Regarding the 90k thread. Man, you haven’t read enough. If you want to see some sore apples, read the threads on the “stars this year.” You will see some dastardly, meanness that will make you grateful there was nothing like this kind of thing when you were on the market for the first time. I couldn’t believe how much hate and anger came out of people on there when they saw people doing well on the market, particular superstars racking up a ton of top flyouts. It was all gallows humor, and I suppose the ones they were making fun of are laughing all the way to their sweet jobs with some nice coin, but at the same time – there’s some agony and anger on this board, and if the under/un-employment is anything like what it sounds like it was based on that estimate of a 20-25% reduction in demand, it’s not surprising.
jason,
Well, talking about placements a week after the meetings is off the wall. Very few happen that fast, indeed, very few flighouts happen that fast. That said, certainly the story out of that breakfast and the broader buzz is that demand is down more than supply, so there is no doubt there will be pain in the market, especially in comparison to the last few years. I do have sympathy, having first been on the job market myself during down times (the 1970s), and, yes, unfortunately things will probably be a lot worse next year.
I do think, however, and am even half tempted to post something on that blog, that folks whining about salaries need to be aware of what is going on more broadly. There are many institutions where what is politely labeled “wage compression” is going on, except that it is not compression but overleap, where newcomers are arriving with salaries above the large majority of those already in the department, including most of the senior faculty. I am aware of even supposedly rational super pro-free market type senior faculty having total cows over this and leaving departments over it, even for pay that is not as good as what they had, but the blow to their egos! Most new arrivals are not even aware this is going on or the simmering resentment that can go on for years against them. I am a really old fart and hear this whining from people junior to me to whom I have to counsel, “behave like a rational market oriented economist and not somebody in an Easterlin-Frank-Veblen sob story of relative income unhappiness.” But, these things cut deep. The newbie arrives with the big salary, and the happiness level of most in the department declines. Gag.
In the defense of the ignorannt newbies (those that actually do succeed in getting hired, that is), there really is something to be said for new human capital and the problem of deadwood among some of the more senior of tenured faculty. Those latter probably would not be able to sit down and take a three hour test in which they would be expected to 1) distinguish clearly between a trembling hand subgame equilibrium and a Bayesian coordinated equilibrium, 2) distinguish clearly between a DSGE model dominated by RBC components and one that is not, and 3) explain clearly the methods used to estimate a panel time series and a VAR time series. But, pride and seniority and…
First, it is clear that there is a lot less hiring going on across all fields. So the story was poorly reported to the extent that it made it sound like only economists were suffering. Second, it definitely was bad this year. As another anecdotal data point, I was hoping to meet up with many friends at the ASSA this year, but they all emailed back to say “Won’t be coming this year–we’re not hiring.”
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