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From The Growth Economics Blog:

There’s a recent working paper by Alexandra de Pleijt and Jacob Weisdorf that looks at skill composition of the English workforce from 1550 through 1850. They do this by looking at the occupational titles recorded in English parish records over that period, and code each observed worker by the skill associated with their occupation. They use the standardized Dictionary of Occupational Titles to infer the skill level for any given occupation. For example, a wright is a high-skilled manual laborer, a tailor is medium-skilled, while a weaver is a low-skilled manual laborer.

The big upshot to their paper is that there was substantial de-skilling over this period, driven mainly by a shift in the composition of manual laborers. In 1550, only about 25% of all manual laborers are unskilled (think ditch-diggers), while 75% are either low- or medium-skilled (weavers or tailors). However, over time there is a distinct growth in the the unskilled as a fraction of manual laborers, reaching 45% by 1850, while the low- and medium-skilled fall to 55% in the same period. You can see in their figure 10 that this shift really starts to take place by 1650, while before the traditional start of the Industrial Revolution.

Looking at more refined measures, de Pleijt and Weisdorf find that the fraction of workers classified as “high-quality workmen” – carpenters, joiners, wrights, turners – rose only from 3.9% to 4.9% of the workforce between 1550 and 1850.

Adjustment to major technological shocks takes a long time…

Assorted links

by on August 22, 2014 at 11:30 am in Uncategorized | Permalink

1. Exit interview with Eric Crampton.

2. How to be polite (good piece)

3. Reihan Salam interviews Lane Kenworthy.

4. Are American housing problems structural?

5. SWAT teams have their own lobbying organization.

6. Moose sex corridor expands with land donation.

U.S.-based economist Arvind Subramanian is poised to be named as chief economic adviser to Prime Minister Narendra Modi’s government, two sources at the finance ministry said on Friday.

There is more here, via David Wessel.  Here are previous MR posts on Subramanian.

I loved the Michael Hofmann review of Stephen Parker’s Bertolt Brecht: A Literary Life in the 15 August 2014 Times Literary Supplement.  Every paragraph of that review is a gem and Hofmann calls the book perhaps the greatest literary biography he has read.  I’ve ordered my copy.

Here is one part of that review, toward the end, which caught my eye:

I’m not really sure what the case against Brecht is.  That he treated women and co-workers badly?  That he played fast and loose with the intellectual property of others, but was litigiously possessive of his own?  That he wrote no more hit shows after The Threepenny Opera?  That he failed to crack America?  That he wouldn’t denounce the Soviet Union?  That he was drab and a killjoy?  That he had it cushy after settling back in East Germany in 1949?  That he was consumed with his own importance?

Perhaps the Parker book will change my mind, but for now file under “All of the Above.”

Addendum: Here is another superb Michael Hofmann review.

Finland fact of the day

by on August 21, 2014 at 2:19 pm in Economics, Education, Uncategorized | Permalink

Finnish students stay in college longer than in any other developed country save Austria, the Netherlands and Denmark, getting their first university degree on average at 29, according to a 2013 report by the Organization for Economic Cooperation and Development. That compares with 24 years for Britons, 26 for Germans and the OECD average of 27 years. Most Finns who graduate from college get a master’s degree.

There is more here.  Of course that undoes a lot of the benefits from their excellent primary education system.

Department of Uh-Oh

by on August 21, 2014 at 1:00 pm in Food and Drink, Law, Uncategorized | Permalink

When it opened in 1990, the McDonald’s on Moscow’s Pushkin Square was a symbol of thawing relations with the U.S., attracting long lines and later becoming the fast-food chain’s most visited outlet world-wide.

On Wednesday evening, it stood empty, closed by Russia’s consumer-safety regulator amid the Kremlin’s most-serious confrontation with the West since the Cold War. The agency cited sanitary violations as it said that it had closed four McDonald’s Corp.’s restaurants in Moscow.

Analysts said the move was more likely the latest shot by Russia in response to U.S. and European sanctions over Moscow’s role in the armed conflict with its former Soviet neighbor, Ukraine.

Food inspectors “have been instruments of Russian foreign policy for years,” said Stephen Sestanovich, a senior fellow at the Council on Foreign Relations. He cited earlier bans on Moldovan wine and U.S. chicken.

There is more here, there is some context here.

There is a new paper out by them:

Thomas Piketty’s recent book, Capital in the Twenty First Century, follows in the tradition of the great classical economists, Malthus, Ricardo and Marx, in formulating “general” laws to diagnose and predict the dynamics of inequality. We argue that all of these general laws are unhelpful as a guide to understand the past or predict the future, because they ignore the central role of political and economic institutions in shaping the evolution of technology and the distribution of resources in a society. Using the economic and political histories of South Africa and Sweden, we illustrate not only that the focus on the share of top incomes gives a misleading characterization of the key determinants of societal inequality, but also that inequality dynamics are closely linked to institutional factors and their endogenous evolution, much more than the forces emphasized in Piketty’s book, such as the gap between the interest rate and the growth rate.

For the pointer I thank Nathaniel Bechhofer.

Here is an update from Leonid Bershidsky:

Among the 28 EU members, public spending reached 49 percent of gross domestic product in 2013, 3.5 percentage points more than in 2007.

There is more detail at the link, via Garett Jones, Humanist by way of Walt Whitman, Civilizationist by way of Jane Jacobs.

Assorted links

by on August 20, 2014 at 12:35 pm in Uncategorized | Permalink

1. Ferguson on Facebook vs. Ferguson on Twitter.

2. Brief survey of the literature on police brutality and use of excessive force.

3. Obamacare attacks are losing potency as a campaign weapon.

4. The advantages of dyslexia (very good).

5. “RegData is an innovative new way of measuring the size and scope of US federal regulation. It is currently in beta. We welcome your feedback.”

6. Excellent Francis Fukuyama piece on American political decay.

7. Brad DeLong identifies The Great Reset, although he does not name it.  Falling AD and hysteresis are important, but we need more tools in the current toolbox.

For context, CAPE is the cyclically adjusted price-earnings ratio.  On that topic, 3rdMoment writes:

While I have great respect for Shiller, I don’t understand his confidence that the CAPE is likely to return to it’s historical average of around 16. There are several reasons why we might expect the average CAPE going forward to be higher than in the past:

1. The average levels of CAPE in most of the last century appear, with hindsight, to have been puzzlingly low. This is the well-known “equity premium puzzle.”

2. There has been a large shift in corporate payout mix, from virtually all dividends in the past, to a roughly equal mix of dividends and share repurchases today. This by itself will add a couple of points to CAPE even if nothing else changes, (as shown in this post by the anonymous blogger who tweets as “Jesse Livermore”): http://www.philosophicaleconomics.com/2013/12/Shiller/

3. Some other accounting changes to the definition of profits might raise the CAPE as well, again see the linked blog post above.

4. Lower information and transaction costs and the rise of index investing have dramatically lowered the cost of maintaining a globally diversified portfolio. This decreases the raw rate of return for any given required rate of realized returns. For example if the costs of investing in equities fall by just 50 basis points, this would allow the required raw earnings yield to fall from 5% to 4.5%, corresponding to a rise in CAPE from 20 to 22, without changing realized returns for investors.

5. The real “risk free” return on treasuries seems to be very low by historic standards. Real returns on other forms of debt also appear low. This lowers the return stocks need to be attractive by comparison.

6. Large corporate cash balances, a “global savings glut,” lower rates of real economic growth, possible “secular stagnation,” all seem to point to the idea that real returns are somewhat harder to get than the past.

Some of these reasons are more certain than others, but taken together they seem to show that we have good reason to expect CAPE levels significantly above the historical average going forward.

Are there any countervailing reasons offsetting the list above, factors that would tend to make CAPE lower than in the past? I can’t really think of any. And I haven’t seen anybody else offering any.

Assorted links

by on August 19, 2014 at 12:05 pm in Uncategorized | Permalink

1. David Zetland’s economics of water book is now free.

2. How Ira Glass works.

3. Did Medicare Advantage get better?  And where is “the pizza belt”?  Is this the most important theory about pizza?  I agree with the claims in that article.

4. Claims about deception detection.

5. Should robots have diverse personalities?

6. Which are the most correlated web searches with hard and easy lives?

7. More on RCT debates: is there a gold standard?

There are many interesting charts and graphs in the post, and he argues against a belief in mean reversion, along with a discussion of “the original Black Swan.”  It is a difficult post to excerpt, best to read and view the whole thing.

Assorted links

by on August 18, 2014 at 12:41 pm in Uncategorized | Permalink

1. Are forward interest rates outrageously low?  Evan Soltas considers whether “secular stagnation” fits the data.

2. Pictures of Chinese acrobatics.

3. Did capital controls help during the Great Depression?

4. The real problem with Big Data?

5. The entire Loeb Classical Library is now on-line.

6. How segregated is Ferguson?  And changes in Ferguson poverty rates.

7. Some new results on whether having a daughter shifts a person’s political orientation.  And free to choose (the culture that is India)?

How much does an EU cow earn?

by on August 18, 2014 at 2:51 am in Economics, Uncategorized | Permalink

This is an old link, from an old blog post, but I believe I missed it the first time around:

A typical cow in the European Union receives a government subsidy of $2.20 a day. The cow earns more than 1.2 billion of the world’s poorest people.

That is from Mark Perry, citing an Australian minister, via Garett Jones on Twitter.  Despite being in the midst of an unprecedented economic crisis, I don’t think these subsidies have changed much in the interim.

Addendum: It may be up to $2.60 a day.

Here is one bit:

 The combination of low inflation and low growth means that it is the evolution of nominal GDP that really matters now. Nominal GDP is non inflation corrected GDP (or GDP at current rather than constant prices). If inflation remains low or even becomes negative, then nominal GDP will hardly increase and may even continue to contract (as has happened in Japan). The result is bound to be that the gross government debt to GDP ratio rises above the 135.6% it hit in March.

One of the arguments frequently advanced about how this dynamic could be turned around would be for Italy to run a “large” primary budget surplus. Now the emphasis here is on large since the country has in fact run a primary surplus (income – expenditure before paying debt interest) since the early 1990s, but that hasn’t stopped the weight of the debt climbing and climbing.

The full post is here, scary throughout.