Month: August 2013

Is the main effect of the minimum wage on job growth?

In their new paper, Jonathan Meer and Jeremy West report:

The voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment. For both theoretical and econometric reasons, we argue that the effect of the minimum wage should be more apparent in new employment growth than in employment levels. In addition, we conduct a simulation showing that the common practice of including state-specific time trends will attenuate the measured effects of the minimum wage on employment if the true effect is in fact on the rate of job growth. Using a long state-year panel on the population of private-sector employers in the United States, we find that the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments.

In a slightly different terminology, the effect of the minimum wage may well be attenuated in the short run, but over longer time horizons there is a “great reset” against low-skilled labor.

The importance of mobile Mexican labor

A novel empirical test reveals that natives living in cities with a substantial Mexican-born population are insulated from the effects of local labor demand shocks compared to those in cities with few Mexicans. The reallocation of the Mexican-born workforce among these cities reduced the incidence of local demand shocks on low-skilled natives’ employment outcomes by more than 40 percent.

That is from Brian C. Cadena and Brian K. Kovak.  Here is a related post from Modeled Behavior.  You can think of the mobile Mexican labor as providing risk insurance for low-skilled labor markets.  It is a further interesting question what this result implies for the aggregate impact of immigration on low-skilled wages, but I don’t see that there is a ready answer a priori, at least not based on the results of this paper.  The local geographic swings could be significant, while the aggregate impact could be either high or low.

Why don’t they eat more fish in the Caribbean?

David Lomita, a loyal MR reader, asks me:

I have often wondered why, given that they are a bunch of small islands, that so many of the more famous dishes of Caribbean countries are meat and not fish.  The woman of this house is Jamaican and she is much more proud of jerk than of escabeche fish.  Puerto Rico has its lechon, Cuban food has ropa de viejo and so on.

I don’t have any data here (though try the incomplete Table 7 in this pdf), but independently I have wondered about a similar question.  I see a few possible factors:

1. Often fish are available, and excellent, immediately right near the ocean.  Transport and adequate refrigeration are not to be taken for granted.  In any case, those dishes won’t always become iconic national recipes.  Note also that a lot of the fish consumed will be boiled, spiced, and salted, presumably for health and storage reasons.

2. Food is an energy source, and meat is often superior to fish in this regard, especially for diets which may otherwise lack calories.  For the same reason such meals also can be more carbohydrate-heavy than the typical daily diet.

3. Cows, chickens, and pigs are media for savings.  Fish are not.  Why not invest in some insurance while you are planning your food supply?  Keep in mind that local banking systems often do not serve the poor very well.  Furthermore it may be easier to own a chicken than to catch a fish.  Fishing is low-productivity in many parts of the Caribbean, due to poor knowledge and implementation of aquaculture.

4. Which countries are we talking about?  In the wealthier Trinidad and Jamaica, retail fish shops are common (that link is useful more generally)  In Barbados, U.S. Virgin Islands, and the Cayman Islands, culinary infrastructure is quite good and there is plenty of wealth.  In Haiti and Cuba, the two most populous nations in the Caribbean, economic conditions are dire.

5. Never overlook the heavy hand of government, plus a lack of resource management expertise: “Most of the governments of the islands aim at self-sufficiency in fish production. Some, such as Antigua, try to prohibit exports; others, such as Jamaica and Trinidad, limit imports. All of them are giving more attention to post-harvest practices both at sea and on shore, processing and storage, and to improved marketing and distribution. Many are now more interested in assessment of their resources, and collecting statistics to determine the best management practices to sustain the stocks.”

By the way, here is a very good recent piece on the rising cost of food imports in the Caribbean, especially Jamaica.

The demand for NSA data

“It’s a very common complaint about N.S.A.,” said Timothy H. Edgar, a former senior intelligence official at the White House and at the office of the director of national intelligence. “They collect all this information, but it’s difficult for the other agencies to get access to what they want.”

“The other agencies feel they should be bigger players,” said Mr. Edgar, who heard many of the disputes before leaving government this year to become a visiting fellow at Brown University. “They view the N.S.A. — incorrectly, I think — as this big pot of data that they could go get if they were just able to pry it out of them.”

Smaller intelligence units within the Drug Enforcement Administration, the Secret Service, the Pentagon and the Department of Homeland Security have sometimes been given access to the security agency’s surveillance tools for particular cases, intelligence officials say.

Here is more, scary throughout.

Assorted links

Testing labor quality without degrees and credit hours

Quite possibly this could be a more significant development — for the United States at least — than on-line education:

Testing firms are offering new ways to measure what students learn in college. Their next generation of assessments is billed as an add-on – rather than a replacement – to the college degree. But the tests also give graduates something besides a transcript to send to a potential employer.

The latest arrival of the bunch will be a revised version of the Collegiate Learning Assessment, dubbed the CLA+, which the Council for Aid to Education is rolling out this fall. The new test, which is the CLA’s first upgrade in a decade, includes a work readiness component and more student-level data.

Earlier this year the Educational Testing Service (ETS) introduced two new electronic certificates for student learning. And ACT Inc. continues to develop its WorkKeys skills assessment system.

There is more here.  In the longer run, what happens when a student shows up with a good score but no degree?

What I’ve been reading

1. Penelope Lively, Moon Tiger.  It is an above-average Booker Prize winner and probably her best novel.  She remains undervalued in the United States.

2. John le Carré, The Naive and Sentimental Lover.  This is supposed to be one of his failed works, and it should have been much shorter, but at least half of it is pretty damned good.  It’s also a classic literary text on attitudes toward business and commerce.  No spies.

3. Alyn Shipton, Nilsson: The Life of a Singer-Songwriter.  Very good for fans.

4. Javier Marías, The Infatuations.  I’m not sold on the ending, but most of the time this feels like one of his two or three best books.  I don’t think it will be his breakthrough book to “truly famous like Rushdie or Coetzee global author” status, but that moment likely will come.

5. Tomoko Shiroyama, China During the Great Depression: Market, State, and the World Economy, 1929-1937.  A good introduction to an understudied but increasingly relevant topic.

Also arrived in my pile are:

6. Rachel Laudan, Cuisine and Empire: Cooking in World History.

7. Jacob N. Shapiro, The Terrorist’s Dilemma: Managing Violent Covert Organizations.

Both appear to be of interest.

Assorted links

Superstar Teachers

In Why Online Education Works I wrote:

… the market for teachers will become more like the market for actors, a winner-take-all market with greater inequality and very big payments at the top…. Bigger markets support larger salaries, so the best teachers will earn much more in an online world.

Evidence for just how much some teachers could earn in the online world comes from Amanda Ripley writing in the WSJ about South Korea’s private education market:

Kim Ki-hoon earns $4 million a year in South Korea, where he is known as a rock-star teacher—a combination of words not typically heard in the rest of the world. Mr. Kim has been teaching for over 20 years, all of them in the country’s private, after-school tutoring academies, known as hagwons. Unlike most teachers across the globe, he is paid according to the demand for his skills—and he is in high demand.

…The bulk of Mr. Kim’s earnings come from the 150,000 kids who watch his lectures online each year. (Most are high-school students looking to boost their scores on South Korea’s version of the SAT.) He is a brand name, with all the overhead that such prominence in the market entails. He employs 30 people to help him manage his teaching empire and runs a publishing company to produce his books.

Celebrity translators, plus a Karl Kraus update

 A second major example Italie cites is Jonathan Franzen‘s forthcoming The Kraus Project: Essays by Karl Kraus. (At this point it also seems worth pointing out that both these translations-by-notable-novelists are translations of works of non-fiction — disappointing, too.)

Fascinating, too, that the brilliant Kraus isn’t seen as the main selling point of the The Kraus Project:

Even the book’s cover is a departure, reversing the usual billing for author and translator. The title may be The Kraus Project, but featured placement and the biggest letters belong to Franzen.

“To me, this is a Franzen book,” Galassi said.  Such, apparently, is the state of translation in the US, that even the likes of Jonathan Galassi — himself a dabbler in translation (even well-regarded, in some circles, as such) — doesn’t think that Kraus could sell the book on his reputation alone (one that surely dwarfs Franzen’s by any measure, save that of contemporary tabloid mentions), but rather that the Franzen-connection is seen as the main selling point and draw.

That is from Literary Saloon.  I have pre-ordered my copy.

By the way, why not do the same for economics?  Let’s say you are a big name but a little short on ideas or too busy to finish a book.  Why not just edit and recycle one of the classics under your name and call it a “Project”?

How dangerous are cell phones when driving?

Maybe not as much as you think.  Here is the abstract from a new paper (AEA gate) by Saurabh Bhargava and Vikram S. Pathania:

We investigate the causal link between driver cell phone use and crash rates by exploiting a natural experiment induced by the 9pm price discontinuity that characterizes a majority of recent cellular plans. We first document a 7.2 percent jump in driver call likelihood at the 9pm threshold. Using a prior period as a comparison, we next document no corresponding change in the relative crash rate. Our estimates imply an upper bound in the crash risk odds ratio of 3.0, which rejects the 4.3 asserted by Redelmeier and Tibshirani (1997). Additional panel analyses of cell phone ownership and cellular bans confirm our result.

Here is another way to put the puzzle:

Cell phone ownership (i.e., cellular subscribers/population) has grown sharply since 1988, average use per subscriber has risen from 140 to 740 minutes a month since 1993, and surveys indicate that as many as 81 percent of cellular owners use their phones while driving—yet aggregate crash rates have fallen substantially over this period.

I don’t want you to start or continue this practice, as numerous other studies do find significant risk.  Still, maybe this matter is not quite as settled as many people think.

Here is a non-gated version of the paper (pdf), and the official ungated version is here.

America fact of the day

The share of American adults with jobs is stuck at just 58.7 percent.

That is The New Normal.  From Binyamin Applebaum, here is more.  One additional development is that long-term unemployment is finally declining somewhat.  There is also a new result that fewer and fewer women are entering the labor force.

By the way, real average hourly earnings fell in June (pdf), not your grandpa’s economic recovery, is it?