Results for “age of em”
14012 found

Do Democratic equity fund managers beat their Republican counterparts?

That is the topic of my latest Bloomberg column.  Here is one bit:

The paper, by Marian Moszoro and Michael Bykhovsky, uses Federal Election Commission data to identify equity fund managers by their political contributions. If the managers at a fund gave to only one of the two major political parties, that fund is then classified as having an intellectual or ideological connection to that party.

…The authors find that for the years 2004 to 2014, with the exception of one period, equity fund managers of the two political affiliations did about the same. That should give pause to anyone who thinks that either political party has a monopoly on a better or more accurate view of the economy.

This is in noted contrast to Krugman’s frequent claim that the Republican fund managers are somehow unmoored from macroeconomic realities.  But:

…for one critical period of time, December 2008 to September 2009, the Democratic fund managers did much better. They earned 25.25 percent on average, compared with the Republicans’ 17.17 percent — a difference that, by the authors’ back-of-the envelope calculations, amounted to about $13.7 billion.

My (unconfirmed) view is that much of this was lack of faith in President Obama, though a big market rally was to start in March 2009.  Perhaps the Republican fund managers were not in the market enough.  Another possibility of course was that some of the Republican managers expected high inflation, due to the Fed injecting trillions of liquid reserves into the banking system.  Finally, the Democratic equity fund managers may have had better political connections and thus been better informed.  The timing of the returns discrepancy, however, I think squares best with the “confidence in Obama” interpretation.  And here is the Hansonian part of the column:

Another interesting finding: Most of the fund managers donated exclusively to either the Democratic or Republican Party — 44.9 percent and 46.6 percent, respectively. “Mixed” funds accounted for only 8.3 percent of the overall sample (of more than 80,000 fund-month observations). Since the choice of party doesn’t appear to provide much of a market edge, the loyalties might reflect longer-standing personal, regional, and institutional connections. Perhaps political unity within a company serves social and networking functions, even if it doesn’t provide any special economic insight.

Do read the whole thing.  And if you are wondering:

Hedge-Fund Money: $48.5 Million for Hillary Clinton, $19,000 for Donald Trump

For the original pointer to the Moszoro and Bykhovsky piece I am grateful to Samir Varma.

Academic average is over sentences to ponder

The percentage of new doctorate recipients without jobs or plans for further study climbed to 39% in 2014 from 31% in 2009, according to a National Science Foundation survey released in April. Median salaries for midcareer Ph.D.s working full time fell 6% between 2010 and 2013.

The reason: supply and demand.

And this:

Ph.D.s still earn a significant premium over others in the labor market and their overall rate of unemployment remains low, though a growing number are taking jobs that don’t use their education. At the same time, their median incomes have been falling. Computer scientists earned $121,300 in 2013, down from $129,839 in 2008; engineers saw a drop to $120,000 from $125,511 and social scientists fell to $85,000 from $90,887.

Here is the WSJ piece, via the excellent Samir Varma.

Why is there a lesbian wage premium?

Marieka Klawitter of the University of Washington looked at 29 studies on wages and sexual orientation last year.* On average, they found a 9% earnings premium for lesbians over heterosexual women, compared with a penalty of 11% for gay men relative to straight men. This discrepancy has been borne out by research on America, Britain, Canada, Germany and the Netherlands. Even after adjusting for the fact that lesbians are on average more educated than straight women, and less likely to have children, the gap persists.

Note the evidence suggests lesbians are not more competitive than non-lesbian women, and lesbians receive no wage premium in the public sector.  Here are some possible hypotheses:

…they work more hours per day and weeks per year than straight women, on average (see chart). Over time this could translate into more experience and better chances of promotion. There is a clue in a paper from Nasser Daneshvary, C. Jeffrey Waddoups and Bradley Wimmer of the University of Nevada, which finds that lesbians who have previously been married to men receive a smaller premium than those who have not.

Finally, it could be that in same-sex couples women do not feel obliged to do as much childcare or housework, giving them more freedom to fulfil their potential in the workplace. Lesbian couples tend to work more equal hours, even when they have children, and several studies find that same-sex households share chores more evenly than heterosexual ones.

That is all from The Economist.

Ben Bernanke’s memoir *The Courage to Act*

1. When it comes to South Carolina, he is a cornball, but a likable one.

2. He played Strato-O-Matic baseball as a kid.  No mention of Jim Bunning in that context.

3. After two years at Harvard, he had taken only Econ 101.  Later Dale Jorgensen became his mentor.

4. He is a fan of Borges, with the influence coming from his wife, who has taught Spanish literature.

5. He regrets his earlier tough rhetoric on the Japanese central bank.

6. Greenspan’s marriage proposal to Andrea Mitchell was riddled with his trademark ambiguity.  Bernanke, in contrast, proposed after two months of courtship.

7. Bernanke underestimated the extent of the housing bubble.  Various negative consequences were to ensue from the collapse of housing prices.

8. “I had never gone overboard on libertarianism…”

9. Ben got really, really mad at the AIG chief executives, in fact he “seethed.”

10. The Fed did not have a good, legal way to bail out Lehman.  It needed a buyer, and no buyer was to be found.  A short-term infusion of cash would not have sufficed.  And Ben was afraid at the time that if he confessed the Fed’s impotence in this regard, the market reaction would have been negative.

11. The idea of a mortgage cram down made good sense but was never politically feasible.

12. “So, by setting the interest rate we paid on reserves high enough, we could prevent the federal funds rate from falling too low.”

13. I found the discussions of Wachovia and WaMu came the closest to offering new perspective and information.  Perhaps he was able to say more because these actions did not skirt the possibility of the Fed exceeding its mandate.

14. He had a favorable impression of the frankness of John McCain.

15. He thought QE should been done through the purchase of corporate bonds, but the Fed didn’t have the right kind of authority at that time.

16. He argues that the idea of ngdp targeting is too complicated and could not easily be made credible, given that the Fed has built up its reputation as an inflation fighter.  It also raises the risk that a non-credible ngdp target wouldn’t boost output, but would deliver price inflation, thereby resurrecting stagflation as a potential problem.  (By the way, here is Scott’s response.)

17. He is still upset at the coverage he received from Paul Krugman.

18. In Nunavut he passed on raw seal meat and a dogsled ride.

The bottom lines: This book has way, way more economics than I expected and probably more than the publisher wanted.  It really is Ben’s attempt to defend his place in history, and yes the book does deliver a huge dose of Bernanke.  This is not ghostwritten fluff.  It does not however dish much “dirt” or shed much new light on the key episodes of the financial crisis.  Both in public and in the book Ben has been extremely gentlemanly.  Still, as I kept on reading I could not escape the feeling that he is deeply, deeply annoyed by many of his critics, and very much determined to tell the story from his point of view.  That is what you get from this book.

Wage stickiness and unflattering accounts of the unemployed and poor

It is common for left-wing progressives to complain that conservatives serve up unflattering accounts of the unemployed and poor, such as by calling them “moochers” and the like.

But many versions of the standard Keynesian account, once we deconstruct them a bit, don’t paint such a flattering picture of the unemployed either.  In one Keynesian scenario, many of the unemployed have lacked jobs for years because they have sticky nominal wage demands.  Under one scenario, they could find jobs for $x an hour but won’t take the work.  If government policy could reflate the economy enough, those jobs in nominal terms would offer more and the unemployed would be in essence fooled into taking the offer.  The job would be paying the same in real terms, so the ex ante stubbornness is a big mistake, at least under this account of the matter.

Such a mistake is made throughout years of material suffering and psychological deprivation, including serious problems for one’s children.  Yet a mere nominal trick, by boosting pride just a bit, will move them back into a job.

It is of course a well-known stylized fact that, at least in America, unemployment rates for the poor and undereducated are much higher than for wealthier or better educated people.  So a general citation of “money illusion” won’t rescue the victims from the rather unflattering Keynesian portrait painted here.

Alternatively, the relevant mechanism may operate through the demand for labor, rather than the supply.  Perhaps low-skilled workers cannot be employed at lower wages because their resentment at the low wage would be so high that they would impose unacceptable morale costs on the organizations employing them.  In other words, insult them with a sub-par wage offer and they turn destructive toward the entire organization.  Companies of course prefer to keep these workers at arms’ length under this hypothesis.

If Charles Murray had come up with that hypothesis, he would have been savagely attacked for it.  Yet there is growing evidence, for instance from the work of Alan Blinder, that it is a major cause of wage stickiness.

Left-wing Keynesians are reluctant to acknowledge their own implicit unflattering treatment of the poor, which I should add came (in part) from snobby and elite British economists, including Keynes.  Often microfoundations are considered an embarrassing topic, and the emphasis is on “well, we know that wages are sticky,” with a desire not to look too closely under the hood, or to consider how those stories jive with other deeply held views, many of which try to raise the relative status of the poor and unemployed.

Bryan Caplan is consistent and is also happy to satisfy the publicity condition.  He believes in nominal stickiness as a driver of unemployment (under many circumstances) and he holds a relatively skeptical view of the decision-making capabilities of many (by no means all) of the poor.

The most flattering macro theories toward the poor, undereducated, and unemployed are the complementarity, increasing returns, and RBC “the poor are maximizing given some bad constraints” approaches.  Insider-Outsider models make the unemployed victims of exclusion who don’t even get a chance, rather than potential troublemakers ready to sabotage an enterprise at a moment’s notice.  The same can be said for Scott Sumner’s “musical chairs” account.  As for schools of thought, the rational expectations theorists provide the most flattering picture of the poor, yet in the context of macroeconomics they are very frequently mocked for their unrealistic assumptions.  Search theory models of unemployment, which for instance I have tried to promote, also paint a not unfavorable picture of the jobless, but they too are not very popular in the New Old Keynesian economics.  If I were to generalize, and yes there are many exceptions, but still I would say that these more flattering pictures of the unemployed are more likely to be associated with or embraced by the political Right.

Consistency is hard to come by, and probably always will be.

How bad is age discrimination in academia?

I believe it is very bad, although I do not have data.  I believe that if a 46-year-old, with an excellent vita and newly minted Ph.D in hand, applied for academic economics jobs at the top fifty research universities, the individual would receive very few “bites.”  Unless of course he or she managed to cover up his or her age.  (I am very pleased with the openness of my own university, I will add in passing.)

Perhaps there are not many examples of this kind of age discrimination (do you know of any?).  In part that is because older individuals are so discouraged from going down that path in the first place.  Furthermore it is likely harder for older individuals to go down that path.  In addition to life-cycle considerations, there may be age discrimination at the stage of graduate admissions.

I rarely hear complaints about age discrimination in academia, though I often hear complaints about gender and race discrimination.  I believe all of these phenomena are real (and unfortunate), and I wonder what exactly this discrepancy indicates.  If anything, I suspect age discrimination is far more extreme, at least when it comes to the final stage of the process, namely the actual interview and hiring decisions.

Is age discrimination less of a concern because “older people as a class” face fewer, other general handicaps than do women or African-Americans?  Or is there some other reason for this difference in worry?

I believe also that older, newly minted doctoral candidates bring useful differences in perspective, as can women and ethnic minorities, due to their differing life experiences.

Here is an article about age discrimination in academia, although I find the cited evidence inconclusive.  Here is an interesting short piece from someone who is arguably the victim of age discrimination in academia.

Even for similarly-aged candidates, is there a bias in academic hiring to prefer “potential” over a solid/good but perhaps not fully inspiring track record?  I believe so.  This is related to the causes of age discrimination, which are not always about age per se.

I found very interesting the new book by Joseph Coleman, Unfinished Work: The Struggle to Build an Aging American Workforce, which deals with some related issues though not primarily in the academic context.

Rage in Jerusalem, by Nathan Thrall

I enjoyed this LRB piece, here is one excerpt:

All Jerusalemites pay taxes, but the proportion of the municipal budget allocated to the roughly 300,000 Palestinian residents of a city with a population of 815,000 doesn’t exceed 10 per cent. Service provision is grossly unequal. In the East, there are five benefit offices compared to the West’s 18; four health centres for mothers and babies compared to the West’s 25; and 11 mail carriers compared to the West’s 133. Roads are mostly in disrepair and often too narrow to accommodate garbage trucks, forcing Palestinians to burn rubbish outside their homes. A shortage of sewage pipes means that Palestinian residents have to use septic tanks which often overflow. Students are stuffed into overcrowded schools or converted apartments; 2200 additional classrooms are needed. More than three-quarters of the city’s Palestinians live below the poverty line.

Since 1967 no new Palestinian neighbourhoods have been established in the city, while Jewish settlements surrounding existing Palestinian areas have mushroomed. Restrictive zoning prevents Palestinians from building legally. Israel has designated 52 per cent of land in East Jerusalem as unavailable for development and 35 per cent for Jewish settlements, leaving the Palestinian population with only 13 per cent, most of which is already built on. Those with growing families are forced to choose between building illegally and leaving the city. Roughly a third of them decide to build, meaning that 93,000 residents are under constant threat of their homes being demolished.

And this:

The crucial difference between the mid-1980s and today is that Palestinian civil society is now much weaker, and so, too, is the likelihood of coherent political organisation of the kind that emerged soon after the First Intifada began. The groups that then channelled political activity have been supplanted, either by the institutions of a technocratic PA whose existence is premised on close co-operation with Israel, or by NGOs whose foreign funders make assistance conditional on the pursuit of apolitical development projects or vague peace-building strategies that explicitly rule out non-violent confrontation with Israel and any initiative likely to drive up the costs of military occupation. Palestinian society is afflicted with dependency, and it is dependent on forces that wish to preserve the status quo.

It is interesting (and controversial) throughout.

Does union membership help cause marriage?

According to David Schneider and Adam Reich it does, their paper is called Marrying Ain’t Hard When You Got A Union Card? Labor Union Membership and First Marriage.   The abstract is this:

Over the past five decades, marriage has changed dramatically, as young people began marrying later or never getting married at all. Scholars have shown how this decline is less a result of changing cultural definitions of marriage, and more a result of men’s changing access to social and economic prerequisites for marriage. Specifically, men’s current economic standing and men’s future economic security have been shown to affect their marriageability. Traditionally, labor unions provided economic standing and security to male workers. Yet during the same period that marriage has declined among young people, membership in labor unions has declined precipitously, particularly for men. In this article, we examine the relationship between union membership and first marriage and discuss the possible mechanisms by which union membership might lead to first marriage. We draw on longitudinal data from the National Longitudinal Survey of Youth-79 to estimate discrete time event-history models of first marriage entry and find that, controlling for many factors, union membership is positively and significantly associated with marriage. We show then that this relationship is largely explained by the increased income, regularity and stability of employment, and fringe benefits that come with union membership.

That is via the excellent Kevin Lewis, who cites some other interesting papers at the link.

Top STEM source cities as a percentage of Total F-1 students, the culture that is South India

1. Vijayawada, India

2. Visakhapatnam, India

3. Chennai, India

4. Hyderabad, India

5. Secunderabad, India

6. Pune, India

7. Teheran, Iran

8. Bangalore, India

9. Kolkata, India

10. Dhaka, Bangladesh

For absolute numbers, Hyderabad is #1.

That is all from the new Brookings report, The Geography of Foreign Students in U.S. Higher Education, by Neil G. Ruiz.

Wedding ring and ceremony expenditures predict shorter marriage duration

There is a new paper from Andrew M. Francis and Hugo M. Mialon:

In this paper, we evaluate the association between wedding spending and marriage duration using data from a survey of over 3,000 ever-married persons in the United States. Controlling for a number of demographic and relationship characteristics, we find evidence that marriage duration is inversely associated with spending on the engagement ring and wedding ceremony.

What is the mechanism?  Are signal-requiring and financial commitment-requiring marriages more likely to be fragile?  Or, to put forward a politically incorrect interpretation, do the high expenditures indicate the wife has too much bargaining power in the relationship?  That hardly seems like a plausible explanation.  By the way, weddings with a large number of attendees are likely to last longer, as are weddings accompanied by honeymoons.  Those correlations are easier to understand.

This piece is by a factor of more than five the most frequently downloaded SSRN paper over the last two months.

Do I wish to revise my time management tips?

I wrote this in 2004 on MR:

Here are my suggestions:

1. There is always time to do more, most people, even the productive, have a day that is at least forty percent slack.

2. Do the most important things first in the day and don’t let anybody stop you.  Estimate “most important” using a zero discount rate.  Don’t make exceptions.  The hours from 7 to 12 are your time to build for the future before the world descends on you.

3. Some tasks (drawing up outlines?) expand or contract to fill the time you give them.  Shove all these into times when you are pressed to do something else very soon.

4. Each day stop writing just a bit before you have said everything you want to.  Better to approach your next writing day “hungry” than to feel “written out.”  Your biggest enemy is a day spent not writing, not a day spent writing too little.

5. Blogging builds up good work habits; the deadline is always “now.”

Rahul R. asks me if I would like to revise the list.  I’ll add these:

6. Don’t drink alcohol.  Don’t take drugs.

7. At any point in your life, do not be watching more than one television show on a regular basis.

8. Don’t feel you have to finish a book or movie if you don’t want to.  I cover that point at length in my book Discover Your Inner Economist.

I think I would take back my old #5, since I observe some bloggers who have gone years, ten years in fact, without being so productive.

Are economists biased to be pro-management?

Luigi Zingales has a relatively new paper on that and related questions:

The very same forces that induce economists to conclude that regulators are captured should lead us to conclude that the economic profession is captured as well. As evidence of this capture, I show that papers whose conclusions are pro-management are more likely to be published in economic journals and more likely to be cited. I also show that business schools’ faculty write papers that are more pro management. I highlight possible remedies to reduce the extent of this capture: from a reform of the publication process, to an enhanced data disclosure, from a stronger theoretical foundation to a mechanism of peer pressure. Ultimately, the most important remedy, however, is awareness, an awareness most economists still do not have.

The paper is here, via the excellent Kevin Lewis.  And here is another new Zingales paper (pdf, with Guiso and Sapienza) on time-varying risk-aversion, here is the tail end of the abstract:

Consistent with a fear-based explanation, we find that subjects who watched a horror movie exhibit a higher risk aversion than subjects who did not. The size of the increase in risk aversion caused by the horror movie is similar to the one experienced by our bank’s clients during the crisis.

Lee Ohanian on the real wage premium for public sector workers

For the case of the public sector, the probability of involuntary separation is just 1.3 percent, which is one-third as high as the probability in the private sector case. I then calculate the difference in compensation between the public sector (low unemployment case) and the private sector, such that a worker would be indifferent between working in either sector. I find that workers would be willing to work for about 10 percent less compensation in the public sector, given the additional benefit of much higher job security. This estimate is conservative in terms of considering today’s labor market, as average unemployment duration today is much higher than its historical average.

This analysis suggests the possibility that public sector compensation may be significantly higher than competitive levels. Moreover, the fact that public sector workers are only about one-third as likely to voluntarily leave their job as private sector workers is consistent with the conclusion that average public sector compensation rates are in excess of competitive levels, indicating that there are relatively few external employment opportunities that dominate public sector workers’ jobs. The fact that average public compensation is higher than average private sector compensation suggests that public sector worker compensation may be well above competitive levels and indicates that public sector wages could be reduced without significantly impacting public sector employment. For example, I’ve calculated the impact of a 5 percent wage reduction for all public employees in California, a state with one of the most severe fiscal crises in the country. A 5 percent wage cut would reduce state spending by $1.33 billion, which would reduce California’s 2011 state budget deficit by nearly 15 percent.

There is more here, interesting throughout.  There is further relevant information here.  Here is the news on today’s Supreme Court decision on public sector unions: “Supreme Court drastically curtails public sector unions.”

Stacked principal-agent problems

The…Obama administration accused Sprint today of overcharging the government more than $21 million in wiretapping expenses.

Sprint, like all the nation’s carriers, must comply with the Communications Assistance in Law Enforcement Act of 1994, which requires telcos to be capable of providing government-ordered wiretapping services. The act also allows carriers to recoup “reasonable expenses” associated with those services.

Sprint, of Overland Park, Kansas, inflated charges approximately 58 percent between 2007 and 2010, according to a lawsuit (.pdf) the administration brought against the carrier today.

There is more here, hat tip goes to Vic Sarjoo.

Neumark and Wascher on minimum wages and youth unemployment

Here is the abstract from their piece from 2003 (pdf):

We estimate the employment effects of changes in national minimum wages using a pooled cross-section time-series data set comprising 17 OECD countries for the period 1975-2000, focusing on the impact of cross-country differences in minimum wage systems and in other labor market institutions and policies that may either offset or amplify the effects of minimum wages. The average minimum wage effects we estimate using this sample are consistent with the view that minimum wages cause employment losses among youths. However, the evidence also suggests that the employment effects of minimum wages vary considerably across countries. In particular, disemployment effects of minimum wages appear to be smaller in countries that have subminimum wage provisions for youths. Regarding other labor market policies and institutions, we find that more restrictive labor standards and higher union coverage strengthen the disemployment effects of minimum wages, while employment protection laws and active labor market policies designed to bring unemployed individuals into the work force help to offset these effects. Overall, the disemployment effects of minimum wages are strongest in the countries with the least regulated labor markets.
More recently, Modeled Behavior has a relevant update on how minimum wages reduce the number of new teenage hires.  Brochu and Green you will find here, the effects on teen hiring are pretty clear.