Results for “age of em”
14012 found

China arbitrage story of the day German flight attendants arrested in quantitative easing scheme

Six Lufthansa employees, including four flight attendants, have been arrested after sneaking in more than 63,000 pounds of out-of-circulation, €1 and €2 coins from China back to Germany over the last four years.

Euro coins have two color tones, gold and silver, and when the German Central Bank takes the coins out of circulation, the two colors (see picture to the left) are separated then sent to China to be melted down into scrap metal.

A wily group in China reassembled the coins rather melting them, then sent them back to Germany with four LH flight attendants serving as “mules.”…The FAs would then take the coins to the Bundesbank (only the central bank in Germany accepts damaged coins) and turn them in for bills.

The story is humorous throughout, and for the pointer I thank none other than Air Genius Gary Leff.  Here is further detail (NYT) as to how the arbitrage worked and relied on low Chinese wages to reassemble the coins in a cost effective manner.

What is the state employee union wage premium?

How much does collective bargaining matter?  On Twitter, Will Wilkinson asks for data.  I find this web site specifying the average Virginia state employee to be earning $50,298.  Rortybomb says that for Wisconsin the comparable number is $48,267.

Yet Wisconsin had collective bargaining for state employees and Virginia does not.  Of course this comparison is a gross one and it is not holding constant the composition of each work force, seniority, cost of living differences, and it also does not seem to pick up possible differences in benefits.  Furthermore it does not consider the 48 other states.  Yet, crude as this one-to-one comparison may be, it is more empirically sophisticated than most (all?) other discussions I have seen.

This David Blanchflower and Alex Bryson paper (see pp.9-10), using 1980s data, finds a union wage premium, for state employees, of 14.5 percent, with the premium being strongest for unskilled workers, as is the case in the private sector as well.  (NB: I am not sure if they are adjusting for differential benefits but I think not.)  Alan Krueger tells us that the union/non-union wage gap is smaller in the public sector than in the private sector ("overwhelming evidence").

I'm not pushing any particular answer, I'd just like to put the question on the table.  What else do you all know?

Addendum: from Adam Ozimek: "The regression coefficients on page 8 of the report show that the union wage premium is between 15% to 16%, while the public sector wage discount is around 11%, meaning unionized public sector employees are paid 4% to 5% wage premium."  Adam also provides further references and discussion.

Does disability insurance discourage employment?

Jagadeesh Gokhale writes:

Jobs lost during the recent recession caused a deluge of applications to the Social Security Disability Insurance program – more than 6 million each year in 2009 and 2010 – and threw into relief the fact that the SSDI program is structurally unsound.

The current applications surge will accelerate the exhaustion of SSDI's trust fund and will force Congress to have to choose among two unpalatable options – increase SSDI payroll taxes or reduce benefit allowance rates.

But that is not enough. If the particularly vulnerable population the SSDI is designed to serve is to be protected, while preserving incentives to work, the program has to be radically restructured.

Even in normal economic times, those with marginally physical or mental impairments apply in the hope of acquiring disabled status under SSDI. Among those already receiving SSDI benefits, the incentive to return to the work force is very poor.

Revealing one's ability to work, especially if it's in a low-paid occupation, could cause permanent loss of SSDI benefits. Strong work disincentives under SSDI result from its eligibility standard that guides benefit awards: an inability to engage in substantial gainful activity for 12 months or more.

Is this an underreported story?  What's the success rate on coming out of disability and finding a decent job?  What percent of the disabled, permanently unemployed are truly unable to engage in productive work?  I was put onto this question by a tip from Larry Katz.

Real wages for the previously unemployed

Catherine Rampell reports:

Nearly 7 in 10 of the survey’s respondents who took jobs in new fields say they had to take a cut in pay, compared with just 45 percent of workers who successfully found work in their original field.

Of all the newly re-employed tracked by the Heldrich Center, 29 percent took a reduction in fringe benefits in their new job. Again, those switching careers had to sacrifice more: Nearly half of these workers (46 percent) suffered a benefits cut, compared with just 29 percent who stayed in the same career.

The wage premium at large firms

Do very wealthy CEOs yank potential wage gains away from median-like workers?  The excellent Adam Ozimek writes to me:

You say: 6. If the top earners are screwing over their wage earners in the big companies, by pulling in excess wages, options, and perks, we should observe non-stagnant median pay for people who avoid working in firms with fat cat CEOs.  Or we should observe talented lower-tier workers fleeing the big corporations, to keep their wages up.  Yet no evidence for these predictions is given, nor are the predictions considered.  It is likely that the predictions are false.

And in fact isn't this precisely the opposite of what the evidence on the employer size wage-premium tells us? If large firms were better at keeping wages down, then the employer size wage-premium would be negative, since small firms would pay more for comparable workers. Apparently this has been true for a long time, for instance from this paper

The fact that large employers pay higher wages than small employers has long been recognized as an important component of the variation in worker wages.This phenomenon was first documented by Moore (1911) and later confirmed by King (1923), Mellow (1982), Oi (1983), and Brown and Medoff (1989) among others.

That paper also argues:

Davis and Haltiwanger (1991) show that the gap in real hourly wages between production workers in plants with 20 to 49 employees and production workers in plants with more than 5,000 employees increased by 79% between 1963 and 1986, and that the gap for nonproduction workers in these same plants increased by 49% over this period.

So the firm size premium is growing. This seems inconsistent with their story.

That is all connected to my earlier review of the new Hacker and Pierson book.

Michael Clemens on the Millennium Village project

It's hard to summarize, so read the whole thing.  But he is calling for a closer look at the evidence and the application of RCT [randomized control trial] standards.  Here is an excerpt:

First, the fact that a technology has been scientifically proven in isolation–such as a certain fertilizer proven to raise crop yields–does not mean that it will improve people’s well-being amidst the complexities of real villages. Recent research by Esther Duflo, CGD non-resident fellow Michael Kremer, and Jonathan Robinson shows that fertilizer use is scientifically proven highly effective at raising farm yields and farmers’ profits in Kenya. But for complex reasons very few farmers wish to adopt fertilizer, even those well trained in its use and usefulness. This means that this proven technology has enormous difficulty raising farmers’ incomes in practice. The gap between agronomy and development is very hard to cross.

Second, it is not sufficient to compare treated villages to untreated villages that were chosen ex-post as comparison villages because they appear similar. Many recent research papers have shown this conclusively. A long list of studies conducted over decades showed that African and other children learned much more in schools that had textbooks than in schools that appeared otherwise similar but did not have textbooks. Paul Glewwe, Michael Kremer, and Sylvie Moulin evaluated a large intervention in some of the neediest schools in Kenya (ungated version here, published here). Schools that received textbooks were randomly chosen from an initial pool of candidates. The problem: Children did not learn more in the treated schools than in the untreated schools.

Chris Blattman comments.

Temporary Marriage in Shiite Islam

ON A DUSTY MORNING in the holy city of Qom, I went looking for a shrine in a walled cemetery of martyrs known as Sheikhan. The graveyard's walls are lined with glass cases containing the framed photos of soldiers felled by the Iran-Iraq war. The shrine, I'd been told, is a hangout for women seeking temporary marriage, an intriguing mechanism in Shiite Islam for relieving sexual frustration. In the Islamic Republic of Iran, sex outside of marriage is a crime, punishable by up to 100 lashes or, in the case of adultery, death by stoning. Yet the purpose of a temporary marriage is clear from its name in Arabic–mut'a, pleasure. A man and a woman may contract a mut'a for a finite period of time–from minutes to 99 years or more–and for a specific amount, mehr in Farsi, which the man owes the woman.

Interesting throughout, from Mother Jones.

Multiple equilibria Potemkin village economic stimulus of the day

Fake businesses are to be used to lessen the impact of the recession on high streets in North Tyneside.

With 140 empty shops in the borough, council bosses think they have come up with a unique way of ensuring shopping areas remain as vibrant as possible.

The rest of the story is here.  For the pointer I thank Bob Cottrell, at The Browser.

Academic wage stickiness

The percentage of faculty members receiving no salary increase this year is 21.2 percent, while 32.6 percent had their salaries reduced, with a median decrease (among those who saw a decrease) of 3 percent.

Here is more information.  I see the overall trend as toward lower wages, with many cut-deserving people put at zero to shut them up.  We'll see how long they stay there.

The economics of local forest management (or another lesson in Elinor Ostrom)

Here are some recent results:

In the first study of its kind, Chhatre and Arun Agrawal of the University of Michigan
in Ann Arbor compared forest ownership with data on carbon
sequestration, which is estimated from the size and number of trees in
a forest. Hectare-for-hectare, they found that tropical forest under
local management stored more carbon than government-owned forests.
There are exceptions, says Chhatre, "but our findings show that we can
increase carbon sequestration simply by transferring ownership of
forests from governments to communities".

One reason may be that locals protect forests best if
they own them, because they have a long-term interest in ensuring the
forests' survival. While governments, whatever their intentions,
usually license destructive logging, or preside over a free-for-all in
which everyone grabs what they can because nobody believes the forest
will last (Proceedings of the National Academy of Sciences, DOI: 10.1073/pnas.0905308106).

The authors suggest that locals would also make a better job
of managing common pastures, coastal fisheries and water supplies. They
argue that their findings contradict a long-standing environmental
idea, called the "tragedy of the commons", which says that natural
resources left to communal control get trashed. In fact, says Agrawal,
"communities are perfectly capable of managing their resources

If you turn to the first page of the paper itself, the header reads:

Edited by Elinor Ostrom, Indiana University, Bloomington, IN, and approved September 4, 2009 (received for review July 22,

Of course this sort of result is inspired by her work as well.  For the pointer I thank Andrew Grant.

Was bailing out Long-Term Capital Management a good idea?

Here is my latest NYT column.  It starts as follows:

The financial crisis is a result of many bad decisions, but one of them hasn’t received
enough attention: the 1998 bailout of the Long-Term Capital Management
hedge fund. If regulators had been less concerned with protecting the
fund’s creditors, our current problems might not be quite so bad.

Bear Stearns, Merrill Lynch, and Lehman Brothers were all major creditors of LTCM.  Given that regulation is inevitably imperfect, and cannot foresee or prevent every firestorm in advance, this was one chance to send a very stern message to those creditors.  Perhaps no LTCM bailout would have meant dire consequences at the time, but still:

…Fed inaction might have had graver economic consequences,
especially if a Buffett deal had fallen through. In that case, a rapid
financial deleveraging would have followed, and the economy would have
probably plunged into recession. That sounds bad, but it might have
been better to have experienced a milder version of a downturn in 1998
than the more severe version of 10 years later.  In 1998, there was no collapsed housing bubble, the government’s budget
was in surplus rather than deficit, bank leverage was much lower, and
derivatives markets were smaller and less far-reaching.

I’ve been reading much about LTCM in recent times, and in so many ways it was a micro- dress rehearsal for our later problems.  This column also criticizes the current now-standard practice of "regulation by deal."

Addendum: Matt Yglesias adds: " At the time I think everyone was clear on the idea that if
institutions such as LTCM were “too big to fail” that they had to be
brought into a regulatory umbrella. But as soon as it was clear that
disaster had been averted, a lot of people became complacent about
operationalizing this determination to expand the scope of regulation
and some of the key participants – especially Alan Greenspan – in the
bailout only redoubled their opposition to regulation."

My sentence on time management

All people are equally good at time management, but some people are more willing than others to admit that they are doing what they want to do, while others maintain the illusion they wish they were doing something else.

Here are my previous posts on time management, most of all here and yes this is the single most frequent topic question I receive from MR readers.  I thank Jacqueline for the query.

Addendum: Will comments, worth reading.  My view is simple: forcing yourself to use your time better just isn’t that costly, so if you want to, you can.  What does *Getting Things Done* sell for?  That’s about its marginal value.   It doesn’t reflect a big shift in time use.

Is there a “marriage premium” for gay men?

Data on cohabitation suggest that the answer is no, whether for gay men or cohabiting heterosexuals.  The standard selection story is that women are more likely to choose the high earning men and marry them.  But why don’t women live with these men too?  Does living together not transfer enough resources?  Could it be that real legal marriage is proxying for the ability to commit, which is positively correlated which other determinants of job success?

Female tennis players and wages — politically incorrect paper of the day

Female tennis players play more conservatively and commit more
unforced errors when playing critical points.  Does this explain the
upper-echelons wage gap?

Here is the fact in more detail:

Women are significantly more likely to hit unforced errors at the most
crucial stages of the match, while men exhibit no significant variation
in performance.  Specifically, about 30% of men’s points end in unforced
errors, regardless of their placement in the distribution of the
importance variable.  For women, about 36% of points in the bottom
quartile of the importance distribution end in unforced errors, but
unforced errors rise to nearly 40% for points in the top quartile of
the importance distribution.  What is remarkable is not the difference
in the levels (men are more powerful and therefore more likely to hit
winners at any stage).  The interest lies in the differences in the way
men and women respond to increases in competitive pressure.

Here is the full article.