Results for “service sector” 459 found
Do we find sectoral shifts in the job market data?
Menzie Chinn discusses the evidence on sectoral shifts hypotheses. See also the piece by Valletta and Cleary.
These are intriguing and useful studies but I don't think they get at the core of the matter, mostly because sectoral shifts and aggregate demand shocks are so closely intertwined in this recession.
Here's a very simple story. The prices of homes and stocks fall, plus there is some panic, so people spend less. On the surface, that's an AD story, following from an economy-wide negative wealth effect. But it's also a sectoral shifts story, because people are not cutting spending proportionately on all items. For instance luxury consumption and debt-financed consumption have been hit especially hard, not to mention real estate and financial services (for other reasons). And since I do not expect a quick rebound of real estate or stock prices, this is more or less a permanent change in sectoral priorities. Still, in the data the AD shock might well absorb most of the "credit" for what happened.
We're also seeing job losses in virtually every sector. It's not for instance a "sectoral shift away from services and into matchstick production and tungsten." It's a shift out of jobs which are revealed as unprofitable and a lot of people not knowing where the new jobs will be created.
If someone wants to insist that "this is really an AD shock, not a sectoral shift," I'm not so keen on fighting to keep one term over the other. I would insist, however, on an issue of substance, namely that not all AD shocks are alike. If we are going to switch terminology, it could be said that this is a real AD shock and not just a nominal AD shock. (Though there have been nominal AD shocks too.) A nominal AD shock can be offset more easily by goosing up some mix of M and V and restoring the previous level of nominal demand. If you want an example of a nominal AD shock, imagine a more neutral change in monetary variables and indeed those have happened in the postwar era. Or read David Hume's parable of the money under the pillow. In those cases you don't need to make people feel wealthier in real terms, you just need to get the flow of spending up again. Today, part of the problem is that people feel less wealthy in real terms and that influences the content of their spending and investment decisions.
When a real AD shock comes, policy still should be expansionary in response, but there is an important difference. In absolute terms, nominal expansion won't much help the labor market, which still has to reallocate workers from some sectors to others, given the collapse in asset prices and expectations.
You'll see indirect recognition of this from many current Keynesian writers, when they talk of the jobless recovery or fear that the economy will fall back next year after the stimulus money runs out. In general I agree with those points. Yet these writers are less willing to consider the implied conclusion that a bigger stimulus won't much help — and may hurt — the longer-run adjustments which are required. Boosting MV will restore employment only to a very limited extent. It's still the case that recovery will require a great deal of sectoral readjustment and that will take a good bit of time.
Which sectors will prove technologically stagnant?
Megan McArdle writes:
As the Boomers age, they will consume fewer of the things that we produce efficiently, and more of the things that we provide relatively inefficiently.
Here is more, and I hereby take Megan to be a robot pessimist.
It is a revealing question to ask which sectors a person considers technologically stagnant. Baumol claimed it is the performing arts, but TV and the internet have belied this; it is true that those media are not *live* performance but that is substituting objective aesthetic judgment for what consumers really care about. People love Dexter, whether or not there is someone actually in the box. For stagnant sectors, I will nominate:
1. Haircuts, you might as well get them in Mexico
2. Automobiles (given the overall extent of technological progress, are they really so much better than in 1957?), although the $2500 car may change this
3. Spicy food, it seems best in relatively poor countries
I’m not yet sure about teaching. It seems to be a candidate but people are learning an awful lot from blogs these days; don’t fixate on delivering the old service the way we always have.
Your picks? Keep in mind that something has to be stagnant in relative terms, to date it sure isn’t computer chips but they raise the bar for the average. I expect pharmaceuticals and webcams to make it much easier to care for old people, but only on a per year of life basis; the number of years lived and thus total cost will rise too.
How do/would unions differ in service industries?
Most unions are found in manufacturing, but the new pro-union arguments emphasize the creation of unions in service industries. I can think of a few differences between manufacturing and services:
1. Labor costs are more important in service industries, so unions have less scope to raise wages. This is Megan McArdle’s argument.
2. There is more long-term fixed capital in manufacturing, and that gives unions greater scope to confiscate those quasi-rents. This is related to #1. (In a service industry, would the transfer be taken away from the return to brand name capital?)
3. On average there is more market power in manufacturing, which again gives unions greater room to raise wages in those sectors. In a perfectly competitive industries, extra wage demands will bankrupt the firm.
4. Many service sector firms face less foreign competition, but I believe they nonetheless face more competition overall. Lower fixed costs mean a more competitive industry, which brings us back to #3.
5. Jobs have shorter duration in service industries, which tightens the link between wages and the current state of the labor market. That also means a smaller role for unions.
6. We have a mental model of service sector companies such as Wal-Mart, which try to get by on the cheap in labor markets. It is harder to make the same claim about General Motors.
The bottom line: Except for #6, most of the effects imply that unions will be less effective in the service sector. You’ll all think of some mechanisms I didn’t, but my tentative conclusion is that unions bring both lower costs and lower benefits in service industries.
I might add I once belonged to a service sector union, in a supermarket as a teen. It was not a pretty picture. I paid high dues and received no apparent benefit, relative to the workers in non-unionized supermarkets. I even heard rumors of corruption.
Should prostitution be cartelized?
In the year 2000, the Dutch Ministry of Justice argued for a legal quota of foreign sex workers, because the Dutch prostitution market demands a variety of bodies (Dutting, 2001: 16). [Source here]
That is one of the most er…creative arguments for protectionism I have heard…
Second addendum: Here is a fascinating article about French policy.
Thursday assorted links
1. “The Spanish judge investigating Russian interference in the Catalonian independence process has extended the probe for another six months after receiving an anonymous letter containing an article that identifies the Russian who offered Catalonian separatists US$500 billion and a small army if they break away from Madrid.” Link here.
2. “We’ve streamlined our recruiting process for new officers. It now takes a quarter of the time it took two years ago to move from application to final offer and security clearance. These improvements have contributed to a surge of interest in the CIA.” Link here.
3. “Interestingly, we also find that same-sex couples default significantly more (53.9%) than similar different-sex couples, which suggests an unobserved characteristic that causes same-sex couples to default more, and could explain a part of observed disparities in mortgage approval, undermining results in previous research.” Link here.
4. Those new service sector jobs: helping people plan their Disney trips.
5. A resource guide to understand the ARPA model, from Institute for Progress.
6. Smoke Sauna Sisterhood is a good Estonian movie, original too.
Wednesday assorted links
1. The Frick Museum will reopen with 14 (!) evening bars.
2. Sebastian Barry in conversation with Roy Foster.
3. On ideological gender disparities in Korea.
4. Those new service sector jobs, What is Intervenor Compensation?, and “robot wranglers” (WSJ).
5. Is Petro stifled in Colombia?
6. Further fresh Vitalik. Includes coverage of his childhood, more personal than about mechanism design.
7. Is there really a “National Hug an Economist Day”?
8. Other than this tweet, I know nothing about the new Catholic Institute of Technology.
Monday assorted links
1. Mexican investment is doing just great.
2. In praise of double majors.
3. How to do things if you don’t have talent (does this mean you do have talent?).
4. The coming of numeracy to 17th century England. And a new project Death by Numbers.
5. Those new service sector jobs: “After years shepherding children from one minute to the next, moms and dads hire $250-an-hour counselors to help them learn to live on their own.” (WSJ)
6. Okie-dokie: The Democrats’ new permitting-reform bill will spend $3 billion to help non-profits increase their participation in the environmental review process (Atlantic). Excerpt here.
Saturday assorted links
1. America’s wealthiest metropolitan areas in 1949.
2. Twins stolen at birth reunited by TikTok video.
3. Which immigrants to America end up most right-wing/left-wing?
4. “The [New Zealand] airport has since penguin-proofed its perimeters.” A small blue penguin, of course.
5. Markets in everything those new service sector jobs the culture that is Japan all the servers at this restaurant have dementia, and NPR says it is true.
6. Benjamin Yeoh podcast with Hannah Ritchie on sustainability.
Friday assorted links
1. Those new service sector jobs, former chess player edition.
2. John O. McGinnis reviews GOAT.
3. Huge ancient city found in the Amazon.
4. Michael Magoon on progress-related Substacks.
5. Elaine Schwartz has been blogging every day for ten years at Econlife.
6. Things you learn dating Cate Hall. And Cate’s essay on how to be more agentic.
What if you have a favorable AS shift and a negative AD shift?
The negative AD shift comes from the Fed’s extreme tightening plus the phasing out of fiscal stimulus. That might hurt housing markets the most, plus whatever consumers were wanting to spend their extra cash on (travel, restaurants?). It should hurt a lot of service sectors with sticky nominal prices quite a bit. And, we are told, that is quite a few sectors.
The positive supply shock comes from supply chains untangling, post Russian invasion, plus mopping up the residue from Covid restrictions. It shouldn’t help most service sectors very much, but a lot of manufactured goods, and resource-intensive goods, and agricultural foodstuffs should boom from this. Imports too, especially if they come by ship rather than by plane. Note that foreign trade is not a huge share of the American economy, though, and America is the world’s leading oil exporter. Falling energy prices may not help us much if at all, not in the aggregate.
You might think these dual shifts can, on net, work out for the better. Maybe. But part of the mix should be a fairly extreme volatility across sectors. You have a lot of service sectors that get hit hard from the negative AD shock and which don’t benefit so much from the supply chain untangling.
Is that what we see in the data? It seems most service sectors have done fine, and we’ve had a high degree of comovement, though I would note continuing issues in real estate markets and also in banking.
These days the Keynesians think you can get so much general positive comovement from the supply shocks resolving themselves — hilarious! For decades they have been criticizing the real business cycle theorists along those lines, and that was without a simultaneous major disinflation staring us in the teeth.
No one should be patting themselves on the back for having figured all this out.
Saturday assorted links
1. Those new, super-duper specific service sector jobs, Federal Reserve edition.
2. The culture that is Korean email etiquette — “suffer a lot.”
3. The rise of the “extremely productive” researcher — a paper every five days? (Did they suffer a lot?)
4. Phil Magness appointed to a chair at the Independent Institute.
5. Preliminary results against lupus and other autoimmune diseases.
Canada Poaches Talent that Competes with American Workers
As I wrote earlier, Canada is poaching talent that should be American! A new working paper by Agostina Brinatti (on the job market) and Xing Guo studies this in detail. The paper first documents that Canada attracted more immigrants when America shut the door but then it traces the consequences through the growth in Canadian firms and on through international trade to American firms and workers. Computer scientists were especially affected by the US policy and the bottom line is that when the US started to deny many more H-1B visas computer scientists went to Canada, increasing the creation of Canadian businesses, jobs and exports. American computer scientists gained because they had less competition but they gained less than the direct effect because they faced more Canadian imports. Moreover, other lower-skilled Americans were harmed because they had fewer higher-skilled workers to work with.
By the end of 2018, there was a decrease of 140,000 H-1B approvals (relative to trend) and an unprecedented spike in H-1B denial rates. Denial rates increased from about 6% in 2016 to 16% in 2018….Immediately following this policy change, Canada experienced a surge in the number of skilled immigrant admissions, equivalent to 76,000 additional admissions in the period between 2018 and 2019. This inflow represents 3.5% of the stock of college-educated immigrants in Canada, or about 2% of all workers in the high-skilled service sector.
…Our event-study estimates imply that a 10 percentage point increase in H-1B denial rates increases Canadian applications by 30%. A back of-the-envelope calculation suggests that for every four forgone H-1B visas, there is an associated increase of one Canadian application.
[the inflow was especially large in computer science]….This inflow decreases the welfare of Canadian computer scientists because they are relatively close substitutes to the incoming immigrants. However, the inflow increases the welfare of workers in other occupations because Canadian sectors expand, especially high-skilled service sectors. For instance, in these sectors, the welfare of computer scientists decreases by 2.9% and that of lower-skilled workers increases by 0.9% approximately.
In the U.S., immigrant labor decreases by 1.6% and is particularly pronounced among computer scientists. As a result, we find that the drop in U.S. approval rates benefits primarily American computer scientists but tend to harm American workers employed in other occupations, especially if their sector contract. For instance, computer scientists in high-skilled service sectors experience a 0.7% welfare increase, while lower-skilled workers experience a 0.3% welfare decrease. These effects on American workers include both direct and indirect effects.
Addendum: Tyler reminds us that in the long-run, immigrants who get Canadian citizenship may immigrate to America! The basic point that Canada and the US are in a more or less free trade area is well taken and so we can thank Canada for making US immigration policy less harmful than it might otherwise be. Still, I’d rather see fewer artificial barriers distorting the allocation of talent.
Wednesday assorted links
2. “Using unique class-level data containing chronological variables and institutional, instructor, and student characteristics, spanning Fall 2010 to Spring 2021 of 7,852 undergraduate classes, it is shown class average grade point averages (GPAs) in the College of Agriculture at Texas A&M University increased for the three semesters most impacted by COVID-19.” Link here, my hypothesis is that instructors graded by easier standards during that time.
3. Ukrainian used markets in totaled EVs. And claims about Ukraine.
4. Those new service sector jobs.
8. Douthat on Milei (NYT).
Monday assorted links
1. Those new service sector jobs: therapists for climate change anxiety (NYT).
2. Defunct airports of Southeast Asia.
3. Eli Dourado on personal aviation and the coming revolution.
4. The coolest neighborhoods in the world? (can’t say I agree with the list…cool for wimps maybe!)
6. “About 20 per cent of 650 Protestant ministers in Korea recently surveyed by the Ministry Data Institute said they have used ChatGPT to create sermons and about 60 per cent of them found ChatGPT useful in coming up with ideas for sermons.” (FT)
Monday assorted links
1. Those new service sector jobs. East vs. west coast money.
2. Scottish NIMBY vs. Stella McCartney. Environmental review is out of control.
3. 104-year-old woman jumps from plane, dies in her sleep a week later.
4. Why not look at fake views in your digital windows?
5. Should Britain “outsource” by sending prisoners abroad to other nations? If so, to which ones?
6. “One thing that the rise of social media (particularly Twitter) did is to suddenly put Americans in direct contact with people from all over the world, without Americans realizing this. A lot of the radicalization of Americans over the last decade came from overseas.” From Noah Smith.