Tyler Cowen's Blog, page 129
August 23, 2014
The loss of skill in the Industrial Revolution
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…
August 22, 2014
China blackmail markets in everything
In Beijing, I met Benjamin Liebman, a professor at Columbia Law School, who has published a study on “malpractice mobs” in China. He told me that protests consistently extract more money from hospitals than legal proceedings do. Family members can even hire professional protesters. One report in Shenzhen mentioned an average price of fifty yuan a day for the service of a protester. The radiologist in Shanghai told me, “If your mother dies in the hospital, there will be an agency that comes to you and says, ‘We can help you. We can have twenty guys who can come to the hospital, blackmail them, and share fifty per cent of the profits.’ They’re very professional.”
The article, by Christopher Beam in The New Yorker, is interesting throughout.
America’s economic problems predated the Great Recession
Here is a very good piece by Binyamin Appelbaum, focusing on the research of Davis and Haltiwanger, here is one excerpt:
Employment losses during the Great Recession may have had more to do with factors like the rise of Walmart than with the recession itself, two economists say in a new academic paper.
The paper, presented Friday morning at the annual gathering of economists and central bankers at Jackson Hole, Wyo., argues that the share of Americans with jobs has declined because the labor market has stagnated in recent decades — fewer people losing or leaving jobs, fewer people landing new ones. This dearth of creative destruction, the authors argue, is the result of long-term trends including a slowdown in small business creation and the rise of occupational licensing.
“These results,” wrote the economists Stephen J. Davis, of the University of Chicago, and John Haltiwanger, of the University of Maryland, “suggest the U.S. economy faced serious impediments to high employment rates well before the Great Recession, and that sustained high employment is unlikely to return without restoring labor market fluidity.”
Their findings contribute to the growing genre of papers that purport to show that the weakness of the American economy is caused largely by problems that predate the recession — and that the Federal Reserve can’t remedy them with low interest rates.
Read the whole thing.
*Gaza: A History*
That is the new book by Jean-Pierre Filiu, Oxford University Press. It would not have come right now unless I were supposed to read it on the plane, so I will.
Good news from India
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.
How much does poverty drive crime?
Maybe less than you thought, at least after adjusting for other variables. The Economist reports:
In Sweden the age of criminal responsibility is 15, so Mr Sariaslan tracked his subjects from the dates of their 15th birthdays onwards, for an average of three-and-a-half years. He found, to no one’s surprise, that teenagers who had grown up in families whose earnings were among the bottom fifth were seven times more likely to be convicted of violent crimes, and twice as likely to be convicted of drug offences, as those whose family incomes were in the top fifth.
What did surprise him was that when he looked at families which had started poor and got richer, the younger children—those born into relative affluence—were just as likely to misbehave when they were teenagers as their elder siblings had been. Family income was not, per se, the determining factor.
That suggests two, not mutually exclusive, possibilities. One is that a family’s culture, once established, is “sticky”—that you can, to put it crudely, take the kid out of the neighbourhood, but not the neighbourhood out of the kid. Given, for example, children’s propensity to emulate elder siblings whom they admire, that sounds perfectly plausible. The other possibility is that genes which predispose to criminal behaviour (several studies suggest such genes exist) are more common at the bottom of society than at the top, perhaps because the lack of impulse-control they engender also tends to reduce someone’s earning capacity.
The original research, by Amir Sariaslan, Henrik Larsson, Brian D’Onofrio, Niklas Långström and Paul Lichtenstein is here, here is how the authors report the conclusion:
There were no associations between childhood family income and subsequent violent criminality and substance misuse once we had adjusted for unobserved familial risk factors.
The worst part of one of this year’s best pieces
I loved the Michael Hofman 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 Hofman 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.
August 21, 2014
Finland fact of the day
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
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.
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