Tyler Cowen's Blog, page 288

Dani Rodrik on premature deindustrialization

Consider Brazil and India, two emerging economies that have done comparatively well in the last decade or so. In Brazil, manufacturing’s share of employment barely budged from 1950 to 1980, rising from 12% to 15%. Since the late 1980’s, Brazil has begun to deindustrialize, a process which recent growth has done little to stop or reverse. India presents an even more striking case: Manufacturing employment there peaked at a meager 13% in 2002, and has since trended down.

It is not clear why developing countries are deindustrializing so early in their growth trajectories. One obvious culprit may be globalization and economic openness, which have made it difficult for countries like Brazil and India to compete with East Asia’s manufacturing superstars. But global competition cannot be the main story. Indeed, what is striking is that even East Asian countries are subject to early-onset deindustrialization.

China is a very large country, of course, with much of its workforce still in rural areas. But most migrant workers now find jobs in services rather than in factories. Similarly, it is extremely unlikely that the new crop of manufacturing exporters, such as Vietnam and Cambodia, will ever reach the levels of industrialization attained by the early industrializers, such as Britain and Germany.

An immediate consequence is that developing countries are turning into service economies at substantially lower levels of income. When the US, Britain, Germany, and Sweden began to deindustrialize, their per capita incomes had reached $9,000-11,000 (at 1990 prices). In developing countries, by contrast, manufacturing has begun to shrink while per capita incomes have been a fraction of that level: Brazil’s deindustrialization began at $5,000, China’s at $3,000, and India’s at $2,000.

There is more here.

Chinese factory workers and the toys they produce

The photos are here, definitely recommended, scroll down to view, hat tip goes to Robin Grier.

Online Education and the Tivo Revolution

Here’s a TV schedule from 1963. If you wanted to watch Hootenanny you needed to be in front of the television on Saturday night between 7:30 and 8:30 pm. Have something else to do that night? Too bad. No pause or rewind either.

Here’s a college class schedule from 2010  If you want to learn Accounting with Ms. Gettler you need to be in class on Mondays and Wednesdays between 11:25 am and 12:50 pm (bring your lunch). If you need another class that’s scheduled at the same time, too bad. No pause or rewind either.

A TV Guide looks quaint. Tivo has liberated us from the dictates of the networks. Today we can get entertainment on demand. Next up, education on demand.

Do children brought up in the same family share the same environmental influences?

Maybe not.  Here is a fascinating 2011 paper (pdf) from Robert Plomin and Denise Daniels, and here is part of the abstract:

…environmental differences between children in the same family (called ‘‘nonshared environment’’) represent the major source of environmental variance for personality, psychopathology, and cognitive abilities. One example of the evidence that supports this conclusion involves correlations for pairs of adopted children reared in the same family from early in life. Because these children share family environment but not heredity, their correlation directly estimates the importance of shared family environment. For most psychological characteristics, correlations for adoptive ‘‘siblings’’ hover near zero, which implies that the relevant environmental influences are not shared by children in the same family. Although it has been thought that cognitive abilities represent an exception to this rule, recent data suggest that environmental variance that affects IQ is also of the nonshared variety after adolescence.

My favorite part of the paper is the section which discusses how siblings represents a non-shared environment for each other.  For instance my sister grew up with a slightly younger brother and I grew up with…a slightly older sister, which is a somewhat different proposition.

For the pointer I thank Michelle Dawson.

Rental car *Average is Over*

A new car rental service at Los Angeles International Airport will allow customers to pick up an Audi A4 without ever having to interact with a clerk.

The company is called Silvercar, and it aims to fill a niche in the car rental market, according to chief executive Luke Schneider. Like other companies seeking to reinvent travel, Silvercar allows customers to streamline the entire process using their mobile phones.

“Mobile plus travel is a beautiful combination,” Schneider said. “To get into a Silvercar, you literally scan the car with your phone. That’s how the doors unlock and you jump in.”

The company’s entire fleet consists of silver Audi 4s, an entry level luxury car made in Germany that starts at around $35,000.

There is further information here, and for the pointer I thank Zenon Zygmont.

Price ambiguity as a buyer sorting mechanism

This is from Peter Aspden’s FT ten point guide to mastering the contemporary art market:

So you quite like the look of something, and you ask how much it costs. “Two,” may be the reply. The air of vagueness is a test. You will know, from your studies of the artist in question, whether that means £2 (no), £200 (unlikely), £200,000, or £2m. But if the gallerist’s assistant is American, she (almost always a she) may be talking dollars. Don’t ask. Make a rough calculation in your head that covers all possible options. Any physical reaction is ill-advised, other than the barely perceptible raising of an eyebrow. Finally, ask if she will accept roubles. You’re on the front foot now.

Keep in mind that art sellers very often have preferences over the quality of buyers they sell to.  Higher quality buyers lead to referrals, perceived gallery quality, and also do more to boost the artist’s reputation, which in turn helps the value of the gallery’s inventory.

Nobel Offices

Here is a panoramic peek inside the offices of a number of Nobel prize winners, including Al Roth for economics. More interesting than it sounds with lots of Easter eggs.

Hat tip: Justin Wolfers.

Assorted links

1. Puffin holding flower (Proposing puffin).

2. Andrew Wylie on Amazon and other matters.  Angus Deaton on replication.

3. Iceland is no longer doing better in terms of gdp than Latvia or Estonia or Ireland.

4. Video on winemaker robots.

5. The favorite albums of Pope Francis.  He has very good taste in pieces and performances both.  And seventeen Janet Yellen papers that you can read about at this link.

Alice Munro wins the Nobel Prize in literature

She is one of my favorite authors.  If you are looking for one place to start try Hateship, Friendship, Courtship, Loveship, Marriage: Stories, but all of her books are worth reading.  As writers go, she falls into the “behavioral” camp, so to speak.  Here is a story on Alice Munro retiring, as of earlier this year.  Here is an associated slide show.  I liked this article about her decision to retire.  She was 37 when her first collection of stories was published, her first story was published in 1977, but she had been sending stories to The New Yorker as early as the 1950s.  Here is a good interview with Munro.

Getting beneath the Veil of Effective Schools: Evidence from New York City

That is a new paper by Will Dobbie and Roland G. Fryer Jr., here is the abstract:

In this paper, we collect data on the inner-workings of 39 charter schools and correlate these data with school effectiveness. We find that traditionally collected input measures—class size, per-pupil expenditure, teacher certification, and teacher training—are not correlated with school effectiveness. In stark contrast, we show that an index of five policies suggested by qualitative research—frequent teacher feedback, the use of data to guide instruction, high-dosage tutoring, increased instructional time, and high expectations— explains approximately 45 percent of the variation in school effectiveness. The same index provides similar results in a separate sample of charter schools.

The gated AEJ version is here, an ungated version is here.