Matthew Yglesias » Evaluating the North American Union

Matthew Yglesias » Evaluating the North American Union:
it’s hard not to notice that Mexican people, in general, seem to wind up doing much better for themselves when they’re able to relocate and live under American or Canadian institutions. So one of the goals of North American political integration would be for Mexico to begin to be governed by more US/Canadian-style institutions, extending the opportunities that are currently provided only through migration. You might also see more reverse migration, as retirement to Mexico could be a compelling opportunity for American or Canadian senior citizens living on fixed incomes.

World Economic Forum - The India Gender Gap Review

World Economic Forum - The India Gender Gap Review: "The India Gender Gap Review has been released on 9 November by the World Economic Forum"

After the Wall

Matthew Yglesias:

The [Berlin] wall was built to bottle up an incipient revolt—a mass emigration that threatened to expose the Soviet system as inferior to the West, as an oppressive dungeon that its most educated young people yearned to escape. The wall not only blocked those yearnings; it also made clear to the brighter young Soviet and Eastern European leaders that the system itself—the ideological basis of their rule—was suspect, that it could not be sustained, much less compete with the West, without the internal imposition of force.

It’s interesting to reflect that it’s very much still the case that millions of people living in Ukraine and Russia and for that matter Mexico and Mozambique would love to engage in mass emigration to the West and expose the systems under which they live as corrupt and uncompetitive. Indeed, according to Gallup 700 million people would like to migrate permanently to a new country:

But of course the voters of the United States and Canada have no intention of letting as many people show up as might like to come, and the voters of Western Europe have even less desire for this, and those of Japan even less.

Birth date, business cycles, and lifetime income

OMB - Blog Post:

We often hear about people who are unlucky in love, but what of those who are unlucky in the business cycle? What is the impact of being born two decades before a significant economic downturn, such that you graduate from college and enter the labor force in the middle of a period of high unemployment?
As the class of 2009 is keenly aware, entering the labor market during a recession has immediate negative effects. Job offers are harder to find: according to the National Association of Colleges and Employers, less than 20 percent of the class of 2009 graduated from college with a job offer in hand, compared to 25 percent in the class of 2008 and more than 50 percent in the class of 2007. Whereas year to year starting salaries on average tend to increase, with the tough competition in this year’s labor market, average starting offers for the class of 2009 are slightly down.

I recently read a paper that suggests that, for this cohort, the wage effect of graduating during a period of high unemployment will continue well beyond the end of the recession and even the labor market rebound. In examining the cohorts of college graduates that entered the labor market before, during, and after the recession of the early 1980s, Lisa Kahn of the Yale School of Management found that an increase in unemployment produces a significant and enduring negative wage effect.

The chart below illustrates this effect: a one percentage point increase in the national unemployment rate is associated with a 6 to 7 percent loss in initial wages. The annual wage loss declines over time, but is still statistically significant 15 years later. Comparing the wages earned by the class of 1982 (a peak unemployment year) with the wages of the class of 1988 (a peak employment year) over the first 20 years of a career, the wage difference resulted in a difference of nearly $100,000 in cumulative earnings in net present value.

Entering Labor Force During Recession Has Enduring Effect on Wages:
For the 1982 Cohort, $100,000 NPV Loss in First 20 Years of Career

Data from Kahn 2009

The long-term effect isn’t just a residual of low first-year wages: the author suggests that poor job match, lower prestige placements, and fewer opportunities for training and promotion also play a role. Other researchers have found similar effects: Oreopolous et al find persistent wage effects for Canadian college graduates; Bowlus and Liu find persistent wage effects for high school graduates moving directly into the work force, and other studies assess how the macroeconomy affects impact newly minted MBAs and economics PhDs.

The evidence thus suggests that a recession hits young people particularly hard, knocking them off course with effects that last for years to come. As we rebuild a new foundation for economic growth, it’s critical that we keep this in mind.

Money, Power Serve Up Alphabet Soup Of Regulators : NPR

Money, Power Serve Up Alphabet Soup Of Regulators : NPR: "Exactly one year ago, the U.S. government began planning its takeover of AIG to prevent the collapse of the largest insurance company in the world. The public seemed outraged that taxpayers had to save a private company. ...AIG was watched over by 400 different agencies around the world, including dozens in the U.S., and none of them noticed that the company was on the verge of taking down the entire global economy.

Economists say this kind of problem stems from regulatory arbitrage. When more than one regulator oversees the same kind of activity, financial firms find ways to play one off against the other. It's like what every 4-year-old has figured out — if Mommy won't let you, maybe Daddy will. Or worse, if Mommy thinks Daddy is watching you, and Daddy thinks Mommy is watching you, then you can get away with anything.

The other thing Democrats and Republicans agree on is that solving the problem by simply merging some of the regulators will never happen.

Consider one of the most glaring examples — the bizarre division of labor between the Securities and Exchange Commission, and the Commodity Futures Trading Commission. If you buy and sell stocks, your overseer is the SEC. If you trade stock futures or their kin, you get the CFTC.

Much of the current financial crisis is linked to the strange financial products that fell between the cracks of the SEC and CFTC."

Higher education and the recession: It still pays to study | The Economist

Higher education and the recession: It still pays to study | The Economist: "The OECD’s answer is simple: the more education, the better. Taking into account tuition fees, lost earnings while studying and extra taxes paid, a male graduate is still $82,000 better off (see chart) in net present value terms than one whose education ended with the equivalent of a high-school diploma. (Women graduates benefit, but by less, since they work and earn less.) Figures show that, so far, the taxpayer has gained too, by more than $50,000 per graduate, even after subtracting the public funds that helped to pay for their studies."

Myth-Busting: The Value of College - Economix Blog - NYTimes.com

Myth-Busting: The Value of College - Economix Blog - NYTimes.com: "a recent National Public radio segment called “Is a College Education Worth the Debt?” In the segment, Richard Vedder, a professor of economics at Ohio University, argued that the country suffers from an oversupply of college graduates. “We are starting to graduate, I don’t want to say too many students, but it’s becoming more and more difficult for new college graduates to get jobs, independent of the recession,” Mr. Vedder said."

Immigration

The Economy and the Economics of Everyday Life - Economix Blog - NYTimes.com: "foreign-born workers who now represent about 15 percent of our labor force."

The Mancession - Economix Blog - NYTimes.com

The Mancession - Economix Blog - NYTimes.com: "We’ve pointed out before that that recession has disproportionately hurt men, who are more likely to work in cyclically sensitive industries like manufacturing and construction. Women, on the other hand, are overrepresented in more downturn-resistant sectors like education and health care. ... for the first time in American history women are coming close to representing the majority of the national work force."

Selection Bias and Quality

Matthew Yglesias » Home Page: "in my experience women are better managers than men. And I think there’s a sound theoretical basis for expecting that to be the case. Back in the 1950s, African-American baseball players were on average much better than white players. Not, it seems, because blacks are “better at baseball” than whites, but because the nature of the integration process was that African-Americans had to clear a higher bar to make it into big leagues at all."