The increasing militarization of the US-Mexico border has tended to increase the duration of time that Mexicans who come to the US to work illegally spend in our country, but both traditionally and under a saner policy most people who cross the border would probably just go back.
People should remember that not only are wage levels higher in the United States, the price level is higher too. Consequently, the best way for Mexicans willing to migrate to maximize their real wealth is to come to the US to work and then take their money back to Mexico. Temporary labor migration of this kind has traditionally been the goal of most work-oriented border crossing and the easiest way to prevent it from turning into illegal labor and semi-permanent settlement is to create a legal channel.
Friday, October 15, 2010
Yglesias » “Illegal Immigrant”
Yglesias » “Illegal Immigrant”:
Saturday, September 11, 2010
Does that make any sense?: Statistical discrimination
Does that make any sense?: Statistical discrimination: "The effects of statistical discrimination go beyond the obvious unfairness of judging an individual by his group identity. As economists have realized, there's the possibility that an entire racial group will be stuck in a bad equilibrium. If an employer believes that very few people of a particular race have invested in their job skills, he's likely to discount a good interview or test result from a member of that race as a fluke. Then, realizing that they're unlikely to get a good job anyway, people in that race will not invest in skills, confirming the employer's belief. It's a simple but lethal self-fulfilling prophecy.
Some observers, like Bryan Caplan, argue just the opposite—that statistical discrimination may be self-reversing because it raises the return to education. Caplan points out that the return to education is empirically higher for black students than white ones; he surmises that statistical discrimination makes "counter-stereotypical" behavior particularly valuable. To an extent, I think he's right. The "bad equilibrium" story doesn't seem to lower the returns to obtaining easily observable credentials like college degrees. Perhaps this is because college degrees are such good indicators of competence that they overwhelm negative racial perceptions, or because in a world that erects massive social and economic barriers to obtaining a good education, managing to get a degree as a black student is much more impressive than it is for most white students.
Some observers, like Bryan Caplan, argue just the opposite—that statistical discrimination may be self-reversing because it raises the return to education. Caplan points out that the return to education is empirically higher for black students than white ones; he surmises that statistical discrimination makes "counter-stereotypical" behavior particularly valuable. To an extent, I think he's right. The "bad equilibrium" story doesn't seem to lower the returns to obtaining easily observable credentials like college degrees. Perhaps this is because college degrees are such good indicators of competence that they overwhelm negative racial perceptions, or because in a world that erects massive social and economic barriers to obtaining a good education, managing to get a degree as a black student is much more impressive than it is for most white students.
Monday, May 24, 2010
Super-Economy: Simple pictures against bad ideas
Super-Economy: Simple pictures against bad ideas
Unfortunately and despite their rhetoric, the Green Party has a lot of bad economic ideas. One in particular is work sharing, a government regulation that forces everyone to work as standard no more than 35-hours per week. Their idea is that if you force people to work fewer hours, there will be more job for others.
The consensus belief among academic economists is that work sharing does not work.
Unemployment does not arise because there are too many people. It is because there is some imperfection in the market (either policy induces or due to market failure) that causes the market to generally not be able to match jobs to people.
We have to remember that normally in functioning economies, there are very strong forces that create jobs for everyone who wants to work. To illustrate this for non-economists, please allow me to put up a graph with a high "duh" factor (but which really is quite important).
This is the relationship between number of working age adults in 2007 and number of jobs in 2007, for the OECD countries. Source is as usual OECD.
The correlation between potential workers and jobs in the OECD is 0.99!
...
To an economist this is trivial, and just says that there is no connection between employment rate and country size among the OECD countries. But savor the pictures for a moment. They have a profound implication. It means that there are extremely powerful forces in market economies that create jobs for ordinary people, no matter how many people we have, and regardless of if we can perfectly understand these forces.
It is not easy to describe this magic when people demand "where will jobs come from?". You may even sound naive if you say that "the market will take care of it", and refer to history or to the graph above. But in this case what sounds naive is in fact the most profound answer. Empirically, we can observe that the market does seem to take care of creating jobs.
The problems that cause unemployment is never the number of people, it is things like the skill composition combined with wage rigidity, cyclical demand conditions, search friction, taxes and regulations, and market imperfections. None of the core economic forces that create unemployment is affected by permanent work sharing for all workers.
Let me also look at this a little more directly. Here is average hours worked for workers and the unemployment rate, again for OECD, and again for 2007.
There is no statistically significant relationship between the typical workday and unemployment rate (p value 0.52). Countries that have reduces the average hours worked have not been able to achieve lower unemployment rate. Now, correlation is not always causation. Maybe the unemployment rate in France would have been even higher if they worked more hours. But I strongly doubt it.
Unfortunately and despite their rhetoric, the Green Party has a lot of bad economic ideas. One in particular is work sharing, a government regulation that forces everyone to work as standard no more than 35-hours per week. Their idea is that if you force people to work fewer hours, there will be more job for others.
The consensus belief among academic economists is that work sharing does not work.
Unemployment does not arise because there are too many people. It is because there is some imperfection in the market (either policy induces or due to market failure) that causes the market to generally not be able to match jobs to people.
We have to remember that normally in functioning economies, there are very strong forces that create jobs for everyone who wants to work. To illustrate this for non-economists, please allow me to put up a graph with a high "duh" factor (but which really is quite important).
This is the relationship between number of working age adults in 2007 and number of jobs in 2007, for the OECD countries. Source is as usual OECD.
The correlation between potential workers and jobs in the OECD is 0.99!
...
To an economist this is trivial, and just says that there is no connection between employment rate and country size among the OECD countries. But savor the pictures for a moment. They have a profound implication. It means that there are extremely powerful forces in market economies that create jobs for ordinary people, no matter how many people we have, and regardless of if we can perfectly understand these forces.
It is not easy to describe this magic when people demand "where will jobs come from?". You may even sound naive if you say that "the market will take care of it", and refer to history or to the graph above. But in this case what sounds naive is in fact the most profound answer. Empirically, we can observe that the market does seem to take care of creating jobs.
The problems that cause unemployment is never the number of people, it is things like the skill composition combined with wage rigidity, cyclical demand conditions, search friction, taxes and regulations, and market imperfections. None of the core economic forces that create unemployment is affected by permanent work sharing for all workers.
Let me also look at this a little more directly. Here is average hours worked for workers and the unemployment rate, again for OECD, and again for 2007.
There is no statistically significant relationship between the typical workday and unemployment rate (p value 0.52). Countries that have reduces the average hours worked have not been able to achieve lower unemployment rate. Now, correlation is not always causation. Maybe the unemployment rate in France would have been even higher if they worked more hours. But I strongly doubt it.
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