Labor Economics – Page 47 – artdiamondblog.com

Upward Mobility from Moving to the Robust Redundant Labor Markets of Open Boomtowns

(p. B3) Chicago in 1850 was a muddy frontier town of barely 30,000 people. Within two decades, it was 10 times that size. Within another two decades, that number had tripled. By 1910, Chicago — hog butcher for the world, headquarters of Montgomery Ward, the nerve center of the nation’s rail network — had more than two million residents.
“You see these numbers, and they just look fake,” said David Schleicher, a law professor at Yale who writes on urban development and land use. Chicago heading into the 20th century was the fastest-growing city America has ever seen. It was a classic metropolitan magnet, attracting anyone in need of a job or a raise.
But while other cities have played this role through history — enabling people who were geographically mobile to become economically mobile, too — migration patterns like the one that fed Chicago have broken down in today’s America. Interstate mobility nationwide has slowed over the last 30 years. But, more specifically and of greater concern, migration has stalled in the very places with the most opportunity.
As Mr. Schleicher puts it, local economic booms no longer create boomtowns in America.
. . .
Some people aren’t moving into wealthy regions because they’re stuck in struggling ones. They have houses they can’t sell or government benefits they don’t want to lose. But the larger problem is that they’re blocked from moving to prosperous places by the shortage and cost of housing there. And that’s a deliberate decision these wealthy regions have made in opposing more housing construction, a prerequisite to make room for more people.
Compare that with most of American history. The country’s economic growth has long “gone hand in hand with enormous reallocation of population,” write the economists Kyle Herkenhoff, Lee Ohanian and Edward Prescott in a recent study of what’s hobbling similar population flows now.
. . .
Were it not for all the restrictions on housing in the most productive places — if workers were able to more freely migrate to them — Mr. Herkenhoff and his co-authors and the economists Enrico Moretti and Chang-Tai Hsieh have estimated that the nation’s G.D.P. would be substantially higher. By their calculations, there are millions of workers missing from the Bay Area and metropolitan New York today.
The population growth that is occurring in these metro areas is fueled almost entirely by immigration, as Ryan Avent points out in “The Gated City,” where he makes a similar argument to Mr. Schleicher. If we consider only domestic moves, about 900,000 more people have moved away from New York than to it since 2010. On net, about 47,000 have left both San Jose and Washington, D.C., while Boston has lost a net 36,000.

For the full commentary, see:
Emily Badger. “Why New York and the Bay Area Are Missing Millions of Workers.” The New York Times (Friday, Dec. 8, 2017): B3.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 6, 2017, and has the title “What Happened to the American Boomtown?”)

The Herkenhoff et al. paper mentioned above, is:
Herkenhoff, Kyle F., Lee E. Ohanian, and Edward C. Prescott. “Tarnishing the Golden and Empire States: Land-Use Restrictions and the U.S. Economic Slowdown.” Journal of Monetary Economics 93 (Jan. 2018): 89-109.

The Moretti and Hsieh paper mentioned above, is:
Hsieh, Chang-Tai, and Enrico Moretti. “Housing Constraints and Spatial Misallocation.” Working paper, May 18, 2017.

The book by Ryan Avent, mentioned above, is:
Avent, Ryan. The Gated City. Amazon Digital Services LLC, 2011.

Millions of Dollars and 30 Years Later, A.I. Still Has Lacks Crucial Common Sense

(p. B6) SAN FRANCISCO — Microsoft’s co-founder Paul Allen said Wednesday [February 28, 2018] that he was pumping an additional $125 million into his nonprofit computer research lab for an ambitious new effort to teach machines “common sense.”
. . .
“To make real progress in A.I., we have to overcome the big challenges in the area of common sense,” said Mr. Allen, who founded the software giant Microsoft in the 1970s with Bill Gates.
. . .
In the mid-1980s, Doug Lenat, a former Stanford University professor, with backing from the government and several of the country’s largest tech companies, started a project called Cyc. He and his team of researchers worked to codify all the simple truths that we learn as children, from “you can’t be in two places at the same time” to “when drinking from a cup, hold the open end up.”
Thirty years later, Mr. Lenat and his team are still at work on this “common sense engine” — with no end in sight.
Mr. Allen helped fund Cyc, and he believes it is time to take a fresh approach, he said, because modern technologies make it easier to build this kind of system.
Mr. Lenat welcomed the new project. But he also warned of challenges: Cyc has burned through hundreds of millions of dollars in funding, running into countless problems that were not evident when the project began. He called them “buzz saws.”

For the full story, see:
CADE METZ, “A.I.’s Greatest Challenge: Digitizing Common Sense.” The New York Times (Thursday, March 1, 2018): B6.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the article has the date Feb. 28, 2018, and has the title “Paul Allen Wants to Teach Machines Common Sense.”)

The More Governments Tax, the Less Workers Work

(p. A17) European countries trail the U.S. in working hard and controlling taxes, and their economies have lagged in comparison. France has a tax-to-GDP ratio of about 44%, and in Italy it’s 43%. The French and Italians work almost 30% fewer hours per person than Americans. Notably, the French economy has flatlined since 2010 while Italy’s has contracted.
These patterns are not a coincidence: High taxes discourage work and capital formation. Data from the Organization for Economic Cooperation and Development suggests that a 1% increase in a nation’s tax rate is associated with a 1.4% decrease in hours worked per person in the working-age population. U.S. data dating to the 1970s also shows that higher taxes cause workers to limit their hours, reducing economic output.

For the full commentary, see:
Winkler, Rolfe and Justin Lahart. “Government Spending Discourages Work; The French and Italians pay higher taxes and put in 30% fewer hours per person than Americans.” The Wall Street Journal (Tuesday, Feb. 27, 2018): A17.
(Note: the online version of the commentary has the date Feb. 26, 2018.)

High Energy Costs Killed 15,000 of the Poor in Britain in Winter of 2014-2015

(p. A15) Higher costs from policies like stringent emissions caps and onerous renewable-energy targets make it even harder for the poorest citizens to afford gas and electricity.
. . .
In the U.K., the cost of electricity has increased by 36% in real terms since 2006, while the average income has risen only 4%. Environmentalists point out that energy usage has fallen as a result. But they ignore the fact that the poorest households cut back their consumption much more than average, while the richest have not reduced electricity consumption at all. Meanwhile, the share of income the bottom tenth of Britons spend on energy has increased rapidly, to almost 10%, while the share of income spent by the top tenth is still under 3%.
One 2014 poll shows that one-third of British elderly people leave at least part of their homes cold, and two-thirds wear extra layers of clothing, because of high energy costs. According to a report in the Independent, 15,000 people in the U.K. died in the winter of 2014-15 because they couldn’t afford to heat their homes properly.
Climate change is a real challenge for every country, but we need to maintain some perspective. The United Nations’ climate-change panel estimates that global warming could cause damage amounting to 2% of global gross domestic product toward the end of the century. That makes it a problem, but not the Armageddon produced by some feverish imaginations.

For the full commentary, see:
Bjorn Lomborg. “Climate-Change Policies Can Be Punishing for the Poor; America should learn from Europe’s failure to protect the needy while reducing carbon emissions.” The Wall Street Journal (Saturday, Jan. 5, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 4, 2018.)

Decline in Startups Reduces Labor Market Dynamism

Source of graphs: online version of the NYT commentary quoted and cited below.

(p. B1) . . . a broad sweep of statistics reveals a peculiar weariness spreading through the economy. Belying breathless headlines about the fabulous opportunities that technology is about to bestow on society, it suggests that many rich market democracies have lost much of their dynamism. Their companies are getting old, and their labor markets are getting stuck. Productivity growth has slumped. And many workers in their prime are peeling off from the labor force.
. . .
(p. B4) . . . , the economy’s ability to generate and support new businesses — agents of creative destruction that bring new products and methods into the marketplace — appears to be faltering across the world. In the United States, the rate of company formation is half what it was four decades ago. And it is slowing in many industrialized countries.
. . .
In a study published on Tuesday [February 6, 2018] by the Hamilton Project at the Brookings Institution, Jay Shambaugh, Ryan Nunn and Patrick Liu explore what economists have figured out about the American economy’s inertia and the fallout for wages and living standards.
The evidence paints a distinct picture of decline: Fewer start-ups mean fewer new ideas and fewer young, productive businesses to replace older, less productive ones. Researchers have found that the decline in companies entering the market since 1980 has trimmed productivity growth by about 3.1 percent.
The dearth of new businesses is also cutting off one of the main paths to workers’ advancement: the outside job offer. Changing jobs allows workers to shift to positions in which they are more productive, and better paid. But labor market fluidity — job switching, creation and destruction — has been declining since the 1980s.
Clear though the pattern may be, the researchers acknowledge that we haven’t yet figured out what is holding the economy’s dynamism back. “This is one of those big, economywide trends,” Mr. Shambaugh told me. “There is room for a lot of stories.”

For the full commentary, see:
Porter, Eduardo. “ECONOMIC SCENE; What to Worry About: Decrease in Start-Ups Is a Sign of Stagnation.” The New York Times (Wednesday, February 7, 2018): B1 & B4.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the commentary has the date FEB. 6, 2018, and has the title “ECONOMIC SCENE; Where Are the Start-Ups? Loss of Dynamism Is Impeding Growth.”)

The paper by Shambaugh, Nunn, and Liu, that is mentioned above, is:
Shambaugh, Jay, Ryan Nunn, and Patrick Liu. “How Declining Dynamism Affects Wages.” In Revitalizing Wage Growth Policies to Get American Workers a Raise, edited by Jay Shambaugh and Ryan Nunn, Washington, D.C.: Brookings, 2018, pp. 11-23.

Blockchain May Bring Property Rights to the Poor

(p. A15) The great economic divide in the world today is between the 2.5 billion people who can register property rights and the five billion who are impoverished, in part because they can’t. Consider what happens without a formal system of property rights: Values are reduced for privately owned assets; wages are devalued for workers using these assets; owners are denied the ability to use their assets as collateral to obtain credit or as a credential to claim public services; and society loses the benefits that accrue when assets are employed for their highest and best purpose.
. . .
Fortunately there is a new technology that could make a global property-rights registration system feasible. Patrick Byrne, an e-commerce pioneer and the CEO of Overstock.com, has committed a professional staff and significant resources to modernizing the collection and maintenance of property-rights records on a global scale. Blockchain is an especially promising technology because of its record-keeping capacity, its ability to provide access to millions of users, and the fact that it can be constantly updated as property ownership changes hands.
If Blockchain technology can empower public and private efforts to register property rights on a single computer platform, we can share the blessings of private-property registration with the whole world. Instead of destroying private property to promote a Marxist equality in poverty, perhaps we can bring property rights to all mankind. Where property rights are ensured, so are the prosperity, freedom and ownership of wealth that brings real stability and peace.

For the full commentary, see:
Phil Gramm and Hernando de Soto. “How Blockchain Can End Poverty; Two-thirds of the world’s population lacks access to a formal system of property rights.” The Wall Street Journal (Friday, Jan. 26, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 25, 2018.)

Reporters Celebrate Union Before Losing Jobs

(p. A23) A week ago, reporters and editors in the combined newsroom of DNAinfo and Gothamist, two of New York City’s leading digital purveyors of local news, celebrated victory in their vote to join a union.
On Thursday [November 2, 2018], they lost their jobs, as Joe Ricketts, the billionaire founder of TD Ameritrade who owned the sites, shut them down.

For the full story, see:
ANDY NEWMAN and JOHN LELAND. “DNAinfo and Gothamist Shut Down After Workers Join a Union.” The New York Times (Tuesday, November 3, 2017): A23.
(Note: bracketed date added.)
(Note: the online version of the story has the date NOV. 2, 2017, and has the title “DNAinfo and Gothamist Are Shut Down After Vote to Unionize.” The online version says that the page number of the New York edition was A21. The page number of my edition, probably midwest, was A23.)

Technology Increases Time at Home, Reducing Energy Use

(p. A15) A new study in the journal Joule suggests that the spread of technologies enabling Americans to spend more time working remotely, shopping online — and, yes, watching Netflix and chilling — has a side benefit of reducing energy use, and, by extension, greenhouse gas emissions.
. . .
Researchers found that, on average, Americans spent 7.8 more days at home in 2012, compared to 2003. They calculated that this reduced national energy demand by 1,700 trillion BTUs in 2012, or 1.8 percent of the nation’s total energy use.
. . .
“Energy intensity when you’re traveling is actually 20 times per minute than when spent at home,” said Ashok Sekar, a postdoctoral fellow at the University of Texas at Austin and lead author on the story.
One of his co-authors, Eric Williams, an associate professor of sustainability at the Rochester Institute of Technology, made the point a different way. “This is a little tongue in cheek, but you know in ‘The Matrix’ everyone lives in those little pods? For energy, that’s great,” he said, because living in little pods would be pretty efficient. “In the Jetsons, where everyone is running around in their jet cars, that’s terrible for energy.”
. . .
. . . , the study suggests that workers are spending less time at work because faster and better online services make it easier for us to work from home. As a result, we’re spending less time in office buildings, which use more energy than our homes, and employers are consolidating office space.

For the full story, see:
Kendra Pierre-Louis. “Tech Creates Homebodies, And Energy Use Declines.” The New York Times (Tuesday, January 30, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the story has the date January 29, 2018, and has the title “Americans Are Staying Home More. That’s Saving Energy.”)

The “in press” version of the article mentioned above, is:
Sekar, Ashok, Eric Williams, and Roger Chen. “Changes in Time Use and Their Effect on Energy Consumption in the United States.” Joule (2018).

“We Have to Entrepreneurialize Society”

Economist Klaus Schwab is the founder and organizer of the annual Davos gatherings of government and corporate insiders.

(p. R15) MR. BAKER: There has been a tremendous growth in industrial concentration, big companies getting bigger. Small companies are essentially being squeezed out. There’s a concern that it’s not just bureaucracies and supernational institutions, but companies themselves, are just too big and too remote. What can be done to address those concerns?
PROF. SCHWAB: We have to entrepreneurialize society. If we look where jobs will come from, they will come mainly from new enterprises, from medium-size enterprises. So companies and countries have to create an ecosystem which allows young people to create their own companies. We have to create new Facebook s, new Googles, and so on. Then we have the necessary dynamic situation which maintains a certain degree of competition in the economy.

For the full interview, see:
Gerard Baker, interviewer. “Nationalism vs. Globalism: A Question of Balance; Klaus Schwab, executive chairman of the World Economic Forum, on how to deal with a fractured world.” The Wall Street Journal (Tuesday, Jan. 23, 2018): R15.
(Note: bold in original.)
(Note: the online version of the interview has a date of Jan. 22, 2018.)

Serial Breakthrough Innovators Have “Almost Maniacal Focus”

(p. C4) It’s 6 a.m., and I’m rushing around my apartment getting ready to fly to California to teach an innovation workshop, when my 10-year-old son looks at me with sad eyes and asks, “Why are you always busy?” My heart pounds, and that familiar knife of guilt and pain twists in my stomach. Then a thought flickers through my head: Does Jeff Bezos go through this?
I recently finished writing a book about innovators who achieved multiple breakthroughs in science and technology over the past two centuries. Of the eight individuals I wrote cases about, only one, Marie Curie, is a woman. I tried to find more, even though I knew in my scientist’s heart that deliberately looking for women would bias my selection process. But I didn’t find other women who met the criteria I had laid out at the beginning of the project.
. . .
The politically correct thing to say at this point is that expanding the roster of future innovators to include more women will require certain obvious changes in how we handle family life: Men and women should have more equal child-care responsibilities, and businesses (or governments) should make affordable, quality child care more accessible. But I don’t think it is as simple as that.
In my own case, I can afford more child care, but I don’t want to relinquish more of my caregiving to others. From the moment I first gave birth, I felt a deep, primal need to hold my children, nurture them and meet their needs. Nature is extremely clever, and she has crafted an intoxicating cocktail of oxytocin and other neurochemicals to rivet the attention of parents on their children.
The research on whether this response is stronger for mothers than for fathers is inconclusive. It is tough to compare the two, because there are strong gender differences in how hormones work. Historically, however, women have taken on a larger share of the caregiving responsibilities for children, and many (myself included) would not have it any other way.
Is such a view hopelessly retrograde, a rejection of hard-won feminist achievements? I don’t think so.
The need to connect with our children does not prevent women from being successful. There are many extremely successful women with very close relationships with their children. But it might get in the way of having the almost maniacal focus that the most famous serial breakthrough innovators exhibit.
I’m no Marie Curie, but I do have obsessive tendencies. If I did not have a family, I would routinely work until 4 a.m. if I had an interesting problem to chase down. But now I have children, and so at 5 p.m., I need to dial it back and try to refocus my attention on things like homework and making dinner. I cannot single-mindedly focus on my work; part of my mind must belong to the children.
This doesn’t mean that mothers cannot be important innovators, but it might mean that their careers play out differently. Their years of intense focus might start later, or they might ebb and surge over time. The more we can do to enable people to have nonlinear career paths, the more we will increase innovation among women–and productivity more generally.

For the full commentary, see:
Melissa Schilling. “Why Women Are Rarely Serial Innovators; A single-minded life of invention is hard to combine with family obligations. One solution: ‘nonlinear’ careers.” The Wall Street Journal (Saturday, Feb. 3, 2018): C4.
(Note: ellipsis added.)
(Note: the online version of the commentary has a date of Feb. 2, 2018.)

Schilling’s commentary is related to his book:
Schilling, Melissa A. Quirky: The Remarkable Story of the Traits, Foibles, and Genius of Breakthrough Innovators Who Changed the World. New York: PublicAffairs, 2018.

Regulating A.I. “Is a Recipe for Poor Laws and Even Worse Technology”

(p. A27) “Artificial intelligence” is all too frequently used as a shorthand for software that simply does what humans used to do. But replacing human activity is precisely what new technologies accomplish — spears replaced clubs, wheels replaced feet, the printing press replaced scribes, and so on. What’s new about A.I. is that this technology isn’t simply replacing human activities, external to our bodies; it’s also replacing human decision-making, inside our minds.
The challenges created by this novelty should not obscure the fact that A.I. itself is not one technology, or even one singular development. Regulating an assemblage of technology we can’t clearly define is a recipe for poor laws and even worse technology.

For the full commentary, see:

ANDREW BURT. “Leave Artificial Intelligence Alone” The New York Times (Friday, January 5, 2018): A27.
(Note: the online version of the commentary has the date JAN. 4, 2018, and has the title “Leave A.I. Alone.”)