23 May 2011

Gender Pay gap

The following table is taken from the European Commission DG employment website. It shows the average Gender pay gap in different EU27 Member States. The first striking thing is the EU wide pay gap between women and men. This is not necessarily the result of discrimination towards women, though it does suggest that women are still disadvantaged in the labour market.

Differences in educational attainment, allocation across different occupations, and different 'work-life' balances can account for gender pay gaps. In other words, there could be an average Gender Pay even in the absence of direct discrimination, i.e.: being paid less in the same sector controlling for educational attainment.

06 May 2011

Keynesian and Chicago economics

Classic quote by Krugman discussing what others say about Keynesian economics:

"Mulligan is critiquing something he heard about Keynesian economics somewhere, maybe in a bar, without bothering to inquire at all whether that’s how it really works. And I stand by my equally well-sourced assertion that Chicago economics relies on goat sacrifices."

04 May 2011

Characterising institutional change

In their book "Beyond Continuity: Institutional Change in Advanced Political Economies" Streeck and Thelen (2005: 1-33) identify types of gradual transformation:

1) Displacement refers to the 'slow rising salience of subordinate relative dominant institutions' or in layman's terms to fact that dominant institutional arrangements are replaced by dominated institutional arrangements. The case in point was liberalisation of certain markets in the 1980s. Liberalism was already partly present but in many respects it was not the dominant institution and was only 'activated' in the 80s.

Institutional stability in European welfare states

How should we characterise changes in the welfare state? Originally, orthodox economics suggested that there was an optimal way to organise the economy. As a logical consequence of this, welfare states and the economy in which they are embedded would evolve towards best practice. Indeed, that was also the 'convergence thesis' that standard (pre-new growth) theory would predict. Countries with lower levels of development would have higher returns to capital. Provided that capital markets were free, capital would flow towards high return countries, thereby resulting in a natural tendency for economies to converge.

The Alternative Vote

Excellent briefing note by the Political Studies Association. The executive summary in particular is pretty informative and helps to discard the ******** that we've been hearing for what it is:
"The basics of AV
 - A move to the Alternative Vote (AV) would not be a radical change from the current system of First Past the Post (FPTP). AV is not a proportional system.
- Rather, AV is majoritarian: candidates win by securing a majority of the votes in their constituency. Under FPTP, only a relative majority is required; under AV, the goal is that winning candidates should secure an absolute majority.
- AV allows voters to rank candidates in order of preference. If no one wins more than 50 per cent of first preferences, second and sometimes lower preferences are taken into account.

03 May 2011

Back from the dead? Understanding the death of Keynesianism and its potential revival

Current debates about whether to further support the economy or to focus on reigning in the  deficits are reminiscent of an older question about whether Keynesianism is dead. Regardless of what one think should be the appropriate response in the current crisis, it is clear that post 1970s governments' attention have de facto shifted to controlling inflation, often at the expense of unemployment. Why this has happened is still not entirely understood.

The first way to approach this question is by asking what determines macroeconomic policy more generally. Here, three sets of explanations stand out.

The State

"It grows everywhere, whatever the poitical method a nation may adopt. Its expansion is the one certain thing about our future"  [Page 294 Schumpeter (1952) Capitalism, Socialism and Democracy. London, Allen and Unwin.]

Total public social spending as % of GDP

02 May 2011

Financial storm versus nature's tsunami: impact on the NIKKEI225 index

Rational financial markets?
*graph generated with Bloomberg interactive charts

The determinants of happiness

There is a lot of talk these days that economic growth is not what matters. Often this follows the (re-)discovery of the fact that large N studies do not seem to indicate a long run relation between happiness and income. I'm quite convinced by the conceptual inadequacies of economic indicators such as GDP. The obvious question is the so what matters for happiness ? A research note by Deutsche Bank Research "the happy variety of capitalism" looks precisely at some simple descriptive stats. I've selected three of the graphs they have produced. Well, for the sceptics of indicators, what these graphs show is that income, unemployment and education are indeed important benchmarks of genuine progress for developed societies...