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Sliwa from Cambridge to Vienna

Published by Anonymous (not verified) on Wed, 28/07/2021 - 7:00pm in

Tags 

employment, hiring

Paulina Sliwa, currently senior lecturer in philosophy at the University of Cambridge, will be moving to the University of Vienna, where she will be professor of moral and political philosophy.

Professor Sliwa works in ethics and moral epistemology, and has interests in epistemology more generally, moral psychology, philosophy of mind, and philosophy of physics. She is currently at work on a book, Telling Right from Wrong: Moral Testimony and Moral Knowledge. You can learn more about her work here.

Professor Sliwa takes up her new position at Vienna in September.

click to learn more

 

Black and White Differences in the Labor Market Recovery from COVID-19

Published by Anonymous (not verified) on Tue, 27/07/2021 - 5:56am in

David Dam, Meghana Gaur, Fatih Karahan, Laura Pilossoph, and Will Schirmer

LSE_2021_EI-series-covid-recession_karahan_460

The ongoing COVID-19 pandemic and the various measures put in place to contain it caused a rapid deterioration in labor market conditions for many workers and plunged the nation into recession. The unemployment rate increased dramatically during the COVID recession, rising from 3.5 percent in February to 14.8 percent in April, accompanied by an almost three percentage point decline in labor force participation. While the subsequent labor market recovery in the aggregate has exceeded even some of the most optimistic scenarios put forth soon after this dramatic rise, the recovery has been markedly weaker for the Black population. In this post, we document several striking differences in labor market outcomes by race and use Current Population Survey (CPS) data to better understand them.

Recessions tend to have disproportionately adverse effects on the labor market outcomes of Black workers. For example, in the years leading up to the Great Recession of 2007-09, the unemployment gap between Black and white workers reached as low as 3.4 percentage points, but it peaked at 8.5 percentage points during the aftermath of the Great Recession. The COVID recession has been no outlier in this regard, as shown in the chart below. The unemployment rate rose significantly more for the Black population, pushing the Black-white unemployment gap from 3 percentage points in February to 5.4 percentage points in August. Similarly, while the long expansion following the Great Recession had narrowed the long-standing Black-white participation gap, the pandemic erased these gains. Participation fell more severely for the Black population at the onset of the pandemic and has since recovered more slowly.

LSE_2021_COVID-recession_karahan_ch1-v2-01

The evolution of the unemployment and labor force participation rates is shaped by flows between employment, unemployment, and being “not in” the labor force. For example, the unemployment rate declines if more people find jobs or fewer workers are displaced. Given that a large share of the unemployed are currently classified as temporarily unemployed (namely, those who have been given a date to return to work or who expect to return to work within six months) and that temporarily and permanently unemployed workers tend to find jobs or drop out of the labor force at very different rates, we distinguish between these two groups in our analysis. We use data from the CPS on individuals age 16 and older, and we compute the rate at which Black and white workers transition between employment (E), temporary unemployment (TU), permanent unemployment (PU), and not in labor force (N).

The rate at which workers find jobs out of unemployment has declined for both Blacks and whites this year, with the level of job-finding significantly lower for Blacks until a recent reversal. Breaking down the job-finding rate into transitions from permanent and temporary unemployment clarifies the disparate experiences of Black and white workers (see chart below). Blacks have lower job-finding rates from both permanent and temporary unemployment but have seen a more gradual decline in job‑finding as the recession has progressed. In recent months, the white job-finding rates from both permanent and temporary unemployment have dropped below the corresponding Black job-finding rates. If the current job-finding rates were to continue, all else the same, we would expect a somewhat faster decline in the Black unemployment rate.

LSE_2021_COVID-recession_karahan_ch2-v2_Artboard 2

Black and white job loss rates have exhibited a similar pattern. For both Black and white workers, job loss resulting in temporary unemployment peaked in June before declining in recent months, as shown in the chart below. Job loss resulting in permanent unemployment similarly peaked in June. However, for employment loss resulting in both permanent and temporary unemployment, Black workers have experienced significantly higher rates than whites. The Black-white gap in job loss resulting in temporary unemployment widened at the peak of job loss resulting in temporary unemployment, while the gap in job loss resulting in permanent unemployment has been relatively stable throughout the recession.

LSE_2021_COVID-recession_karahan_ch3-v2_Artboard 2

An important feature of the U.S. labor market is that flows out of employment are not always to unemployment; a nonnegligible share of workers drop out of labor force each month. These flows are important determinants of the unemployment and labor force participation rates. Indeed, labor force exit from employment varies significantly for Black and white workers. Until June, the two groups exhibited similar trends as labor force exit from employment dropped. However, in recent months the labor force exit rate for white workers has reverted to pre-pandemic levels, while the labor force exit rate for Black workers has increased dramatically (see chart below). The divergence in Black and white labor force exit rates from employment in recent months suggests that labor force participation for the Black population may remain significantly depressed in the coming months while white labor force participation may recover more quickly, with this combination erasing the gains achieved during the long expansion following the Great Recession.

LSE_2021_COVID-recession_karahan_ch4-v2_Artboard 2

The COVID recession, like most post-war recessions, has had disproportionate effects on the Black population. We trace the rising and persistent Black-white unemployment and labor force participation gaps to the underlying flows between labor market states. For Black workers, a lower job-finding rate and a higher separation rate into unemployment have contributed to the larger increase and subsequent slower recovery of the unemployment rate. While the job-finding and job-loss rates for Black and white workers have converged recently, resulting in a narrowing of the Black-white unemployment gap, the transition rate from employment into nonparticipation for Black workers remains elevated. This relatively high rate of labor force exit for Black workers may lead to a persistently elevated Black-white labor force participation gap and an uneven labor market recovery.

Chart data

Dam_david
David Dam is a senior research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.
Gaur_meaghan2
Meghana Gaur is a senior research analyst in the Research and Statistics Group.
Karahan_fatih
Fatih Karahan is a senior economist in the Research and Statistics Group
Pilossoph_laura
Laura Pilossoph is an economist in the Research and Statistics Group.
Schirmer_will_2
Will Schirmer is a senior research analyst in the Research and Statistics Group.

How to cite this post:

David Dam, Meghana Gaur, Fatih Karahan, Laura Pilossoph, and Will Schirmer, “Black and White Differences in the Labor Market Recovery from COVID-19,” Federal Reserve Bank of New York Liberty Street Economics, February 9, 2021, https://libertystreeteconomics.newyorkfed.org/2021/02/black-and-white-di....

Related Reading

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Disclaimer

The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Unseen trends and the society we are becoming.

Published by Anonymous (not verified) on Wed, 21/07/2021 - 5:49pm in

Societies are evolving and complex, which often makes it hard to see at any moment where things are going. It was thus with the move of Northern European countries towards democracy in the 19th century, which seems inevitable and clear in hindsight but blurred at the time by lots of other developments that have now been forgotten, such as an increase in Protestant fanaticism and an anti-technology (Luddite) movement. In the last few decades there have also been many trends, some already waning, like the increase in international migration, and some on a seemingly unstoppable growth, like increased inequality. As in previous centuries, events like covid-mania accelerate some previous trends, like state surveillance, and reverse others, like the growth of international tourism.

Many commentators have rushed towards applying a particular label to the developments of the last 50 years. One hears about neoliberalism, financialization, or unsustainable growth. Though they make things sound neat and simple, such labels immediately make things moral and political, forcing people to take sides, which obscures the breadth of changes and makes a calmer assessment impossible. Let us thus look here at some of the less noticed trends which do not easily fit into existing labels. In this short post I just want to flag some trends in the Western world and briefly mention some instances of misperceptions of trends, leaving analysis for later. I will deliberately not show any statistics, forcing you to engage with the ideas rather than be a ring-side observer. See what you yourself make of these issues.

One major trend is the stark increase in the volume and extent of state regulation ever since the early 1970s, under any political leadership, pretty much everywhere in the Western world. From a few hundred pages of regulation per year, our bureaucracies and parliaments are now producing hundreds of thousands of pages of regulation per year. This rise makes a mockery of the idea that we are in a period of neoliberal deregulation, which is pretty much the exact opposite of the true direction of travel. The change defies any simple left/right or neoliberal/socialist label. It is a rise in bureaucracy. It has many causes, including meddling bureaucrats looking to expand their sphere of influence, but also the demands from large corporations for regulations that make life harder for the small business competition. The rise in regulation thus does not fit existing labels.

Another major trend is the decrease in IQ of the population in the Western world, probably due to increased use of mobile phones and social media. The mayor loss is the reduced capacity for abstract thought and seeing the interconnections between events. This is a profound dumbing down of the population with effects on every sphere of life, ranging from the quality of our institutions to the types of art enjoyed. Again, this trend is hardly known though it has been clear from the late 1990s. The phenomenon furthermore is not easily given a political label. It is neither pro-environment nor anti-environment, liberal or anti-liberal, woke or populist. Yet it is deeply worrying as a dumber population is less productive and easier to mislead.

Another such trend is the move towards monoculturalism in many areas of life, including politics, media, corporations, entertainment, academia, and commerce: the people, the manners, and the morals in these spheres all look the same. The gradual increase in similarity between people in the same sphere was noted a long time ago by Ortega Y Gasset (1930s) and Theodor Adorno (1960s), and has now reached a zenith: the coffee shop in Berlin is pretty much the same as in Melbourne or Los Angeles. The coffee shop is furthermore pretty similar to the movie theatre or the truck hire company: similar protocols and staff manners. The left-wing politician in Sydney is pretty much the same as the right-wing one in Ontario, using similar language and media methods. Italian artists differ in the language from the famous Polish or Kiwi ones, but the sounds, images, and personalities are very similar. Once again, such a trend is not so easy to put into a political or moral box. But it is a profound change with many consequences.

Let us then briefly mention the issue of misperceptions in trends.

There are the slow changes that are talked about in particular circles, but hardly known by a wide audience. A big one is the changes in demography. As they say, demography is destiny, so any observer of politics and international relations should have a good grasp of what is happening with demographic trends. But how many truly do? How many know whether fertility rates in the Muslim world have remained steady or are decreasing? How many know if the population of Latin America is still expanding or stabilising? Who would know if and when India will overtake China as the most populous country? The answers are ‘decreasing’, ‘still expanding but at a slowing rate’, and ‘in the next 10 years’. Did you know and do you see the great significance of such trends for analyses of the future? Once again, such trends are not so easily put into a political or moral box.

There is also the converse, which is trends large parts of the population believe are immense which are in fact relatively minor compared to other factors. For instance, if one were to ask a random person in the West whether the food security of Africa is more threatened by climate change than by reversing economic growth, I bet many would say ‘climate change’. Don’t even get me started on the magnitude of the threat of covid as compared to that of lockdowns! A sense of real proportions is thus rare because moral and political imperatives increasingly distort our view of things, which is itself an important trend.

A final trend that is hardly known I wish to alert you to is the major reduction in autonomy among workers in the West. Since about the 1980s more and more workers, even the well-paid ones, are spending their working lives surrounded by tight protocols and schedules, with increasingly less discretion over what they do and how they do it. It has been a creeping change wherein labour is more and more shackled to processes and compliance mechanisms. It is an explosion in regulation inside both private and public workplaces. Being bossed around in every aspect of life is now a lived reality for most of us, but who realises this or minds? What effects will the increased habit of obedience have on our societies?

There are hence many profound changes that have been brewing for decades, changes that defy easy political or moral labels. ‘We’ are becoming more regulated, dumber, similar to others, obedient, and ignorant of demographic and social realities.

What kind of society are we then moving towards? I am not sure. Are you? Do put your views in the comments!

Politicians and the media coax the public to accept a new period of austerity

Elderly woman looking out of her windowPhoto by Kaspars Eglitis on Unsplash

“The political class in Westminster have failed us. They inoculate themselves against the pain that we suffer. We will not forgive them, and no, we will not be patient with their political ideology – a belief system which sees exploitation, grotesque levels of inequality, the constant threat of war and destitution as a fair price for the protection of a system which serves them and the richest so well. We have run out of patience with their destruction.

They wilfully look away at the crisis in housing, at poverty pay, they have encouraged a system of privatisation and fragmentation of our NHS, taking away more and more of our services, they stoke a despicable nationalistic racism and cultivate culture wars to distract us, to divert our attention and to obscure the truth. The truth is they refuse to serve our interests and they have disdain for our lives.”

Laura Pidcock

 

This week, the debt doomsters have been out in force! The media and politicians alike have yet again been trying to pull the wool over our eyes with warnings about public debt, handily reinforced by the publication of the Office for Budget Responsibility’s (OBR) Fiscal Risks Report.

Whilst Labour’s Rachel Reeves commits to a cosy conversation with the public about how we can pay for social care, saying that the party would be willing to put up taxes to do so, the OBR’s report has set off a spate of media articles designed to prepare the public for some ‘hard choices’, as Rishi Sunak has previously described it.

We are being primed for the government to abandon its commitment to the pension ‘triple lock’ with scaremongering about its cost, as Sunak claims that concerns about the 8% rise to the state pension due this year under the policy are ‘completely legitimate’, and that any decision will be ‘fair for pensioners and taxpayers.’ And thus, yet again, we see politicians creating and reinforcing societal and intergenerational division for a political agenda, based on the lie that taxes fund state pensions. By claiming that there is a limited pot of ‘taxpayers’ money’, they imply that the triple-lock for pensioners will deprive young people of a stable life and burden them with higher taxes in the future, leading to the conclusion that pension costs must be controlled to be fair to the young. At the same time, it ignores the ongoing reality of decades of government created pensioner poverty and the mess of government-encouraged private pensions that rely on a corrupt and unstable financial sector. Yet again, we see the government creating conflict and absolving its responsibility for its citizens on the false premise of monetary unaffordability.

Then, this week, it was announced that the government would be withdrawing the £20 a week Universal Credit uplift which gave people a lifeline during this difficult time, and went some way to repair the damage caused by 10 years of cuts to public and social security spending.

What sort of perverted logic claims that reducing weekly payments will contribute to getting people ‘back into work’? What sort of perverted logic suggests that people already in work and existing on low incomes and in precarious employment, and for whom the uplift represented an improvement in their living standards, should now be denied it?

Apart from lacking moral compass, such a decision is also macroeconomically bonkers, as it removes money that was being spent into the economy by both those unfortunate enough to have been made unemployed or indeed those receiving in-work benefits because of low incomes. In this respect, the government’s preoccupation with the economy is laughable, since it fails to recognise the role of private spending. It also fails to recognise that it is the government that is actually responsible for creating an environment conducive to the good functioning of the economy.

When asked how a cut would help people to find work, Sunak’s response was that the government was ‘making sure that people are funded by the government to get new qualifications and skills.’ However, as the parable about the 100 dogs and 95 bones (told by Warren Mosler, below) and the economist Bill Mitchell make clear, ‘training does not equal jobs.’

 

And as for job creation, we can look to the government’s Kickstart scheme which allows employers to offer a six-month work placement funded by the government. It was revealed this week by the work and pensions secretary, Therese Coffey, that just over 40,000 young job seekers had started work on the scheme out of a planned 250,000. A scheme that expires at the end of the year, and we are already halfway through. Not exactly a roaring success.

Those in government suggesting that reducing the current payments is a solution and would contribute to getting people back into work, presumably because then they will accept a low wage and insecure employment, clearly have never had a day of living with government-created want in their lives. Even former Tory work and pensions secretaries have asked that the government rethink, as government ministers have admitted that they have made no studies on how many more children the withdrawal of the Universal Credit uplift will push into poverty, with figures being suggested of over 400,000.

In that light, a report published this week by Loughborough University revealed that even before the pandemic arrived 4.3 million children were living in poverty, up 200,000 on the previous year – and up 500,000 over the past five years. It also noted that 75% of children living in poverty in 2019/20 were in households with at least one working adult, which was up 67% on 2014/15.

Anna Feuchtwang, Chair of the End Child Poverty Coalition said:

“The figures speak for themselves – the situation for children couldn’t be starker. We all want to live in a society where children are supported to be the best they can be, but the reality is very different for too many.

“The UK Government can be in no doubt about the challenge it faces if it is serious about ‘levelling up’ parts of the country hardest hit by poverty. After the year we’ve all had, they owe it to our children to come up with a plan to tackle child poverty that includes a boost to children’s benefits. And they need to scrap plans to cut Universal Credit given parents and children are having a tough enough time as it is.”

The solutions lie in a much broader and radical approach to unemployment which puts government at the heart of policy, rather than leaving the market to dictate unpalatable responses which are about maintaining a competitive environment to keep profits rolling in, but which are at the expense of working people. People who have been exploited and manipulated to serve an economic system that depends on keeping some of them unemployed to control inflation and benefit employers, by keeping wages low and jobs insecure, whilst at the same time blaming those very same people for being unemployed.

Given the huge environmental challenges ahead, we need a policy mix which includes expanding the public sector to restore its efficiency and effectiveness. We need to enable a shift in what we consider to be a healthy economy by moving away from endless growth and consumption of stuff to keep the profit wheels oiled, towards one which values human well-being and planetary sustainability as key to success.

This policy mix should be underpinned by the implementation of a permanent Job Guarantee to provide economic and price stability when the next recession hits, as most surely it will, along with a fit for purpose benefit system for those who are unable to work for any reason.

And yet while the very real challenges which will define our future remain, with respect to the consequences of climate change, the continuing exploitation of human beings, land and oceans for profit motives, we are being coached daily and relentlessly to accept the likelihood of increased taxes and more public sector austerity to pay for public debt, as the OBR’s report shows. Someone, somewhere, will have to pay in financial terms on this model.

The BBC, The Telegraph and The Financial Times, like many other news outlets covering the OBR’s report, focus yet again on debt piles and the so-called ‘eye watering’ record levels of borrowing. The Telegraph, quoting from the report, claimed that soaring costs would threaten to make Britain’s debt unsustainable, should interest rates rise to curb inflation. It painted a picture of a chancellor ‘battling to steady the public finances’, as if he is a captain straining to keep control of his ship in a raging storm. It suggested that addressing the spending pressures could require both cuts to the budgets of government departments and tax rises. It cautioned that the fiscal impact of achieving net-zero could add 21% of GDP to public sector net debt in 2050-51, that lost fuel duty due to the move towards electric vehicles would impact on the government’s fiscal position, and that investment in zero-carbon technologies would add to costs as it would only be partly offset by higher carbon tax revenues. The report also warned of the potential rising costs of servicing government debt in the event of what it called the ‘future shocks’ of higher inflation or interest rates.

The classic household budget narrative of how governments spend rules the roost, and acts to prepare the public for an unpalatable solution to rising debt.

Of course, this narrative does not reflect monetary reality, however hard the orthodoxy tries to suggest it does. The government doesn’t have a debt pile and the Chancellor doesn’t have to tackle it with tax rises or cuts to public spending in any government departments. There is no finite pot of money to share out.  The government is the financial and legislative ‘controller’.

The concerns about dealing with public debt and the potential ‘threat’ of the rising cost of borrowing, which would, according to the orthodoxy, place future burdens on taxpayers, are continuing headline themes on the right of the political spectrum. Whilst on the left, the message is that we must sting the rich to pay for public services, and that politicians must have supposedly ‘sensible’ conversations with the public about paying more tax to provide social care, or being able to borrow at low interest rates to spend on public infrastructure.

However, whilst the monetary orthodoxy prevails, it is becoming more and more difficult to believe that Rishi Sunak, at least, or his Treasury staff really don’t know how the government spends. One can only draw the conclusion that denying monetary reality allows them to continue delivering their political agenda by claiming that money is scarce. It is quite simply all part of the ongoing smoke and mirrors of how the government spends, which gives them power over the public purse and who benefits from it and who loses out.

At this point, it would be useful to revise the facts of monetary reality. It is not difficult to understand and doesn’t require the services of an economist to decipher. Such general knowledge could make a huge difference to how people view politics, which would allow them to examine the connection between government policies and spending decisions and who benefited and lost out as a result. Neither politics nor the economy exist in a vacuum; they both determine how well society functions or not as the case may be. Without that understanding, such narratives will always, in the end, put the brakes on government action, on the false count of unaffordability, and threaten the implementation of policies to deal with the climate crisis and rising poverty and inequality.

Firstly, the government is the currency issuer. It spends money into existence. That is where the story of how the government spends begins.

Secondly, as the currency issuer, the government neither needs to tax in order to spend, nor to borrow to cover its spending over and above its tax revenue. The government’s deficit, which sounds quite scary to ordinary people who compare it to a shortfall in their own household budgets, is everyone else’s surplus. That is the money in our savings and circulating in the economy, in our pockets. The use of the tax, deficit, debt and borrowing frameworks are just accounting conventions that bear no relation to the monetary reality of how the government spends.

Thirdly, by asking where the ‘money’ in our pockets and bank accounts comes from, we find that logically speaking the government must spend before any of us can pay our tax, and by extension before it can ‘borrow’, which is just another smoke and mirrors illusion.

The act of spending is the primary step, and on that basis, why would any government want to borrow money it had spent in the first place? However, the term borrowing’, which is often accompanied by the phrase ‘living beyond our means’, serves to keep the public on board with the idea of the need for fiscal discipline. Relating those concepts to people’s own budgets keeps people accepting the prospect of tax rises and cuts to public services.

In the Times this week in the light of the OBR’s fiscal risk report, the paper reported that Sunak had been warned by the OBR that the £10bn ‘deficit’ (which is the money in our savings and pockets) can be fixed only by taxation and yet more spending cuts, as apparently ‘there is no longer any easy way of cutting Britain’s debt.’

Referring to the ongoing challenges of clearing hospital backlogs, maintaining the test and trace and vaccination programmes, catch-up funding for schools and making up lost rail fare income would, it said, ‘add around £10bn a year on average in the next three years.’

 What can one say? Good luck with that Rishi! Thinking caps need to be at the ready! How will taking money out of an uncertain economy with a virus still raging and furlough unwinding help? The idea that the government needs any tax to reduce the deficit or pay down debt is quite simply yet more deliberately sowed confusion. Worse, to suggest more austerity when we are living the consequences of 10 years of public sector spending cuts, is, without doubt, absurd and would continue to damage an already fragile public infrastructure.

By extension, the false logic must surely follow that we cannot then afford to deal with the planetary emergency that threatens our existence, because there will always be a burden of debt hanging over us and a shortfall in revenues, which will require the government to make difficult decisions by increasing taxes, cutting its spending, or divvying up a finite money pot to serve its agenda. In the end, such narratives will always lead to the government putting on the spending brakes to balance the public accounts, regardless of the impact of such decisions.

The same false logic suggests that we cannot afford to rebuild our public and social infrastructure, even if we had a government with the political will to do so, rather than one that spent 10 years dismantling it. That we cannot address the growing poverty and inequality that has arisen over a decade, due to politically motivated austerity by a government which over the last year has shown its true colours, using its spending capacity as the currency issuer to benefit corporations with little or no accountability or transparency. Corporate welfare at the expense of public purpose.

By that false logic, abandon all hope ye who enter here because, apparently, we’ve spent too much and need to attend to the public finances. The deficit spending in itself, however, does not represent the material risk to the public spending outlook that is being suggested. In fact, we need to turn this argument right on its head and ask a different question.

Instead of worrying about the public finances and the size of the deficit, we would do better to consider first what the deficit represents, and who has benefited from the government spending and who has not. Secondly, rather than seeing the deficit as a problem, we need to examine how we can best address the future challenges before us through government policy and spending decisions. And thirdly, if finance is not the constraint, then what is?

If spending is always reduced to the concept of fiscal discipline to keep the public accounts in order – how much tax is collected and how much has been borrowed -then the future will most certainly be bleak. The cutting spending and increasing taxes recipe that the Chancellor will most certainly trot out on budget review day later in the year, will satisfy the Treasury bookkeepers tallying their modern computer-driven version of the public accounts, thus giving the government an opportunity to promote itself as a safe pair of fiscal hands in future elections. However, such thinking will fail at the first hurdle by creating yet more economic pain for a nation that has already had a bellyful, as delivering public purpose is relegated yet again to being unaffordable.

The real constraints we face are, as we are finding out, resource-driven, and the potential that creates for inflationary pressures. Early on in the pandemic, we experienced such pressures on the NHS when trying to source PPE and other equipment, not to mention the pressures on a service which was and remains short of over 40,000 nurses as a result of government policy and cuts to spending.

In recent weeks, the lack of HGV drivers has put increasing pressure on supermarket delivery networks. The construction industry is experiencing shortages of building materials and transport capacity and is being affected by long lead times for items coming from abroad. And then there is also a shortage of the semiconductor chips which form the basis for the technologically driven world in which we live, from TVs, PCs and cars to hospital and other vital equipment that drive our energy and water networks.

Even though the Bank of England has said that it expects these current price pressures to be temporary as economies start to open up, the inflation doom merchants continue to rattle their warnings about high levels of public debt and future financial burdens. They should instead turn their attention to the real issues related to continuing economic uncertainty and raised levels of unemployment, the all too real threat of climate change and managing our finite resources to create a stable and sustainable economy. That is the real role of the government, not balancing the books. Future shocks will have nothing to do with the rising costs of borrowing, but will be related to any government decision to cut spending or impose more austerity at the expense of people and the planet.

We have a government which must know about monetary reality by now, advocating fiscal discipline on the backs of human existence and abdicating its role in spending and legislation to drive public purpose aims. At the same time, it promotes killer growth and the role of the profit-motivated private sector as the mechanism for human betterment. A contradiction in terms. We have a government wielding the power of life and death for the supposed sake of balanced budgets and the maintenance of the status quo.

In the words of Naomi Klein:

Our economic system and our planetary system are now at war. Or, more accurately, our economy is at war with many forms of life on earth, including human life. What the climate needs to avoid collapse is a contraction in humanity’s use of resources; what our economic model demands to avoid collapse is unfettered expansion. Only one of these sets of rules can be changed, and it’s not the laws of nature.”

 

 

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The post Politicians and the media coax the public to accept a new period of austerity appeared first on The Gower Initiative for Modern Money Studies.

Lockdowns and privilege

Published by Anonymous (not verified) on Wed, 07/07/2021 - 3:03am in

Tags 

employment, humour

Consider three graphs that really on their own tell the story of the groups in the US/UK that did well and that did badly economically out of the lockdowns.

On the super-rich:

Image

On the workers, particularly the bottom 25% (meaning those who in their characteristics like education and experience look like the bottom 25% in January 2020):

And for the UK on who is expecting trouble with paying the bills:

You btw see the same picture when it comes to whose children are worst affected by the school closures, who is more banned from travel than others, whose business is less essential than others, or whose sports are less essential than others. Basically the same story in all realms.

Who is “in this together” again? Methinks the top group. Why on earth the left is in favour of all this emerges as a puzzle some true left-wingers have also asked. I think the answer is simple: there is hardly any real left left, which is doubly surprising given the top graph.

Liverpool Philosophers Object to Planned Layoffs at University, Call for Support

Published by Anonymous (not verified) on Wed, 07/07/2021 - 1:06am in

The members of the Department of Philosophy at the University of Liverpool have authored a letter in support of the actions being taken by their union in response to planned layoffs (redundancies) of colleagues in the Faculty of Health and Life Sciences

While the Department of Philosophy has not been targeted in the latest round of redundancies, they write, “these redundancy proposals, and especially the disreputable manner in which individuals have been targeted for redundancy, should be greatly alarming to academics across all universities and disciplines.”

Here’s the letter:

We are members of the Department of Philosophy at the University of Liverpool. We belong to a branch of the University and College Union (UCU) that is currently undertaking industrial action in response to redundancy threats against colleagues in the Faculty of Health and Life Sciences (HLS). The way in which these redundancy proposals have been drawn up and pursued would, if it came to be regarded as acceptable outside our University, have severely detrimental consequences for the working conditions of academics in the UK.

This is a plea for support.

47 colleagues in Health and Life Sciences were originally targeted for redundancy under ‘Project SHAPE’. We share our union’s view that the University has, during this redundancy process, blatantly abused research metrics and that it has deployed inappropriate grant income thresholds to ‘rank and yank’ academic staff. UCU models demonstrate that >50% of Russell Group staff in matched disciplinary areas would not meet these redundancy criteria. Please see further: https://ulivucunews.org.uk/project-shape-redundancies/flawed-selection-criteria-for-redundancies/.

We believe that these redundancy proposals, and especially the disreputable manner in which individuals have been targeted for redundancy, should be greatly alarming to academics across all universities and disciplines. The redundancies at Liverpool, if allowed to go through, would set a dangerous, intellectually indefensible, and unjust precedent for dismissing academics on the basis of inappropriate citation metrics and crude grant-capture statistics. Furthermore, the deeply flawed criteria that management at Liverpool is attempting to apply ‘perpetuate research and higher education barriers for women and minoritised groups and those with caring responsibilities’ (https://thepsychologist.bps.org.uk/metrics-are-clearly-weaponised-against-psychology).

Our industrial action against the redundancy proposals is democratically mandated, under legal statutes that place high demands on unions before industrial action can proceed. Our ballot had a 59.8% turnout, with 83.7% voting in favour of strike action and 90.3% in favour of Action Short of a Strike (ASOS). This was the largest ballot turnout in the history of the branch.

Our industrial action has included working to contract as part of ASOS since 10th May. From 24th May, there were three weeks of continuous strike action. The number of colleagues under threat of redundancy has now been reduced to 21. Nevertheless, management at the University has continued to employ redundancy criteria that UCU members, and >60 full professors in HLS who have written to our University’s Council, regard as deeply flawed and unethical: https://www.hls47.co.uk/new-tab/.

The highly regrettable industrial dispute in which we are now involved would probably have been avoided had management accepted our union’s requests to go to the Advisory, Conciliation and Arbitration Service (ACAS, https://www.acas.org.uk). UCU requested in writing that both parties agree to seek the assistance of ACAS in resolving the dispute on 27th January. This was declined by management in writing on 29th January. UCU reiterated this request on 3rd February during collective consultation. This was declined again. Management at the University has not made its reasons for not going to ACAS clear, stating only that it ‘does not consider it appropriate to engage the services of ACAS’ (https://www.ucu.org.uk/article/11349/Outrage-as-University-of-Liverpool-threatens-health-and-life-science-jobs-during-pandemic). Collective consultation with UCU was ended by management during the three-week strike.

Since 18th June, UCU has been undertaking an assessment and marking boycott as part of ASOS. Our employer’s response has been to dock 100% of the pay of those UCU members who are participating in this boycott. Shockingly, the employer describes this 100% pay docking as ‘proportionate and necessary’ (https://news.liverpool.ac.uk/2021/06/17/important-information-about-the-ucu-assessment-and-marking-boycott). The employer insists that any work that we do for the University while participating in the boycott will be voluntary, unpaid work. The employer only made this statement at 4pm on 17th June, without providing us with any clarity at all as to the practical details of how this highly punitive, union-bashing measure is supposed to work. Punitive actions have continued since, with many union members reporting that they feel intimidated by management communications during this time. In addition, members of staff in many departments, including our own, who have been participating in the industrial action have now had their annual leave requests rejected, apparently regardless of whether they had already taken the statutory minimum amount of holidays.

We call on the wider academic community to aid us in persuading, and putting pressure upon, senior management at the University of Liverpool to revoke the redundancy plans under Project SHAPE. In the face of the extreme and aggressive tactics against organized labour at our institution, we call on the wider academic community to support our industrial action and our union branch.

We would greatly appreciate your support in this very grave situation. Ways in which you could help us and our colleagues include the following.

Thank you for considering supporting us in this distressing and important dispute.

1st July 2021

Dr John Adams, University Teacher
Thomas Brown, Ph.D. student
Dr Rebecca Davnall, Lecturer
Harry Drummond, Ph.D. student
Dr Lucy Frith, Reader
Dr Katherine Furman, Lecturer
Dr Nikolaos Gkogkas, Lecturer
Professor Simon Hailwood
Dr Daniel Hill, Senior Lecturer
Dr Jan Jobling, Lecturer
Zishan Khawaja, Ph.D. student
Dr Robin McKenna, Lecturer
Dr Stephen McLeod, Senior Lecturer
Dr Elias Markolefas, University Teacher
Dr Vid Simoniti, Lecturer
Lauren Stephens, PhD Student
Jack Symes, Ph.D. student
Paul Taylor, Ph.D student
Dr Panayiota Vassilopoulou, Reader
Dr Elizabeth Ventham, Postdoctoral Research Associate
Dr Rachael Wiseman, Senior Lecturer

The letter is also available here.

(via Robin McKenna)

What types of businesses have used government support during the Covid-19 pandemic?

Published by Anonymous (not verified) on Mon, 05/07/2021 - 6:00pm in

Will Banks, Sudipto Karmakar and Danny Walker

This post is the first of a series of posts about the Covid-19 pandemic and its impact on business activity.

During the pandemic, UK businesses have received unprecedented levels of government support, set to total 9% of GDP. This has mainly been through the Coronavirus Job Retention Scheme (CJRS), under which 1 in 3 employees have been furloughed, and the government-guaranteed loan schemes that were used by 1 in 4 businesses. Despite the scale of this support, little has been said about which businesses received it. In this post we combine data on loan scheme and CJRS usage with a data set on the characteristics of businesses. We find that small, relatively old and sophisticated, labour-intensive businesses in the sectors most vulnerable to the impacts of the pandemic are most likely to have received both types of support.

What do we already know about the schemes?

HMRC has already published statistics on the CJRS and the British Business Bank has published statistics on the loan schemes. These statistics show that in absolute terms, businesses in the accommodation and food sector have been the biggest users of the CJRS. Construction businesses have been the biggest users of the Bounce Back Loan Scheme. Data also shows that the West Midlands has the most furloughed workers and London the most users of the BBLS. But this does not tell us how these interact. Our previous work explores what types of businesses have borrowed under the loan schemes, but some questions around furlough and the interaction between schemes remain unanswered. Has the West Midlands furloughed more workers because they have more accommodation and food businesses? What type of businesses have used both of the schemes?

What can we learn from business-level data?

We have collected the most up-to-date data on the individual businesses that have used the CJRS and the government loan schemes. From this, we find that around 45% of businesses which have used CJRS have also taken out a government loan, and 41% of loan-scheme users furloughed at least one employee from December 2020 to February 2021 (Figure 1). We match this scheme data to a large public data set with information on all limited companies in the UK, based on names and unique identifiers. We then run a series of probit regressions to isolate the effects of sector, region, leverage, age, firm size and capital intensity on a business’ probability of having used the CJRS and the loan schemes, following a similar methodology to this Staff Working Paper. We analyse the marginal effects of each business characteristic controlling for all of the others: giving us the estimated impact of a given characteristic on the probability of using the schemes.

Figure 1: Proportion of businesses using government support measures

What type of business is most likely to have used the support schemes?

A lot of the results of our regressions are intuitive. HMRC stats show that businesses in the accommodation and food sector are most likely to have used the CJRS, and this remains the case when controlling for other factors. That sector was hardest hit at the height of the pandemic. In fact, an accommodation and food business is almost 20 percentage points more likely to have furloughed employees than a manufacturing business (see Figure 2). There is similar sectoral variation in the businesses that have used both schemes. And interestingly, a business that has used the loan schemes is 20 percentage points more likely to have also furloughed employees.

Figure 2: Variation in scheme usage by sector

Reports have shown that there is limited regional variation in the use of the CJRS and the loan schemes, and we find that this holds even if you control for other characteristics. A business in the North East – the region with the highest usage once we control for other factors – is less than 5 percentage points more likely to have used CJRS than a similar business in Scotland, where usage is lowest.

A benefit of the data set we have used is that it provides details on business characteristics that haven’t been examined before in relation to CJRS: their assets, age, leverage and existing bank relationships are all new variables we’ve explored. For example, micro businesses with <£100,000 in assets are most likely to have used the schemes, while very large businesses the least likely (see Figure 3).

Figure 3: Variation in scheme usage by total assets

The balance sheet data that small businesses report publicly is limited, but we have used it to create a proxy measure of how ‘labour or capital intensive’ a business is. We do this based on their assets per employee – a high ratio indicates high capital intensity. The result here is striking (see Figure 4). Businesses in the lowest decile of assets per employee – ie highly labour-intensive businesses – are almost 20 percentage points more likely to have used the CJRS than the average firm, and almost 15 percentage points more likely to have used both CJRS and a government loan.

Figure 4: Variation in scheme usage by capital intensity

The final set of variables we examine relate to how well established businesses are, and their access to finance. We know that even before Covid, a large share of SMEs did not use any external finance. We find that the youngest (1st) quintile of companies are least likely to have used the schemes: compared to them, firms in the 4th age quintile are around 8 percentage points more likely to have used furlough, and 6 percentage points more likely to have used both schemes. Similarly, a firm which has an established bank relationship is 6 percentage points more likely to have used furlough and a government-guaranteed loan scheme than a firm which had not previously accessed bank finance.

What does this mean for the economy?

The furlough scheme is set to end in September 2021, and has cushioned the impact of changes in GDP on the UK labour market. The original government-guaranteed loan schemes closed in March 2021, and resulted in a tightening of credit conditions for the most vulnerable small and medium businesses. Our findings suggest that both types of support have been most likely to help small, relatively old and sophisticated, labour-intensive businesses in the sectors most vulnerable to the impacts of social distancing. We expect many of these businesses to have stopped using furlough since February 2021, and UK businesses have stronger cash positions than a year ago. But it’s possible that some of these businesses will continue to struggle from changes in demand patterns and the ongoing economic effects of Covid-19.

Will Banks works in the Banks Resilience Division, Sudipto Karmakar works in the Stress Testing Strategy Division and Danny Walker works in the Macro-financial Risks Division.

If you want to get in touch, please email us at bankunderground@bankofengland.co.uk or leave a comment below.

Comments will only appear once approved by a moderator, and are only published where a full name is supplied. Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.

Allais from UCSD to Johns Hopkins

Published by Anonymous (not verified) on Wed, 30/06/2021 - 5:30pm in

Tags 

employment

Lucy Allais, currently Henry E. Allison Endowed Chair in the History of Philosophy at the University of California, San Diego, will be taking up a position as professor of philosophy at Johns Hopkins University.

She will also be maintaining her current position at the University of Witwatersrand, spending part of each year there.

Professor Allais works on the philosophy of Immanuel Kant, moral responsibility, forgiveness, justice, and other topics. You can learn more about her work here.

She starts at Hopkins this fall.

(via Steven Gross)

Women’s Work in South Asia: trends and challenges

Published by Anonymous (not verified) on Thu, 17/06/2021 - 11:01pm in

Although gender equality in employment is among the Sustainable Development Goals for South Asia, progress is hard to observe. Determined to explore why female employment levels remain low and stagnant, Varsha Gupta and Arun Balachandran of YSI’s South Asia Working Group organized a webinar series. Featuring eminent speakers such as Prof. Jayati Ghosh, Prof. Sonalde Desai, Prof. Jeemol Unni, Prof. Ashwini Deshpande, Dr. Dipa Sinha and Dr. Ramani Gunatilaka, the resulting conversations shed much-needed light on the topic.

Illustration by Aneesha Chitgupi, Coordinator of the South Asia Working Group

Employment is a subset of work

The series began on May Day, with an inaugural session by Professor Jayati Ghosh. Highlighting the low female employment figures in India, she explained the difference between employment and work, the former being a subset of the latter. A major proportion of women are involved in work, though it is not paid and hence does not get counted as employment. The 2019 Time Use Survey in India reaffirms that women in India spend 2.5 times more time than men in unpaid activities. The gender wage gap exists and is high in private casual work. The Covid-19 pandemic has made things worse, furthering the case for gender-sensitive economic policies. View here

The impact of COVID-19

The second talk by Prof. Sonalde Desai focussed on employment trends during the Covid-19 pandemic. She presented the latest research with the use of Delhi Metropolitan Area survey (March 2019-20). The decline in employment occurred majorly in wage employment. With the use of econometric techniques, the research finds that in absolute terms, job loss for men was severe in the first wave of Covid-19, while the second surge hit women harder in the Delhi NCR region, India. The closure of schools and the consequent child rearing duties was one of the reasons that women’s wage work fell. Highly educated women were more affected than men. Rural areas absorbed the impact of the pandemic better than urban areas. The gender difference in impact was found to be highly dependent on the sector of employment and region. View here.

Informal workers bear the brunt

Jeemol Unni’s session concentrated on the impact of the Covid crisis on women and domestic violence among members of the informal workforce. Globally, pandemics harshly affect women more, due to the sectors and the kind of work women are involved in. The majority of the women form the bottom of the labor hierarchy. With the use of CMIE and NSS data, it is seen that the second wave of Covid-19 and lockdown affected women’s employment more vis-à-vis men. Discouraged worker effect is also visible among women.  View here.

Prof. Ashwini Deshpande’s talk focussed on the gendered patterns in employment in India during first wave of the pandemic. The world over, the subsequent economic recession led to more unemployment among women than men, a pattern different from previous recessions. This is visible in India as well, in the 2020 CMIE data. The already gendered labor market in India, with fewer women employed, worsened further for females. Though the absolute figures for job loss are higher for men, the impact has been higher on women due to the pre-existing gaps. There has been exacerbating of women’s position in the domestic division of labor during August-December 2020. View here.

The potential of public employment

The penultimate session was featured Dr. Dipa Sinha highlighting the relevance of public employment in generating opportunities for female labor force in India. Nations with higher female LFPR are the ones which also have higher proportion of women in the public sector. In India, the NSS data shows that government is a significant employer for women. There is also sectoral concentration of women in health and education, where they are engaged as contractual or honorary workers (ASHA’s, Anganwadi Workers). Creating regular permanent positions in these sectors could encourage female employment. View here.

Education is not enough

Various facets of female employment in Sri Lanka were brought in by Dr. Ramani Gunatilaka from International Centre for Ethnic Studies, Colombo. While Srilankan women are better educated than their counterparts in other South Asian countries, they still remain disadvantaged in the labour market. As seen from a study led by Dr. Ramani on women’s activity preferences and time use, unpaid care and household work in Srilanka are mediated by social norms, and unequal division of unpaid work makes it difficult for women to take up paid work. View here.

Altogether, the webinars now form a virtual knowledge base on YSI’s YouTube Channel, making the insights available to young scholars all over the world.

About the organizers:

Arun Balachandran has a PhD in Economics from the University of Groningen, the Netherlands, in collaboration with the Institute for Social and Economic Change, Bengaluru. He is currently a Post-doctoral fellow at the University of Maryland, and serves as Coordinator of the YSI South Asia Working Group.

Varsha Gupta is a PhD student in Economics at Jawaharlal Nehru University, New Delhi. She using NSS data to assess issues of labor and gender, and serves as organizer for the YSI South Asia Working Group.

The YSI South Asia Working Group provides a platform for young scholars from South Asia -or those interested in the region- to select an issue they wish to work on, collaborate and discuss for better conceptualization of the problem and, debate, critique and improve upon solutions. We also invite scholars to suggest the most pressing problems and challenges to better guide the path for this working group. Join us!

Job Seekers’ Beliefs and the Causes of Long-Term Unemployment

Published by Anonymous (not verified) on Thu, 17/06/2021 - 12:41am in

Andreas I. Mueller, Johannes Spinnewijn, and Giorgio Topa

LSE_2021_job-finding_topa 920_x_576

In addition to its terrible human toll, the COVID-19 pandemic has also caused massive disruption in labor markets. In the United States alone, more than 25 million people lost their jobs during the first wave of the pandemic. While many have returned to work since then, a large number have remained unemployed for a prolonged period of time. The number of long-term unemployed (defined as those jobless for twenty-seven weeks or longer) has surged from 1.1 million to almost 4 million. An important concern is that the long-term unemployed face worse employment prospects, but prior work has provided no consensus on what drives this decline in employment prospects. This post discusses new findings using data on elicited beliefs of unemployed job seekers to uncover the forces driving long-term unemployment.

The long-term unemployed face significantly worse employment prospects

A robust finding in labor economics is that the chances of finding a job decline significantly the longer a person is unemployed (see, for example, Machin and Manning [1999]). This empirical regularity is referred to as “negative duration dependence.” A long-standing question is the extent to which this phenomenon reflects an actual worsening in job-seekers’ job prospects—for instance because one’s skills deteriorate over time—or rather the shifting composition of the pool of unemployed (see, for example, Lancaster [1979], Heckman and Singer [1984]): if the unemployed are heterogeneous in their propensity to find a job, those with a higher underlying job-finding rate exit unemployment sooner, while those with a lower job-finding rate make up a progressively larger and larger share of the unemployed. We refer to the former as “true” duration dependence and to the latter as “dynamic selection” or heterogeneity in job-finding. While separating the two effects is empirically challenging, the two competing explanations have different implications for labor market policy. True duration dependence may require timely job search incentives or re-training programs, while heterogeneity would call for the targeting of re-employment efforts.

A novel way of disentangling these effects is to jointly use data on job-seekers’ subjective perceptions of their chances of finding a job, together with actual job-finding rates at different unemployment durations. As we show in Mueller et al. (2021), the covariance between perceptions and actual job finding helps uncover the extent of ex ante heterogeneity in underlying job-finding probabilities. The remaining duration dependence can then be attributed to a “true” decline in one’s employment prospects.

Here we use data from two novel sources, namely the New York Fed’s Survey of Consumer Expectations (SCE; see Armantier et al. [2017]) and the Survey of Unemployed Workers in New Jersey (NJUI; see Krueger and Mueller [2011]). Both surveys follow the same respondents over time, enabling us to trace how the same individuals update their perceptions as their unemployment spells progress and when they find employment. The SCE is a monthly online survey of a rotating panel of household heads in the United States that started in June 2013, whereas the NJUI is a weekly survey of unemployed workers sampled among recipients of unemployment insurance benefits in New Jersey in the fall of 2009. In the SCE, unemployed job seekers report the probability that they expect to find a job within the next three months. In the NJUI, job seekers report the probability that they expect to be re-employed within the next four weeks. The beliefs are elicited up to twelve times in the SCE, and up to five times in the NJUI, for job seekers who remain unemployed.

Job-finding perceptions and actual labor market transitions

The chart below shows the average realized job-finding rate at the three-month horizon for different sets of job seekers, grouped by the length of their elicited three-month job-finding perceptions. The positive relationship reveals the strong predictive nature of the elicited beliefs: on average, those who report a higher perceived chance of finding a job over the next three months are more likely to find a job within that time frame. A related finding (not shown here) is that job-finding perceptions are also highly predictive of actual job-finding rates over the subsequent three months—that is, between months four and six from the time the belief was elicited. This indicates the persistence of potential differences in job finding.

LSE_2021_job-finding_topa chart-01

While highly predictive, the subjective perceptions in our data also display an optimistic bias overall, confirming prior evidence in Spinnewijn (2015). The next chart shows averages of the elicited three-month job-finding perception and realized three-month job-finding rate for different ranges of unemployment duration. The chart confirms the strong negative duration dependence in actual job-finding rates. Perceived job-finding probabilities also decline but at a slower pace. Indeed, while perceptions are roughly in line with realizations at the start of a spell, a gap emerges as the spell continues, with elicited beliefs on average higher than actual job-finding rates—indicating a widening optimistic bias at longer durations. Moreover, we find that job seekers do not revise their beliefs downward as they remain unemployed, so the observed decline in perceived job finding is fully driven by dynamic selection.

LSE_2021_job-finding_topa chart-02


True duration dependence or heterogeneity?

As mentioned above, to disentangle the roles of dynamic selection and “true” duration dependence in explaining the observed decline in actual job finding, we exploit the availability of data on both the individual perceptions and realizations of job-finding, together with the ability to follow the same individuals over time. As detailed in Mueller et al. (2021), we do so both in a “model-free” way, looking for a lower bound of the contribution of heterogeneity, and in a statistical model that allows for biases in perceptions and for transitory as well as persistent differences in job finding across job seekers. We find that about 85 percent of the decline in job-finding rates by duration is due to heterogeneity in job-finding “types,” suggesting a limited scope for actual deterioration in one’s employment prospects over the course of an unemployment spell. The chart below illustrates this graphically: at an unemployment duration of zero months, the distribution of underlying job-finding probabilities is very dispersed, reflecting the large heterogeneity in types. At higher durations (six or twelve months), the distribution becomes more and more compressed toward lower job-finding propensities, reflecting the effects of dynamic selection in the unemployment pool.

LSE_2021_job-finding_topa chart-03

Biased beliefs and long-term unemployment

Our analysis underlines the importance of the heterogeneity in unemployed job seekers’ employment prospects. But job seekers underestimate these differences. Those with low underlying employment prospects tend to be overly optimistic and vice versa. The corresponding dynamic selection drives the optimistic bias among the long-term unemployed. Importantly, the under-response of beliefs can itself induce a higher incidence of long-term unemployment. Job seekers with worse employment prospects discard too many potential job offers, as they hold out for the possibility of a better offer in the future. Workers with better prospects do the opposite. The differences in re-employment thus get magnified through job-search behavior. Incorporating such biases in beliefs into a model of job-search behavior, we find that they may raise the incidence of long-term unemployment by 10 percent—a significant amount.

Overall, these findings suggest that the design of unemployment policies should take the heterogeneity across workers losing their jobs seriously due to the resulting selection into long-term unemployment. Improving job seekers’ information about their employment prospects may further help to lower the high incidence of costly long-term unemployment.

References

Armantier, Olivier, Giorgio Topa, Wilbert van der Klaauw, and Basit Zafar, “An Overview of the Survey of Consumer Expectations,” Economic Policy Review, 2017, 23 (2), 51-72.

Heckman, James J. and B. Singer, “The Identifiability of the Proportional Hazard Model,” The Review of Economic Studies, 1984, 51 (2), 231-241.

Krueger, Alan B. and Andreas I. Mueller, “Job Search, Emotional Well-Being, and Job Finding in a Period of Mass Unemployment: Evidence from High-Frequency Longitudinal Data,” Brookings Papers on Economic Activity, Spring 2011, 1 (1), 1-70.

Lancaster, Tony, “Econometric Methods for the Duration of Unemployment,” Econometrica, 1979, 47 (4), 939-56.

Machin, Stephen and Alan Manning, “The Causes and Consequences of Longterm Unemployment in Europe,” in Orley C. Ashenfelter and David Card, eds., Handbook of Labor Economics, Vol. 3, Part C of Handbook of Labor Economics, Elsevier, 1999, pp. 3085-3139.

Mueller, Andreas I., Johannes Spinnewijn, and Giorgio Topa, “Job Seekers’ Perceptions and Employment Prospects: Heterogeneity, Duration Dependence, and Bias.” American Economic Review, 2021, 111 (1), 324-63.

Spinnewijn, Johannes, “Unemployed but Optimistic: Optimal Insurance Design with Biased Beliefs,” Journal of the European Economic Association, 2015, 13 (1), 130-167.

Andreas I. Mueller is an associate professor of economics at the University of Texas at Austin.

Johannes Spinnewijn is an associate professor of economics at the London School of Economics.

Topa_giorgio
Giorgio Topa is a vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

How to cite this post:

Andreas I. Mueller, Johannes Spinnewijn, and Giorgio Topa, “Job Seekers’ Beliefs and the Causes of Long-Term Unemployment,” Federal Reserve Bank of New York Liberty Street Economics, January 29, 2021, https://libertystreeteconomics.newyorkfed.org/2021/01/job-seekers-belief....

Disclaimer

The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.

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