Sunday, February 17, 2008

Economists vs Family (Human) Values?

Betsey Stevenson and Justin Wolfers proposed an analogy between the supposed rigidity of European labor markets and the stability of European families:

"The U.S. labor market, like its marriage markets, differs from Europe in having substantially greater "churn"; in any given month in the United States, workers are more likely to be fired than are their European counterparts and those without a match are more likely to be hired. There is an emerging consensus that restrictions on churning in European labor markets yield inefficient labor markets with "too few" job separations. We do not mean to suggest by analogy that Europe is afflicted with too few divorces."

Stevenson, Betsey and Justin Wolfers. 2007. "Marriage and Divorce: Changes and their Driving Forces." Journal of Economic Perspectives, 21: 2 (Spring): pp. 27-52, p. 50.



Although they downplay the seriousness of their analogy, they may actually be on to something. Economists also know that home ownership, which might also contribute to family stability, represents a barrier to labor mobility. In effect, the ideal members labor force would be people without any attachments. Even better, these workers sprout like mushrooms already formed, like an 18-years old, age and expire on the day of retirement.

10 comments:

Myrtle Blackwood said...

"..Social rationality presupposes individual rationality, and this, in turn, depends not only on certain biological equipment but on continuity, order and regularity in the environment. It is premised on some correlation between the pace and complexity of change and man's decisional capacities. By blindly stepping up the rate of change, the level of novelty, and the extent of choice, we are thoughtlessly tampering with these environmental preconditions of rationality. We are condemning countless millions to future shock."

Alvin Toffler 'Future Shock' page 333. 'The limits of adaptability'.

Mr Toffler seemed to miss the point in his book that 'super-industrialism' (that he aspired to) would surely entail systemic, unnavoidable and radical change.

Anonymous said...

"There is an emerging consensus that restrictions on churning in European labor markets yield inefficient labor markets with "too few" job separations."
That's a very interesting point of view. I'm wondering just who it is that makes up that consensus. It sounds like something "Chainsaw"
Al Dunlap might have postulated. Note the equating of inefficient labor market with too few job seperations. Do these two geniuses of economic phenomenon have anything to say regarding the possible value of job experience? The casual observer would note that most job availability postings tend to require some past experience coupled with a history of individual stability on the job.
I like their use of the term "emerging consensus." It provides so little verification for such a huge hypothetical leap of faith.

Michael Perelman said...

Dean Baker did an excellent job in debunking the "eurosclerosis" myth.

Anonymous said...

That's exactly the problem with so much of what parades as social science. Where's the science in their supposition of causal relationships. The measurement of social phenomenom is barely competent. The statistical analysis of such broadly measured parameters is constantly derided by real mathematicians. The result being that an entire mythological conceptualization of real world effects is presented as that which is verified by the "emerging consensus." True enough that guys like Dean Baker are around to debunk the more glaring inadeuacies, but they are sadly out gunned in the public media where there is a taste for mythological concepts.

kevin quinn said...

It's also not clear that extreme flexibility is good for the economy proper - apart from its devastating social effects. The incentive structures created with jobs-as-careers- the expectation that pay will increase with seniority, starting below marginal product and ending above, as long as no shirking has occurred-solves the same problem as efficiency wages without the unemployment the latter involves. They are fragile, though. Workers have to believe the implicit promise on the employer's part not to renege and invent problems to justify separation at the latter stages of a career, when pay is above productivity. If such promises aren't believed, these structures won't work. More and more the US model seems to be predicated on the idea that no one should expect long-term employment with the same company. Keep your bags packed, ready to move at a moment's notice. This is a lousy environment for encouraging the specific investments in human capital that would make for efficient production.

Anonymous said...

As Cochise is said to have said, "White man speak with forked-tongue." Or is it, out of two sides of the mouth. On the one hand the employee is expected to prepare through education and training to be the most desireable candidate. Dedication to the job with long hours, blood, sweat and tears, as was once said. For what purpose? To get the job, not necessarily to keep the job. Does the second employer get the better od the deal? Now experience has been added to the vitae. Or, does such conversation only apply to labor which requires little training?

"This is a lousy environment for encouraging the specific investments in human capital that would make for efficient production."
That's becoming a quaint concept, investment in human capital. Does the employer expect to make an investment in human assets, or are they just hiring staff?

Eleanor said...

When I lived in Detroit, the way to get a raise was to jump jobs. (These were nonunion shops.) When I moved to Minnesota, you increased your income by staying in one place, and employers did not like job jumpers. They were seen as unreliable. Minnesota is now much more like Detroit; and Detroit is mostly empty.

Henry said...

This also underscores the vast hypocrisy of Republicans claiming to stand for Family Values.

Anonymous said...

Suppose that horses multiplied in England in such quantities that they were to be had for the asking, like kittens condemned to the bucket. You would still have to feed your horse—feed him and lodge him well if you used him as a smart hunter—feed him and lodge him wretchedly if you used him only as a drudge. But the cost of keeping would not mean that the horse had an exchange value. If you got him for nothing in the first instance—if no one would give you anything for him when you were done with him, he would be worth nothing, in spite of the cost of his keep. That is just the case of every member of the proletariat who could be replaced by one of the unemployed to-day. Their wage is not the price of themselves; for they are worth nothing: it is only their keep. For bare subsistence wages you can get as much common labor as you want, and do what you please with it within the limits of a criminal code which is sure to be interpreted by a proprietary-class judge in your favor. If you have to give your footman a better allowance than your wretched hewer of match-wood, it is for the same reason that you have to give your hunter beans and a clean stall instead of chopped straw and a sty.

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jamzo said...

"inefficient job market"

what a concept!

think about it!

what exactly does it mean?

novel applications of economic theories should not be paraded as useful social commentary