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Jodi Beggs

Jodi's Economics Blog

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This Year's John Bates Clark Medal Recipient Is...

Monday April 21, 2014

The John Bates Clark Medal, awarded by the American Economic Association to who they feel is the most promising economist under the age of 40, is often referred to as the "baby Nobel" due to its high correlation with future Nobel Prize awards. This year's medal goes to Matthew Gentzkow of the University of Chicago's Booth School of Business for his work in analyzing and understanding bias in the media and its effect on society.

In case you're curious, here's a good roundup of many of the favorites to win the prize.

An Economist on that Pesky "Job Creator" Category...

Monday April 21, 2014

Job creators, directly, at least, are obviously those entrepreneurs and business owners that hire workers. Economist Jared Bernstein, however, argues that, in an important indirect sense, consumers and investors are the job creators, since their actions give businesses the incentives to expand output and hire workers.

This works in theory because firms should be willing to hire workers up until their profit-maximizing point, and, as demand for goods increases, this profit-maximizing point gets larger. In practice, however, this principle breaks down if the "job creators" aren't even hiring the profit-maximizing number of employees.

Some New Economics Reading, in Book Form...

Monday April 21, 2014

One topic that is getting a lot of attention both in economics and in politics is the "profitability" of labor versus capital (i.e. financial assets invested and earning a return). The reason for this concern is that, logistically, most people are endowed with the ability to work (and therefore earn money from their labor), but few people are endowed with financial capital that they can use to earn income that way. Therefore, if returns shift towards capital and away from labor, there are going to be very important implications for income inequality.

Given this potential predicament, it's important to understand what has actually been happening regarding the role of capital in business and society. Luckily, Thomas Piketty has a new book (new in English at least) entitled Capital in the Twenty-First Century that sheds a lot of light on this progression.

Some More Evidence on the Effects of Minimum-Wage Increases...

Monday April 14, 2014
In econ 101, we are taught that a minimum wage is a price floor on labor, and, as such, a binding minimum wage will increase unemployment and decrease employment. It's important to note, however, that in econ 101 we assume that both the labor market and the market for whatever the firms are selling are perfectly competitive, when in reality this need not be the case. When those assumptions are taken away, the theoretical conclusions regarding a minimum wage increase are much less clear, so empirical evidence becomes very important. The latest on this front is from San Jose, CA, and it shows that the effect of a minimum wage increase is certainly not always obvious.

An Economist's Take on the Gender Pay Gap

Monday April 14, 2014
The differential in compensation for men and for women in the U.S. is getting a lot of attention right now, largely due to the fact that President Obama has made gender pay equality a priority and issued two executive orders aimed at bringing gender wage parity to government employees. (A similar bill failed to reach the Senate floor for discussion, however.) In order to assess what actions should be taken, it's important to understand what the wage gap looks like in the first place. Luckily, economist Claudia Goldin has as much data and analysis on the topic as you could possibly want.

The Latest on High-Frequency Trading...

Monday April 14, 2014
In case you haven't heard, Michael Lewis has a new book out entitled Flash Boys: A Wall Street Revolt that gives a fascinating narrative inside the world of high-frequency trading. As expected, the book has reignited discussions about the social value (or cost) of high-frequency trading. This article gives a nice overview of what a variety of experts have to say on the matter.

Some Labor Market Trends to Watch Out For...

Monday April 14, 2014

If you read this site regularly, you likely know that jobs numbers are posted by the Bureau of Labor Statistics each month. While those numbers are a useful snapshot, it's also important to look at longer term trends in order to understand the overall employment picture. Economist Jared Bernstein says that there are three trends worth noting:

  • Reversing the shrinking labor force
  • Increasing job growth
  • Raising wages

Larry Summers on Business Cycles...

Monday April 7, 2014
Former Treasury Secretary, former Harvard University President, and former Obama economist Larry Summers has some views on the dynamics of business cycles. His talk is part of a larger panel on full employment put together by the Center on Budget, and there is commentary from a few other well-known economists as well.

An Inside Opinion on the State of Monetary Policy...

Monday April 7, 2014
The (favorable) March jobs report has gotten some people wondering about what the Federal Reserve is going to do in terms of its future course of monetary policy- does the economy seem like it still needs help or is it healthy enough to continue tapering the current asset purchase program? A related question is whether the Fed's past policies have been sufficiently aggressive to combat unemployment and further economic downturn. The Federal Reserve of St. Louis' James Bullard argues that that answer is yes.

The March Jobs Report...

Monday April 7, 2014
The Bureau of Labor Statistics released the March jobs report on Friday. The good news is mainly in the fact that 192,000 jobs were added in March, which means that the total number of jobs in the U.S. is officially above where it was in January 2008, before the financial crisis and recession hit. The bad news is that there has been population growth in the last 6 years, and an economy whose growth is stagnant for 6 years isn't particularly impressive. Baby steps, I suppose. In related news, the unemployment rate is holding steady at 6.7 percent, mainly because more people are entering the labor force as of late.

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