Inequality begets inequality, according to the Economic Report of the President

~ MilesCorak ~ 5 Comments

On a warm evening last spring I found myself at a dinner party in the lush suburbs of a small Ivy League town not far from New York City.

The main concern of a fellow economist was the trouble his son was having raising his new family: that would be the son living in Manhattan, the one making $10 million a year.

It appears there is a bidding war for spaces in good kindergartens and, as we all know, prices skyrocket when demand outstrips supply.

And demand has been rising. We also know that.

So the most striking claim in the Economic Report of the President for 2012 is not that the share of earnings accruing to the top 1%—a share that was about 8% during the early 1980s—stands at close to 20%. After all, this is old news, the stuff of Occupy Wall Street.

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Charles Murray, a Libertarian who worries about America coming apart along the seams of class

~ MilesCorak ~ 8 Comments

The major point in Charles Murray‘s book—Coming Apart: The State of White America, 1960-2010—is that the United States “is coming apart at the seams—not ethnic seams, but the seams of class.”

You can watch him summarize the major messages of his book in this February 14th interview hosted by the TVO program The Agenda.

The book has proved to be instantly provocative. Toward the end of this interview, at about 13 minutes and 50 seconds, Murray states: “I don’t do solutions very well.”

So why all the buzz?

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Immigrants face challenges in finding jobs that are not of their own making

~ MilesCorak ~ 32 Comments

The challenges immigrants face in finding jobs have to do with not just the characteristics and skills they bring to the labour market, but also the state of our economy and the barriers put in their way. More and more tinkering with the selection rules used to admit immigrants will not on its own address these challenges.

In a post on my blog I called for lower rates of immigration during business cycle downturns, and a reader commented by saying:

I arrived in Canada in July 2011 with my family and was called for exactly one job interview a couple of weeks ago. To say I am scarred is putting it mildly. I left a very successful career with the knowledge that it will be difficult to get a similar position but I never anticipated that I would end up feeling invisible and a non-entity with absolutely nothing to offer. Since coming here I have been shelling out money for everything, university fees for my kids and so on. Other than contributing to the Canadian economy through our expenses, I feel immigrants are not considered to be of any particular value.

It struck me how odd and incomplete the public policy response by Canadian opinion makers and governments is to this kind of concern.

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The burden of unemployment is worse than Statistics Canada’s official number suggests

~ MilesCorak ~ 13 Comments

This morning Statistics Canada reported that the unemployment rate increased to 7.6%, confirming a rising trend since July of last year and still significantly above the low of about 6% just before the recession took hold in the autumn of 2008.

This statistic is probably the closest a number can come to having a human face; it relates directly to the hardship Canadians experience in providing for their families, saving for their retirement, and just meeting their day-to-day needs.

But in the end we can’t clearly see the faces of real people behind this number, which at best is an incomplete picture of waste and hardship.

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The Economics of the Great Gatsby Curve: a picture is worth a thousand words

~ MilesCorak ~ 16 Comments

A quick post to thank Scott Winship for his response to my feedback on his original article. His comments are now on the National Review web site.

But I am afraid they do not advance the discussion. I addressed all of the technical issues in my original paper (see the appendix). The internationally comparable estimates I offered account for these concerns.

But let me repeat the picture of the Great Gatsby Curve using the most recent information on the largest available set of countries.

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The Economics of the Great Gatsby Curve

~ MilesCorak ~ 31 Comments

In an article on the Brookings Institution website that was originally posted by the National Review, Scott Winship questions the idea that greater inequality at a point in time is associated with less generational mobility over time — what the Chairman of the Council of Economic Advisors, Alan Krueger, called the “Great Gatsby Curve” in a speech given on January 12th.

Winship’s article does a disservice to a well-established literature on generational mobility by suggesting that the basic information Krueger used is in some sense invalid. Krueger’s Great Gatsby Curve is in fact well-rooted in the labour economics literature, and debate would be better placed addressing the policy implications he draws than to suggest that President Obama’s top economist feels compelled to create his own facts.

So in the spirit of moving evidence-based public policy forward here is a quick review of the underpinning of the Great Gatsby Curve in both theory and practice.

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