Inequality and Occupy Wall Street 3: the top 1% are superstars

~ MilesCorak ~ 3 Comments

To explain the fact that the top 1% now take home a larger share of total earnings than they ever have since the 1940s Occupiers need to understand the economics of superstars.

Talent is unique. Or as the late University of Chicago economist Sherwin Rosen stated, “hearing a succession of mediocre singers does not add up to a single outstanding performance.” When he was at his best there was only one Wayne Gretzky, and I guess that is why they nicknamed him “the Great One.” To those of us listening to the opera, or watching the hockey game, the superstar is one-of-a-kind. And because there are no substitutes they get paid much more than even the second best.

This only explains that there is a top 1%, and that as the most talented they get paid a good deal more than the rest of us. It does not explain what has changed, why have they been taking away a bigger and bigger slice of the pie since about 1980.

Continue reading “Inequality and Occupy Wall Street 3: the top 1% are superstars” →

Inequality and Occupy Wall Street 2: the facts are fertile soil

~ MilesCorak ~ 3 Comments

The Occupiers have their facts right.

There has been an unprecedented increase in earnings inequality in the United States, with significant shares of total earnings increasingly going to the very top.

Let’s be clear on this: we are not talking about inherited wealth, but rather “earnings”, the stuff we get from being an “employee”.

The only group to see their average earnings rise over the course of the last three decades or so are highly educated, older, men. And this is driven by the select few. It is not an exaggeration to say that it is the top 1%.

Continue reading “Inequality and Occupy Wall Street 2: the facts are fertile soil” →

Inequality and Occupy Wall Street 1: who should you believe, Wente or Carney?

~ MilesCorak ~ Leave a comment

Margaret Wente argues, in her column in the Saturday Globe and Mail,  that “Occupiers are blaming the wrong people“. She states that :”It’s not the greedy Wall Street bankers who destroyed these people’s hopes.”

Continue reading “Inequality and Occupy Wall Street 1: who should you believe, Wente or Carney?” →

Foreign aid: forget the T-shirts, just give them the money

~ MilesCorak ~ 5 Comments

I am thinking of starting a contest.

To the first three people who sign up to follow my blog I will send one of my used T-shirts, shipping and handling included. Or how about this: to the first three people who sign up I won’t send T-shirts, but will send the approximately $10 it would have cost to ship them.

Which would you prefer?

Before answering you should know that foreign aid programs are often designed as in-kind transfers: they send the T-shirts, not the money. In fact, in some cases quite literally the T-shirts.

Continue reading “Foreign aid: forget the T-shirts, just give them the money” →

Economics is about being a good plumber

~ MilesCorak ~ Leave a comment

Ester Duflo is a smart women.

She has a PhD from MIT where she has taught development economics since her graduation in 1999. She holds a chair in the Department of Economics there, edits an influential economics journal, has published too many articles to count, won major prizes and awards—including a MacArthur Foundation Fellowship that is nicknamed the ‘genius’ award—and has authored or co-authored four books with the most recent released earlier this year called Poor Economics: A Radical Rethinking of the way to Fight Global Poverty.

And to just what does this 38-year-old aspire? … She wants to be a good plumber!

Continue reading “Economics is about being a good plumber” →

Success in school for child migrants is linked to their age of arrival

~ MilesCorak ~ Leave a comment

Children who migrate to Canada have a better chance of finishing high school if they arrive in the country at a younger age.

In a study published by Statistics Canada I show that immigrant children arriving in Canada after the age of nine are more likely to drop out without finishing high school than those arriving at a younger age.

Continue reading “Success in school for child migrants is linked to their age of arrival” →