faulker020

Few econ policy debates are as fraught, or as confused, as the debate over "skills shortages" in the labor market. This debate occasionally crops up in discussions of the labor market as a whole, i.e. interpreting shifts in the Beveridge Curve. But it mostly comes up in the context of high-skilled or STEM labor. The main problem with this discussion, as I see it, is that no one really knows what a "shortage" of skilled or STEM labor is supposed to mean. Here are some possible alternative meanings: 1. The labor market for skilled/STEM workers is not clearing, due to government policy; demand is outstripping supply. (This is the classic "econ 101" definition of "shortage"). 2. There has been an increase in demand for STEM workers in the U.S. not matched by an increase in supply, causing wages in those occupations to rise. 3. A policy-engineered increase in the supply of STEM workers would raise overall U.S. GDP per capita. 4. A policy-engineered i...

"You'll wear a Japanese kimono, babe/There'll be Italian shoes for me" - Randy Newman, Political Science A lot of people are talking about this story from Oberlin . Apparently some kids are complaining because certain kinds of Asian-themed food served in dining halls is crappy and non-authentic, and therefore constitutes "cultural appropriation." Now, on one hand, this is just a story about rich kids complaining about bad food. Nothing much to see here. But it gives me an opportunity to say something that has been rattling around in my head for a while: Cultural appropriation is actually a great thing! Wikipedia defines cultural appropriation as "the adoption or use of elements of one culture by members of a different culture." This is a good thing, for several reasons. Reason 1: Product diversity. This is the simple, "Econ 101" reason, if you will. Suppose Japanese people open a bunch of Italian restaurants in Tokyo. The "Italian fo...

After reading this cool article about the debates surrounding string theory, someone on Twitter asked me to do a post comparing it to macro theory. Well, I did that a long time ago  back when I was a snarky young lad, but as someone at Bloomberg once said to me, "If you know a good story, tell it from time to time," so here goes. String theory and macro (business cycle and growth theory) have one big problem in common: They're not easily testable. They are not untestable . There's a big difference. With string theory, if you could build a really really really huge powerful particle collider, you could probe particles down to the Planck scale, and you could establish whether or not particles are shaped like tiny strings. With macro, if you could observe a whole bunch of planets with no mutual trade between them, or if you could establish a world government and get it to do random policy experiments, you could definitely test growth and business cycle theories. The pr...

"Stratos has never sampled the full terror stalking the stars." - David Brin, Glory Season Paul Romer complains of "mathiness" in macroeconomics. Paul Pfleiderer talks about "chameleon" models . Ricardo Caballero says macroeconomists encourage the "pretense of knowledge" . Everywhere, people complain about economists' fetish for pointless model-making. And of course, some folks accuse the economics profession of being a front for laissez-faire ideology. But we should remember that compared to other disciplines, econ is in great shape. A friend just sent me a paper by Ananya Roy, a professor of urban planning at UCLA, entitled " What is urban about critical urban theory? " Here is an excerpt from the abstract: This essay discusses how the “urban” is currently being conceptualized in various worlds of urban studies and what this might mean for the urban question of the current historical conjuncture. Launched from places on the map ...

In response to a John Cochrane policy paper on growth policies, I wrote a post chiding Cochrane for selling efficiency policies as long-term growth policies. Cochrane now has a long and rather testy reply to Yours Truly. The basic message of the reply is: "If level effects are really, really big, they tend to look like long-term growth effects." Yep. That's right. Cochrane's original paper described the impact of growth policies by drawing an analogy with the period from 1950-2000: If the US economy had grown at 2% rather than 3.5% since 1950, income per person by 2000 would have been $23,000 not $50,000. That’s a huge difference. Nowhere in economic policy are we even talking about events that will double, or halve, the average American’s living standards in the next generation.  To get a policy change that had that effect, we'd need: A) A doubling of the level of detrended steady-state GDP, and B) Frictions in the economy and/or the policy-making process that...