tag:blogger.com,1999:blog-2830084253401570472.post3207770798477794327..comments2024-03-28T09:22:36.967+13:00Comments on Offsetting Behaviour: Youth unemployment and evidence-based policyEric Cramptonhttp://www.blogger.com/profile/15831696523324469713noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-2830084253401570472.post-23353649608771575162011-06-28T18:37:48.220+12:002011-06-28T18:37:48.220+12:00Rimu, you clearly have not seen any of Meteria Tur...Rimu, you clearly have not seen any of Meteria Turia's comments on economics. I cringe when I read them.Ross Calverleyhttps://www.blogger.com/profile/13810489752054963588noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-65597476541219888622011-05-06T08:34:41.834+12:002011-05-06T08:34:41.834+12:00I fear you may be fighting an uphill battle here E...I fear you may be fighting an uphill battle here Eric. There seem to be some within the Green camp who are entirely idealogically driven and who cannot, or will not, accept that well-intentioned policy with a social conscience may have unintended negative impacts. Being a leftie myself I tend to be a supporter of many Green policies, but one thing I have noticed is that some Greens have a distrust of science, to the point of refusing to acknowledge the outcomes of research when it disagrees with their preconceived notions. Mind you, this isn't restricted to the left of the political spectrum, there are probably just as many scientifically retarded folk to the right. ;)Latsnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-30613081865592182782011-05-06T08:20:29.817+12:002011-05-06T08:20:29.817+12:00@gileswrites: That's why the Canadian study is...@gileswrites: That's why the Canadian study is telling: increases in the minimum wage correlated with increased numbers of families below the poverty line. The gains to the folks who kept their jobs are nice, but the folks who lost their jobs were the second earners who kept their families above the poverty line.<br /><br />I'm pretty sure there are papers in climate change arguing that changes in human emissions are too small to account for observed changes in temperatures, just like plenty of papers find that observed changes in minimum wages account for very little of observed changes in employment. The consensus of the literature in climate science seems that carbon emissions matter, but there are dissenters. Just as there are dissenting papers on the effects of minimum wages.Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-10422072458003020152011-05-05T23:45:48.498+12:002011-05-05T23:45:48.498+12:00On the plus side, additional money in wages was pr...On the plus side, additional money in wages was presumably paid out to the youths who remain employed at the new higher minimum wage. Is it possible to figure out something like how many dollars were paid to youth workers per year before and after the rate change? Might be an interesting comparison.<br /><br />I think comparing climate change research to economic research is pretty cheeky. Your linked 'no effect' vs. 'large effect' studies show that the data does not always fit the theory due to unknown confounding factors. Whereas it is entirely possible to explain climate change data with fundamental theories (thermodynamics etc.), and there are no equivalent peer-reviewed papers finding that carbon emissions have zero effect. Also climate change and other 'green issues' (long-term energy prices, resource shortages etc.) might end up being far more consequential than the current lack of $6/hr jobs.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-45392281995102062142011-05-05T20:51:49.795+12:002011-05-05T20:51:49.795+12:00@Anon. I'd put really good money against each ...@Anon. I'd put really good money against each part of that. First, I don't buy that Key would do it. Second, the claims of policy efficacy are way too strong.<br />- Even if you abolished the youth minimum wage entirely tomorrow, there's no way youth unemployment would disappear. It would instead slowly retreat to a level somewhat below the historical trend prevailing through the 90s relative to the adult unemployment rate. For starters, wages are downward sticky - many employers would choose to shed staff rather than cut wages even if they would have hired folks on at a lower rate had the lower rate been available at time of hiring - motivational effects of pay cuts aren't good. So the action would be relatively slow and come as new jobs were created.<br />- Existing workplace regulations in NZ can't have that huge of effect - we did manage to get unemployment down to very low levels around 2005/6 with those regulations in place. A lot of nonsense comes of them, but I can't imagine the aggregate effects are massive.<br />- Making use of some of the policy evidence from America's experience with welfare reform would help, but there are lots of folks for whom employment will never work out. It would be pretty surprising if any government were to cut things that radically. I'd expect civil society to work through charity to help folks were it to happen, but I doubt we'd ever see those kinds of cuts.<br /><br />I'm really hoping that you're a leftie trying for a caricature of pro-market economist beliefs about the effects of policy. It's borderline crazy to expect that any policy changes could eliminate unemployment overnight.Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-86280703443206154972011-05-05T20:36:09.836+12:002011-05-05T20:36:09.836+12:00The empirical evidence and academic consensus are ...The empirical evidence and academic consensus are brutally clear:<br /><br />to remove unemployment NZ needs to only three things<br /> - eliminate minimum wage rates (the youth min wage is only a subset of the real problem, the adult min wage)<br /> - eliminiate the unions and other restrictive work practice legislation (notable the ERA & Holidays Act) <br /> - eliminiate the dole and other benefits<br /><br />Make those three changes and unemployment will disappear - literally overnight. The good news is that all these three commonsense policies are advocated in the 2025 taskforce, are now official ACT policy, and will be implemented in Don Brash's emergency budget this NovemberAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-19563103443136220862011-05-05T19:24:43.593+12:002011-05-05T19:24:43.593+12:00Rimu: In a 1996 survey of labour economists, in an...Rimu: In a 1996 survey of labour economists, in answer to the question “A minimum wage increases unemployment Among young and unskilled workers”, 13% generally disagreed, 37% agreed with provisions and 50% generally agreed. That looks like majority support for the idea that increases in the minimum wage increases unemployment among young workers.Paul Walkerhttps://www.blogger.com/profile/13731003529546075700noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-84444896628956709882011-05-05T19:06:35.626+12:002011-05-05T19:06:35.626+12:00Check the wording of the survey you're citing....Check the wording of the survey you're citing. I would agree with the 46% cited that minor changes in the US federal minimum wage, which is already low, make little difference in overall employment. American minimum wages tend to rise very slowly - they've deteriorated over time in real value. So they have little employment effect in aggregate statistics. But they do have real effects on poor urban blacks.<br /><br />Suppose that for the last 50 years we've had carbon taxes. And the carbon tax tends only to rise with inflation. If you polled climate scientists after that period, most of them too would likely say that carbon taxes have little effect on overall emissions, because the context of the question is around the very small changes that really don't make much difference. But that doesn't mean that the overall effect of the system as a whole isn't large.Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-60582469949066164172011-05-05T19:03:24.609+12:002011-05-05T19:03:24.609+12:00@Rimu: I encourage you to go and read the prior po...@Rimu: I encourage you to go and read the prior post where I discuss the method. The data set goes back to 1986. I only report results here for the era post the abolition of the youth minimum wage. I start in 1986 because that's when the data series starts; going back prior to that would introduce some data series commensurability problems. And quarterly data back to 1986 is plenty sufficient for showing that results since 2009 have been very anomalous.Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-22694881980850498732011-05-05T17:02:13.663+12:002011-05-05T17:02:13.663+12:00Also your data covers only 4 years, and you use th...Also your data covers only 4 years, and you use that to try to show a connection???! <br /><br />I did pretty bad at stats at uni so I'm not 100% on this but my gut doesn't feel like that is a long enough time to average out statistical noise. Why did you only use 4 years of data? Why not 40, or go back to when the minimum wage was introduced?Rimuhttps://www.blogger.com/profile/03901093351146855584noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-21137082898507558812011-05-05T16:44:28.290+12:002011-05-05T16:44:28.290+12:00It is a bit condescending to assume that an MP is ...It is a bit condescending to assume that an MP is not familiar with the price/demand model underpinning basic economics.<br /><br />"In 2000, only 46 percent of members of the American Economic Association agreed that minimum wages increase unemployment among young and unskilled workers. Another study published in 2006 showed that slightly less than half of all economists surveyed thought the minimum wage should be eliminated, while more than a third favored increasing it."<br /><br />http://economix.blogs.nytimes.com/2010/11/01/along-the-minimum-wage-battle-front/<br /><br />Seems like there is some disagreement between experts about how simple the minimum wages <---> unemployment relationship is!Rimuhttps://www.blogger.com/profile/03901093351146855584noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-73822692154834380022011-05-05T16:33:53.666+12:002011-05-05T16:33:53.666+12:00"The neighbours likely already think I'm ..."The neighbours likely already think I'm a jerk anyway."<br /><br />Not just the neighbours!!!Paul Walkerhttps://www.blogger.com/profile/13731003529546075700noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-31996839946715451172011-05-05T14:33:04.642+12:002011-05-05T14:33:04.642+12:00Thanks Eric. Following our tweets the other day wa...Thanks Eric. Following our tweets the other day wanted to understand your "Green economic policies" comment better.Sarahttps://www.blogger.com/profile/12617499739047089214noreply@blogger.com