Week links (4)

Another edition of the best from the rest in the blogosphere and beyond:

1. Ryan Avent, "Labour markets: A theory of troubles", The Economist, Free Exchange blog - a great article on the productivity puzzle that has been going on for quite a while. Here are some of the key trends in the past 30 years (during the ongoing third industrial revolution) that he summarizes: 

"Since the early 1980s, labour markets have polarised or “hollowed out” (Employment in high- and low-skill positions has risen substantially relative to middle-skill jobs.)

Polarisation is mostly attributable to elimination of “routine” tasks by trade and technology (automation and trade are responsible for displacement of routine tasks previously done by middle-skill workers, in both manufacturing and clerical or service activities, leading to polarisation of local and national labour markets)

Since the early 1980s, polarisation has occurred almost entirely during recessions

(This pattern is linked to the phenomenon of “jobless recoveries”, which followed the recessions of 1990-1, 2001, and 2007-9 but not earlier downturns)

The jobless recoveries of the past generation have been characterised by a change in the cyclical behaviour of productivity (It has since risen relative to trend in recessions and fallen relative to trend in expansions)

Productivity-rich recessions, and jobless recoveries, are a product of sticky wages (Productivity therefore rises during recessions—rising most in industries where wage rigidity is most binding—reducing the incentive to take on new workers despite relative wage flexibility among the unemployed)"

Read the whole thing, it's very intuitive.

2. "Massive open online forces", The Economist, Free Exchange, the print edition - add to this the Schumpeter column from the same issue last week where they discuss how the open online courses (MOOCs) are presenting a real threat to some business schools, and more importantly how these business schools, who should be teaching their students (MBA grandaunts) how to adapt to an ever-changing environment, are themselves failing to do the same. 

3. Nicholas Kristof, "Professors We Need You!", New York Times - expressing a concern that the vast academic knowledge available out there simply isn't being used to its fullest capacities. 

"A basic challenge is that Ph.D. programs have fostered a culture that glorifies arcane unintelligibility while disdaining impact and audience. This culture of exclusivity is then transmitted to the next generation through the publish-or-perish tenure process. Rebels are too often crushed or driven away.

...

A related problem is that academics seeking tenure must encode their insights into turgid prose. As a double protection against public consumption, this gobbledygook is then sometimes hidden in obscure journals — or published by university presses whose reputations for soporifics keep readers at a distance."

True that. This is why many notable academics "talk" to the public via their personal blogs. And this, at least in the economic science, is deepening the debate, bringing some old papers to new light and furthering the understanding of economics among the population (hopefully). Krugman raises a few good points on this as well. As does Noah Smith. 

4. David Brooks, "The American Precariat", New York Times - a bit on social mobility, mobility in general, and a change in the value system in America, giving rise to the so-called Precariat.

"...the Precariat is the growing class of people living with short-term and part-time work with precarious living standards and “without a narrative of occupational development.” They live with multiple forms of insecurity and are liable to join protest movements across the political spectrum.

The American Precariat seems more hunkered down, insecure, risk averse, relying on friends and family but without faith in American possibilities. This fatalism is historically uncharacteristic of America."

5. And finally, a couple of Mankiw articles on inequality, Wall Street and CEO wages.