The Political Economist

I've posted this curve in my previous blog : Source: Alan Krueger:  "The Rise and Consequences of Inequality in the US" (FYI: The Great Gatsby is a famous novel by an American author Scott Fitzgerald describing the decadence of the US upper classes in the "roaring 20-ies". There is (another) movie released about the book recently, staring Leonardo Di Caprio). The source is Krueger's presentation from January last year at the Center for Economic Progress. You can see the slides here . The curve depicts a relationship between inequality (measured by the Gini index) and intergenerational earnings elasticity (if it's more elastic then people find it harder to move between income classes). The US, even though it's positioned pretty high (relative to other developed nations), is projected to be even higher if 2010 Gini were to be taken into account. This means that among the developed countries the US is by far the worst in its high inequality a...

Greg Mankiw wrote an excellent paper (forthcoming in the Journal of Economic Perspectives) that caused a lot of fuss around the blogosphere. This is hardly a surprise since the title of the paper happens to be: "Defending the One Percent". However, the paper is much less provocative than the title would imply. It is portrayed as a survey of economic ideas on progressive taxation and redistribution equiped with easy to understand examples and basic utilitarian concepts. I recommend it as an excellent argument not against redistribution (as this certainly isn't the case he's making), but as an attempt to shed more light in the controversial debate on inequality and how to approach it. Mankiw drives a persuasive argument, similar to the one I've pointed out in a previous text , that the top 1% of income earners aren't rent-seekers or those that have inherited their wealth (an argument Stiglitz tries to deliver in his book "The Price of Inequality"...

From the Financial Times  (it's an interactive feature so you can click on the country to see its specific rates) It is interesting to note that corporate tax rates have decreased on average by 3 percentage points in the last couple of years for the OECD countries. However the biggest decrease was done just before the onset of the crisis, by 2008. Afterwards corporate taxes slightly increased (due to an immediate response to the crisis) and have, on average, started to decrease slowly since 2010. Some would say this was evidence of austerity, at least the "good" type of austerity where taxes go down combined with spending cuts. However spending cuts in OECD economies were scarce , to say the least, while tax cuts were only applied to corporate taxes while personal income taxes, along with all other forms of taxes like VAT, shot up in some countries. As an effect personal consumption was hit hard, since prices were going up, while people were earning less.  Inte...

Looking at the supply side of the job market, several online exchanges have emerged attempting to link the demand and supply of workers more successfully across the globe. In particular, online job markets are an increasingly popular way to fight domestic monopolies (or overpriced services) by introducing global competition in the local market. The pool of offered jobs varies from web programming, mobile apps, translation, project management, design, media, to more than 35 different types of jobs. The most important implication is that one does not need to pay the local rate for the service, rather one can simply find the needed workers online and hire them at a much lower rate.  The Economist has the story:  "...According to his Elance page, “oswaldo g”, from Colombia, has already completed 31 jobs, earning a combined $4,193 and a satisfaction rating of 4.9 (out of 5). He quoted a tempting $16.44 an hour—though not as tempting as the five bids on oDesk (three of them by f...

Over the past three decades the US has experienced a steady increase of College graduands. New York Times has the story:  Source: New York Times "The increases appear to be driven both by a sharp rise in college enrollment and by an improvement among colleges in graduating students. The trends could bring good news in future years, economists say, as more Americans become qualified for higher-paying jobs as the economy recovers.   College attendance has increased in the past decade partly because of the new types of jobs that have been created in the digital age, which have increased the wage gap between degree holders and everyone else. The recent recession, which pushed more workers of all ages to take shelter on college campuses while the job market was poor, has also played a role." I made this point several times before, most precisely in an article from January last year, entitled  "Percentages and inequality: Where is the middle class?" . The ...