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February 13, 2015

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Posted: 13 Feb 2015 12:06 AM PST

'Are We Becoming a Part-Time Economy?'

Posted: 12 Feb 2015 12:30 PM PST

John Robertson and Ellie Terry at the Atlanta Fed's Macroblog:

Are We Becoming a Part-Time Economy?: Compared with 2007, the U.S. labor market now has about 2.5 million more people working part-time and about 2.2 million fewer people working full-time. In this sense, U.S. businesses are more reliant on part-time workers now than in the past.
But that doesn't necessarily imply we are moving toward a permanently higher share of the workforce engaged in part-time employment. As our colleague Julie Hotchkiss pointed out, almost all jobs created on net from 2010 to 2014 have been full-time. As a result, from 2009 to 2014, the part-time share of employment has declined from 21 percent to 19 percent and is about halfway back to its prerecession level.
But the decline in part-time utilization is not uniform across industries and occupations. In particular, the decline is much slower for occupations that tend to have an above-average share of people working part-time. This portion of the workforce includes general-service jobs such as food preparation, office and administrative support, janitorial services, personal care services, and sales.
...
Why has the demand for full-time workers in general-service occupations been more subdued than for other jobs? As the following chart shows, wage growth for these occupations has been quite weak in the past few years, suggesting that employers have not been experiencing much tightness in the supply of workers to fill vacancies for these occupations. Presumably, then, the firms generally find it acceptable to have a greater share of part-time workers than in the past.
The overall share of the workforce employed in part-time jobs is declining and is likely to continue to decline. But the decline is not uniform across industries and occupations. Working part-time has become much more likely in general-service occupations than in the past—and a greater share of those workers are not happy about it.

How Safe is the Financial System?

Posted: 12 Feb 2015 09:16 AM PST

Part of an interview with Tim Geithner:

... The really important distinction to make in terms of both diagnosing the risks of a crisis and of thinking about how to respond is to try to determine when your system is vulnerable to a truly systemic disruption and when it is not. If there is a lot of dry tinder, you are more vulnerable and even a modest shock can risk tipping you over into a more systemic panic. You want to make your system resilient to such shocks. So, the most important thing is to ask yourself: where today do we face the kinds of vulnerabilities, the kinds of conditions – the dry tinder – that might make us more vulnerable to a more cataclysmic kind of shock that would be very damaging to the economy?
For systems to face that kind of threat you really need to have had a long boom in credit financed either through the banking system or through the financial system in ways that create a classic vulnerability to a run. That is, you need to have a set of long-dated assets that are illiquid, are vulnerable to a loss, and are funded short. We don't face that sort of vulnerability in the financial system today. In many ways, the crisis is still too recent. The memory is too fresh for us to have had that long build up in borrowing through the banking system that makes you susceptible to systemic panic. Since the crisis, credit growth has been very modest while financial reforms have produced a system that is much better capitalized.
The one exception I would make to that general view is that Europe is vulnerable for different reasons to a kind of classic run or panic. They don't have the institutions that would allow them to defend themselves credibly against such an event. For them to build that kind of arsenal (like what we eventually built in 2008-2009 to break a panic) they would have to do a whole range of things – creating institutions that aren't in place today.
Beyond that, there is a familiar set of risks out there. But they are not risks on a scale like those that made the world vulnerable to a panic in 2008-2009. ...

We should probably remember that he has an incentive to say that the things he helped to do during the financial crisis have made the system safer today.

'The Austerity Con'

Posted: 12 Feb 2015 08:57 AM PST

Simon Wren-Lewis in the London Review of Books:

The Austerity Con: 'The government cannot go on living beyond its means.' This seems common sense, so when someone puts forward the view that just now austerity is harmful, and should wait until times are better, it appears fanciful and too good to be true. Why would the government be putting us through all this if it didn't have to?
By insisting on cuts in government spending and higher taxes that could easily have been postponed until the recovery from recession was assured, the government delayed the recovery by two years. And with the election drawing nearer, it allowed the pace of austerity to slow, while pretending that it hadn't. Now George Osborne is promising, should the Tories win the election in May, to put the country through the same painful and unnecessary process all over again. Why? Why did the government take decisions that were bound to put the recovery at risk, when those decisions weren't required even according to its own rules? How did a policy that makes so little sense to economists come to be seen by so many people as inevitable? ...

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