Category Archives: Growth Causes and Consequences

Assortative Mating has not increased?

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So say Rania Gihleb and Kevin Lang.

Some economists have argued that assortative mating between men and women has increased over the last several decades, thereby contributing to increased family income inequality. Sociologists have argued that educational homogamy has increased. We clarify the relation between the two and, using both the Current Population Surveys and the decennial Censuses/American Community Survey, show that neither is correct. The former is based on the use of inappropriate statistical techniques. Both are sensitive to how educational categories are chosen. We also find no evidence that the correlation between spouses’ potential earnings has changed dramatically.

I have not read the paper. It certainly would throw cold water on one of the four forces.

Can Men Be Socially Reconstructed?

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Betsey A. Stevenson writes,

Women’s new role clashed with social norms around femininity, but they were able to merge the two. (Remember “I can bring home the bacon, fry it up in the pan?”) By contrast, men are being asked to embrace traditionally feminine roles at work and at home, including helping with the cooking and laundry.

Pointer from Greg Mankiw.

Suppose that in terms of the five-factor personality model, men tend to score lower than women on agreeableness.
When women were moving from the home to the labor force, they moved into office work, where agreeableness was not a drawback. In fact, it is often a plus.

But if you want men to move from a factory to becoming home health care aides, then you are asking them to take on jobs that require a high level of agreeableness. It is not such an easy transition.

The Gentrification Phenomenon

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Derek Hyra writes,

Gentrification, in some places, is associated with political and cultural displacement. Some gentrifying areas once dominated by low-income minorities demonstrate an association between the movement of upper-income people and a loss of minority political representation. Remember, it was presumed upper-income people moving to low-income neighborhoods would bolster civic society, and it appears, in some circumstances, it has. Often, however, newcomers take over political institutions and advocate for amenities and services that fit their definition of community improvement. This process of political displacement can be linked with cultural displacement, a change in the neighborhood norms, preferences, and service amenities.

You don’t think that those poor urban residents appreciate the new bike lanes?

Thanks to Timothy Taylor–I took a small excerpt from his interesting post. Read the whole thing.

As you know, I think of gentrification as driven by the shift toward the New Commanding Heights of health care and higher education. These sectors create jobs for the affluent in urban areas.

Wither Factor-Price Equalization?

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Elisa Giannone writes,

The interaction of SBTC [skill-biased technical change] and agglomeration economies imply that more educated locations have larger skill premium. High and low-skill workers have some degree of complementarity, so, agglomeration effects raise the wages of all the workers. The differential increase in the wages of high-skill workers makes the migration patterns for high and low-skill workers diverge: high-skill workers migrate to educated cities more than do low-skill workers. Migration has a twofold effect. First, the more workers migrate to a location, the marginal productivity of each will decrease, hence, the returns will decrease. Second, when more high-skill workers move to a location, productivity goes up because of agglomeration effects, raising the wages of all the workers, but especially the wages of the high-skill workers.

Pointer from Tyler Cowen.

She points out that within the U.S. since 1980, wages have stopped converging across cities, and this is mostly due to divergence among high-skilled workers. So we are not getting factor-price equalization, and she wants to try to explain why. Her explanation strikes me as quite complex (it includes more than just what is in the quoted paragraph) and a bit just-so-story-ish, but that is what happens when you observe a phenomenon that challenges a core interpretive framework.

If you believe in factor-price equalization, then you predict that workers with similar skills will tend toward the same pay in different locations. The word “similar” often gives me pause. As consumers, we value different amenities. In my prime, I could have earned a higher wage working in Manhattan, but relative to the people who chose to work there, I valued the amenities less. I wonder how much of the apparent divergence can be traced to the interaction of consumer preferences with other factors. I am guessing that assorattive mating fits in somewhere.

Picturing Genetic Engineering

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A commenter writes,

Imagine you have a button on the wall you could press which would which would eliminate schizophrenia in all people born after say January 1, 2017. Would you press it?

That is not the way I picture genetic engineering working, at least in the near future. Instead, the question might be posed as, “This gene raises the probability of schizophrenia by .03, but it also raises the probability of artistic genius by ___. Would you like us to edit that gene out of your offspring?”

To put it another way, if there is a single gene that caused schizophrenia, and it has no beneficial effects that compensate, then how does that gene persist?

My amateur understanding is that many characteristics are determined by multiple genes, and many genes have multiple impacts. That means that for genetic engineers the choices will not be clear-cut for a long time, perhaps never.

Two Questions about Convergence

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1. If culture socially communicated thought patterns and behavioral tendencies are what determine economic performance, why do we not see more convergence?

2. Assuming that genetic engineering of humans becomes feasible, what traits will parents select for, and will this lead to convergence in the human race?

Tyler Cowen posed the first question to Joseph Henrich in his conversation with Tyler (you may need to Google for a link, and it may not be up yet). Tyler pointed out that even within the United States, we are seeing divergence in economic outcomes across geographic areas.

Later, at a private dinner, Tyler posed the second question.

It is possible to give similar answers to both questions. Two factors are involved.

a) parents want children to be like themselves, not simply copies of people that the parents admire.

b) we do not understand the processes well enough to reliably get the outcomes that we want. There is too much causal density.

Because of (a), we will never get complete convergence. Also, the fact that parents want children to be like themselves slows down the process of cultural convergence of thought patterns and behavioral tendencies across countries. Even if a family moves from a poor country to the United States, parents will want their children to retain a lot of the “old ways.” If it takes a few generations for people to assimilate thought patterns and behavioral tendencies when they are immersed in them, imagine how much longer it takes for people to assimilate distant thought patterns and behavioral tendencies when their immediate surroundings differ.

Because of (b), even if we knew that we wanted a particular outcome (a highly-growth economy, a high-IQ child), we do not know which changes to make to achieve that outcome. We do not know which genes to edit in order to produce high IQ. We do not know which social institutions will promote the thought patterns and behavioral tendencies of Iraqis in order to transform that country into a Jeffersonian democracy.

Too Much Innovation?

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A commenter pointedly asks,

What’s an example of a culture and a period for which there was too much innovation?

Some possibilities.

1. None. It has never happened.

2. Europe from 1880-1940. That is, if we can blame the two world wars and the Communist revolution on instability caused by innovation. That is debatable.

3. The U.S., 1990-present. That is, if we can blame the decline in respect for government and leaders on innovations in communications technology (see Martin Gurri’s The Revolt of the Public) and if we view this decline as more of a bug than a feature.

Joel Mokyr Interviewed

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He says,

It isn’t just that China doesn’t have an Industrial Revolution, it doesn’t have a Galileo or a Newton or a Descartes, people who announced that everything people did before them was wrong. That’s hard to do in any society, but it was easier to do in Europe than China. The reason precisely is because Europe was fragmented, and so when somebody says something very novel and radical, if the government decides they are a heretic and threatens to prosecute them, they pack their suitcase and go across the border.

Without an exit option, voice does not get you very far.

Honestly, I did not notice the small type in Mokyr’s new book until commenters pointed it out to me. Maybe at my age, every type face looks small.

What I did notice is the tsunami of citations. There are something like 40 pages of references, with something like 20 works listed on each of those pages. It is quite overwhelming. That, along with the fact that Mokyr usually refrains from making definitive judgments* makes the book somewhat ponderous. But I will withhold overall judgment until I am finished.

*As my father used to say, the First Iron Law of Social Science holds (“Sometimes it’s this way and sometimes it’s that way”)

Japan, Culture, and the Economy

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A commenter asks,

how do you view post-war Japan economy and society? I remember in the 1970s – 1980s the Japan Inc. being the ultimate economic machine and now today they look like a society of Grandpa Simpsons? The Japanese culture did not suddenly turn completely 180 degree different on January 1, 1990.

I think that the conventional view of the Japanese economy is that it was well-structured for “catch-up growth” but unable to adapt when that ran out. At its best, it combined a dynamic sector of large manufacturers with stagnant retail and service sectors consisting of small firms protected by regulation. Then other catch-up countries, notably South Korea and China, started to eat into manufacturing, and things went down hill. That is much clearer in hindsight, of course, but I have no reason to second-guess that story.

More generally, I want to speculate that for economic purposes, culture has two important dimensions, which are somewhat in tension with one another. One dimension is trust, and the other dimension is receptiveness to innovation.

One way to read McCloskey, and perhaps also Mokyr (I have just started his book) is that they see the Enlightenment as creating receptiveness to innovation. The conventional story would suggest that in the 1990s Japan’s economic performance came to be dominated by the sectors where there was resistance to innovation.

Trust is valuable because when people are confident that others will follow norms, this helps to lower transaction costs. Seeing markets and government as legitimate is an element of trust.

Innovation tends to lower the status of some people relative to others. That in turn tends to breed distrust among those whose status is lowered.

So I think that societies have to navigate a trade-off. Too much innovation might lead to a breakdown in trust. Too little innovation leads to stagnation. Japan appears to have erred on the side of protecting the status of small business people but suffering stagnation. The U.S. appears to be having a hard time avoiding a breakdown in trust.

Brad DeLong on Joel Mokyr’s New Book

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DeLong writes,

perhaps 10,000 well-educated Europeans thought of themselves as participants in the search for useful knowledge. Knowledge flowed between them and the tens of thousands of “trained engineers, capable mechanics, and dextrous craftsmen”, the (rather few) industrialist-inventors such as Josiah Wedgwood, and the (rather more) entrepreneurs who had little abstract interest in science or innovation, but found that in a competitive market economy, the dynamic few drag along the inertial many.

DeLong says that he prefers the view of Robert Allen. who

places the origins of the Industrial Revolution in the British Midlands in the eighteenth and early nineteenth centuries. In Allen’s view, the only route to modern economic growth required an array of elements never seen together before in Britain. Among them were high, imperialism-driven wages; cheap coal next to an ample canal network; and an open trading network allowing for a vast expansion of textile exports.

Here, you can see the contrast between a materialist view (Allen’s) and an idea/culture view (Mokyr’s). I think that this is a very important division in economics, and I am strongly on the idea/culture side.

I have been thinking about this in the context of my latest book Specialization and Trade. I ask myself, what would make someone unable to grasp its insights? I think that the bias toward materialist explanations of social phenomena is a major factor. What seems obvious to me, coming from a culture/idea perspective, is just downright baffling to people who instinctively think the other way. (Note that Brad has thought about these issues–he is not just coming at them from instinct.)