Harry Clarke On economics, politics & other things

August 8, 2014

Unemployment & immigration

Filed under: immigration,jobs — hc @ 10:57 am

The Australian unemployment rate has hit a 12-year high at 6.4% – the highest since 2002 and higher than the US unemployment rate for the first time since 2007. Good market for equities markets this means the RBA will almost certainly not increase interest rates any time soon and may cut them further.  Of course disastrous for people such as myself who will probably soon be on the job market.   While the Treasurer has argued that these figures provide motivation to pass the budget – they do no such thing – the obvious candidate for policy is our immigration intake.

Currently Australia is taking in net 240,000 immigrants annually – it adds nearly a million people to our population every 4 years.  709,000 immigrants have arrived since the beginning of 2011 and 380,000 of these have got jobs. During that period 400,000 jobs were created net.

There are Ripley Believe-it-or-not economic theories  (often propounded by ANU economists) that these immigrants create jobs by adding more to aggregate demand than supply but this clearly is not the case at present.  What can be expected is that as unemployment increases the demand for immigration will weaken a little.

As much as I am concerned about the current unemployed I am even more concerned by forecasts that, at this rate, Australia’s population will be 40 million by 2060 and 50 million by 2100.  Sydney’s population will grow 80% and Melbourne’s population will double by 2060. Do Australians really want to live in mega-cities

It is almost politically incorrect among the latte left to criticize anything relating to unrestrained high immigration but I do.  The implications of high rates of immigration for the economy are modestly positive at best.  With high international capital mobility most of the labour market benefits from a liberal migration program accrue to the migrants not to resident Australians.  Economies of scale arguments are irrelevant in an economy that trades with the world. At the same time we must put up with more crowded cities and less people-free, biodiversity-rich landscapes.

I’d prefer a migration policy that stabilises the Australian population at something less than 30 million.   I am selfish enough to prefer living in open, low density landscapes where nature is not extinguished.

March 6, 2013

The unemployed are unhappier than the employed even when income-compensated

Filed under: happiness,jobs,work — hc @ 9:39 am

A popular myth is that the unemployed are only unhappy because they lose income. They derive gains from the increased leisure they enjoy – hence the popular notion of the “dole-bludger” at Bondi Beach enjoying the surf and sunshine while the rest of us slave away supporting their dole payments with our taxed income.

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June 19, 2008

Editorial assistant sought

Filed under: jobs — hc @ 1:53 pm

I am looking for someone to work as an Editorial Assistant for the journal Economic Papers which I now edit. They must be based in Melbourne.

The work involved is 1-2 days per week depending on the volume of work. The work involves proof-reading and dealing with academic journal submissions. It also involves maintaining records for refereeing of journal articles, reminding referees of work due and communicating with authors and the Economic Society of Australia by email and phone.

The work would be part carried out at my university but could also be partly done at home. It is a position that would be casual but would be fairly permanent – probably for several years – if things worked out well. The position would suit someone wanting regular, part-time employment. Remuneration depends on skills.

The main requirement is excellent written English language skills and the ability to communicate easily with authors and referees by telephone. Prior knowledge of economics is useful but not essential.

I can be contacted at harryrclarke@gmail.com.

Closing date: 27 June 2008.

January 10, 2007

Dating services & getting a job

Filed under: economics,jobs — hc @ 7:52 pm

One of the more onerous tasks faced by younger participants at the American Economic Association (AEA) meetings is to try to get a job.

The meetings provide the largest organized job market in economics. Each year around 1000 soon-to-be doctoral graduates attempt to get jobs in universities and public agencies around the world that send representatives to the meetings and interview. Most of the larger, and some of the smaller, Australian universities send representatives and there are now typically quite a few Australian-based job applicants at the meeting as well.

The task of getting a job is onerous for all concerned because of the sheer volume of interviews – talented students might secure up to 30 interviews over the 3 days. For the interviewing institution the cost of hiring a young Assistant Professor can range between $10,000-$15,000. It’s a lot and my guess is that it would cost Australian universities more than this.

Harvard’s Alvin Roth has sought to simplify the procedure and reduce everyone’s costs. To do this he borrowed a technique from online dating – each applicant is allowed to send to electronic pings to potential employers to ‘signal’ a serious desire to secure employment at a school and to reduce frivolous applications. This is a market design procedure that reduces the costs of both applicant and interviewing institution.

Candidates are advised not to waste a ping on a school who already knows they are interested and not to waste a ping on a school that is well away from their plausible range. Schools in turn are told not to take a failure to ping as a brush-off.

The approach follows the 2005 suggestion of Stanford’s Muriel Niederle and MIT economist Dan Ariely to the dating service Cupid.com. The difficulty in online dating services is that women get lots of approaches from men but men only get a few. Thus this dating service allocates two electronic roses to its male members which they can use to contact two women. The men tend therefore to be much more selective and the signals they do send are much more serious. This reduces the search costs of both men and women by weeding out the non-serious interest.

Each of these examples illustrate the idea that getting more information in a market does not always promote efficiency given positive search costs. Measures can often be devised which restrict the amount of information provided and which thereby deliver efficiency gains to all.

December 15, 2006

Recruiting labour for the ADF

Filed under: defence,jobs — hc @ 4:14 pm

PM Howard has just announced a series of financial moves to boost recruitment into the Australian military from a total of 51,000 to 57,000.These include retention bonuses, possible recruitment bonuses, allowing introductory ‘gap year’ programs of 1 year service in the ADF, reducing service entry requirements and reducing the time taken to achieve entry. As yet there are no proposals for simply increasing salaries offered – the immediately most effective way of improving the attractiveness of serving in the military.

It is interesting to consider the long-term labour recruitment issues facing the military in Australia, the United States and in other countries – particularly those poorer countries supporting international terrorism. The threats of terrorism, and unconventional or asymmetric warfare, clearly indicate that technology alone is not enough to resolve future military conflicts – terrorists will fight on their terms not ours. In addition, Australia’s ADF have recently had substantial police-military roles in East Timor, the Solomon Islands as well as their partly peacekeeping roles in Afghanistan and Iraq. All of these activities are labour not technology intensive.

Australia, like the US, is a high income country with good future social and economic prospects and relatively low, though increasing, fertility. Women have substantial gender equality and over 60 per cent are in the paid workforce – this increases the opportunity cost of having children and helps create low fertility. A family’s children have high human capital and consequently, the cost of a death of one of them in terms of foregone human capital, is high to the individual concerned and to their family. In wealthy societies, apart from high living standards, young men and women enjoy a variety of recreations, healthy sex lives and normal male-female relationships. Australia is a society with few strong internal conflicts, few direct external military threats, moderate religious views and moderated libidos and an eminently sensible national contempt for religious and ideological fanaticism. It is predictably difficult to motivate young men to risk their lives for political or religious objectives given the possible opportunity value of benefits foregone.

The countries that support terrorism and religious fanaticism have almost none of these characteristics in common with Australia. For the most part they are low income countries with failed social and economic development programs and joyless, repressive social mores. All are undemocratic dictatorships, failed states or have subversive, militant, undemocratic groups within their fledgling democracies. In almost all, fertility rates are among the highest anywhere, in part because the only role for women is to raise children – they have low levels of education and low levels of workforce participation. A family’s sons have low human capital, poor economic and social prospects – unemployment prospects are, for example, very high. Young men and young women have sexless, joyless lives that trigger male aggression/fanaticisms and female fatalism. The cost of death is relatively low to individuals and to their family particularly if the death can be rationalized in terms of martyrdom or other religious myths. The joyless, low-living-standard societies containing such families are wracked with internal conflict, external military threats and religious fanaticism. In such settings it is much easier to motivate people to risk their lives for bizarre religious or political objectives than it could ever be in countries such as Australia or the United States. Those serving in the military have less to lose and the prospect of a good life in the hereafter makes sense to those whose current lives are worth little to themselves.

In David and Goliath conflicts between rich societies with advanced technologies and poorer societies without either technology or future prospects, terrorism is an equilibrium strategy for those without technology in dealing with international conflict.

Then labour rather than capital-intensive military responses to terrorist threats are called for by wealthy countries particularly if, as has become standard, the poorer societies use their local populations as hostage to technologically-based military responses. Civilian casualties matter relatively little to societies who value their own live children at relatively low levels whereas, those in wealthy countries, feel pain at seeing even their enemy’s civilian populations being subject to attack, even if they are clearly being used as hostages. The winging of left-leaning Australian intellectuals over Israel’s aerial bombardment of southern Beirut, even while Hezbollah was launching almost continuous daily missile attacks on non-military targets in Israel, was a recent instance of the hypocrisy of the left.

Australia and the United States need to meet their military human resource needs by taking advantage of their wealth by paying incomes to service-people that compensate them for the substantial economic and social benefits they put themselves at risk of losing by joining the military. Wealthy societies have the financial capacity to provide such benefits and do not need to rely on such things as conscription. The Australian military has an excellent reputation for being well-trained and effective – they need to continue to be intensively-trained to retain their military edge.

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