Maximising happiness does not maximise welfare

Edward Glaeser, Joshua Gottlieb, Oren Ziv 15 October 2014

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Recent interest in the psychology and economics of happiness has had pronounced influence on public policy. The high-profile report by Stiglitz et al. (2009) epitomises a push for policies to explicitly promote increases in survey measures of wellbeing as a major social objective. Places ranging from the country of Bhutan to the city of Somerville, Massachusetts explicitly measure happiness, or subjective wellbeing, and strive for improvements over time in such measures.

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Topics:  Frontiers of economic research

Tags:  happiness, welfare, cities, Rust Belt, US

Americans work too long (and too often at strange times)

Daniel S. Hamermesh, Elena Stancanelli 29 September 2014

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The facts on work hours and timing

The average US workweek is 41 hours, 3 hours longer than Britain’s and even longer than in Germany, France, Spain, or the Netherlands (see the Table below).

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Topics:  Labour markets

Tags:  work hours, night work, weekend work, US, Europe

Cross-country differences in perceptions of inequality

Judith Niehues 28 September 2014

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The well-known and frequently tested median voter theorem predicts a positive relationship between income inequality and state redistribution; if the decisive median voter’s income is below the social average, he votes for more welfare redistribution because he expects to benefit from progressively financed welfare programmes. However, this theory does not perform very well when confronted with data. Although income inequality is high in the US, support for welfare state programmes is relatively low. In contrast, income differences in European countries are substantially lower.

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Topics:  Poverty and income inequality Welfare state and social Europe

Tags:  income inequality, perceived income inequality, Europe, US

The rise of China and the future of US manufacturing

Daron Acemoglu, David Autor, David Dorn, Gordon H. Hanson, Brendan Price 28 September 2014

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The end of the Great Recession has rekindled optimism about the future of US manufacturing. In the second quarter of 2010 the number of US workers employed in manufacturing registered positive growth – its first increase since 2006 – and subsequently recorded ten consecutive quarters of job gains, the longest expansion since the 1970s.

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Topics:  International trade

Tags:  manufacturing, US, China, value added

Outsourcing and the shift from manufacturing to services

Giuseppe Berlingieri 25 September 2014

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How much of the structural transformation of modern economies from manufacturing to services is a shift in organisational boundaries, in which work that was previously done within manufacturing firms is now outsourced to specialised service providers? This column looks at changes in the US economy over the past 60 years, and shows that the evolution of the input-output structure – which is mostly due to professional and business services outsourcing – accounts for 36% of the increase in services and 25% of the fall in manufacturing.

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Topics:  Global economy Labour markets

Tags:  outsourcing, manufacturing, services, marketing, US, professional and business services

Skill gaps, skill shortages, and skill mismatches: Evidence for the US

Peter Cappelli 21 September 2014

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Federal and State governments in the US are giving serious consideration to the idea that the there are important problems with the overall quality of labour in the US. 

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Topics:  Labour markets

Tags:  skill gap, Labour Markets, US, skill mismatches

Quantifying the macroeconomic effects of large-scale asset purchases

Karl Walentin 11 September 2014

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Central banks have used various unconventional monetary policy tools since the onset of the financial crisis yet the debate continues regarding their efficiency. This column attempts to shed light on the ‘bang for the buck’, or the macroeconomic effects, of one such unconventional monetary policy – the Federal Reserve’s large-scale asset purchases of mortgage-backed securities employed during the Fed’s QE1 and QE3 programs.

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Topics:  Global crisis Monetary policy

Tags:  monetary policy, unconventional monetary policy, large-scale asset purchases, central banking, financial crisis, Federal Reserve, quantitative easing, mortgage-backed securities, term premia, zero lower bound, interest rates, US, UK, Sweden, mortgages, global crisis

To exit the Great Recession, central banks must adapt their policies and models

Marcus Miller, Lei Zhang 10 September 2014

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“Practical men…are usually the slaves…[of] some academic scribbler of a few years back” – John Maynard Keynes.

For monetary policy to be most effective, Michael Woodford emphasised the crucial importance of managing expectations. For this purpose, he advocated that central banks adopt explicit rules for setting interest rates to check inflation and recession, and went on to note that:

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Topics:  Global crisis Macroeconomic policy Monetary policy

Tags:  Taylor rule, forward guidance, great moderation, global crisis, Great Recession, quantitative easing, DSGE models, expectations, tapering, US, UK, Europe, eurozone, ECB, Bank of England, central banking, IMF, unconventional monetary policy

The US economy performs better under Democratic presidents. Why?

Alan S. Blinder, Mark Watson 04 September 2014

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Economists and political scientists – not to mention the political commentariat – have devoted a huge amount of attention to the well-established fact that faster economic growth helps re-elect the incumbent party (see, for example, Fair 2011 for the US). But what about causation in the opposite direction – from election outcomes to economic performance? It turns out that the US economy grows faster – indeed, performs better by almost every metric – when a Democratic president occupies the White House.

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Topics:  Politics and economics

Tags:  US, politics, Democrats, Republicans, growth, macroeconomics, self-fulfilling prophecies

Migration states and welfare states: Why is America different from Europe?

Assaf Razin, Efraim Sadka 01 September 2014

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European welfare and migration policies are strikingly different from states within the US. Over the last half century, Europe ended up with 85% of all unskilled migrants to developed countries, whereas the US retains its innovative edge by attracting 55% of the world-educated migrants.

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Topics:  Migration Welfare state and social Europe

Tags:  migration, welfare generosity, EU, US, skilled migrants

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