Saturday, August 3, 2013

Labor Economics Fraud from White House Economists

White House economists have a simple trick for projecting wonderful labor market results from just about any policy they like:
  1. Take the market-expanding effects and put them through a multiplier machine, such as a Philips curve analysis.
  2. Take the market-contracting effects and put them through a shrinkage machine, such as a labor supply and demand analysis with labor supply assumed to be fully wage inelastic.
  3. Add the results together, which amounts to ignored the market-contracting effects, while advertising that you considered all of the effects.
The honest way to do this would be to take all of the effects and put them through the same machine.  We can debate whether it should be a multiplier machine or a shrinking machine, but at least the direction would be clear.

Here's and example: the White House's the Economic Case for Health Reform.  Take a look at page 30, where they look at potentially market-expanding effect: a reducing in health care costs.  It's fundamentally a labor market tax effect effect (in the direction of cutting the tax rate) because (in their view) cutting employer costs will not commensurately reduce employee value of compensation: see also page 612 of this paper.

They say that this effectively-tax-cut will reduce inflation and, through a Phillips curve analysis, reduce unemployment.  It's not the way I would approach it, but that's not fraud.  The fraud becomes visible on  page 36 where they note that parts of health reform raise marginal tax rates.

Unlike the tax cut effect of health care cost reductions, the White House economists put the marginal tax rate hike analysis through a labor supply and demand analysis in which labor supply is wage inelastic.  Therefore, the marginal tax rate hike has essentially no effect on the quantity of labor.

Again, that's not the way I'd approach it, but that's not the fraud.  The fraud is saying that marginal tax rate hikes have zero effect while at the same time saying that marginal tax rate cuts have big effects.  Choose one machine -- a multiplier machine or a shrinkage machine -- and use it consistently.

In this case, their simultaneous and inconsistent use of multiplier and shrinkage machines distorts their final conclusion in exactly the wrong direction.

29 comments:

Yasir Khalid said...

Somebody should have informed The legislature that the ACA's labor-contracting conditions far over-shadow its labor-expanding conditions. The scams becomes noticeable on web page 36 where they observe that areas of wellness change increase minor tax prices. my own Blog

muzammal khan said...

at least when the nonmarket household industry is included.
bubblegum casting

Yasir Khalid said...
This comment has been removed by the author.
Yasir Khalid said...

We can debate whether it should be a multiplier machine or a shrinking machine, but at least the direction would be clear. is bubblegum casting legitimate

Yasir Khalid said...

On the other hand, an company dropping its wellness insurance policy coverage next season will put its high-income workers in a tough spot, because they will have to buy insurance policy on their own without the tax advantages they had in the past by obtaining wellness insurance policy coverage through their company. Asiapoker77

Yasir Khalid said...

Human help is, of course, not free, and economizing on the cost of a baby sitter or an automobile driver is a reward for creating a machine to do those tasks. But the amount of the reward is commensurate with the amount of wages that people earn in the task. facebook marketing

Yasir Khalid said...

A baby-sitting machine with a high rate of return might, as one commenter suggested, be one designed to help children during fires and other disasters. Or a machine to care for children at night. Buy Twitter Followers UK

Yasir Khalid said...

Anne-Marie Forest is well known for her one lady performs such as Patiently waiting To Burst, a perform with 8 funny women figures that considered many problems in modern community through the use of funny and music. Agen Casino

Yasir Khalid said...

Her perform obtained a discuss from the New You are able to Document, Behind the scenes as one of the performs from overseas that separated itself. london accountant

Yasir Khalid said...

This perform was a Edge Hit in Nova Scotia and also was released at the Nationwide Dark Theatre Event in Winston Salem, Northern Carolina in 2001. coupons for grubhub

Yasir Khalid said...

I took the Case-Shiller composite 20 and made two conversions one to US-inflation-adjusted US dollars. coupon code mltd

Yasir Khalid said...

The scams becomes noticeable on web page 36 where they observe that areas of wellness change increase minor tax prices. best tasting e liquid

Yasir Khalid said...

Policy on their own without the tax advantages they had in the past by obtaining wellness insurance policy coverage through their company. Score95

Yasir Khalid said...

"If out-of-towners observe that we’re in the Birkenstock boston area, and ever journey to city, we wish they will make an consultation to come see us. online betting

Yasir Khalid said...

And being a author has really advised my performing and guiding. That is why I began composing in the first position. I was an performing professional and I desired to comprehend the encounter of composing so that I could better know what a author desired from an performing professional. films en streaming

Yasir Khalid said...

The scams becomes noticeable on web page 36 where they observe that areas of wellness change increase minor tax prices. HGH

Yasir Khalid said...

It is my honor and privileged to found and read your post. It made me learn a lot of different ideas. Keep up the good work. Buy Twitter Followers UK

Yasir Khalid said...

And had a whole new host of medications and expenses, I invited her to live with me and my family. I have never regretted it once. roofing

muzammal khan said...

The organization has designed and created a variety of IMAs certified for army and high-end-commercial use, such as regularity converters, energy amps, high-power transceivers, changes, and high-linearity turned amps. sapphire wedding band

muzammal khan said...

Different way of considering the issue. I informally offered two xkcd t-shirts as awards for whoever offered the first appropriscenario gets to. www.ddriverss.com

Yasir Khalid said...

She advised to him how the variety of 10 women who author the Mennonite Women Can Get ready blog site and information of the same name all determined that the royalties would go to the Outstanding Shepherd Security in Ukraine. buy facebook likes uk

muzammal khan said...

Any assistance is considerably well known since I'm trying to have a local set up since my clients project is fairly complex and for techniques it can't all be organized . click to read

muzammal khan said...

To some stage, we are able to be price creators on these bushels rather than price takers on the product. important source

Yasir Khalid said...

I am confident that these industries will continue to offer health insurance to their employees in much the same way that they have in the past. Form 990n

Yasir Khalid said...

The fraud is saying that marginal tax rate hikes have zero effect while at the same time saying that marginal tax rate cuts have big effects. Choose one machine -- a multiplier machine or a shrinkage machine -- and use it consistently. pretty nails

Yasir Khalid said...

Clare Ann Ruth-Heffelbower, home of COSA in Fresno, first experienced COSA (a recovery design that is widely used throughout Canada) when she joined a coaching on the design in 2006. Paramore Jon

Yasir Khalid said...

And what about parent care, as in, adults that must take care of their parents once they become too old or sick to be self-sufficient any longe. thermography price

Yasir Khalid said...
This comment has been removed by the author.
doglas markel said...

were throughout this posting to assist you practice your short economical desires. the particular advance could be a howling product and in addition solutions {which can|which can|which is in a position to} can allow varied people, rather such as you, day-to-day! Anytime installment loans Northlake emergencies occur, don’t stress! appear uncover all of us. We're at currently there on the marketplace for you in addition to the majority of us calculate aiding somebody practice your economical desires.