tag:blogger.com,1999:blog-7539577136486286096.post4816106282594548575..comments2024-03-28T02:46:41.090-05:00Comments on Supply and Demand (in that order): Economics Lesson from the University of Chicago’s U.S. SenatorCasey B. Mulliganhttp://www.blogger.com/profile/03317454408275318282noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7539577136486286096.post-84648397678081488032008-12-26T17:41:00.000-06:002008-12-26T17:41:00.000-06:00The conclusion that, "the decreased employment is ...The conclusion that, "the decreased employment is explained more by reductions in the supply of labor (the willingness of people to work) and less by the demand for labor (the number of workers that employers need to hire).", is based here on extremely flimsy evidence and simplistic reasoning that takes literally a few simple models with grossly unrealistic assumptions. Simple models can be great for understanding, but you have to interpret them properly. They usually just teach how a few factors work by looking at them carefully in isolation. They aren't exactly equal to reality, and should not be interpreted as such. You should always ask – with any model – are there important other factors that the model assumes away that I should still consider. Unfortunately, however, taking the models literally and cranking out technical publication after technical publication with great speed and workaholism can get you tenure at an Ivy League school.<BR/><BR/>A decrease in demand and involuntary layoffs – with no decrease in the desire to work – does not have to lead to a decrease in productivity. There are many strong factors here that move in different directions, most of which your argument wrongly assumes don't exist.<BR/><BR/>If firms are very reluctant to layoff workers in the face of a demand decrease they may keep some on who have little productive work to do, and spend a lot of time just sitting around waiting for something to do. This would decrease productivity. It does fit your argument. But, there are also ways productivity could increase, like if firms are less reluctant about laying off workers in the face of a slowdown -- something you would expect with today's less worker concerned culture – then layoffs will be swift and abundant, and the first let go are the least experienced and productive workers. This raises substantially the average productivity of the workers left. Also, those left will have more capital per worker, raising their productivity. And then there are other factors which can raise productivity, like the coincident great technological advance in computers, communication, and globalization. And what about underemployment? the engineer forced to take a job at Wal-Mart. This is grossly inefficient, but it would result in a lower official unemployment rate and an increase in the average productivity of Wal-Mart workers.<BR/><BR/>For good reason the vast majority of top economists don't profess that a decrease in desire to work is the primary, or even a large cause, of the current great increase in unemployment.Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-7539577136486286096.post-36133351043106343382008-12-25T05:53:00.000-06:002008-12-25T05:53:00.000-06:00My experience with layoffs:The recent "reduction i...My experience with layoffs:<BR/>The recent "reduction in force" has given our company the opportunity to fire people that they had wanted to fire for years but had not put together the necessary performance files. With management turnover and the onerous task of detailing performance failures, it is extremely difficult to fire anyone. In addition, upon firing, there is a high possibility of a lawsuit based on some alleged discrimination. <BR/>At least with the early rounds of layoffs, productivity would naturally increase. Labor laws and lawyers have prevented discrimination but has also protected unproductive employees.fscondhttps://www.blogger.com/profile/16031066661213931338noreply@blogger.comtag:blogger.com,1999:blog-7539577136486286096.post-35009506024549248452008-12-24T20:00:00.000-06:002008-12-24T20:00:00.000-06:00Professor, wouldn't it be the case that, with labo...Professor, wouldn't it be the case that, with labor heteregeneity, if there's a drop in labor demand, the workers that are going to be let go will be those that are less skilled, less productive and those with least firm-specific human capital, and therefore average productivity will go up?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7539577136486286096.post-18238578968831522032008-12-24T18:55:00.000-06:002008-12-24T18:55:00.000-06:00Wow.. not a very popular piece at among the NYT co...Wow.. not a very popular piece at among the NYT commentators. Hopefully it led a few of things to think about things a little more carefully, though.PLWhttps://www.blogger.com/profile/03553390628955077151noreply@blogger.comtag:blogger.com,1999:blog-7539577136486286096.post-12336721233364439532008-12-24T14:32:00.000-06:002008-12-24T14:32:00.000-06:00Senator Douglas also served with the First Marine ...Senator Douglas also served with the First Marine Division on Okinawa and Peleliu, after enlisting in the Corps as a private at the age of 50. He earned two Purple Hearts; the wound from the second left his left arm permanently disabled. It took him 13 months in Bethesda to recover.LetUsHavePeacehttps://www.blogger.com/profile/15150236444828943359noreply@blogger.com