Unemployment over the business cycle in the U.S. and Europe

Time will tell whether October's 10.1% unemployment rate in the U.S. was the high water mark or not, but it appears that the unemployment rate in Europe may only be beginning its ascent. While today's measure of December unemployment in the U.S. remained at 10.0%, the Euro-area unemployment rate hit 10.0%, the highest in the decade.

The differences are presumably due to labor market regulations and practices. A Times article reports economists' pointing to French and German plans to restrict worker hours in order to avoid layoffs.

Is it better to spread the pain of recessions more broadly, even if it means delaying (or at worst, prolonging) recovery in the labor market?

Dueling cost forecasts

A new cost forecast by Richard Foster, Chief Actuary of CMS is in the news, this one regarding the health insurance reform bill. This forecast, like his sobering projection of the costs of the prescription drug benefit expansion of Medicare, is less optimistic than its counterpart out of CBO.

One thing that's been puzzling me is how a one-time increase in the tax rate applied to employer-paid health insurance premia could create a reduction in the rate of growth of health spending rather than just a level effect. But given some of the literature I've seen from the union I belong to, which argues that the tax on "Cadillac plans" will slowly grow to cover more individuals, maybe the secret is indeed that the effective tax rate will be rising over time. If that's true, it doesn't suggest cost savings can be long-lived.

Maybe I'm missing the point entirely: rates of growth don't change, but levels of tax revenues and thus fiscal sustainability do.

Brooks on endogenous growth

David Brooks provides a nice summary of "new" growth theory and the macroeconomics of innovation in his column, drawing from Paul Romer's work as well as several others. Romer's quote on the trend in the average age of NIH grantees, now 50 instead of 35 in earlier periods, was interesting.

A 2006 article in Science by the NIH Directory Elias Zerhouni implicitly pointed out another trend, in addition to the rising age at which scientists receive a first independent NIH award. The average age at starting a tenure-track faculty position was 38 in the data he examined, surely higher than in earlier periods. Lengthier training periods might explain part of the increase in average grantee age.

Nobel laureates on women in academia

Two of the three winners of the Nobel Prize in medicine this year, Elizabeth Blackburn and Carol Greider, urged changes in academic career structures that fit the changing realities of women's work and family needs. My favorite quote, which I think is absolutely right: "You can do really good research when you are doing it part-time."

Brooks on health care and institutions

There are at least two things to appreciate about David Brooks's column today. One is that it discusses the efficiency/equity tradeoff implicit in social safety nets. Nothing's for free, but that's not to say that costly things have no value.

The second point is that he argues that "over the years, Americans decided they wanted a little more safety and security. This is what happens as nations grow wealthier; they use money to buy civilization."

Political scientists and economists see this connection between economic growth and institutions in completely opposite ways. Economists think institutions precede and create growth; political scientists believe the reverse. As Gary King once said, what you think is exogenous curiously tends to depend on your discipline. In fact it should depend on inherent statistical properties!

Gail Collins on the details

For an academic perspective on the changing roles of women in U.S. Society, check out Claudia Goldin's work. As reviewed in the Times, the new book from Gail Collins, When Everything Changed: The Amazing Journey of American Women From 1960 to the Present, presents many of the details to the story that scholarly works are sure to leave out. Collins "aims to tell social history 'by combining the public drama of the era with the memories of regular women who lived through it all.'” (How's that for a quotation of a quotation!)

Acemoglu on institutions in Esquire

Daron Acemoglu outlines the case for institutions in determined economic well-being. To me, the biggest revelation is his call for U.S. foreign policy to punish kleptocracies and repressive dictatorships in order to foster growth.