Highly Recommended: "Commanding Nature by Obeying Her; A Review Essay on Joel Mokyr's Culture of Growth"

From NBER Working Paper 26061: Enrico Spolaore: Commanding Nature by Obeying Her; A Review Essay on Joel Mokyr's Culture of Growth

Abstract:

Why is modern society capable of cumulative innovation? In A Culture of Growth: The Origins of the Modern Economy, Joel Mokyr persuasively argues that sustained technological progress stemmed from a change in cultural beliefs. The change occurred gradually during the seventeenth and eighteenth century and was fostered by an intellectual elite that formed a transnational community and adopted new attitudes toward the creation and diffusion of knowledge, setting the foundation for the ethos of modern science. The book is a significant contribution to the growing literature that links culture and economics. This review discusses Mokyr’s historical analysis in relation to the following questions: What is culture and how should we use it in economics? How can culture explain modern economic growth? Will the culture of growth that caused modern prosperity persist in the future?

This essay is highly recommended. Link here. 

New NBER Working Paper: Improving the accuracy of economic measurement with multiple data sources: The case of payroll employment data

A new NBER Working Paper, "Improving the accuracy of economic measurement with multiple data sources: The case of payroll employment data," by Cajner, Crane, Decker, Hamins-Puertolas, and Kurz.

Abstract:

This paper combines information from two sources of U.S. private payroll employment to increase the accuracy of real-time measurement of the labor market. The sources are the Current Employment Statistics (CES) from BLS and microdata from the payroll processing firm ADP. We briefly describe the ADP-derived data series, compare it to the BLS data, and describe an exercise that benchmarks the data series to an employment census. The CES and the ADP employment data are each derived from roughly equal-sized samples. We argue that combining CES and ADP data series reduces the measurement error inherent in both data sources. In particular, we infer “true” unobserved payroll employment growth using a state-space model and find that the optimal predictor of the unobserved state puts approximately equal weight on theCES and ADP-derived series. Moreover, the estimated state contains information about future readings of payroll employment.

Available at NBER. 

Notes on the U.S. Employment Situation for June 2019: U-rate 3.7%, Jobs +224,000

OVERVIEW

• Total non-farm payroll employment increased by 224,000 and the unemployment rate rose to 3.7 percent, according to the Bureau of Labor Statistics.  
• The Labor Force Participation (LFP) rate remained at 62.9 percent the same rate from one year ago. The Employment-Population ratio also remained at 60.6 percent. 
• Professional and Business Services (+51,000) and Health Care (+35,000) led all sectors in May.  Construction added 21,000 jobs. Manufacturing added 17,000 jobs.
• Employment in other industries did not change from May to June. Mining, Wholesale Trade, Retail Trade, Information, Financial Activities, Leisure and Hospitality and Government changed little. 
• Average hourly earnings rose by 6 cents to $27.90. Since June 2018 wages are up 3.1 percent. 
• In June, the average workweek for all employees remained at 34.4 hours.  
• The number of persons employed part-time was unchanged in June (4.3 million). The number of long-termed unemployed (greater than 27 weeks) remained unchanged at 1.4 million and accounted for 23.7 percent of all unemployed. 
• In June 1.6 million persons were not in the workforce but wanted and were available for work and sought employment in the last year. This group known as “workers marginally attached to the labor force” was unchanged since last year. BLS reports that 1.1 million of this group had not searched for work “for reasons such as school attendance or family responsibilities.” 
• Revisions to the two previous months counted 11,000 less jobs than reported initially. April 2019 was revised from 224,000 to 216,000 while May 2019 was revised from 75,000 to 72,000. 

ANALYSIS

After a weak May payrolls report (+72,000) the U.S. jobs machine roared back with 224,000 new jobs in June. 

Professional and Business Services, Health Care and Transportation and Warehousing sectors lead June’s growth. 

Overall, the jobs machine is clearly slowing down. Employment growth, according to the BLS, has averaged 172,000 this calendar year compared with an average of 223,000 in 2018. 

However, today’s BLS report shattered expectations;  Wall Street expected a gain of 160,000 new jobs. While slower than one year ago, the private sector culled 191,000 new jobs. The parallel measure, the ADP National Employment Report, earlier this week projected a gain of 106,000 private jobs.  

With the BLS revisions, the three-month average for U.S. job growth rang in at 171,000. 

Despite uncertainty about international trade, the U.S. Manufacturing sector is holding its own. The Manufacturing sector added 17,000 jobs in June; while little changed over the past four months, manufacturing is growing albeit slowly. Thus far the sector has averaged 8,000 per month, compared with 22,000 last year. 

The trade-tariff impasse is not diminishing growth in the sector. While the manufacturing sector employs approximately 120,000 less workers than it did before the Great Recession, average hourly wages are rising steadily. (See Figure A.)  

Unemployment in the manufacturing sector declined from June 2018 to June 2019, from 3.1 percent to 2.8 percent. For most part, manufacturing attracts workers on the lower end of educational attainment, but wages are good entry point to the middle class. These workers have also fared well overall in the economy. Unemployment for those with less than a high school degree was 5.8 percent in May. Workers with a high school diploma and no college and some college faced unemployment rates of 3.9 percent and 3.0 percent, respectively. 

Figure A:  Employment and Average Hourly Wages in the U.S. Manufacturing Sector

Notes on the May 2019 Massachusetts Employment Situation: U-Rate: 3.0 %; Jobs: -3,600

OVERVIEW

• The state’s total unemployment rate for May increased to 3.0 percent according to the Executive Office of Labor and Workforce Development.  
• From May 2018 to May 2019, the Bureau of Labor Statistics estimates that Massachusetts added 26,700 jobs.  
• Professional, Scientific and Business Services added 1,000 jobs with 7,100 jobs added over the past 12 months. 
• Education and Health Services lost 300 jobs over the month. Over the year, this sector gained 14,300 jobs
• Manufacturing gained 100 jobs in May and has lost 1,800 jobs over the year. 
• The Construction sector lost 2,300 jobs and has lost 700 over the year. 
• Trade, Transportation and Utilities lost 2,300 jobs over the month. Over the year, the sector lost 600 jobs.
• Financial Activities lost 100 while Information added 300 jobs in May. 
• Growth in the Other Services sector remained unchanged but is up 2,300 over the year. 
• Government added 400 jobs in May. Over the past 12 months this sector has gained 4,900 jobs.
• The 3.0 percent rate in Massachusetts is six-tenths of a point lower than the national rate of 3.6 percent.
• According to the Bureau of Labor Statistics, unemployment rates were lower in 6 states, higher in 2 states, and stable in 42 states and the District of Columbia in May. Nonfarm payroll employment increased in Washington state and was essentially unchanged in 49 states and in D.C. 

ANALYSIS

Until last month, December 2016 was the last time the unemployment rate in Massachusetts ticked up by one-tenth of a point. In May 2019, the state’s rate ticked up to 3.0 percent.  The state’s economy is still at full employment.  

“Massachusetts continues to experience a strong economy with a low unemployment rate of 3.0 percent and over 60,000 more employed residents and 17,500 fewer unemployed residents in the last year. Also, the Commonwealth’s labor force participation rate remains at a near 15-year high and is 5 points above the US rate,” Labor and Workforce Development Secretary Rosalin Acosta said.  

The state’s labor force totals 3.84 million representing a 67.8 percent labor force participation rate. 

Manufacturing gained 100 jobs over the month, but the sector is still losing jobs since last year (1,800). Trade, Transportation and Utilities lost 2,300 jobs and Education and Health Services lost 300 jobs. However, Government added 400 jobs, part of the 4,200 jobs it gained year over year. 

Since the end of the Great Recession in June 2009, the state’s unemployment rate has dropped significantly from 8.1 percent. During the recovery, the Massachusetts unemployment rate increased by no more than 0.1 percent six times. That means the rate has dropped or remained unchanged for 109 of the 120 months that mark the recession (see Chart A). 

Chart A.

Massachusetts enjoys the 12th best unemployment rate in the U.S. (See Table A.) Two other New England states are atop the nation: Vermont has the lowest unemployment rate at 2.1 percent while New Hampshire registers third in the nation with its 2.4 percent rate.  

Table A: New England Unemployment Rates

Source: Bureau of Labor Statistics

The BLS updated the state’s county employment picture with April 2019 data.  Middlesex and Hampshire counties enjoyed the lowest unemployment rates. More than half of the counties — 8 of 14— recorded rates lower than the statewide rate of 3.0 percent for April 2019 (See Table B).

Table B: County Unemployment Rates

Democrats Would Resolve the Question of Whether Illegal Immigrants Burden Society

Merrill Matthews: Democrats Would Resolve the Question of Whether Illegal Immigrants Burden Society

Like most economists, we think legal immigrants can be a huge benefit to the economy—because historically most immigrants, whether legal or otherwise, came here to work.