Obedience on the Job

On America's first subway, Boston's Green line, the middle doors stopped opening. When I asked the driver to open the doors, he said that he couldn't: now all boarding and deboarding at the above-ground stops is through the narrow front door by the fare box. Ah, the MBTA: making up for the 23 percent fare hikes on July 1 with improved service!

Me: "The new policy slows the ride for everyone. Now passengers cannot board and pay their fares until all the deboarding passengers have left."

Driver, shrugging: "It's the new policy. I just do what my boss tells me to do. I don't question."

Me: "We could use some questioning."

Driver: "Questioning isn't part of my job. I just wait for my pay day."

Are Good Manufacturing Jobs Bad News for Education?

Here's a fascinating new working paper from Yale economist David G. Atkin, called "Endogenous Skill Acquisition and Export Manufacturing in Mexico" (abstract here; PDF of an earlier version here). The gist:

This paper presents empirical evidence that the growth of export manufacturing in Mexico during a period of major trade reforms, the years 1986-2000, altered the distribution of education.  I use variation in the timing of factory openings across municipalities to show that school dropout increased with local expansions in export manufacturing. The magnitudes I find suggest that for every twenty jobs created, one student dropped out of school at grade 9 rather than continuing through to grade 12.  These effects are driven by the least-skilled export-manufacturing jobs which raised the opportunity cost of schooling for students at the margin.

It makes sense, of course, that students on the margin might happily abandon school in favor of a good job. But is that necessarily a bad thing? How should a society balance jobs and educational ambition? And who should be thinking harder about this issue -- India or China? Or perhaps the U.S.?

Worried About Unemployment? Find a "High Touch" Profession

Writing for Slate, Ray Fisman (who's been on the blog before) explains why "the bottom 20 percent of American families earned less in 2010 than they did in 2006, the year before the recession began":

There are two broad shifts that account for much of this decline: globalization and computerization. From T-shirts to toys, manufacturing jobs have migrated to low-wage countries like Vietnam, Bangladesh, and of course China. Meanwhile, many of the tasks that might have been done by middle-income Americans employed as bookkeepers or middle managers have been replaced by spreadsheets and data algorithms.

Fisman argues that in order to succeed in the new economy, American workers need to shift away from construction and manufacturing jobs to "high touch" professions. "If jobs are being lost to low-wage Indians and computer programs, then what today’s worker needs is a set of skills that offers the personal touch and judgment that can’t be provided by a machine or someone 12 time zones away," writes Fisman.

Are Fake Resumes Ethical for Academic Research?

“Audit studies” have been popular in labor economics research for 10 years.  The researcher sends resumés of artificial job applicants in response to job openings. Typically there is a crucial difference in some characteristic of the person that indicates a particular racial/gender/ethnic or other group to which one person within a pair of resumés belongs while the other does not.  The differential response of employers to the difference in the characteristic implied by the resumés is taken as a measure of discrimination in hiring.

Is this ethical? 

White House Economist Alan Krueger Answers Your Questions

We recently solicited your questions for Alan Krueger, chairman of the President's Council of Economic Advisers. Below are Krueger's answers, in which he talks about the Bush tax cuts, the American Jobs Act, and why NFL coaches should go for it on fourth down. Thanks to everyone for participating.

Q. The recovery from the recent recession has been great for corporate profits, but not so great for employment. I think that this is a natural result of the fact that when demand is insufficient, corporations focus on improving productivity rather than on producing more goods and services.

What can be done to increase employment? -Adam

The Dilbert Index? A New Marketplace Podcast

Our latest Freakonomics Radio on Marketplace podcast is called "The Dilbert Index?" (Download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.) It's about workplace morale and the measurement thereof.

This segment was largely crowd-sourced from Freakonomics blog readers -- so: thanks! It began with a blog post in which a reader named Tim Wadlow asserted that the direction you park in your company lot may say something about company morale. We then opened up the blog to further observations on company morale. One of the most interesting: the "Dilbert Index," as described by a reader named Damon Beaven:

BEAVEN: I look for the number of Dilbert comics and that seems to be inversely proportional to the level of morale. A lot of Dilbert comics seems to be like a passive aggressive way of an employee complaining.

We also take a step back and ask the basic questions like: How much does company morale matter to a company's bottom line? What's the best way to measure morale? And, in the realm of unintended consequences, what happens when a company tries to cut down on sick days?

How Much Do Music and Movie Piracy Really Hurt the U.S. Economy?

Supporters of stronger intellectual property enforcement -- such as those behind the proposed new Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA) bills in Congress -- argue that online piracy is a huge problem, one which costs the U.S. economy between $200 and $250 billion per year, and is responsible for the loss of 750,000 American jobs. 

These numbers seem truly dire: a $250 billion per year loss would be almost $800 for every man, woman, and child in America. And 750,000 jobs – that’s twice the number of those employed in the entire motion picture industry in 2010.

The good news is that the numbers are wrong.

Physical Activity During the Recession: More Voluntary Exercise, Less Exertion

Last month, we wrote about data pulled from the American Time Use Survey (ATUS), examining how Americans spend their lost work hours during the recession. While 32% of foregone work hours were spent watching TV and sleeping (not great, though sleeping is helpful), 15% of that time went to “other leisure,” among which, there is "listening to music" and "being on the computer," as well as "exercise and recreation."

Two new studies (both coauthored by Dhaval M. Dave of Bentley University) drill further into that ATUS data to paint a more complete picture of our exercise and physical activity habits, and ultimately, what impact they have on our health. The first finds that during the recession, we engage in more voluntary exercise, but have less exertion. Part of this has to do with the difference between exercise and physical activity -- the latter is seen as the healthier of the two. (Better to walk to work everyday than do sit-ups twice a week.) With the loss of work, comes a loss of physical activity -- particularly with the types of jobs we've lost.

How Does High Unemployment Affect Wages of Those Who Remain Employed?

Of course higher unemployment generally raises unemployment among men, women and minorities. But how does it affect the wages of workers who keep their jobs? I believe a new paper that I coauthored with Jeff Biddle is the first to use large amounts of data to address this question about cycles in wage discrimination. Here's the abstract:

Using CPS data from 1979-2009 we examine how cyclical downturns and industry-specific demand shocks affect wage differentials between white non-Hispanic males and women, Hispanics and African- Americans. Women’s and Hispanics’ relative earnings are harmed by negative shocks, while the earnings disadvantage of African-Americans may drop with negative shocks. Negative shocks also appear to increase the earnings disadvantage of bad-looking workers. A theory of job search suggests two opposite-signed mechanisms that affect these wage differentials. It suggests greater absolute effects among job-movers, which is verified using the longitudinal component of the CPS.

Obama's Jobs Bill: A Reasonable Plan

Here are some quick thoughts on President Obama's jobs plan:

- It's reasonably big, at about 3% of GDP.

- It's reasonably front-loaded. Goldman Sachs says it will raise 2012 GDP by about 1.5%--before any multiplier effects. Moody's chief economist Mark Zandi thinks the effect on 2012 GDP will be about 2%. Expect more estimates in the 1-3% range for 2012; smaller for 2013.

- It's reasonably well targeted. Unemployment insurance extensions will get spent. Infrastructure money gets spent and also builds stuff. as for the payroll tax: Who knows if it gets spent, but the point is to stimulate hiring, rather than spending.

- It's reasonably well designed. The biggest problem with a payroll tax is that firms get it even for employees already on the books. But this time, the biggest payroll tax cut is only for firms raising their payrolls. This will yield a much bigger bang-for-each-buck. Early analyses have yet to realize how important this is.