More slant than substance in jobs reform ideology
Ross Gittens, the eminent Economics Editor of the Sydney Morning Herald, is at it again.
8 October 2005
The Sydney Morning Herald
http://www.smh.com.au/news/business/more-slant-than-substance-in-jobs-reform-ideology/2005/10/07/1128562999563.html
If you don't like the sound of John Howard's industrial relations "reforms", don't be intimidated by all the politicians, business people and economists assuring you they'll lead to "more jobs, higher wages and a stronger economy".
Why not? Because the empirical evidence in support of such claims is a lot weaker than the urgers ever let on.
There's a lot of fashion in economics. At present, it's the height of fashion to believe that deregulating the labour market is the key to improving the economy's performance.
Just achieve a more "flexible" labour market and you'll get lower unemployment, higher productivity, faster economic growth and improved material living standards.
How do you make the labour market more flexible? Weaken unions, lower minimum wages, lessen employment protection laws and discourage collective bargaining.
...
But though this is the conventional wisdom among economists, not all economists accept it. And it turns out it's more something the majority choose to believe than have actually proved.
The weak foundations on which the conventional wisdom is based are exposed in a recent paper by a man who's probably the doyen of US labour market economists, Professor Richard Freeman, of Harvard University and the National Bureau of Economic Research (which published his paper).
Freeman says there are "substantive and growing objections to the evidentiary base on which the new orthodoxy rests".
[...remainder snipped...]
Document SMHH000020051007e1a800050
8 October 2005
The Sydney Morning Herald
http://www.smh.com.au/news/business/more-slant-than-substance-in-jobs-reform-ideology/2005/10/07/1128562999563.html
If you don't like the sound of John Howard's industrial relations "reforms", don't be intimidated by all the politicians, business people and economists assuring you they'll lead to "more jobs, higher wages and a stronger economy".
Why not? Because the empirical evidence in support of such claims is a lot weaker than the urgers ever let on.
There's a lot of fashion in economics. At present, it's the height of fashion to believe that deregulating the labour market is the key to improving the economy's performance.
Just achieve a more "flexible" labour market and you'll get lower unemployment, higher productivity, faster economic growth and improved material living standards.
How do you make the labour market more flexible? Weaken unions, lower minimum wages, lessen employment protection laws and discourage collective bargaining.
...
But though this is the conventional wisdom among economists, not all economists accept it. And it turns out it's more something the majority choose to believe than have actually proved.
The weak foundations on which the conventional wisdom is based are exposed in a recent paper by a man who's probably the doyen of US labour market economists, Professor Richard Freeman, of Harvard University and the National Bureau of Economic Research (which published his paper).
Freeman says there are "substantive and growing objections to the evidentiary base on which the new orthodoxy rests".
[...remainder snipped...]
Document SMHH000020051007e1a800050
posted by Patrick Henry at 3:50 AM
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