By John Schmitt, Senior Economist University of Chicago economist Casey Mulligan has a post today at the New York Times Economix blog where he seems to argue that the current push for statutory paid sick days in the United States is ignoring the role of economic incentives. According to Mulligan, workers in countries with generous paid sick day policies stay home because of "incentives, and not the flu".
I don't think Mulligan has been following the U.S. debate on paid sick days very closely. The U.S. debate is very serious about incentives. The current system --which does not require employers to provide paid sick days and leaves upwards of 50 million workers without paid sick days-- gives strong incentives to workers to go to work sick, lowering productivity and potentially spreading illness.
Of course, offering paid sick days also gives workers incentives to take time off when they are not sick. But, there is nothing in Mulligan's post that says where we should set the optimal level. He doesn't even make a case that the most generous systems in Europe are too generous, just that they lead to more sickness absences in some cases. For all we know, after we factor in the cost of contagious diseases, the most generous European systems might still be too stingy.
To make his point about the effect of incentives, Mulligan features the following graph from a recent IMF paper:
Mulligan, however, has made very selective use of the original IMF graph:
In the original, Denmark, Germany, and seven other countries with more generous statutory paid sick days policies all have lower sickness absence rates than the United States. A really interesting question is: how is it that these countries are able to provide both guaranteed paid sick days and lower sickness absence rates? (And why didn't Mulligan include these countries in his graph?)
September 25, 2009
In honor of our 10th Anniversary, CEPR hosted a two-hour live webcast. CEPR Co-Directors Dean Baker and Mark Weisbrot were on hand to answer questions from viewers, and Jane Hamsher of firedoglake was the special guest moderator. Dim lights
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July 17, 2009
CEPR Co-Director and author, Dean Baker was recently interviewed on the Big Think, a global online forum.
July 16, 2009
CEPR Co-Director, Mark Weisbrot has written numerous columns, analyzing the aftermath of the coup in Honduras, and in which he questions the Obama Administration's commitment to restoring democracy in Honduras.
April 21, 2009
As the IMF and World Bank prepare to meet this weekend, CEPR's released a paper that shows that the International Monetary Fund (IMF) is still prescribing inappropriate policies that could unnecessarily worsen economic downturns in a number of countries.
CEPR Co-Director Dean Baker was on the Diane Rehm Show, with Jared Bernstein (Chief Economist and Economic Policy Adviser for Vice President Biden and Executive Director of the Vice President's Middle Class Task Force), Deborah Solomon (reporter for The Wall Street Journal) and, Vincent Reinhart (resident scholar at the American Enterprise Institute).
April 10, 2009
A new report from CEPR shows that unionization significantly boosts the wages of service-sector workers. The report, which was written by CEPR Senior Economist, John Schmittshows that unionization significantly boosts the wages of service-sector workers. Specifically, the report finds that unionization raises the wages of the average service-sector worker by 10.1 percent, which translates to about $2.00 per hour. This report is the latest in a series of reports produced by John Schmitt on the advantages of unionization for lower-wage workers and other groups.
CEPR Co-Director, Dean Baker appeared on GRITtv with Laura Flanders to discuss the G-20 summit, together with Ann Lee, professor of economics at New York University and visiting professor at Peking University in Beijing, and Greg Denier, Communications Director of Change to Win.
March 10, 2009
CEPR Senior Research Associate, Ha-Joon Chang was on Democracy Now! with Amy Goodman, where he discussed his book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. Ha-Joon Chang, is an economist at the University of Cambridge specializing in developmental economics. In 2005, he was awarded the Leontief Prize for Advancing the Frontiers of Economic Thought. He is also the author of Kicking Away the Ladder: Development Strategy in Historical Perspective. The interview begins around the 15:00 minute mark.
Hannity Repeats False Calculation of Job Creation Cost
Sean Hannity asserted that the economic stimulus bill would amount to spending at least $217,000 for every job created, echoing a false calculation from a press release issued by the Republicans on the House Appropriations Committee and repeated by numerous media figures. In fact, by calculating the per-job cost by dividing the estimated total cost of the stimulus package by the estimated number of jobs created — and thus suggesting that the sole purpose of that package is to create jobs — these media figures ignored other tangible benefits stemming from the package, such as infrastructure improvements and education, health, and public safety investments.
Treasury Attempts to Lead IMF Resurgence in Developing Countries
by Mark Weisbrot
One of the little-noticed but most important international responses to the current world recession is the reassertion of power by the International Monetary Fund, which ten years ago was the most powerful financial institution in the world. The IMF answers mainly to the U.S. Treasury Department, although it is ostensibly a 185-country member organization.
The Treasury Department is using the IMF the same way it did ten years ago, during the last major financial crisis, in East Asia. Treasury is trying to re-establish the IMF’s former pre-eminent position as gatekeeper to any rescue funds. This would enable the IMF/Treasury to choose which developing countries get loans and what conditions are attached to the lending.
The IMF played a disastrous role in the Asian crisis, which is one of the reasons that its portfolio shrank to almost nothing over the last decade, and any country that could, avoided them like the plague. Now they are back, unreformed and unreconstructed. Despite the G20 meeting’s lip service to making some developing countries partners in international financial reform, the idea of giving them any more representation in the IMF’s decision-making is decidedly off the agenda. China, the world’s second-largest economy with 1.3 billion people, has just 3.6 percent of the vote in the IMF; the United States has 16.5 percent. But since Europe and Japan virtually always side with the United States, the developing countries are effectively without a voice.
While the IMF wants the rich countries to adopt large stimulus packages and lower interest rates to counter the world recession, it is requiring its borrowers — so far Iceland, Hungary, Ukraine, and Pakistan — to do the opposite. Perhaps even worse, some countries will need to adopt capital controls, to prevent damage from money fleeing the country; the IMF will use its muscle to prevent that. Washington and the U.K. are trying to get the countries with surplus reserves — mostly China and the Gulf states – to pitch in to the IMF. So far, only Japan is willing to do so. Hopefully, the developing countries that have excess international reserves and want to help those who need them will find other ways to channel the money.
Media Briefing: Economists Question IMF's 'Firefighting' Abilities in Current Economic Crisis As world leaders gather in Washington this weekend for a summit to address the global economic crisis, the International Monetary Fund is being touted as a "financial firefighter." However, the IMF's track record of the last 30 years casts serious doubts on that institution's ability to contain the financial meltdown. Rather than dousing flames, the IMF's prescriptions have often poured gasoline on economic fires in emerging nations, crippling long-term development. Should the IMF be designated as the lender of last resort, it must overhaul the structural adjustment policies that prevent many nations from providing basic services for their people. CEPR Co-Director Mark Weisbrot joined Robert Weissman, Director of Essential Action, in a call with reporters that was moderated by Joanne Carter, Executive Director, RESULTS Educational Fund. To listen to a reccording of the call, dial 719-457-0820, and enter passcode 4097561. A transcript is available on the RESULTS site.
CEPR Co-Director, Dean Baker attended a panel discussion on the economics of inequality, on September 30, at the Institute for Policy Studies. Dean spoke about the 'financial crisis' and argued that a tightening of credit is normal in the context of a recession and that a bailout is uneccessary. His weekly columns on the economy can be found here. Jared Bernstein of the Economic Policy Institute and Barbara Ehrenreich of the Institute for Policy Studies also spoke. The discussion was moderated by Chuck Collins,the Director of the Inequality and the Common Good Project at IPS. Dim lights
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The Center for American Progress and the Economic Policy Institute co-hosted a forum entitled "Corporate and High Income Tax Cuts and the Economy: The Economics, History, and Public Debate of Supply-Side Policies," which consisted of two panels. In the first panel, "The Economics of Supply-Side," economists Lawrence Summers, Gene Sperling, and Jeffrey Frankel discussed the resounding denunciation of Supply-Side Economics (such as Bush's tax cuts for the wealthiest 1% of Americans in an attempt to stimulate the economy) by the majority of professionals in the field, both from its theoretical perspective and from evidence over the past 60 years. In the second panel, "The History and the Public's View," Jonathan Chait gave a synopsis of his new book, "The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics." Anna Greenberg, a leading polling expert, discussed American opinions on various tax issues, pointing out that most think the wealthy and corporations pay too little in taxes, but many are also in favor of tax cuts in order to stimulate the economy.
August 10, 2008
CEPR Co-Director, Dean Baker and journalist Bob Herbert, sat down with Bill Moyers to discuss the economic challenges facing the government and the American people. Video and audio clips of the interview can be found here.
July 21, 2008
We're delighted to announce that CEPR is this month's featured partner on the International Relations and Security Network (ISN) homepage. ISN provides an extensive network of free research materials for international relations scholars, as well as up-to-date current event analysis, conference listings and interactive educational content.
July 18, 2008
CEPR's Director of International Programs, Deborah James, is in Geneva where she will take part in meetings and events with trade ministers and civil society organizations related to the World Trade Organization "mini-ministerial" which begins July 21. CEPR expects the negotiations to face significant challenges due to the recent spike in food prices, and the limited gains projected for developing countries.
June 30, 2008
A recent article by MarketWatch on CEPR's latest report, "The Housing Crash and the Retirement Prospects of Late Baby Boomers," was among the ten most cited articles on their website, for the week of June 23-27. The study, which was co-authored by Dean Baker and David Rosnick, analyzed the wealth holdings of families headed by people between the ages of 45 and 54 in 2004 and projected the wealth of families headed by people who will be in this age group in 2009. The findings are presented by income quintile under three scenarios- real house prices remain at current levels, real house prices fall by 10 percent, or real house prices fall by 20 percent. In all three scenarios, the vast majority of these families will have little or no housing wealth in 2009. Most importantly, this report should lead to a serious re-examination of policy proposals that would cut Social Security and Medicare for near retirees.
May 29, 2008
The Economic Policy Institute hosted a forum called Rising Economic Insecurity, focusing on instability of household income. Jacob S. Hacker and Elisabeth Jacobs presented their paper, “The Rising Instability of American Family Incomes, 1969-2004.” They showed that family income variance has approximately doubled over the time period and that the percentage of working-age Americans who have experienced a catastrophic drop (more than 50%) in their family income has steadily risen to about 10%. They found that this volatility tends to come from male head of household income, not from changing patterns of women’s labor force participation. More research is needed to determine the sources of the volatility, which may include the impact of globalization and labor unions. Peter Gosselin of the Urban Institute also talked about his related paper “Trends in Income Volatility and Risk, 1970-2004.” He focused on a general shift of risk from the government and businesses to households.
May 21, 2008
Dean Baker testified before the House Subcommittee on Domestic Policy, promoting his Subprime Borrower Protection Plan. The hearing, "Neighborhoods: the Blameless Victims of the Subprime Mortgage Crisis," focused on the effects of the meltdown of the mortgage market on neighborhoods and communities, particularly the increase in the number of vacant and abandoned properties due to foreclosures.
In an effort to provide greater housing security to families put at risk by the current crisis in the housing market, Congressman Raul Grijalva, (D-AZ) introduced a bill yesterday - with similar elements of the Subprime Borrower Protection Plan - that would allow homeowners of moderate-value homes who are facing foreclosure to remain in their homes as renters. See video of the full hearing.
May 19, 2008
Co-Director, Dean Baker, spoke to the Baltimore Sun in an extensive interview about where he thinks the housing market is headed. Dean, one of the first economists to write about the existence of the housing bubble in August 2002, warned that house prices are still falling rapidly and that housing wealth could decline by as much as forty percent before the worst is over. More of Dean's work on the housing crisis can be found here. Readers can also subscribe to CEPR's Housing Market Monitor which is published weekly and provides a breakdown of the latest indicators and developments in the housing sector.
May 13, 2008
"How bad could it get?" asked the editor of Challenge: the Magazine of Economic Affairs. Their current issue features articles on the topic of economic crisis. The good news: they've published Dean Baker and John Schmitt's recession prediction paper. The bad news: the recession is going to hurt mostly everyone.
May 9, 2008
Dean Baker was in Boston on May 1, presenting his paper "Financing Prescription Drug Research: What Are the Issues?" The paper was presented at the annual conference of the Sloan Foundation's Industry Studies group.
Previously, on April 22, Dean gave a presentation on the rise and demise of the housing bubble at Bucknell University.
April 22, 2008
Last week, senior economist John Schmitt traveled to Amsterdam where he participated in a conference on low-wage work in Europe. The conference attracted some of the world's leading labor market economists and European policy makers who debated the meaning of the employment and wage differences between Europe and the United States.
The conference was organized to present the findings of research conducted over a four year period by teams in research institutions spanning five countries: the National Institute for Economic and Social Research, and the ESRC Centre on Skills, Knowledge and Organisational Performance, Oxford/Cardiff, (UK); Arhus School of Business, (Denmark); Institut for Arbeit und Qualifikation, Universitat Duisburg, (Germany); Universite de Paris-I Sorbonne-Pantheon and Paris X/Ecole Normale Superieure, (France); and the Amsterdam Institute for Advanced Labour Studies (AIAS) at the University of Amsterdam and STZ Consultancy (Netherlands).
The analysis of 200 firm-level case studies showed stable rates of low pay employment of about 10 percent in Denmark and France, the rate in the Netherlands has stabilized at over 15 percent and in the United Kingdom at over 20 percent, with rapidly growing rates in Germany, which had low-wage employment rates almost as high as the 25 percent rate in the United States. However, researchers also found that low-wage workers in the European Union are generally significantly better off than their counterparts in the United States, primarily due to the social insurance provisions in the EU, including health care. The study was carried out with generous support from the Russell Sage Foundation as part of its Future of Work research program. John will be one of the editors of a volume summarizing the cross-country results of the multi-year project.
April 11, 2008
The Senate Committee on Banking, Housing and Urban Affairs asked Dean Baker to testify at a hearing yesterday, "Turmoil in U.S. Credit Markets: Examining Proposals to Mitigate Foreclosures and Restore Liquidity to the Mortgage Markets". Also testifying were Lawrence Summers, former U.S. Treasury Secretary, and representatives from the Center on Responsible Lending, the Brookings Institution and Lenders One, a national alliance of mortgage bankers.
Dean Baker argued that the situation in the housing market represents the largest economic crisis the country has faced since World War II. He went on to say that current legislation, while appropriate for some parts of the nation, will not address the needs of homeowners in bubble-inflated markets. You can read Dean's testimony here.
April 3, 2008
The International Relations and Security Network (ISN) Publishing House, which is based in Zurich, Switzerland at the Center for Security Studies has chosen one of CEPR's latest publications as one of the editor's top picks. The paper, "An Empty Research Agenda: The Creation of Myths About Contemporary Venezuela," was written by co-director, Mark Weisbrot, as a response to a recent article in the March/April 2008 issue of Foreign Affairs that argued that Venezuela's poor have not benefited from the policies initiated byt the government of President Hugo Chávez. The ISN Publishing House is a repository of over 12,000 freely accessible policy briefs, research papers, government reports and journal articles covering a broad range of international relations and security-related topics.
March 25, 2008
Co-director Mark Weisbrot spoke at a panel discussion at the George Washington University Elliot School for International Affairs entitled “US Policy Toward Latin America in the Post-Bush Era”. The co-panelists included Greg Craig, a foreign policy advisor to Senator Barack Obama, Nora Lustig, a visiting professor at GWU and President of the Universidad de las Americas and Mark Schneider, the Senior Vice President and Special Advisor on Latin America at the International Crisis Group. All the participants agreed that supply-side counter-narcotics efforts in the Andes have failed. Nora Lustig discussed the possible effects of a US recession on the economies of Latin America, the topic of a recent CEPR report. Mark Weisbrot followed up on Mr. Schneider’s comments about economic inequality by underscoring the electoral consequences of Latin America’s dismal economic performance during the period of Washington-backed reforms. Recent economic policies, pursued independently of IMF advice, have lead to much higher economic growth, particularly in Argentina and Venezuela. The event was attended by an audience of over 100 policy makers, diplomats, academics, and students. A video of Mark's presentation can be viewed here.
March 21, 2008
Co-director, Dean Baker spoke at two conferences this past week. On Tuesday, he was part of a panel at the Take Back America 2008 conference which was held in Washington, DC. His co-panelists were: Albert Meyerhoff, who has practiced for more than 30 years in labor, civil rights and environmental law; Lisa Ransom who is the Vice President of Federal Affairs for the Center for Responsible Lending, and Theresa Di Martino, an activist and consumer who was ensnared by a predatory home lender. Video of the panel discussion can be seen here. Then, on Thursday, Dean traveled to Sacramento, CA where he spoke at the annual conference of the California Budget Project on the bursting of the housing bubble and the challenges it presents to homeowners in California and across the country. More of Dean's research on the housing bubble can be found here.
March 12, 2008
Senior Research Associate, David Rosnick traveled last week to New Haven, CT, where he participated in a conference on Venezuela, "The Popular Sectors and the State in Chavez's Venezuela." The conference was held at Yale University where David presented a paper titled, "Illiteracy Revisited: What Ortega and Rodriguez Read in the Household Survey." The paper was a rebuttal to Daniel Ortega and Francisco Rodriguez's argument that they had shown econometrically that the Robinson literacy program likely had no impact on reducing illiteracy in Venezuela.
February 19, 2008
Sponsored by the Center for American Progress (CAP), The Future Direction of US International Economic Policy brought several distinguished experts together to discuss a recent report, “Virtuous Circles: Strengthening Broad-Based Global Progress”, part of CAP’s Progressive Growth series on the next administration’s economic policy. The report’s lead author, Richard Samans focused the discussion on what the future of US international trade policy should be given the current context of slowing US economic growth, a constrained middle class and dramatic changes in the world economy, particularly the rapid increase of China and India’s involvement and the corresponding growth in the international labor pool. His three-pronged approach incorporated trade, development, and monetary policy. The effects that information-communication technology, policy regulation, capital mobility, and global labor supply are having on different countries’ living standards were incorporated into Saman’s outline of key steps toward fostering stable growth and economic equality in the United States as well as abroad.
February 1, 2008
Discussing his new book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, Economics Professor at the University of Cambridge (UK) and CEPR Senior Research Associate, Ha-Joon Chang, took aim at the popular orthodoxy that in order to develop, countries need to prescribe to a strict "free trade" agenda. Chang argued that the "developed" world, by pushing countries to pull themselves out of poverty by cutting tariffs, privatizing industries, and opening up to global competition, has perpetrated one of the greatest historical about-faces in economic history. This engaging and provocative discussion was co-sponsored by the New America Foundation and the Center for Economic and Policy Research. If you missed this crowded event, you can watch the C-SPAN BookTV video online.
January 30, 2007
Jennifer Wheary, Thomas M. Shapiro, Caleb Gibson, and Julia Isaacs, a senior fellow at the Brookings Institute, discussed "By a Thread", a new study that measures economic stability in America's middle class, at a Capitol Hill briefing. Released by Demos and the Institute for Assets and Social Policy (IASP) at Brandeis University, the study uses a new measurement, the Middle-Class Security Index, to examine the financial security of the middle class using five factors: education, assets, housing, budget and healthcare. The vulnerability highlighted by the study was thoroughly discussed, as well as a recommended set of policies to help strengthen America's middle class. Domestic Intern Hye Jin Rho was in attendance.
Today, CEPR released the Housing Market Monitor, a new weekly analysis by co-director Dean Baker. With worries of recession and a mortgage crisis, this Monitor will provide an incisive breakdown of the latest indicators and developments in the housing sector. To receive the Monitor by e-mail, sign-up here.
January 5, 2008
Dean took part in three panels at the ASSA (Allied Social Sciences Association) annual meeting, including a presentation at a plenary session sponsored by the Association for Social Economics on "Democracy, Inequality, and Economics." A written version of the talk is available on our website. One of the panels he attended was an American Economics Association session devoted to the subprime crisis. All four panelists were at least as pessimistic about the housing market as Dean. They also all agreed with his point that the problem is not subprime mortgages, but declining house prices, and the worst is yet to come.