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If you’re feeling suitably guilty after too much chocolate and not enough consideration of the economic quandaries of our time, here’s a strong dose of medicine. This week’s instalment of Top of the Charts calls time on the robot wars, notes the growing backlash against traditional labour market economics (in the US), touches on trade and shines a light on the perennial question academics ponder: why doesn’t anyone listen. Finally, today sees minimum pension contributions rise, so of course, we have a chart for that.
Pipe down on the robot fears – especially if you’re Norwegian. The OECD thinks all the ‘half of jobs will be lost to the ROBOTS’ nonsense is… nonsense. Who’d have thought. More seriously, they still think 14 per cent of jobs across the OECD have a high risk of being automated – but that figure is just 6% in Norway. Another reason to be jealous of the oil-funded, sun-deprived northern edge of Europe. There’s a longer version of the report if you’re anti instant gratification.
Labour market. The labour market doesn’t work as the textbooks promised us. Another shocker. Noah Smith over at Bloomberg has a good summary of a big theme of recent US labour market research. Summary: employers have so much power in the labour market that the idea that wages are determined competitively according to supply and demand is rubbish – therefore not only should we have higher minimum wages but get on with other interventions. It’s a good (short) read – but a word of warning: the evidence base is very US-centric so far. We’ll be publishing more on the picture in the UK in the coming months.
Calling it quits. Paid unfairly for the job you do? We already knew that could make you ill – but a forthcoming paper argues that it also means you’re more likely to quit your job in the next year. Employers can’t pay everyone the same – but treat them mean, keep them keen is bad advice for HR departments.
Why doesn’t anyone listen? A blogpost by Paul Cairney asks academics: why are policymakers ignoring you? His link-heavy answer is: policy makers don’t have time and they’re not in control anyway. Hope that’s reassured you. Now you know why every RF report ends up summarised in 280 characters on Twitter.
Trade deficits. It’s all kicking off trade wise, rhetorically at least. The trade balances between countries are back in the headlines in a way they haven’t been since the financial crisis, but this time as some kind of ‘scorecard’ in international political economy. Donald Trump consistently talks in these terms, while coverage of the Brexit-related trade deals often lapses into this sort of thinking. A recent briefing from the Peterson Institute of International Economics corrects some of the key misconceptions, making the key points that over the long run trade policy is ‘not the most important cause of fluctuations in the trade balance’ and ‘trying to achieve balanced trade (or surpluses) with individual trading partners will only generate distortions and constrain the diversity of goods for purchase while raising prices’. Safe to say they aren’t on team Trump (or team Warren for that matter).
Live long and prosper. The young almost always have less wealth than the old – but the gap is growing big time according to a short ONS note on economic well-being. Those aged 60-62 had six times the property wealth of 30-32 year olds in 2006-8. That rose to 17 times by 2014-16 – mainly because today’s 30-32 year olds have 2/3rds less property wealth than those a decade back. Gulp.
Chart of the week: Thanks to the government’s highly successful auto-enrolment pensions policy, today is the day that minimum pension contributions go up, from 1 to 2 per cent for employers and 1 to 3 per cent for employees. The rates increase again to 3 and 5 per cent respectively next year. This is good news for our pension pots and ability to fund a delayed mid-life crisis car purchase. But having higher living standards in future isn’t cost free today. We already knew that typical take-home pay wasn’t set to regain its pre-crisis level until the middle of next decade, but this chart shows the extent to which (for those affected) the increase in pension contributions will further weigh down on a typical worker’s real take-home pay: It will be over £150 lower in 2022-23 than in 2016-17, and over £1,100 lower than in 2009-10.