Unlucky millennials, and why we’re better than the French

Afternoon all,

Enough of the gloom – it’s time for a bit of national pride. Yes things are messy in Westminster, but we shouldn’t let this damage our national psyche – after all the REAL lesson of this week is that we’re better than the French*. Here are three reasons why.

1) Yes we’re all falling out with each other on both sides of the channel – but we do it via techy amendments and oddball protestors, while the French are just trashing the joint.

2) We’re busy getting nominated for shed loads of awards, rather than slipping into misogyny presenting them.

3) One for the tax haters amongst you – the French, not us, are the most taxed people in the West (that’s if you believe the OECD rather than the Taxpayers’ Alliance)

So no, we’ve no idea where this country is headed – but by god we should be proud of it. Get your flags out and wrap them around yourself while enjoying this week’s reads.

Have a great weekend.

Torsten Bell,

Director, Resolution Foundation

*Of course, there is the World Cup. The weather. And the food…

Gender love-ins. An interesting article, co-authored by Christine Lagarde, offers a different take on the reasons why policy should aim for greater female engagement in the labour market. The paper starts from the argument that women are different from men. Relax, it doesn’t bang on about Venus and Mars or the usual pseudoscience. Instead, it focuses on empirical evidence of gender differences in risk aversion, propensity to collaborate, and attitude to competition that mean hiring more women increases firms productivity. The core argument is that men and women are complementary inputs to the production process rather than substitutes (see detailed IMF discussion paper). The conclusion – higher female labour force participation also boosts men’s wages. Forget gender wars, it’s a gender love in.

Arty farty. Reputations matter. In economics getting published in the top five journals is the route to academic success. But if you think that’s a big deal for economists, spare a thought for those in the art world – for whom reputation is everything. A (techy) paper in Science by some renowned network scientists looks at how reputation and networks determine an individual’s lifetime success as an artist. It finds that an artist who has early-career access to prestigious institutions gains life-long advantages in terms of high-prestige exhibitions and sales, and they have a lower chance of dropping out of the art world altogether. So for those of you thinking of a career switch into the world of art – practice your networking as well as your paint strokes.

Italian food for thought. While we Brexit away there’s another mini-crisis brewing down south in Italy. The new government there wants to run a bigger deficit (to increase welfare spending and to be nice to pensioners). The EU wants them to stop it. The finance minister is having a rubbish time – not least sandwiched between the populist right and left wings of the coalition government and the European Commission. Adam Tooze summarises why the issue is so hard – because there isn’t a simple good answer to how fiscal policy balances the needs of a disastrously weak economy with the reality of a very high level of national debt. He places more blame on the EU, while another paper thinks the Italian government has more responsibility. Both would probably agree that ideally Italy and the EU wouldn’t be arguing about Italy’s fiscal policy but instead would be focusing on what needs doing in Italy (not fiscal) and the EU (more fiscal) to raise growth. How this plays out is worth paying attention to in the months ahead.

American movers. In the post-recession years RF has documented the decline – and partial recovery – in the number of people moving jobs and region. The evidence shows that moving job AND region is the best way to get a big pay rise, so this phenomenon matters for living standards, and especially for millennials who are less mobile than previous generations. But what about the story in the USA? New data (commentary) out last week documents the much longer-run decline in house moves in the USA, which has been going on for over half a century (apart from a surge in the early 80s). Turns out as the new world becomes less new it starts staying put. Other interesting findings are that North Eastern USA has been losing population consistently, while the South has gained.

Right age/wrong age. A recent paper (h/t Tim Harford) looks at the advantages people get if they happen to be the right age to enter the labour market during an economic upswing or disadvantages from entering during bad times. Someone who starts work during a downturn is likely to suffer some short-term disadvantage, and sadly it finds that this persists later in their career too. All the more reason for policy to try to reduce the labour market ‘scarring’ for those millennials that spent their early careers in insecure work, lower-paying sectors and with stagnating wages during the financial crisis… as our Intergenerational Commission recommended earlier this year.

Chart of the week. We all know that the education and jobs you get have long been determined to a significant extent by your parents. These advantages also indirectly increase the odds of you becoming a homeowner – but new Resolution Foundation research shows that even after accounting for these benefits, our parents’ wealth still has a direct impact on whether young people own their own home. What’s particularly worrying – as our Chart of the Week shows – is that this relationship has strengthened in recent decades. Having parental wealth today means you’re three times as likely to own (up from twice as likely in the mid-90s). We need to think long and hard about what it means to become a society where getting on in life depends on what your parents own, rather than what you earn yourself.