Paul Walker

Dr Paul Walker is an economist at University of Canterbury. He has expertise in microeconomics, institutional economics and industrial Organization. He blogs for The Dismal Science.

Marriage, kids, and the wage gap - The Dismal Science

Mar 11, 2017

The career dynamics of the gender gap for graduates of the Chicago Business School, as studied by Bertrand, Goldin, and Katz (2010), illustrate a common pattern. While women and men start their careers with similar earnings, a substantial gap arises over time, and the arrival of children is a major concurrent factor in the rising earnings gap. At least in this highly (and homogeneously) educated population, only a small share of the gender gap is due to premarket factors such as training and coursework; instead, family formation sets the gap in motion. In short, kids are bad for the income of women. The above quote comes from Specialization Then and Now: Marriage, Children, and the Gender Earnings Gap across Cohorts by Chinhui Juhn and Kristin McCue, Journal of Economic Perspectives—Volume 31, Number 1—Winter 2017—Pages 183–204. The conclusion … Read More

How old is behavioural economics? - The Dismal Science

Feb 01, 2017

I came across an interesting paper the other day that suggests behavioural economics is older than most people think. The paper “The Relations of Recent Psychological Developments to Economic Theory” by Z. Clark Dickinson in The Quarterly Journal of Economics, Vol. 33, No. 3: 377-421 dates from May 1919! The summary of the paper reads, The purely objective factors in economics, 377. – Psychological principles necessarily used in addition, 381. Social assumptions, 385. – Psychical factors are human motives, 387; their analysis needed for most social problems, 389. – Adequacy of psychology assumed in economic theory in dispute, 390. – Analysis of arguments pro and con, 392. – Hedonistic foundation, 394. – Costless production, 401. – Industrial peace, 404. – Sums of utility, 406. – Social demand, 407. – Institutional economics, 409. – Most accurate psychology needed, of producers’ … Read More

How computer automation affects occupations: technology, jobs, and skills - The Dismal Science

Sep 22, 2016

A common argument you see with regard to computers and employment is that computer automation leads to major job losses. James Bessen deals with this issue in a new column at A modern version of the Luddite story. Bessen argues that this line of argument, however, ignores the dynamic economic responses that involve both changing demand and inter-occupation substitution. Using US data, he explores the effect of automation on employment growth for detailed occupational categories. Computer-using occupations have had greater job growth to date, while those using few computers suffer greater computer-related losses. The major policy challenge posed by automation is developing a workforce with the skills to use new technologies. Bessen looks at estimates of employment demand growth. Taking these considerations into account, I estimate a simple model of occupational demand across industries that … Read More

Another advantage of legal medical marijuana - The Dismal Science

Sep 08, 2016

Another post at the ProMarket blog highlights the cost advantages of medical marijuana, at least in the institutional framework for healthcare currently in use in the US. A new working paper by University of Georgia researchers shows that medical marijuana leads to sharp drops in the number of prescriptions for branded drugs.The paper estimates savings of up to $1.5 billion per year in Medicaid spending if medical marijuana was legalized in all 50 states. The blog post goes on to argue that the ideas of George Stigler might offer a potential explanation as to why the countrywide legalisation of medical marijuana has not happened yet. One possible reason: Some, including journalist Lee Fang and the Washington Post’s Christopher Ingraham, have suggested that this might have something to do with resistance from pharmaceutical companies, longtime rivals of … Read More

Economic benefits from mega-events like the Olympics are often overstated - The Dismal Science

Aug 09, 2016

This title will not come as a great surprise to many people. But its still worth reminding everyone of it. Especially as we have something as stupid as the Olympics going on right now. At the American Economic Association website Tim Hyde writes on about a paper in the recent Spring issue (vol. 30, no. 2, 2016) of the Journal of Economic Perspectives which breaks down the costs and benefits of hosting the Olympic Games and explains why some of the perceived economic blessings of the Olympics are mostly wishful thinking. Hyde opens by saying, In Going for the Gold: The Economics of the Olympics (PDF), authors Robert Baade and Victor Matheson consult estimates from academic, public, and media sources on the costs and benefits of hosting the Games. As with any … Read More

Why is Fat B*stard fat? - The Dismal Science

Jul 13, 2016

Apart from the obvious point that Mike Myers created the character that way. In a recent column at Rachel Griffith and Melanie Lührmann argue that its because he doesn’t exercise as much he used to. Griffith and Lührmann start by arguing that the rise in obesity we see around the world has largely been attributed to an increase in calorie consumption. They then set out to investigate this claim by examining the evolving consumption and lifestyles of English households over the 30 year period between 1980 and 2013. While there has been an increase in calories from restaurants, fast food, soft drinks, and confectionery, there has been an overall decrease in total calories purchased. This decline in calories can be partially rationalised with weight gain by the decline in the strenuousness of work and … Read More

Female/male pay gaps in STEM subjects - The Dismal Science

May 21, 2016

New research suggests that women earn, on average, around 31% less that men in STEM (Science, Technology, Engineering or Mathematics) subjects within a year of completing a PhD. An obvious question is why. Perhaps surprisingly the answer to this questions can be reduced to just two factors: 1) field of study and 2) kids. But after controlling for differences in academic field, the pay gap between males and females is reduced to around 11% in first-year earnings. There is a tendency for women to graduate in less-lucrative academic fields – such as biology and chemistry than comparatively industry-friendly fields, such as engineering and mathematics. This 11% difference can be explained entirely by the finding that married women with children earned less than men. Note that an unmarried, childless woman earned, on average, the same annual salary after receiving her doctorate … Read More

Things Adam Smith got wrong - The Dismal Science

Apr 09, 2016

In short, not many and the things he got right far outweigh the things he got wrong, but as  James R. Otteson argues in his book “Adam Smith” there were some wrong steps. In his book Otteson has a chapter on “What Smith Got Wrong”. He suggests four things: Labor Theory of Value, Happiness and Tranquility, Committing the Great Mind Fallacy? and Smithian Limited Government and Human Prosperity. I’m going to argue here for a fifth thing, Smith missed the opportunity to formulate a theory of the firm. He had building blocks on which to base such a theory, he just didn’t develop them. In particular I would argue he could have his expanded his discussions of specialisation and the division of labour and of joint-shock companies to formulate some version of a theory of the firm. Smith … Read More

Ceremonial science: the state of Russian economics - The Dismal Science

Nov 17, 2015

A question worth asking is what damage did the Soviet era do to economics in Russian. Well now we may have, at least part of, the answer. A paper by Alexander Libman and Joachim Zweynert in Economic Systems (Volume 38, Issue 3, Pages 289-468, September 2014) looks at Ceremonial science: The state of Russian economics seen through the lens of the work of ‘Doctor of Science’ candidates. The highlights of the paper are: We perform an empirical analysis of a dataset of extended abstracts of 552 Russian Doctor of Science theses. The scientific work of Russian ‘Doctor of Science’ candidates is marked by a ‘ceremonial’ way of quoting scientific authorities and using simple mathematics and quantitative criteria. Adam Smith, John Maynard Keynes and Karl Marx are the most quoted authors; there are almost no references to … Read More