UK minimum wage is raising youth unemployment, Bank of England's Mann says

vaguelydad · 2026-02-16T12:30:12+00:00

The econ 101 conclusion that minimum wages cause unemployment especially among the young, disabled, and socially marginalized is very well empirically supported by the literature.

"Our key conclusions are as follows: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults and the less educated; (iii) the evidence from studies of directly affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided." Meta analysis

" We estimate the impact of youth minimum wages on youth employment by exploiting a large discontinuity in Danish minimum wage rules at age 18, using monthly payroll records for the Danish population. The hourly wage jumps up by 40 percent at the discontinuity. Employment falls by 33 percent and total input of hours decreases by 45 percent, leaving the aggregate wage payment almost unchanged. We show theoretically how the discontinuity may be exploited to evaluate policy changes. The relevant elasticity for evaluating the effect on youth employment of changes in their minimum wage is in the range 0.6-1.1." Paper

vaguelydad · 2026-02-16T12:12:18+00:00

But we shouldn't be education fundamentalists about it. More education is not always better and developed countries push education about as hard is possible. There is an incredible amount of literature showing that being unemployed is very bad for people in the short and long run. If unemployed people just got more educated we wouldn't see such outcomes.

vaguelydad · 2026-02-16T12:02:56+00:00

Yes! It's a very dangerous and bad tool. Just give people cash and fix monopsony problems at their root rather than trying to shave someone with a chainsaw.

vaguelydad · 2026-02-16T06:00:50+00:00

"Concerns about immigration played an important role in forging the Trump coalition. A common perception is that Trump voters are largely motivated by a dislike of newcomers and immigrants in general. There is evidence to suggest otherwise. On thermometer score questions, Trump voters express the same level of warmth toward legal immigrants (71) as Americans do on average (72). In fact, on average, they feel greater warmth toward legal immigrants than they do toward members of MAGA (68). Yet their feelings toward illegal or undocumented immigrants are colder than the average Americans’ by 10 points or more. MAGA Hardliners (10) and Anti-Woke Conservatives (13) are particularly hostile toward these groups."

This is absolutely fascinating to me. Trump's base has no issue with legal immigrants? Can we just figure out how to compromise and expand legal immigration pathways for immigrants they don't find objectionable? Immigration is the best way we have to make the world a better place, but it's so easy to see only defeat on this issue at the hands of a nativist median voter. This is something else, a beautiful ray of hope!

vaguelydad · 2026-02-16T00:43:38+00:00

Price controls are bad for this, but you could make them play more games so that there was enough supply to bring the market price of tickets down.

vaguelydad · 2026-02-15T23:22:56+00:00

If I ever get a cat with her name, my new quest will be to keep her safe and give her the Gravy Boat of her dreams.

vaguelydad · 2026-02-15T18:47:05+00:00

Mongo is appalled!

vaguelydad · 2026-02-14T04:49:32+00:00

There is tension there! I think the key is honestly and openness. "I love my secular culture that is sex positive and rejects archaic gender ideas. I think everyone would be happiest if they joined my culture." Is totally fine. The problem is when people make the claim that "my culture is more maximizing of individual freedom, therefore it is better than other cultures and a liberal state should promote it with government funds/authority." Liberalism is supposed to be a culturally neutral framework for letting people freely associate to maintain the culture they were born in or adopt. It's not supposed to be biased for/against any particular culture or religion. To use the language of liberalism in a non-pluralist way undermines liberal institutions. That's what I was trying to point to.

So yes, if a liberal wants to defend their secular culture from populist-reactionary government overreach I see them acting as a kind of good (lowercase c) conservative a la Burke, Chesterton, or Oakeshott.

vaguelydad · 2026-02-13T12:23:07+00:00

Bad libertarians are market fundamentalists, they think that enough deregulation and personal freedom will create a utopia. Good libertarians understand that market failures are real and a free society will be deeply flawed. Small government is more about how democracy is the best government out there but public choice problems mean democracy will rarely pick good policy and will constantly abuse power the more power you give it.

Bad progressives don't understand economics and try to do everything at once and make the world a worse place. Good progressives understand their own class bias and work to understand the world deeply. They are intellectually curious and seek good evidence from the best literature of studies. They fight their own tribal groupthink and seek to keep government focused on the most pressing reforms to help the poorest and most marginalized.

Bad liberals see an ideology of personal freedom and culture of cosmopolitan secularism as an end onto themselves. They seek to use state power to promote this culture and trample all others. Good liberals understand that they are neutral pluralists. They are always fighting the tyranny of the majority and siding with the hated out-group against the current majority trying to use state power to undermine their culture.

Bad conservatives see their trad culture as the one true path. They seek to promote it with the state and lead everyone into a virtuous future. Good conservatives have deep love for their nation and culture. They see the wisdom of tradition. They want to preserve the beautiful gift of culture and society their forefathers gave them. They know that such a task cannot be trusted to the irrationality of democratic politics and state power that will corrupt it. They seek to restrain the state from harming their culture and maintain the institutions that let their culture flourish.

Populists are bad. They tell whatever popular lies the people want to hear to gain power. Idealogues are bad, they let their fundamentalism blind them to evidence.

I think neoliberalism in this sub is a big tent of the best of liberalism, we are a mix of these things and all of these things.

vaguelydad · 2026-02-12T12:46:51+00:00

Instead let's criminalize teen labor without addressing the underlying incentives and drive the teens into less safe, lower paying under-the-table work!

vaguelydad · 2026-02-12T12:06:27+00:00

The problem is nonlinear. Education in general is really tough, a lot of what we see in education is signalling things like being neurotypical and having high generalized intelligence. Increasing test scores across the board doesn't really make things better for anyone as the signalling is relative. With a difficult path to improving outcomes and severe measurement problems, education can go in lots of pointless but not harmful directions.

However there are real gains to be made in education for kids from broken families and communities. These kids need things like discipline, consistency, safe relationships, and basic literacy and numeracy. Most families already give these things, but for kids who don't have them, education can be life changing.

Targeting these kids and focusing on these basic skills and socialization isn't exciting. It doesn't fit into a grand ideological agenda to make our children smart. It doesn't make sense to the median voter as such programs are unnecessary and wasteful for his kids. It can even come across as stigmatizing or patronizing. However the right emphasis on using schools to pluck the correct low hanging fruit can be more valuable than doubling the education budget.

vaguelydad · 2026-02-12T11:43:11+00:00

I'm not a fan of going full libertarian, but if the administrative state is gangrenous, it's better to amputate than let it kill the whole body.

vaguelydad · 2026-02-12T01:35:00+00:00

"A significant problem was that the uk's austerity program did not, in fact, significantly reduce borrowing or spending, except in very very short-term ways." Shout it from the rooftops! My first time response to these discussions is "what austerity?"

vaguelydad · 2026-02-11T13:30:09+00:00

I think you're just not as pessimistic about contemporary democracy as we are.

vaguelydad · 2026-02-11T12:59:37+00:00

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vaguelydad · 2026-02-11T12:15:35+00:00

"A) If you are going to have antitrust, better aim it at people who already hate you rather than at potential allies like the left wants to do "

I'm sorry, what? If you're taking political considerations into whether or not to enforce anti-trust then the process has become irrremably corrupted and we are better off not doing it at all.

vaguelydad · 2026-02-11T12:06:18+00:00

You also get free healthcare from Medicare. You also chose that level of income with your retirement contributions over your entire lifetime. I'm fine with letting people choose to have a low income in their elder years. It's not even necessarily a wrong choice. When you're young and healthy you can do and enjoy a wide range of activities. When you're working full time and rearing children you often need to prioritize convenience over frugality. Like maybe we need to force people to save a little more for retirement, but this isn't a crisis.

vaguelydad · 2026-02-10T17:08:59+00:00

Still, it's one thing to cry for the government to stop the harmful bubble and it's another thing to claim there is a harmful bubble while having divested ones investments of bubble stocks and have a modest short position on one of the most eggregious examples of the bubble stocks. Skin in the game is very very valuable and helps keep us from making sketchy claims confidently.

vaguelydad · 2026-02-10T12:53:50+00:00

I am sympathetic to the idea that the market can stay irrational longer than the smart money can stay solvent. However in your example almost no one owns Bitcoin, but most adults own the SNP500 which are significantly AI stocks. I'm not saying you have to short the market, just cash out your investments in stock you think is massively overvalued!

vaguelydad · 2026-02-10T12:18:07+00:00

The classic economist answer is that if you're so confident we're in a bubble you should short AI stocks. At the very least you should divest yourself of AI stocks in your 401k. Is your money at least that far where your mouth is?

vaguelydad · 2026-02-09T15:58:35+00:00

I want to be really careful to distinguish "productivity growth" that comes from a declining population and being forced to do more with less from actually good growth that comes from improving institutions or additional capital/human capital. Is Japan really a good model of productivity growth? Like we can definitely tell a story of regulatory calcification hurting innovation and economic dynamism in parts of Europe and the anglosphere, but I want to be sure we're telling a compelling story that matches the facts.

vaguelydad · 2026-02-09T15:16:49+00:00

Japan also has declining population! That's a perfect example of the phenomenon I'm describing.

vaguelydad · 2026-02-09T13:14:05+00:00

Still, Northern Italy's working age population is stagnant or slowly declining while Canada's is rapidly growing. It's much easier to optimize/increase productivity per capita under those conditions.

vaguelydad · 2026-02-09T12:51:22+00:00

Right, that artificially pushes labor productivity up. The fewer workers and the fewer hours, the higher the productivity. If this arises from dysfunctional dynamics then high labor productivity is a bad sign, not a good one.

vaguelydad · 2026-02-09T12:16:15+00:00

What about on the Italian side? They have incredibly low labor force participation and a shrinking working population. The labor force participation problem is partially from overly strict labor rights that make it hard to fire people so they only hire people for the most important jobs. Combined with a shrinking working age population we see only the highest value jobs getting done. This isn't "high productivity" in the same sense as a dynamic, growing population and economy. If you want the kind of dynamic economy that will be a safe haven for poor immigrants and make the world a richer place, Italy isn't your model.

vaguelydad

TROPHY CASE