Quotation of the Day… feedly

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Quotation of the Day…
// Cafe Hayek

(Don Boudreaux)

… is from pages 38-39 of the manuscript of Deirdre McCloskey‘s extensive and insightful review of Thomas Piketty’s Capital in the Twenty-First Century; (quoted here with Deirdre’s kind permission) (original emphasis; footnote excluded):

The usual way, especially on the left, of talking about poverty relies on the percentage distribution of income, starting fixedly for example at a relative “poverty line.” As the progressive Australian economist Peter Saunders notes, however, such a definition of poverty “automatically shift[s] upwards whenever the real incomes (and hence the poverty line) are rising.” The poor are always with us, but merely by definition, the opposite of the Lake Wobegon effect – it’s not that all the children are above average, but that always there is a bottom fifth or tenth or whatever in any distribution whatsoever. Of course.

[The Saunders citation is: Peter Saunders, "Researching Poverty: Methods, Results, and Impact," Economic and Labor Relations Review, Vol. 24, June 2013, pp. 205-218.]

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More on Recent Evidence on the Effects of Minimum Wages in the United States — by David Neumark, J.M. Ian Salas, William Wascher feedly

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More on Recent Evidence on the Effects of Minimum Wages in the United States — by David Neumark, J.M. Ian Salas, William Wascher
// National Bureau of Economic Research Working Papers

A central issue in estimating the employment effects of minimum wages is the appropriate comparison group for states (or other regions) that adopt or increase the minimum wage. In recent research, Dube et al. (2010) and Allegretto et al. (2011) argue that past U.S. research is flawed because it does not restrict comparison areas to those that are geographically proximate and fails to control for changes in low-skill labor markets that are correlated with minimum wage increases. They argue that using “local controls” establishes that higher minimum wages do not reduce employment of less-skilled workers. In Neumark et al. (2014), we present evidence that their methods fail to isolate more reliable identifying information and lead to incorrect conclusions. Moreover, for subsets of treatment groups where the identifying variation they use is supported by the data, the evidence is consistent with past findings of disemployment effects. Allegretto et al. (2013) have challenged our conclusions, continuing the debate regarding some key issues regarding choosing comparison groups for estimating minimum wage effects. We explain these issues and evaluate the evidence. In general, we find little basis for their analyses and conclusions, and argue that the best evidence still points to job loss from minimum wages for very low-skilled workers – in particular, for teens.
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David Henderson on the Minimum Wage feedly

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David Henderson on the Minimum Wage
// Cafe Hayek

(Don Boudreaux)

In this video for Prager University, EconLog’s David Henderson does a splendid job explaining that minimum-wage legislation harms the very people its well-meaning proponents mean to help.

Of course, not all of its proponents are well-meaning. As David explains in a section of his 2002 book, The Joy of Freedom, some minimum-age proponents are rent-seekers who profit unjustly when government prevents competitors from under-pricing them.

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27 October, 2014 13:09

http://www.cbsnews.com/news/the-gender-pay-gap-is-a-complete-myth/
Daniel J. Smith


The Hard-Won Beauty of Entrepreneurship feedly

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The Hard-Won Beauty of Entrepreneurship
// Reason Magazine – Hit & Run

“The Hard-Won Beauty of Entrepreneurship” was originally released on October 23, 2014. The original write-up is below:

Starting a business involves massive emotional and financial risks. Why do it?

“It’s all about writing your own script, controlling your destiny,” says Chris Viligante, owner and founder of Vigilante Coffee, a roasting house and wholesale bean business based in Maryland. Reason TV reached out to Chris and a few other local millenial-aged entrepeneurs to figure out what motivates them.

The answer we got was different from those offered in popular politics. For these entrepeneurs, their job is a vital source of spiritual satisfaction. They’ve aligned what they love doing with what the world is willing to pay for. And they’re authoring their own lives. As Nick Wiseman, owner of DGS Delicatessen, puts it: “This is my opportunity to actually make an imprint and do something that’s my own.”

Watch the full video above, or click below for downloadable versions. And subscribe to Reason TV’s YouTube channel for daily content like this.

Run time: About 4 minutes.

Directed and hosted by Rob Montz. Camera by Todd Krainin.

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New Wealth Inequality Paper Confirms: Saving in Decline for the 90% feedly

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New Wealth Inequality Paper Confirms: Saving in Decline for the 90%
// Tax Foundation – Tax Foundation’s “Tax Policy Blog”

A new paper on wealth inequality from economists Emmanuel Saez and Gabriel Zucman – who have written frequently on the subject – was released earlier this month. This paper is far better than previous attempts to measure inequality. It includes pensions and other sources of wealth not taxed by the IRS – a shortcoming for which I have previously criticized measurements of inequality.

One of the most interesting findings in the paper was the finding that the saving rate had fallen extremely far for the lower 90% of America’s income distribution:

This is a trend I wrote about in a recent paper on the decline of saving and investment in America. It is worrisome that saving – which I believe is beneficial to society at large, but even more beneficial to the saver – is becoming an activity only for the rich.

Saez and Zucman further found that “saving inequality” actually drove wealth inequality even more than income did:

This is a problem worth correcting.

Some people simply earn too little to save. This is a problem that can only be addressed with a stronger, more competitive labor market. But the “bottom 90%” is a group that, as a whole, earns a lot of income. It includes plenty of people with six-figure salaries. It is puzzling and distressing to see savings so low for people who are, by all means, some of the richest on earth. Many of these households have six-figure incomes. One would think that they could put aside more. Increasing the caps on IRA contributions – or finding a more comprehensive tax treatment of saving – would probably help.

Saving cannot and should not be for the rich only.

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Andrei Shleifer and Daniel Treisman | The Surprising Success of Postcommunist Countries | Foreign Affairs

http://www.foreignaffairs.com/articles/142200/andrei-shleifer-and-daniel-treisman/normal-countries

Daniel J. Smith
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