Sunday, May 24, 2009


Tuesday, May 19, 2009

Taller People Earn More

Well, this kind of research is not old itself, "height premium": taller people earn more.

This is a new research conducted by two Australian economists.

Using data from a nationally representative sample of Australian adults, we found that taller people earn more, with the effect being strongest for men”. “For example, the average man in our sample is 5 feet 10 inches tall,...,if he was 6 feet tall, he would earn another 1.5 per cent, or around $950 per year."

“The wage gain from another 2 inches (5 centimetres) of height is approximately equal to wage gain from one more year of labour market experience,..., This result holds constant across a number of other factors that also affect wages, such as age, race, family background, experience, and education. However, we found that the effect of height on women’s wages was smaller than for men, and not statistically significant.”

Interestingly, they also look at the relationship between wages and Body Mass Index (BMI).

In their data, 36 per cent of Australian workers were overweight, and 22 per cent were obese.

“...there seemed to be no wage penalty to being overweight or obese in the Australian labour market,...,This is in contrast with previous studies that used older data from the United States and Germany and found that people with higher BMI scores earned lower wages.

“It is difficult to know whether this is due to cross-country differences, or changes over time. Perhaps Australians are less likely to discriminate against overweight and obese workers than the other nations. Or maybe we cannot find an effect because we are using more recent data than the other studies, and the majority of workers are now overweight or obese.”

This problem, as I've ever heard, is the one related to "discrimination" in the labor market, or we could also say, employers' "preference "to employees.

This research is interesting because wage might be closely related to appearence.

Wednesday, May 06, 2009

Lucas on the Crisis

In macroeconomics, there are two theories(or believes?) : no policy should be done, and as many policies as should be done for the ailing economy. The difference is due to how to see the functioning of a market: a market is self-regulating or not.

Which is true? Nobody can still answer it definitely. Robert Lucas, one of the theorists who are in the former position(at least I believe so), talked about the recent crisis:

The responsibility of the Federal Reserve in this situation is to provide more cash reserves, and in that sense they are doing their job.

...But right now the recession is the more immediate problem. If inflation resumes, reserves can be taken out as quickly as they were added. This is a classic lender-of-last-resort situation and it is important to maintain focus.

In my view, these are the most important considerations for US policy today. I think if the current Federal Reserve lending policies are continued aggressively our chances of avoiding a recession larger than that of 1982 are very good. At this point, I think this is the best that can be hoped for and it is a lot better than a replay of the 1930s.

He worries about the deflation and he thinks the Fed should add more money to people.

In my impression, textbook-version Lucas discussion is like that: nothing should be done, let it alone.

However, he doesn't think so. The lesson: we should ask the question for the right person!

Monday, May 04, 2009