Jul 202013
 

This Freakonomics Marketplace podcast: Our latest podcast, “Crowded at the Top,” presents a surprising explanation for why the U.S. unemployment rate is still relatively high. (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript.)

It features a conversation with the University of British Columbia economist Paul Beaudry, one of the authors (along with David Green and Benjamin Sand) of a new paper called “The Great Reversal in the Demand for Skill and Cognitive Tasks“:

What explains the current low rate of employment in the U.S.? While there has substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labour market at the turn of the century. In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together. In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a flow. We show how such a model can explain the trends in the data that we present, and offers a novel interpretation of the current employment situation in the U.S.

Transcript:

Kai RYSSDAL: Time now for a little Freakonomics Radio. It’s that moment every couple of weeks we talk to Stephen Dubner, the co-author of the books and the blog of the same name. It is “the hidden side of everything.”  Dubner, how are you man?

Stephen J. DUBNER: Hey Kai. I’m great.  I bet you can’t wait to see the new unemployment numbers on Friday.  That’s kinda like catnip for you, huh?

RYSSDAL: It makes my day, pal!  Come on.  I live for that stuff.

DUBNER: Let me say this: whatever the numbers say on Friday, the general picture is pretty clear, which is that unemployment remains relatively high.  Everyone has a pet theory, but I’m here to tell you today about a trio of economists who have a new research paper out with a pretty interesting angle to explain the unemployment.

 

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Source: Freakonomics

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