New patterns in deindustrialization
As economies across Europe and in the United States have become more knowledge-based, urban-centered, and tech-driven, people in manufacturing reliant regions have seen declining life expectancies, stagnating real incomes, and minimal job growth.
In recent years, social scientists have been grappling with the interconnected political, economic, and social effects of deindustrialization. But this literature is almost entirely confined to Europe and the U.S. In a new paper, DAVID KUNST broadens the scope of this research using a novel dataset on manufacturing employment by occupation in developing countries. He studies the labor market effects of 'premature deindustrialization,' finding a general decline in the hiring capacity of manufacturing sectors and a genuine risk from automation in emerging markets. The study comes to four conclusions:
"First, it is mostly unskilled jobs that have disappeared, and also the wage premium of workers with little formal education in manufacturing relative to other industries has declined. Second, the disappearing jobs have been among the most formal both relative to other industries, and to the manufacturing average. Third, premature deindustrialization has been driven by occupations which are intensive in tasks that are vulnerable to an increasing adoption of ICT. Fourth, the phenomenon pertains most clearly to middle income countries, as low income countries have been spared from premature job losses.
250 years after the beginning of the Industrial Revolution, it appears that manufacturing is losing its ability to employ unskilled workers more productively than other industries. Developing countries, abundant in unskilled labor, lose their comparative advantage in producing an increasing range of manufactured goods. Hence, future growth in developing countries may have to rely more on improvements in 'fundamentals' such as education and governance, and policy makers need to focus on a broader range of sectoral policies than in the past."
Link to the full paper.
- The notion of 'premature deindustrialization' was developed by Dani Rodrik in 2015. In that paper, Rodrik argued that "countries are running out of industrialization opportunities sooner and at much lower levels of income compared to the experience of early industrializers" and suggested that "early deindustrialization could well remove the main channel through which rapid growth has taken place in the past." Link.
- In a 2017 report, Carol Graham, Sergio Pinto, and John Juneau II map the "geography of desperation" in the United States: "In general, minorities scored worse on all of the variables in states where there are proportionately fewer minorities, such as Washington State and Kansas. These include Maine, Wisconsin, North Dakota, and Florida. Poor whites, meanwhile, tended to score lower across the board in the Appalachian states, and then poorly in many of the Midwestern and Western heartland states." Link. Two more reports from Brookings offer suggestions for place-based policies in the U.S. to counter these effects. Link, link.
- David Clingingsmith and Jeffrey G. Williamson study the causes behind Indian deindustrialization from 1750-1860. Unlike literature which attributes the decline to growing competition in textile production from Britain, the authors find that the dissolution of Mughal hegemony and deteriorating climate conditions better account for the shift. Link.
New Researchers: INFLUX NULL
Immigration and labor market effects in the early-20c Northeast
In a joint paper, UC Davis PhD candidates SIOBHAN O’KEEFE and SARAH QUINCY examine how the proliferation of Russian Jewish agricultural colonies between 1880 and 1910 influenced the job prospects of local residents in southern New Jersey. Their results suggest no negative impact produced by the influx of migrants:
From the paper:
"Jewish charities funneled refugees and funds into clusters of farms across southern New Jersey chosen for the affordability of land and relative proximity to New York City and Philadelphia. Before the establishment of the first agricultural colony at Alliance in 1882, no Russians lived in the area, allowing us to isolate the effect of the immigrant inflow. We compare the 1910 labor market outcomes of native-born men living next to the colonies in 1880 to those living in the rest of southern New Jersey. The influx of Russian immigrants was equivalent to approximately one percent of the total population in areas next to agricultural colonies.
We find that men living near a colony had not only a decreased probability of moving away by 1910, but also a higher probability of upgrading to higher-paying jobs complementary to refugee-occupied niches. Men who lived near agricultural colonies had a 4.7 percent higher income than men who did not live near a colony. In contrast to the positive results for the nonfarm sector, we find there to be no effect of living near a colony on farmers, despite the influx of new farmers."
Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you'd like to see shared here? Send it our way: firstname.lastname@example.org.
- Magnolia Mother's Trust—an exciting guaranteed income program aimed at low-income single Black mothers in Mississippi—was covered extensively in the New York Times. Link. At the end of the month, Aisha Nyandoro, the project's executive director, and Rachel Black, from New America, will be giving a research session at JFI. Link to a related report co-authored by Nyandro and Black. (And link to a list of our upcoming research sessions.)
- Joint research by Finland's LUT University and the Energy Watch Group "rigorously opens up a new perspective towards a shift to 100% renewable energy within the next two to three decades." Link.
- "The earnings premium associated with a good occupational match is larger in countries where the credential has a stronger link to the labor market, but the penalty for a mismatch is also greater in such countries. Moreover, strong linkage reduces unemployment risk." A new paper by Thijs Bol et al examines education and labor market matching across industrialized countries. Link.
- A forum on the politics of nature in the Boston Review. Among the contributors, Ugo Mattei argues for an ecological legal infrastructure, Roy Scranton holds that “The distinction between human and nature has always been a self-serving political lie,” and Anna Tsing defends the importance of cross-species interdependence. Link to the forum's introductory piece by Jedediah Purdy.
- Via Brad DeLong, an extremely useful cheatsheet on common probability distributions. Link.
- Examining Brazil's Family Grant conditional cash transfer scheme (the largest in the world), three new papers by Fernanda Brollo, Katja Karufmann and Eliana La Ferrara show the political effects of benefits programs that sanction recipients. Link to coverage in the Economist. ht Sidhya
- In the New York Times, Margot Kaminski and Andrew Selbst comment on a new Senate bill that would mandate companies to audit their algorithmic decision systems for discrimination. Link.
- An exploratory tool offering data on various wellbeing metrics—healthcare, early learning access, family stability—for babies and toddlers throughout the United States. Link.
- Belleville, Ontario has piloted an on-demand public transit service, allowing riders to order buses to take them to and from any bus stop, using a unique routing system that solves for a globally optimal solution for all vehicles and trips. Some results on the first month of service: "Ridership has increased by 300%; Per vehicle mileage has decreased by 30%; The number of bus stops covered by the service is 70% greater than the previous bus service, using the same number of vehicles and service hours." Link. ht Francis
- Bentley B. Allan charts the neoclassical orientation of World Bank imperatives throughout Keynesian, neoliberal, and post-Washington Consensus "paradigmatic shifts." Link.
- At 3P, Matt Bruenig dives more deeply into his arguments against trapezoid benefits—income supplements that phase in based on a recipient's pre-transfer earnings. After mentioning that these programs exclude the poorest based on political calculations (work incentives are popular among legislators), Bruenig explains new research disproving the argument that phase-ins increase the labor supply. Link to the post, link to the research by Henrik Kleven.
- From Janine Aron and John Muellbauer at VoxEu, the economics of mobile money. Link.
- "Colonial and postcolonial port cities in the Atlantic and Indian Ocean regions functioned as crucial hubs in the commodity flows that accompanied the emergence and expansion of global capitalism. They did so by bringing together laboring populations of many different backgrounds and statuses—legally free or semi-free wage laborers, soldiers, sailors, and the self-employed, indentured servants, convicts, and slaves. The presence of these 'motley crews' makes them an ideal vantage point from which to investigate the consequences of the 'simultaneity' of different labor relations for questions such as the organization of the work process under developing capitalism, the emergence of new forms of social control, the impact of forced and free migration on class formation, and the role of social diversity in shaping different forms of group and class solidarity." New work from Pepijn Brandon et al. Link.