Thursday, April 25, 2013

The estimable Ryan Murphy on the EPI paper


He says he largely agrees with Cowen's reaction so not surprisingly my reaction to Ryan is much the same as my reaction to Cowen (here). I largely agree with his thoughts but would put a somewhat different spin on it.

First, I'm interested in shortages and labor market adjustment because I'm a labor economist and the quirky things about these specialized labor markets are interesting to me (the fact that there's a lot of bad information out there is also a motivator).

Second, I agree with all the "moving out the PPF" stuff from Ryan and Tyler completely. I tend to think the bottleneck is on the demand-side and not the supply-side when it comes to STEM so I don't see giving a special visa to a bunch of IT guys as the way to do that. I take a long-term perspective on growth too. I'm not just thinking of the next Apple... I like to think about the next planet we settle too. For that, basic research features more prominently than it does in Ryan's post.

Third, I really don't like the "high skill immigration is good for poor natives" line. It's not that it's wrong or anything. It's fine as far as it goes. But if you think the minimum wage is a blunt instrument for helping poor Americans (and I do), then helping poor Americans by compressing the wage distribution through importing somewhat underpaid IT guys is a really blunt instrument for doing it. A cynic might suggest that this is what otherwise market-friendly economists tell themselves to feel better about manpower planning.

Like I said, I'm fine with the broad thrust that Ryan has here but would put it all just a little differently.

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