Talking about that ESRI Report… June 13, 2012
Posted by WorldbyStorm in Economy, Irish Politics, The Left.trackback
It’s kind of nice to see Michael Taft’s name and research being referenced in comments to this here. As to the ESRI report… no doubt it serves a function for someone.
I can’t find anything referencing Michael Taft on the link.
SOrry for the delay Ian been otherwise occupied. Scroll down to comments and unhide some of the comments. He’s in there.
Here’s thing. During the Celtic Tiger years there was a widespread perception that Ireland had become a vastly more unequal society. I remember around the middle of 2005 the ESRI claimed that this was wrong, and that they had data and analysis which demonstrated the opposite. “That’s pretty interesting”, I thought, “I’ll have to watch out for their published findings on that one”.
It’s been seven years now, and I’ve seen no sign of the ESRI publishing their findings on that one.
Hmmm. . . .
I had to laugh though when Joan Burtons spokesperson questioned Professor Tols assumptions on the cost of going out to work.
€10k per year probably does seem on the high side when one has a state-provided driver, regularly eats lunch in a state-subsibized restaurant, and enjoys unvouched expenses to cover any incidentals.
Minister wonders how anyone could be out-of-pocket from going to work, dont these people know how to claim mileage? Refers working stiffs to Ruairi Quinn for advice on maxing out the odometer.
Back here in the real world, it seems on the low side TBH – creche fees for even a single child would account for virtually the entire €10k.
I would wait for others to thoroughly check Tol’s work before crowing, if I were you.
Well we await any kind of detailed quantitative rebuttal of Tols work, but his critics have been conspicuous in their silence on that score so far.
Even Michael Tafts take-down of the report was really just probing around the edges of the work, and more a commentary on social policy in general and the lack of employment options.
My own feeling is that Tol will ultimately be proven to have been wrong, but only in so far as he underestimates the effect.
The main flaw in his methodology that I can see is that he doesnt account sufficiently for the fact that actual wages on offer to unemployed people tend to be substantially lower than the average wage levels across the economy.
The reason for this are simple:
- some the highest-paying employers in the economy (such as the state itself) are either not recruiting at all, or else recruiting far fewer workers at reduced salary levels (again the state is a prime example of a large employer shifting adjustment costs onto new joiners)
- the skill-sets available within the ranks of employed are less sought-after and hence less valuable than those typical in the general workforce, as unemployment often results either from low skill/education levels or having the wrong sort of skills (e.g. a skilled brick-layer searching for work at a time when the construction sector is collapsing)
- the age profile among the unemployed skews low, which would tend to predict lower potential earnings when taking up work
the skill-sets available within the ranks of employed are less sought-after and hence less valuable than those typical in the general workforce, as unemployment often results either from low skill/education levels or having the wrong sort of skills (e.g. a skilled brick-layer searching for work at a time when the construction sector is collapsing)
I presume you mean “the unemployed” here. Do you mean this?
As to the rest, your “simple” justification still doesn’t cover the gaping hole below the waterline in Tol’s whole premise, namely that the data is from our recent period of full employment. I notice that you’re still shying away from this rather fatal flaw.
@EWI
I presume you mean “the unemployed” here. Do you mean this?
Yep, well spotted, a slip of the keyboard.
As to the rest, your “simple” justification still doesn’t cover the gaping hole below the waterline in Tol’s whole premise, namely that the data is from our recent period of full employment. I notice that you’re still shying away from this rather fatal flaw.
True these data are old, but I am not so sure that the cost of going out to work has changed that much.
Commuting has become far more expensive, childcare costs have stayed fairly static, whereas maybe there has been some scope in reducing the spend on take-away lunches. Overall, I would call it a wash.
If Tol’s report is correct, it would suggest that the minimum wage is far too low. Good to see him fighting the good fight for the lower paid.
+1
‘First of all, the data is from the 2004/05 Household Budget Survey, at a time when we had practically full employment in Ireland. While the ‘incentives’ might seem to have made moving from welfare to work unattractive, the fact was that practically everyone was actually working and many people left welfare to take up employment. This somewhat deflates the central argument of the paper.’
Nat O’Connor
http://www.progressive-economy.ie/2012/06/costs-of-working-in-ireland.html
The ‘incentives’ become ‘disincentives’ when there is mass unemployment due to the govt’s austerity policy.
‘We can safely abandon the doctrine of the eighties, namely that the rich were not working because they had too little money, the poor because they had much’.
John Kenneth Galbraith
Michael Taft makes a similar argument over on notesonthefront.typepad.com and TBH it doesnt really stand up in either case.
The starting wages on offer to workforce entrants are lower now than during the boom, and perhaps more importantly the perceived upside was much higher then – i.e. if I take this job, I will be in line for pay rises, on the path to a promotion or a move up the ladder to a better job, and also get access to credit in order to purchase a car or house.
This effect is far weaker in an era of stagnant/falling wages, fewer opportunities for advancement, much tightened credit availability and general antipathy to debt.
Also a whole new level of perverse incentives (to get on welfare and/or to stay there) will be unleashed once the new Personal Insolvency Arrangements are passed into law.
Thanks for copy and pasting your leaving cert Home Economics Social & Scientific answer sheet there Bartley, but in the adult world you need actual evidence rather than stuff you’ve overheard on the dartline from Dalkey.
“perceived upside”
a career as economics editor of the Irish Times awaits you methinks.
You didn’t use ‘sentiment’, though, which is the noun of choice for for the masking of dull, plodding opinions.
Might have to dock you points there.
This effect is far weaker in an era of stagnant/falling wages, fewer opportunities for advancement, much tightened credit availability and general antipathy to debt.
You do happen to realize the enormous social stigma and shame around being unemployed, don’t you? This blows away all the rest of this rather tortured reasoning… which of course really has only one overriding objective, namely cutting social welfare, and everything is constructed around that.
Tell me what the view from your ivory tower looks like.
You do happen to realize the enormous social stigma and shame around being unemployed, don’t you?
Do you think this stigma is uniformly felt across the country?
Expand upon your point, with specific examples
A few things:
The ESRI have released another note criticising the paper’s methodology:
http://www.esri.ie/about_us/the_costs_of_working_in_i/Review_of_Costs_of_Working_WP_Final.pdf
The broad conclusion of the paper is that the methodology of the CPT is unsound and produces wide variations in results. The paper itself cuts the projections of the CPT paper by at least half. Overall, they caution putting any weight behind the findings.
Richard Tol has also commented over on Michael Taft’s blog that the CPT paper results can equally indicate that taxes on the lower paid are too high at present or that our social welfare provision is poor and is miserly towards those on low pay. The paper can equally be construed as demanding that we increase social welfare and loosen the prerequisites for a medical card. Of course, these views are not being articulated because the paper is being used as a blunt political tool.
The ESRI released a paper barely nine months ago stating that only three percent (3%) of people were better off on social welfare than on the dole. They pointed out that the replacement rates for Ireland were quite low (lower being ‘better’ in that there is more incentive to work although you could argue it implies our social welfare is meagre and should be increased further). Paper here:http://www.esri.ie/UserFiles/publications/WP395/jacb201155.pdf
The CSO tells me that average hourly earnings are actually slightly higher than in 2008. The figures are here: http://www.cso.ie/quicktables/GetQuickTables.aspx?FileName=EHQ03.asp&TableName=Earnings+and+Labour+Costs&StatisticalProduct=DB_EH
Pre-2008 earnings are broken down by individual sector and are not averaged out as whole (from what I can see).
I am surprised that you are latching on to this paper, Bartley. Previously you dismissed the need for any evidence to support cuts and caps in social welfare; instead, these would be done to ensure solidarity between the very rich and those on benefits. You were a regular Karl Marx of the fecking Master Class.
The ESRI; not so long ago John Fitzgerald a professor,no less,declared that any deal to bail out Greece would have to be “very painful”. Remember reading that and thinking what a heartless,uncaring statement.Hope Fitzgerald is happy he got what he wished for as he toils over data for the ESRI while people go hungry in Athens.Also remember thinking that the ESRI has little or no credibility.What does the social stand for the ESRI?Where is the social aspect of the ESRI?It seems to be all about economics,which ultimately is a doctrine of the rich and powerful for the rich and powerful