Clippings 2017

Recommended reading, economic debates, predictions and opinions.
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ghariton
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Re: Clippings 2017

Post by ghariton » 11 Aug 2017 20:28

Consumption and Income Inequality in the U.S. Since the 1960s

This paper claims that inequality in the U.S. has been growing much more slowly when measured in terms of consumption than in terms of income. ISTM that consumption is at least as important as income. After all, the only point of earning money is to spend it.

The abstract:
Official income inequality statistics indicate a sharp rise in inequality over the past five decades. These statistics do not accurately reflect inequality because income is poorly measured, particularly in the tails of the distribution, and current income differs from permanent income, failing to capture the consumption paid for through borrowing and dissaving and the consumption of durables such as houses and cars. We examine income inequality between 1963 and 2014 using the Current Population Survey and consumption inequality between 1960 and 2014 using the Consumer Expenditure Survey. We construct improved measures of consumption, focusing on its well-measured components that are reported at a high and stable rate relative to national accounts. While overall income inequality (as measured by the 90/10 ratio) rose over the past five decades, the rise in overall consumption inequality was small. The patterns for the two measures differ by decade, and they moved in opposite directions after 2006. Income inequality rose in both the top and bottom halves of the distribution, but increases in consumption inequality are only evident in the top half. The differences are also concentrated in single parent families and single individuals. Although changing demographics can account for some of the changes in consumption inequality, they account for little of the changes in income inequality. Consumption smoothing cannot explain the differences between income and consumption at the very bottom, but the declining quality of income data can. Asset price changes likely account for some of the differences between the measures in recent years for the top half of the distribution.
George
The plural of anecdote is NOT data.

gaspr
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Re: Clippings 2017

Post by gaspr » 14 Aug 2017 10:01

Mike Piper's latest post on whether dividend stocks belong in your portfolio. I totally agree with his conclusions.

http://www.obliviousinvestor.com/do-div ... portfolio/

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Descartes
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Re: Clippings 2017

Post by Descartes » 15 Aug 2017 10:10

gaspr wrote:
14 Aug 2017 10:01
Mike Piper's latest post on whether dividend stocks belong in your portfolio. I totally agree with his conclusions.

http://www.obliviousinvestor.com/do-div ... portfolio/
finally and most importantly: dividend stocks are not a substitute for bonds
Mind-blowing.
"A dividend is a dictate of management. A capital gain is a whim of the market."

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ghariton
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Re: Clippings 2017

Post by ghariton » 17 Aug 2017 12:13

The left thinks that increases in the minimum wage have no impact on jobs and makes workers better off. The right thinks that increases in the minimum wage lead to loss of jobs and increases in the unemployment wage. Past studies have tended to show little impact either way. The problem with those studies is that they have looked at all workers as a single homogeneous group. Recently studies have distinguished low-skill from high-skill workers and have concluded that low-skill workers are indeed harmed by increases in the minimum wage. One such study found this result in Seattle as a result of their wage hikes. (The study was denounced by Seattle City Council, because they didn't like it. Now another study, much broader in scope, comes to similar conclusions. The abstract:
We study the effect of minimum wage increases on employment in automatable jobs – jobs in which employers may find it easier to substitute machines for people – focusing on low-skilled workers from whom such substitution may be spurred by minimum wage increases. Based on CPS data from 1980-2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers, and increases the likelihood that low-skilled workers in automatable jobs become unemployed. The average effects mask significant heterogeneity by industry and demographic group, including substantive adverse effects for older, low-skilled workers in manufacturing. The findings imply that groups often ignored in the minimum wage literature are in fact quite vulnerable to employment changes and job loss because of automation following a minimum wage increase.
George
The plural of anecdote is NOT data.

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