The Wage Penalty of Regional Accents

The Wage Penalty of Regional Accents
Jeffrey Grogger, Andreas Steinmayr, and Joachim Winter #26719


Previous work has documented that speaking one’s native language with an accent distinct from the mainstream is associated with lower wages. In this study, we seek to estimate the causal effect of speaking with a distinctive regional accent, disentangling the effect of the accent from that of omitted variables. We collected data on workers’ speech in Germany, a country with wide variation in regional dialects. We use a variety of strategies in estimation, including an instrumental variables strategy in which the instruments are based on research findings from the linguistics of accent acquisition. All of our estimators show that speaking with a distinctive regional accent reduces wages by an amount that is comparable to the gender wage gap. We also find that workers with distinctive regional accents tend to sort away from occupations that demand high levels of face-to-face contact, consistent with various occupational sorting models.

Posted in Economics and public policy, Gender | 1 Comment

Brexit is not ‘Tot ziens’ (bye bye).

I have little economic insight to add to the various projections made by other economists in Britain about the Brexit scenario that follow under various outcomes of the negotiations with the EU. Like all of them, I think severing trade ties will not work out well in the short run for the economy of the UK, though I am less convinced than others that it will necessarily all work out badly in the longer run.

Most importantly, Britain can always come back to the EU in the future, so if it doesn’t work out as you thought, you Brits can change your mind again.

Yet, I think economics is a distraction, even though all kinds of economic interest groups are tugging in various directions. Break-ups are nearly always bad for the purse, but the immediate reason is seldom money but emotions and identity.

I thus want to talk about the feelings and identity of the Brexiteers, which I think is the heart of the matter.

A large number of you were persuaded you did not belong with the rest of Europe. You were seduced by over 30 years of negative media stories that the rest of Europe looked down on you and was looking for ways to get one over you. You were constantly told and encouraged to believe that you were different, better in fact, than the rest of us Europeans. That mentality is perhaps best illustrated by the ‘Football is coming home’ anthem so popular in the UK at the time of the World Cup. That smug entitlement mentality stings us ‘other’ Europeans but we will try and keep our disdain to a minimum because you remain family. In my case, with an English mum and a Dutch dad, you are literally family.

What I want to mention is the political perspective from one of your main friends in Europe: the Netherlands, perhaps your strongest and oldest ally, sharing royal families since William and Mary, and being very close language and culture wise too. We are close cousins in the Germanic language tree, with old English very close to Frisian (a language and people in the North of the Netherlands and along that coastline into Denmark). There were also several waves of immigrants to Britain via what is now the Netherlands. And of course, we have been on the same side in the second World War when our government and Queen was seated in London.

In truth, English culture is largely a blend of the Dutch and the French. The structure of your language is largely Dutch, with massive French influences. Whilst your words for some of the animals you eat are hence the same as in Dutch (‘Cow’ is ‘Koe’, ‘Sheep’ is ‘Schaap’, and ‘Goat’ is ‘Geit’), what you call them when they are cooked is French (‘Beef’ is ‘boeuf’, ‘veal’ is ‘veal’, and ‘Pork’ is ‘porc’).

So too English culture. The class structure, with elite schools and an upper layer that has owned most of the country for centuries is quintessentially French. They got rid of their nobility in the Napoleontic Wars and in the two World Wars, whereas you were (un)lucky enough not to have yours swept out by an invader. Your nobility, which of course is largely French or other-European in origin, headed by the House of Hannover (!), never left. You have elite private schools and Oxbridge, the French have ‘Grand Ecoles’ and ‘Lycea’. Like your language is old-Dutch, your class system is old-French. Continue reading

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Effects of the Minimum Wage on Child Health

Effects of the Minimum Wage on Child Health
George Wehby, Robert Kaestner, Wei Lyu, and Dhaval M. Dave #26691

Effects of the minimum wage on labor market outcomes have been extensively debated and analyzed. Less studied, however, are other consequences of the minimum wage that stem from changes in a household’s income and labor supply. We examine the effects of the minimum wage on child health. We employ data from the National Survey of Children’s Health in conjunction with a difference-in-differences research design. We estimate effects of changes in minimum wage throughout childhood. We find evidence that an increase in the minimum wage throughout childhood is associated with a large improvement in child health. A particularly interesting finding is that much of the benefits of a higher minimum wage are associated with the period between birth and aged 5.

Posted in Economics and public policy | 6 Comments

Are drugs the Achilles heel of stagnant inequality?

[off the cuff research idea memo]

There is an uncanny analogy between China in the 19th century and the US this very moment: in both cases a large part of the general population could not be persuaded away from drugs by morality or prison. Opium in China then, opioids in the US now. Could it be the case that the essential mechanism is that those at the bottom of very unequal societies cannot say no to drugs and that with a stagnant society, the elites cannot say no to drugs money because growth has then come to be zero-sum? So the combination of inequality and stagnation spells great trouble with drugs? Let’s go over the core bit of this idea and how to check for it in other historical episodes.

In China, the opium offered on a large scale by foreign invaders was too seductive to the general population to ignore. China was under great strain with high inequality, no longer able to ward off foreign powers (the UK and France) or maintain efficient government. The US now too is under strain from foreign competition (from China but also the EU), has high inequality, and is subject to a quite stunning opioid crisis, one essentially engendered by corrupt insiders to the US establishment, exactly as in China the establishment was corruptible when the Opium trade came round.

Now, the US is stagnant in a very particular way: whilst its GDP is growing, the majority has seen little improvement in their lives and nearly all the growth occurs at the very top of the income and wealth distribution, so all those lowly government bureaucrats have seen their relative income and status drop the last few decades, just as was true in China when the UK pushed its opium on the people. The US is stagnation in the echelon of the elites that it needs to keep law and order functioning: in its basic bureaucratic machinery.

The EU countries are not suffering from the same opioid epidemic, where the upsurge in problems is far less than in the US. At the same time, the EU is not stagnating in its middle ground: employment levels are high, inequality is much lower than in the US, and its basic government machinery has not become corrupted to the same degree as the US’ machinery has. Perhaps most importantly, much of the EU feels it is doing well, with happiness levels up markedly in many countries (including Italy), and the Eastern countries growing in confidence and stature.

So the basic pattern fits the big power players. Let’s check some of the other drug-related knowledge history provides. Continue reading

Posted in Death and taxes, Geeky Musings, Health, History, Political theory, Politics - international, Politics - national, Race and indigenous, Society | 13 Comments

The Economic Consequences of the Peace

These are some quick notes on listening to a Libravox recording of Chapter Three of Keynes’ Economic Consequences of the Peace the text of which can be found here. I was stunned at how good it was. It was like listening to a phone message from another planet.

  • The overarching casting of the drama in terms of looking forward and the loftiness of the future which seems possible for Western Civilisation (and that this is not only the best course but also the only rational one) and looking backwards (which ends in the magical thinking of basing one’s thinking on the impossibility of recovering the past).

[Clemencau’s position] is the policy of an old man, whose most vivid impressions and most lively imagination are of the past and not of the future. … My purpose in this book is to show that the Carthaginian Peace is not practically right or possible. Although the school of thought from which it springs is aware of the economic factor, it overlooks, nevertheless, the deeper economic tendencies which are to govern the future. The clock cannot be set back. You cannot restore Central Europe to 1870 without setting up such strains in the European structure and letting loose such human and spiritual forces as, pushing beyond frontiers and races, will overwhelm not only you and your “guarantees,” but your institutions, and the existing order of your Society. Continue reading

Posted in Cultural Critique, Economics and public policy, History, Philosophy | 4 Comments

The poverty of intellectual correctness – Part One: Neo-Darwinism

I wrote this essay a few years ago as part one of a two-part article that would illustrate some parallels between intellectual authoritarianism in neo-Darwinism and in neoclassical economics. In some ways my response to Paul Krugman’s response to me was Part Two. But, wanting to quote this essay in another essay I’m working on – “Disciplines as institutions” I’m publishing it now in all it’s unfinishment. 

I. Denis Noble on what’s wrong with gene centred Neo-Darwinism

A few weeks ago I finished reading Denis Noble’s very intriguing and provocative Dance to the Tune of Life, a comprehensive take-down of Neo-Darwinism and excessive reductionism in science. Noble was one of Richard Dawkins’ PhD examiners and used to identify with the Neo-Darwinist mainstream – of which more in a moment. But, through his work in mathematical physiology gradually became aware of mounting problems with certain doctrinal foundations of Neo-Darwinism.

Often he shows us recent work that seems to debunk very important Neo-Darwinist doctrines at the same time as showing us that those heterodox ideas have been around for many many decades – sometimes over a century – but that they’ve been marginalised by the Neo-Darwinist consensus. And that consensus has been enforced by a Neo-Darwinist ‘political correctness’ police in which Richard Dawkins takes pride of place. My purpose in this essay is to delineate some intellectual roots of this political correctness and also to show strong parallels with the way ‘scientific rigour’ is policed in another discipline – economics – with similar disastrous results. 

Fittingly enough, cross-fertilisation between economics and biology has been common. Since economics first threatened to become little more than a branch of applied mathematics as the marginal revolution took hold, numerous economists of note have insisted that economics should be more like biology. In fact the cross fertilisation goes right back to the beginning of modern evolution. When Darwin read Malthus’s political economy, particularly his famous Essay on the Principle of Population it turned his mind toward every creature’s and every species’ struggle for survival.  The rest was history – well biology actually, but you get my meaning.

II. Reductionism: Here’s looking at Euclid

Continue reading

Posted in Cultural Critique, Economics and public policy, Science | 4 Comments

Corporate Social Policy Responsibility

I was after one of the sillier charts to illustrate CSR. It was a tough choice, but this one hit all its KPIs. Originally worked up from the map which guided the bombing of Hamburg, all Troppodillians will join with me in celebrating its use in a civilian capacity.

CSR, shared value and its old establishment incarnation, pro bono work, arose from the old sense of noblesse oblige. Actually I wouldn’t have the slightest idea how it arose, but I thought I’d begin this post with a bit of strategisation – you know, where I say that a social institution suited its own time but now needs to be brought into the modern world, that given the state we’re in this issue has never been more important etc etc? </strategisation>

In any event, today CSR and similar initiatives arise from various motives.

  • The company would like to do something good, either because it wants to of its own accord or because it’s got up the community’s nose in the past.
  • The company would like to associate itself with Good Things which it hopes won’t hurt, and ideally will help its bottom line. This can happen through:
    • Continued licence to operate (it minimises the number of people chaining themselves to its bulldozers or snarking about it on social media);
    • Increased sales through improving its image with consumers; and/or
    • Improved recruiting power in appealing to employees who want to ‘make a difference’.

In my discussions with big consulting and legal firms, one driver of pro bono work is its capacity to address the angst of the best graduates. Amid all this money making, they want their careers to be about making the world a better place. As the saying goes “All work and no change we can believe in makes Jack a dull boy”. Of course this hankering can only be addressed within reason – we’re not running a charity here. Nevertheless, a managing partner of BCG once told me that this was worth 5% of payroll to them to attract the best graduate talent. Continue reading

Posted in Economics and public policy, Political theory, Politics - international | 5 Comments