Difficult Run

“The Captured Economy” Site

July 21, 2018 by Walker

I picked up Brink Lindsey and Steve Teles’ book The Captured Economy last week at Half-Price Books and added it to my never-ending to-read list. Turns out they’ve created a website based on the book. They describe the site as follows:

In November 2017, Oxford University Press published The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality. Coauthored by Niskanen Center scholars Brink Lindsey and Steven M. Teles, The Captured Economy argues that systematic breakdowns in democratic governance have allowed wealthy special interests to capture broad domains of the policymaking process and twist the rules for their own benefit. Steadily worsening “upward redistribution” via “regressive regulation” has contributed significantly to the American economy’s twin woes of stagnating growth and sky-high inequality.

This website builds on and expands the analysis provided in The Captured Economy. In the book, Lindsey and Teles briefly examined four broad policy areas that showcase the problem of regressive regulation: financial regulation, intellectual property protection, occupational licensing, and land-use regulation. They admitted, though, that space constraints permitted them to cover “only the tip of the iceberg.” This website is dedicating to explore the phenomenon in all its murky depths.

We begin by focusing on the four policy areas covered in the book, but over time we plan to include additional, related policy and issue areas. For each covered area, capturedeconomy.com will serve as a comprehensive repository of analysis and news, including not only academic research and journalistic analysis but also the latest news on policy developments. Our goal is to make capturedeconomy.com an indispensable resource for journalists, policymakers, and concerned citizens interested in better understanding and remedying the deep structural problems that afflict American policymaking and economic performance.

Seems like an exciting development.

WEIRD Origins

July 20, 2018 by Walker

Image result for catholic church medieval — “Thou art weird.”

Anthropologist and cultural psychologist Joseph Henrich has defined our peculiar subset of the world population as WEIRD: Western, Educated, Industrialized, Rich, Democratic. How did this psychological variation arise? A new working paper offers a very interesting answer:

A growing body of research suggests that populations around the globe vary substantially along several important psychological dimensions, and that people from societies characterized as Western, Educated, Industrialized, Rich and Democratic (WEIRD) are particularly unusual (1–6). Often at the extremes of global distributions, people from WEIRD populations tend to be more individualistic, independent, analytically-minded and impersonally prosocial (e.g., trusting strangers) while revealing less conformity, obedience, in-group loyalty and nepotism (3, 5–13). While these patterns are now well documented, efforts to explain this variation from a cultural evolutionary and historical perspective have just begun (13–20). Here, we develop and test a cultural evolutionary theory that aims to explain a substantial portion of this psychological variation, both within and across nations. Not only does our approach contribute to explaining global variation and address why WEIRD societies so often occupy the tail ends of global distributions, but it also helps explain the psychological variation within Europe—among countries, across regions within countries and between individuals with different cultural backgrounds within the same country and region.

Our approach integrates three insights. The first, drawing on anthropology, reveals that the institutions built around kinship and marriage vary greatly across societies (21–23) and that much of this variation developed as societies scaled up in size and complexity, especially after the origins of food production 12,000 years ago (22, 24–29). In forging the tightly-knit communities needed to defend agricultural fields and pastures, cultural evolution gradually wove together social norms governing marriage, post-marital residence and in-group identity (descent), leading to a diversity of kin-based institutions, including the organizational forms known as clans, lineages and kindreds (21, 27, 30). The second insight, based on work in psychology, is that people’s motivations, emotions, perceptions, thinking styles and other aspects of cognition are heavily influenced by the social norms, social networks, technologies and linguistic worlds they encounter while growing up (31–38). In particular, with intensive kin-based institutions, people’s psychological processes adapt to the collectivistic demands and the dense social networks that they interweave (39–43). Intensive kinship norms reward greater conformity, obedience, holistic/relational awareness and in-group loyalty but discourage individualism, independence and analytical thinking (41, 44). Since the sociality of intensive kinship is based on people’s interpersonal embeddedness, adapting to these institutions tends to reduce people’s inclinations towards impartiality, universal (non-relational) moral principles and impersonal trust, fairness and cooperation. Finally, based on historical evidence, the third insight suggests that the branch of Western Christianity that eventually evolved into the Roman Catholic Church—hereafter, ‘the Western Church’ or simply ‘the Church’—systematically undermined the intensive kin-based institutions of Europe during the Middle Ages (45–52). The Church’s marriage policies and prohibitions, which we will call the Marriage and Family Program (MFP), meant that by 1500 CE, and likely centuries earlier in some regions, Europe lacked strong kin-based institutions, and was instead dominated by relatively weak, independent and isolated nuclear or stem families (49–51, 53–56). This made people exposed to Western Christendom rather unlike nearly all other populations.

Integrating these insights, we propose that the spread of the Church, specifically through its transformation of kinship and marriage, was a key factor behind a cultural shift towards a WEIRDer psychology in Europe. This shift eventually fostered the creation of new formal institutions, including representative governments, individual rights, commercial law and impersonal markets (17, 57). This theory predicts that (1) societies with less intensive kin-based institutions should have a WEIRDer psychology and (2) historical exposure to the Church’s MFP should predict both less intensive kin-based institutions and, as a consequence, a WEIRDer psychology.

To illuminate these relationships for diverse populations, we (1) developed measures of the intensity of kin-based institutions, (2) created historical databases to estimate the exposure of populations to the Church (along with the MFP) and (3) compiled 20 different psychological outcomes, including laboratory experiments, validated scales, survey questions and ecologically-valid observational data. We examine the predicted relationships from three complementary perspectives. Across countries, we can observe the broadest range of variation in the largest number of psychological outcomes. Across regions, we can track the historical Church as it lumbered across Europe and detect its footprints on the psychological patterns and marital arrangements of modern Europeans. Finally, by comparing second-generation immigrants in Europe based on their links to the kin-based institutions of their ancestral communities around the world, we eliminate many alternative hypotheses for the relationships we’ve illuminated.

Check it out.

Does Loneliness Lead to Pornography Consumption or Vice Versa?

July 16, 2018 by Walker

According to a new study, the answer is “yes” to both:

Our study suggests a close and painful partnership between pornography and loneliness for some users. From our survey of over 1,000 individuals around the world, we developed a statistical model that suggests an association between pornography use and loneliness, each increasing in tandem with the other. Each incremental increase in loneliness was associated with an increase in pornography use (by a factor of 0.16), and each incremental increase in pornography use predicted a significant increase in loneliness (by a factor of 0.20). While the magnitude of effects was small, they were statistically significant. Interlocking partnerships like this are worrisome since they represent an entrapment template associated with addiction—where the consequences of coping with loneliness through pornography use only increase loneliness, potentially locking the two in a self-fueling cycle.

If loneliness can lead to pornography use, and pornography use may bring about or intensify loneliness, these circular linkages may create a vicious cycle, pulling the user even further from health-promoting relationship connections. In the cultural context of emotionally-disconnected sexual hookups scripted by pornography, loneliness may deepen and become increasingly painful, yet in response, pornography use may only intensify.

While the gender gap in pornography use is closing, men still use pornography more than women, and married persons use pornography less than single persons. The fact that pornography use decreases after marriage may hint at a link between pornography, relational success, and loneliness. Are those who use pornography less likely to achieve relational success and marry? Or does relational success in marriage remove the loneliness trigger for pornography use—or both?

How do porn and loneliness work in tandem?

Pornography triggers the sexual system, providing a physical “feel-good” experience overshadowing negative feelings. Sexual arousal and climax offer a quick “feel-good” fix. Pornography also expands the sexual system’s escape through creating sexual anticipation, bringing a person “under the influence” of sexual arousal for as long as they care to be before acting out.

Additionally, the sexual system is biologically and neurologically tied to a relationship experience. The human sexual system is carefully designed to support both conception and bonding. First, there’s the physical pleasure of arousal, intercourse, and climax—the engine designed to ensure offspring. Then, after climax, partners experience the brain’s “love” plan for pair bonding, when oxytocin (or what researchers refer to as the “cuddle chemical”) is released, producing feelings of comfort, connection, and closeness. In the context of a caring attachment relationship, this release and “after-play” support emotional bonding.

When pornography is used to trigger the sexual system, the biology of the sexual system produces a false relationship experience, offering temporary “relief” from lonely feelings, but soon enough, the user again faces a real-world relationship void. That emptiness may trigger loneliness. Additionally, porn invites the mental fantasy of a relationship experience. Thus, the mind fantasizes and biologically the sexual system tricks the brain into imagining it’s having a relationship experience and can thus mask loneliness—but only temporarily. In this way, pornography exploits the sexual system but only tricks the brain for a while. The user can’t escape the fact that when the experience is over, they’re still alone in an empty room. So, when sexual intoxication wears off, the experience may only end up excavating a deeper emptiness—a setup for a vicious cycle. We hypothesize that this experience could create the potential for getting trapped in the short-term, feel-good escape of pornography joined with long-term loneliness.

…Recent scholarship suggests that pornography’s sexual scripts of eroticism, objectification, promiscuity, and misogyny (domination) are, on their face, fundamentally anti-relationship and anti-attachment and “conceptually linked to loneliness.” Pornography promotes an understanding of sexuality and relationships that is corrosive to connection because it doesn’t promote people, only parts. Hence, in the most intimate of circumstances, actual intimacy is elusive—because pornography doesn’t support or advocate emotional connection and whole relationships.

…In the recent research conducted with my colleagues, we raise the possibility of pornography use compulsivity or addiction, pointing to how pornography use fits this entrapment template. The potentially habitual “fix” of pornography may consist in using it to relieve loneliness (or other troubling emotions). The sexual system’s combination of two very different rewards—intense sensual gratification during arousal and climax, followed by oxytocin’s relief and comfort during the resolution period—could be thought of like a combined cocaine-valium experience and “hook.”

Sex therapist and friend Mark Bird lists pornography addiction as one of “ways people try to cope ineffectively: [one of] the negative symptoms associated with connective disorders.”[ref]Mark Bird, In Tandem: Recovering Me, Recovering Us, pgs. 20-21.[/ref] The above research seems to back this claim.

Income vs. Consumption Inequality, 1961-2016

July 13, 2018 by Walker

I’ve highlighted this before, but Bruce Meyer has an article in the NBER Reporter on consumption vs. income inequality. He explains,

The debate over inequality relies almost exclusively on income data that indicate that inequality has increased sharply in recent decades. Yet economists generally prefer using consumption rather than income to measure well-being…Income typically fluctuates more than economic well-being, because people can save when income is temporarily high and borrow when it is temporarily low. Income also fails to reflect the flow of services received if one already owns a house or a car, and has no expenditures but significant consumption. A retired couple in their own home living off the savings accumulated over a lifetime may be living quite comfortably even if they have no income. Consumption measures will reflect the loss of housing-services flows if homeownership falls, the loss in wealth if asset values fall, and the belt-tightening that a growing debt burden might require — all of which an income measure would miss. Furthermore, consumption is more likely than income to be affected by access to public insurance programs, and to capture the effects of changes in access to credit or the government safety net. Consumption is better than income at reflecting deprivation. In a series of papers, Sullivan and I show that measures of material hardship or adverse family outcomes are more severe for those with low consumption than for those with low income.

What does inequality look like when viewed through the lens of consumption?

Official measures of income inequality suggest a steady rise in the U.S. since the early 1970s. An important limitation of the official statistics is that they are based on pre-tax money income, which does not account for tax credits and in-kind transfers, such as housing benefits and food stamps, which have increased sharply over time. Income inequality still rises for measures of income that more closely reflect family resources available for consumption, but the rise is less noticeable. Using our improved measure of consumption, however, a very different story emerges.

These differences are evident in Figure 1, where we report the ratio of the 90th percentile to the 10th percentile (the 90/10 ratio) for pre-tax money income, after-tax money income, and well-measured consumption. Since the early 1960s, the rise in after-tax income inequality as measured by the 90/10 ratio (26 percent) has significantly exceeded the rise in consumption inequality (7 percent). Furthermore, this much smaller percentage increase in consumption inequality started from a considerably lower base. In some decades, such as the 1960s and 1990s, income and consumption inequality moved in parallel, but in other decades the differences were sharp. In the 1980s, inequality for both measures rose, but the increase was much greater for income (28 percent) than for consumption (5 percent). After 2005, these measures moved in opposite directions: income inequality rose sharply while consumption inequality fell.

The center and right panels of Figure 1 show that income inequality has risen for the top (90/50 ratios) and bottom (50/10 ratios) of the distribution, but increases in consumption inequality are only evident for the top. The finding that the patterns of consumption and income inequality at the top are fairly similar from the early 1960s through 2005 suggests that underreporting of consumption by the rich is not behind the differences in inequality over time.

Our evidence of only a modest rise in consumption inequality over the past five decades contrasts sharply with evidence from tax data that an increasing share of the nation’s income is going to the very highest income families, though several papers using broader and more consistent measures of income reported on income tax forms do not show large increases in the top 1 percent’s income share. Our analyses are distinct from these studies that focus on the highest income households. We do not include the extreme tails of the distribution because resources are likely to be poorly measured in survey data for these observations. Tax returns alone are also unsuitable for measuring incomes at the bottom, since they miss non-filers and important sources of income such as TANF, SSI, SNAP and housing benefits, which are not taxable.

Meyer concludes,

Most of the discussion around recent trends in inequality highlights growing dispersion. However, the evidence from consumption data indicates that changes in inequality in economic well-being are more nuanced than a simple story of rising income dispersion would suggest. In the bottom half of the distribution there is little evidence of rising consumption inequality, and in the top half of the distribution the rise in consumption inequality has been much more modest than the rise in income inequality, particularly since 2000.

Do Undocumented Immigrants Commit More Crime?

July 12, 2018July 12, 2018 by Walker

From the Oxford Research Encyclopedia of Criminology and Criminal Justice,

Despite recent research that shows the lack of a direct connection between immigration and increases in crime, the American public still believes that immigrants are a dangerous group…Illegal immigration occurs when a person unlawfully enters the United States or overstays their visa once in the country; it is estimated that between 30 and 50% of undocumented immigrants in the United States have overstayed their visas (Blondell, 2008; Metcalf, 2011). The perception that “all” undocumented immigrants have nefariously crossed the U.S. border is not accurate. More refined analysis regarding legal and illegal immigration and crime has been done by researchers in recent years.

Researchers in the United States have begun to distinguish between the act of being an undocumented immigrant, which is illegal, and crimes committed by immigrants. Metcalf (2011), for example, found that if an undocumented immigrant is processed by an immigration court for deportation, deportation is most likely to actually occur if the person committed a serious felony. In other cases, the individual is likely to be released and will continue to unlawfully reside in the United States. Concern about crimes committed on or near the U.S. border has also resulted in some studies about the nexus among migration, victimization, and criminal offending. Hickman and Suttorp (2015) analyzed whether undocumented immigrants were more likely to be a recidivist one year after release from jail than nondeportable immigrants. Analyzing a month of data from the Los Angeles County Jail in 2002, they found that 21% of inmates were “foreign born.” For those whose immigration status was known, and for which the inmate was not released to another agency, about 60% of the inmates were nondeportable and 40% were deportable immigrants. One year after release from the county jail, deportable immigrants were no more a threat to public safety than immigrants who were nondeportable (Hickman & Suttorp, 2015). Hickman and Suttorp concluded that the fear that undocumented immigrants are a disproportionate threat to a community’s safety is not empirically supported by analysis of data for the immigrants subjected to criminal justice sanctions at a local jail level. The re-arrest rate for all the immigrants (both deportable and nondeportable) in their study was relatively low (about 38%).

I’ve covered this topic before, but it is worth revisiting. The above ORE article is from 2017, but is there even more recent evidence? As reported by NPR,[ref]The charts are from The Washington Post.[/ref]

Michael Light, a criminologist at the University of Wisconsin, Madison, looked at whether the soaring increase in illegal immigration over the last three decades caused a commensurate jump in violent crimes: murder, rape, robbery and aggravated assault. “Increased undocumented immigration since 1990 has not increased violent crime over that same time period,” Light said in a phone interview. Those findings are published in the current edition of the peer-reviewed journal Criminology.

In a separate study, these same researchers previously looked at nonviolent crime. They found that the dramatic influx of undocumented immigrants, similarly, did not drive up rates of drug and alcohol arrests or the number of drug overdoses and DUI deaths. “We found no evidence that undocumented immigration increases the prevalence of any of those outcomes,” Light said.

A third study, by the libertarian Cato Institute, recently looked at criminality among undocumented immigrants just in Texas. The state records the immigration status of arrestees, creating a gold mine for criminologists. Cato found that in 2015, criminal conviction and arrest rates in Texas for undocumented immigrants were lower than those of native-born Americans for murder, sexual assault and larceny.

Finally, a research paper appearing in the current edition of the U.K. journal Migration Letters shows that youthful undocumented immigrants engage in less crime than do legal immigrants or U.S.-born peers.

As The Washington Post notes, “These two studies are far from the only ones showing that immigration, legal or otherwise, does not lead to rising crime. But the evidence they present is some of the strongest offered to date. The Trump administration, however, does not seem to be listening.”

Do Individualistic Values Lead to Less Inequality?

July 11, 2018 by Walker

That appears to be the case, according to a 2017 paper. From a working paper version,

Our results challenge the conventional view that individualistic societies are more prone to higher levels of income inequality. On the contrary, we find that even if people in more individualistic cultures are more likely to accept and encourage greater individual differences, they end up living in far more equal societies at the end of the day. In our 2SLS analysis, we find that the historical prevalence of infectious diseases is strongly and negatively correlated with individualistic values, which then, in the next stage, are a strong determinant of economic inequality, measured by the net GINI coefficient from the Standardized World Income Inequality Database (SWIID). These results hold even when we control for a number of confounding factors including the level of economic development, social capital, formal institutions, local factor endowments, geographic dummies, and other cultural values. The results are furthermore robust to different sub-samples of countries and alternative measures of income inequality and individualism.

One possible explanation for these findings is that citizens in individualistic cultures favor more inclusive institutions that are characterized by respect for the rights, liberties, and well-being of all members of society, not just their immediate circle. This is consistent with recent empirical findings which show that more individualistic societies are far more likely to develop high quality political and economic institutions including respect for the rule of law, protection of private property and strong democratic institutions (Greif, 1994; Nikolaev and Salahodjaev, 2017; Kyriacou, 2016; Nikolaev and Salahodjaev, 2016; Gorodnichenko and Roland, 2015; Licht et al., 2007; Inglehart and Oyserman, 2004). People in more individualistic cultures are also more likely to tolerate minorities and have higher levels of interpersonal trust and lower levels of corruption (Thornhill and Fincher, 2014; Allik and Realo, 2004), which can further reduce transaction costs and facilitate market exchange leading to higher rates of human and physical capital investment, technological innovation and long-run economic growth (Oyserman et al., 2002; Gorodnichenko and Roland, 2012) and encouraging people to put more effort and get a fairer share of the economic pie (Alesina and Angeletos, 2005). When citizens perceive state institutions to be fair, less corrupt, and more efficient, they are far more likely to tolerate higher taxes and government spending on welfare programs (Dimitrova-Grajzl et al., 2012; Svallfors, 2013; Pitlik and Kouba, 2015; Daniele and Geys, 2015; Pitlik and Rode, 2016). When they trust and care about the wellbeing of their fellow citizens, they will be more inclined to support welfare programs that benefit others. Finally, when people earn higher incomes, they are more likely to be able to bear the burden of higher taxation while still maximizing their own talents through their free choices (pgs. 3-4).

Do Parents Matter More Than Country?

July 7, 2018 by Walker

Several years ago, I linked to a Brookings post that highlighted parenting as having a massive effect on children’s outcomes. I was reminded of it while reading a 2016 post at the World Bank’s Development Impact blog. The author David McKenzie, Lead Economist in the Development Research Group, writes,

I was surprised by a paper by Todd Schoellman in the most recent AEJ Macro which argues that parents, not country, are what matters for early childhood development.

He studies the adult outcomes of refugees who immigrated to the U.S. as children, but who differed in the age of arrival. The main analysis is on IndoChinese refugees fleeing the Vietnam War and Khmer Rouge. The thought experiment is to compare the labor market outcomes and completed education of a refugee who arrived at age 1 to one who arrived at age 3 or 4. The latter had 2 or 3 more years of that critical early childhood period in a poor country (Vietnam, Laos and Cambodia) where conflict was going on, and then both come to the U.S. and grow up there. The key result is seen in this graph – which shows that adult wages are no different for those who arrived at age 4 or 5 versus those who arrive at age 0 or 1:

Schoellman argues (according to McKenzie)

that the theory most consistent with this data is that parents, rather than country environment, are the most important inputs to early childhood human capital formation. Of course one can argue that country environment in turn shapes parents – it determines parental education, parental wealth, etc. But the result that parents, and not goods or place, matter is a surprising one. By the way, if you are worried about external validity, he shows the same flatness of log wages with respect to age of arrival between 0 and 5 also holds for Ethiopian and Afghani refugees, Cuban immigrants, Mexican immigrants, and for the set of immigrants from poor countries as a whole.

If you want to argue about another type of external validity, I would argue that the U.S. may not be very good at providing early childhood care for refugees (at least at the time of the study) – this is not discussed in the paper, but it seems likely to me that the U.S. is a worse place to receive early childhood care if you are a poor family than most European countries or Australia and New Zealand – so perhaps it is only when you get into public schools here that you start to get the benefits. The type of data the authors have doesn’t tell us anything about what early childhood educational facilities, if any, were available to these refugee kids.

You can read a working paper version of the study here.

Is Unemployment a Rich Country Privilege?

July 6, 2018 by Walker

The question is cheeky, but appropriate given how “check your privilege” is all the rage. A new working paper suggests that high unemployment rates are actually found in wealthy countries rather than poorer ones. The researchers summarize,

[C]laims about unemployment in poorer countries are all over the map, with some studies finding that the highest unemployment rates in the world are in Sub-Saharan Africa, at around 30% per year (World Bank 2004), while others posit that unemployment is almost non-existent in developing countries, since people there are too poor to have the luxury of not working (Fields 2004, Squire 1981).

In our paper (Feng et al. 2018), we contribute to the study of unemployment by building a data set of average unemployment rates covering 84 countries of all income levels. To address the issue of data comparability, we intentionally bypass existing data banks, such as those of the ILO, and build our own measures of unemployment from the ground up using household survey data. We draw on 199 nationally representative household surveys conducted in various recent years (but mostly between 2000 and 2010). Importantly, our data cover not just the rich countries of the world, but many poor nations, including a dozen from sub-Saharan Africa and many more from the middle of the world income distribution.

…We define work as wage employment, self-employment, and unpaid work in a family farm or business. We exclude those doing home production of services like cooking, cleaning, and childcare. Our search measures cover job search activity in some recent period, like the last week (in our preferred metrics). We compute unemployment rates in each survey as the number of adults not working but searching for work / (number working + those not working and searching). We then average over all surveys for each county in our data.

What we find is that average unemployment rates are in fact substantially lower in poor countries than in rich countries. In the poorest quartile of the world income distribution, unemployment averages around 2.5%, while in the richest quartile, around 8% of the labour force is unemployed on average. Interestingly, we find that the higher unemployment rates of richer economies hold for workers of all ages, for men and women separately, and within both urban and rural areas. Thus, our data suggest that unemployment is largely a rich-country phenomenon, rather than a feature of underdevelopment.

Why is this the case?

The figure below plots the ratio of unemployment for the low educated to that of the high educated against the log of GDP per capita. In the poorest countries, this ratio is below one, meaning that the low educated are less likely to be unemployed than the high educated. The exact opposite is true of the richest countries, all of whom have ratios above one. For instance, in the US, the ratio is 2.3, meaning that those without high school education are more than twice as likely to unemployed as those that finished high school (or went on to college or beyond). Whereas one might have thought this pattern is a universal feature of labour market outcomes, our data show that unemployment concentrated among the less educated is actually confined to richer economies.

The authors explain,

Countries differ only by their productivity in the modern sector, with the traditional sector offering the same (low) level of output per worker in all countries. This assumption is central to our analysis and based on the emerging consensus that cross-country productivity differences are skill-biased, rather than affecting unskilled and skilled tasks and workers equally (Caselli and Coleman 2006, Malmberg 2016).

The model predicts that in countries with low modern-sector productivity levels, the bulk of the workforce sorts into the traditional sector. Only workers with the highest skill levels choose the modern sector. Then, as modern-sector productivity rises – our proxy for ‘development’ – more and more lower skilled workers are drawn into the modern sector. This raises overall unemployment, as more workers now search for jobs, with some of them being unemployed each period in equilibrium. As in the data, our model predicts that development also brings a rise in the ratio of unemployment for the less- to more-skilled. The reason is most of the higher skilled workers are already in the modern sector and searching for wage jobs in poor economies. As modern-sector productivity grows, it is the less skilled workers that switch sectors, and their unemployment rate rises faster as a result.

They conclude,

Our research suggests that unemployment is largely a feature of advanced economies. In poor countries, only the most skilled workers search for wage jobs, while most of the less skilled workers select into traditional self-employment activities. Thus, few workers in poor economies are actually unemployed in practice. In advanced economies, the modern wage-paying sectors have relatively high productivity levels and employ the bulk of the labour force. As a consequence, as modern firms and positions come and go, workers are occasionally cast into unemployment. While unemployment per se is undesirable, the high underlying productivity level of the modern sector is not.

Paul Krugman once famously said, “Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”[ref]The Age of Diminished Expectations: U.S. Economic Policy in the 1990s, 3^rd ed., pg. 11.[/ref] Harvard’s Greg Mankiw writes, “Almost all variation in living standards is attributable to differences in countries’ productivity[.]”[ref]Principles of Economics, 7^th ed., pg. 13.[/ref] This study demonstrates at least two important points:

Employed =/= Productive
Jobs =/= Wealth

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