The other side of Israel

Dan Senor (Council on Foreign Relations) and Saul Singer (Jerusalem Post) write:

For all the press coverage of the Middle East, there is one side of Israel that gets scant attention: the country’s economy has the highest concentration of innovation and entrepreneurialism in the world today. For years, multinational technology companies and global investors have been beating a path to Israel. Even in 2008—a year of global economic turmoil—per capita venture investments in Israel were 2.5 times greater than in the United States, more than 30 times greater than in Europe, 80 times greater than in China, and 350 times greater than in India. And Israel still boasts the highest density of start-ups in the world (a total of 3,850 start-ups, one for every 1,844 Israelis). More Israeli companies are on NASDAQ than companies from all of Europe, China, India, Korea, and Japan combined.

…In fact, according to the Organisation for Economic Co-operation and Development (OECD), 45 percent of Israelis are university-educated, which is among the highest percentages in the world. And according to a recent IMD World Competitiveness Yearbook, Israel was ranked second among sixty developed nations on the criterion of whether “university education meets the needs of a competitive economy.”

Click here to read the full article.

The Human Cost of Delayed Economic Reform in India

Swaminathan S. Anklesaria Aiyar of the Cato Institute shows how socialism kills. He finds

that with earlier reform, 14.5 million more children would have survived, 261 million more Indians would have become literate, and 109 million more people would have risen above the poverty line. The delay in economic reform represents an enormous social tragedy. It drives home the point that India’s socialist era, which claimed it would deliver growth with social justice, delivered neither.

HT: Cafe Hayek

Stimulus Saves 650,000 Jobs, at $230,000 A Pop

Slate:

According to new White House economic data, the federal stimulus package has saved or created 650,000 jobs since it was rolled out earlier this year. But wait a second, TheStreet.com’s Glenn Hall says; with stimulus spending at around $150 billion, this means that each job costs the government roughly $230,000, or four times the median household income. Ultimately, the government hopes the stimulus will create 3.5 million jobs after it’s all been spent (we’re only about a fifth of the way through), but the early numbers don’t look particularly strong, Hall writes. According to Recovery.gov site, 30,000 jobs have been directly saved by federal contracts, while the rest of the jobs presumably came from a trickle-down effect. Moreover, Hall notes, if we follow the money, it looks as though a lot of bailout money has gone to big companies that have yet to actually create jobs. Lockheed Martin was given $165.9 million, Northrop Grumman received $57.6 million, and Sanofi-Aventis got $373.6 million, although none of these companies have actually created any jobs. “Maybe,” Hall suggests, “the White House needs to create a few jobs itself to get a better tracking system.”

Obama Lifts Travel Ban for HIV-Positive

Newser reports:

HIV-positive individuals will no longer be banned from visiting or immigrating to the US, President Obama announced today. The president discussed the revocation of the ban, which has stood since 1987, at today’s signing of an extension of the Ryan White HIV/AIDS bill. That bill provides funding for HIV/AIDS testing and treatment for low-income individuals.

“We often speak about AIDS as if it’s going on somewhere else,” the president said. “But often overlooked is the fact that we face a serious HIV/AIDS epidemic of our own—right here in Washington, DC, and right here in the United States of America.” The president applauded George W. Bush and the 2008 Congress for beginning the process of overturning the ban last year, CBS News reports. “We are finishing the job,” he said.

Average Marginal Tax Rate

HT: Greg Mankiw

Do International Labor Standards Contribute to the Persistence of the Child Labor Problem?

Matthias Doepke (Northwestern University) and Fabrizio Zilibotti (Institute for Empirical Research in Economics) have a paper on whether international labor standards contribute to the persistence of the child labor problem:

In recent years, a number of governments and consumer groups in rich countries have tried to discourage the use of child labor in poor countries through measures such as product boycotts and the imposition of international labor standards. The purported objective of such measures is to reduce the incidence of child labor in developing countries and thereby improve children’s welfare. In this paper, we examine the effects of such policies from a political-economy perspective. We show that these types of international action on child labor tend to lower domestic political support within developing countries for banning child labor. Hence, international labor standards and product boycotts may delay the ultimate eradication of child labor.

Who admires their country the most?

From the Economist:

Just as some people have a better self-image than others, so it seems do countries. In a poll of 33 nations by the Reputation Institute, a branding consultancy, people were asked to rate their trust, admiration, respect and pride in their country. The results are presented as an index. By this measure, Australians are almost as exuberant about their country as they are about sport, and lead the list. They are followed closely by Canadians. Americans, normally a patriotic and positive bunch, are perhaps being affected by the recession. The limited self-regard of Brazilians belies their reputation as a sunny, carefree people, but the Japanese are gloomiest of all.

Long Term Effects of Minimum Legal Drinking Age Laws on Adult Alcohol Use and Driving Fatalities

Robert Kaestner (University of Illinois) and Benjamin Yarnoff (University of Illinois at Chicago) have a new working paper on the long term effects of minimum legal drinking age laws on adult alcohol use and driving fatalities:

We examine whether adult alcohol consumption and traffic fatalities are associated with the legal drinking environment when a person was between the ages of 18 and 20. We find that moving from an environment in which a person was never allowed to drink legally to one in which a person could always drink legally was associated with a 20 to 30 percent increase in alcohol consumption and a ten percent increase in fatal accidents for adult males. There were no statistically significant or practically important associations between the legal drinking environment when young and adult female alcohol consumption and driving fatalities.

How incentives affect sick days

Casey B. Mulligan writes:

A study by the International Monetary Fund showed that American workers were less frequently absent from work for sickness than was the average European (during the years studied, 1995-2003). As shown in the chart below, workers in the Netherlands, Sweden and Norway stayed home sick about twice as much as American workers did.

Economists have been aware of these differences for a while now, and have understood them to be the result of incentives. Quite simply, the financial penalty for work absence in the Netherlands, Sweden and Norway was quite small (as compared with other European countries and the United States), and the labor market responded by keeping workers home “sick” more often.

In Norway, for example, the social insurance system may have to pay a sick worker’s entire salary for the duration of a worker’s sickness, and require the employer to provide still further benefits. Under such a system, sick people are less likely to go to work when sick — but healthy people are also more likely to stay home claiming they are sick.

Indeed, a 2004 paper by the Stockholm School of Economics professor Skogman Thoursie found that the Swedish incentives were so strong that a large number of Swedish men reported sick merely to watch sporting events on television.

Thus, none of the studies have concluded that the Dutch, Swedes or Norwegians are sicker than we are. Regardless of whether you think these countries’ sick leave systems are on balance desirable because they allow sick workers to stay home, or counterproductive because they induce healthy workers to feign sickness, the literature concludes that financial incentives are affecting the size of the work force.

Slump Sinks Visa Program

From the Wall Street Journal:

Last year, even as the recession began to bite, employers snapped up the 65,000 visas available in just one day. This year, however, as of Sept. 25 — nearly six months after the U.S. government began accepting applications — only 46,700 petitions had been filed.

In addition to the weak economy, companies have curbed applications in the face of anti-immigrant sentiment in Washington and rising costs associated with hiring foreign-born workers.

Usually, all visas are allocated within a month or two from April, when applications for the following fiscal year are first accepted. But this year, six months later, “you can still walk in with an application and you’re still highly likely to get approved,” said R. Srikrishna, senior vice president for business operations in North America for HCL Technologies Ltd., an Indian outsourcing company.