U.S. and Them: The Geography of Academic Research

Using a database of 76,046 empirical economics papers published between 1985 and 2004 in the top 202 economics journals, the World Bank finds two associations:

First, per-capita research output on a given country increases with the country’s per capita gross domestic product (GDP). Regressions controlling for data availability and quality in the country, indicators of governance and the use of English yield an estimated research-GDP elasticity of 0.37; surprisingly, the United States (US) is not an outlier in the production of empirical research.

Second, papers written about the US are far more likely to be published in the top five economics journals, even after the quality of research has been partially controlled for through fixed-effects for the authors’ institutional affiliations; the estimates suggest that papers on the US are 2.6 percentage points more likely to be published in the top-five journals. This is a large effect because only 1.5 percent of all papers written about countries other than the US are published in the top-five journals. The authors speculate about the interpretations of these facts, and invite further analysis and additions to the public release of the database that accompanies this paper.

The figure below plots publications aggregated over the 20 years for all countries included in the database, separated by geographical region. In each region, countries are aligned in descending order of the number of publications.

According to the authors, “[T]here is a mass of countries with very few publications; a thin layer above this group, which includes China, Canada, Japan and; above these is the United Kingdom with 6,567 publications over the 20 years. Standing out from the group is the United States with 36,649 publications over these 20 years, accounting for the geographical focus in 48 percent of all the economic empirical research during this time.”

In the UK, Taxing the rich is causing exodus

Is it surprising that people respond to incentives?

The number of directors of British companies who have registered in the Channel Island tax havens of Jersey and Guernsey, along with the Isle of Man has risen by almost 500 in the past 12 months.

All three are Crown Dependencies and as such can set their own tax rates.

The British Virgin Islands, a popular tax haven in the Caribbean, has seen an 18 per cent rise on a year ago.

Those who are leaving what they see as the mainland’s punitive tax rates include highly paid bankers and hedge fund mangers along with entrepreneurs running luxury travel companies, healthcare, property firms and call centres.

Did the National Minimum Wage Affect UK Prices?

Jonathan Wadsworth (London School of Economics and Political Science) has a relatively new discussion paper looking into how the national minimum wage affected UK prices:

One potential channel through which the effects of the minimum wage could be directed is that firms who employ minimum wage workers could have passed on any higher labour costs resulting from the minimum wage in the form of higher prices. This study looks at the effects of the minimum wage on the prices of UK goods and services by comparing prices of goods produced by industries in which UK minimum wage workers make up a substantial share of total costs with prices of goods and services that make less use of minimum wage labour.Using sectoral-level price data matched to LFS survey data on the share of minimum wage workers in each sector, it is hard to find much evidence of significant price changes in the months that correspond immediately to the uprating of the NMW. However over the longer term, prices in several minimum wage sectors – notably take-away foods, canteen meals, hotel services and domestic services – do appear to have risen significantly faster than prices of non-minimum wage sectors. These effects were particularly significant in the four years immediately after the introduction of the minimum wage.

United States: Top destination for adults who seek to relocate

According to Gallup, seven hundred million people would love to permanently move to another country.

The United States ranked first as the top destination where adults wanted to relocate permanently:

Nearly one-quarter (24%) of these respondents, which translates to more than 165 million adults worldwide, name the United States as their desired future residence. With an additional estimated 45 million saying they would like to move to Canada, Northern America is one of the two most desired regions.

The remaining top desired destination companies are predominantly European. Forty-five million adults would like to move to the United Kingdom or France, thirty-five million would like to move to Spain, and twenty-five million would like to move to Germany.

For the rest of the world, thirty million name Saudi Arabia and twenty-five million name Australia as their ideal home.

So what would happen if people could actually move wherever they wanted?

Singapore’s adult population would swell from about 3.6 million people to as high as 13 million. The Democratic Republic of the Congo, on the other hand, would lose 60 percent of its adult population.

Health Care and Life Expectancy

The Daily Mail writes,

More than 100 top doctors have signed an open letter to U.S. senators to counter ‘lies’ about the National Health Service.

…The doctors, including former president of the Royal College of Physicians Sir George Alberti and Professor Alan Maryon-Davis, president of the UK Faculty of Public Health, and patient groups, used their letter to point out that life expectancy is longer in the UK than the U.S. – showing, they claimed, it is a better system.

Pointing to a relatively lower American life expectancy as proof of a flawed health care system is a false argument.  “The problem with such international comparisons, Greg Mankiw explains, “is that there are a lot of differences among nations beyond their health systems. To make comparisons in health outcomes, you need to control for other variables. Without such controls, the simple correlations have little meaning.”

As John Stossel explains,

The WHO judged a country’s quality of health on life expectancy. But that’s a lousy measure of a health-care system. Many things that cause premature death have nothing do with medical care. We have far more fatal transportation accidents than other countries. That’s not a health-care problem. Similarly, our homicide rate is 10 times higher than in the U.K., eight times higher than in France, and five times greater than in Canada. When you adjust for these “fatal injury” rates, U.S. life expectancy is actually higher than in nearly every other industrialized nation.

Nobel laureate Gary Becker makes a similar argument:

National differences in life expectancies are a highly imperfect indicator of the effectiveness of health delivery systems. For example, life styles are important contributors to health, and the US fares poorly on many life style indicators, such as incidence of overweight and obese men, women, and teenagers. To get around such problems, some analysts compare not life expectancies but survival rates from different diseases. The US health system tends to look pretty good on these comparisons.

A study published in Lancet Oncology in 2007 calculates cancer survival rates for both men and women in the United States, the United Kingdom, and the European Union as a whole. The study claims that the most important determinants of cancer survival are early diagnosis, early treatment, and access to the best drugs, and that the United States does very well on all three criteria. Early diagnosis helps survival, but it may also distort the comparisons of five or even ten-year survival rates. In any case, the calculated five-year survival rates are much better in the US: they are about 65% for both men and women, while they are much lower in the other countries, especially for men. These apparent advantages in cancer survival rates are large enough to be worth a lot to persons having access to the American health system.

Several measures of the quality of life also favor the US. For example, hip and knee replacements, and cataract surgery, are far more readily available in the US than in Europe.

For even more on this, I highly recommend reading Greg Mankiw’s New York Times Op-Ed ‘Beyond Those Health Care Numbers.’

‘Show Me a Country Without Lawyers, Hobos and Fighting Politicians and I’ll Show You a Dictatorship’

Tim Cavanaugh from Reason writes,

As the healing begins after these terrifying three days when the words “You Lie” held America hostage, let’s round up a parliamentary-procedure control group to see how Yankee decorum stacks up against international standards:

Korea | United Kingdom | Ukraine | Taiwan | Russia | United Kingdom | Taiwan

More Negative Effects of Progressive Taxation

Joseph Henchman of the Tax Foundation discusses Britain’s rising tax rates on the wealthy:

In April, the United Kingdom raised its top income tax rate from 40% to 50%, imposed on amounts over £150,000 (approximately $245,000), jumping past Italy, Germany, Spain, and France. At the same time, Spain has cut their top tax rate on “foreign executives” to 24%, leading to a flurry of well-known Britons reclassifying themselves as Spanish executives.

From NCPA and the Weekly Standard:

• [N]ot only did [Spain] create a massive loophole, they backdated it to 2003, which was, coincidentally, the year David Beckham left Manchester United to join Real Madrid.
• Beckham became the first man in Spain to acquire “foreign executive” status; the tax break came to be known as “the Beckham Law.”
• And it has become an almost insurmountable advantage for Spanish soccer teams
• Deloitte Sports Business Group estimates that between the falling pound, the higher British tax rate, and the Spanish tax break, U.K. clubs would have to pay 70 percent more in order to match a player’s take-home pay in Spain.

Countries and states should always keep other jurisdictions in mind when setting tax rates. If you raise the rates to an uncompetitive level, don’t be surprised if you become uncompetitive.

Wealth is not a static quantity and it does not exist in a vacuum. It must be created. When a society punishes the creators of wealth, that society is sowing the seeds of its destruction. The lives we, of the industrialized world, lead are made possible by those leaders and innovators who are so often punished for their ability. If we continue on our current path, we will remove any and all incentive for success. In other words, don’t bite the hand that feeds you.