What is the issue?
A new macroeconomic model states that in USA especially black men are much more likely to lose their jobs.
What is the new macro-economic model?
- It looked at things as the distributions of income, wealth and employment, seeking to understand how they change over time and through the business cycle.
- This documented systematic differences in the way American men and women participate in the labour force over the course of their lives.
- There are two papers cast significant doubt on the wisdom of assuming a race less and genderless society.
- According to this model, Quantitative economic models that ignore such differences can be poor guides to understanding the impact of government programs such as Social Security on savings and employment.
What are the issues with the economic model?
- This model is blind to race and gender, as if macroeconomic policies typically affect blacks the same as whites and women the same as men.
- Academic macroeconomists get a lot of criticism for using models that oversimplify the world for example, by having one “representative agent” stand in for all consumers.
- The kinds of heterogeneity that economists study remain quite limited.
- Gender has figured in some work, but is typically ignored.
- No work within any research program should focus explicitly on race.
- Economics is supposed to be concerned with figuring out what makes people better off, and how we can have more of it.
- For decades, macroeconomists have operated with the presumption that such questions are best addressed using models that ignore race and gender differences.
- The more we learn about these differences, the clearer it becomes that this is a mistaken models and it needs a change.
Source: Financial Express
