Re: Fix unemployment (was: Re: Hollywood Economics)

Robin Hanson (hanson@econ.berkeley.edu)
Thu, 03 Sep 1998 10:49:43 -0700

At 07:49 AM 9/3/98 -0700, you wrote:
>I think Robin had an idea which could help with the problem of structural
>unemployment due to job skills becoming obsolete. The idea was that
>you could sell "income futures" which would give the buyer a percentage
>share of your future income. (Apologies if I misunderstood the idea.)

I did propose this, and it would be a way to implement certain kinds of unemployment insurance.

I think asking us to "fix unemployment" is a bit too broad. It's like asking us to fix "ill health", "poverty", "stupidity", or "arrogance".

There are lots of causes of unemployment, and a discussion would best focus on one of them if it is to make substantial progress. 1) Search - one is between jobs, and doesn't want to grab the first job

that comes along. Similarly, companies don't want to hire the first candidate that comes along.
2) Minimum wages - supply & demand may not meet with imposed wage bounds.

The price employers would be willing to pay may be below the bound. 3) Capital constraints - people may not have assets to invest in their

own education and training, and so may settle for less than their potential. Others who might invest may be stopped by bankruptsy laws which prevent effective indentured servitude. 4) Time runs out - if your industry/career gets smaller, and you're near

retirement, it may not be worth retraining you. 5) Bad luck - if your industry/career gets less in demand, you may have to

accept being less in demand. Insurance can mitigate this loss. 6) Poverty - if you live in a time/place with little capital, and moving

is prohibitively expensive, capital may be too expensive to make it worth training you.

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/ RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884 140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614