Thursday, September 9, 2010

Krugman Confused in Tokyo

Paul Krugman confusion is not limited to the U. S.

Krugman is currently in Japan and recently posted a comment about Japan. Dean Baker spotted it and explains why Krugman's  comment indicates a surface understanding about Japan that is confused and wrong:

BTP doesn't ordinarily focus on blogs, but Paul Krugman's blog is widely read, and most of us expect him to be right, so it is a big deal when he gets an important point wrong. This morning he told readers that part of the explanation for Japan's decline in per capita income relative to the U.S. is due to its aging population. He argues that his has led to a drop in the percentage of working age people in the population, which has led to a drop in per capita output.

A quick trip over to the OECD's data base tells a somewhat different story. While the ratio of working age people to population did fall in Japan over this period, we also see a rather dramatic decline in average hours worked per worker. Average annual hours per worker dropped by 7.0 percent from 1992 to 2008.

This indicates that there was no shortage of potential labor in Japan over this period.

1 comment:

  1. "most of us expect him to be right"

    What is that expectation founded upon? Hope? Pity?