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We develop a new monthly panel survey of business executives and a new question design that elicits subjective probability distributions over own-firm outcomes at a one-year lookahead horizon. Our Survey of Business Uncertainty (SBU) began in 2014 and now covers 1,500 firms drawn from all 50 states, every major industry in the nonfarm private sector, and a full range of firm sizes. We use SBU data to measure expected future outcomes for the growth of sales, employment, and investment for each firm and the uncertainty surrounding those expectations. Mean expectations are highly predictive of realized growth rates in the firm-level data, and subjective uncertainty is highly predictive of absolute forecast errors. We also use the SBU data to produce a Business Expectations Index (first moment) and a Business Uncertainty Index (second moment) for the U.S. economy. In Granger causality tests, the Business Expectations Index has statistically significant predictive power for a range of prominent business cycle indicators. The SBU also includes special questions that elicit additional information, including the perceived effects of specific government policy developments on the firm's decisions and outcomes.

The change in gov policy towards farm labor indicated by the lapse of Public Law 78 (with the effect of denying admission to foreign agri'al workers) led to the prediction by the Amer Farm Bur Federation that crops would go unharvested & prices would soar due to a 'gov-created labor shortage.' Evidence is presented to refute this prophecy. Current conditions are examined, & it is shown that there is a high degree of poverty among US farm wage workers. This is clearly illustrated by facts such as 'in 1962 about 27% of all children & youth in the poverty sector of the economy were in farm wage-worker households,' in spite of the fact that agri'al employment is a smaller % of total employment. Statistics on wages show that mean/average hourly farm wages are less than 50% of the mean/average hourly rate in industry. Technological advances in agriculture have resulted in severe underemployment, & workers are held in the agri'al sector of the economy primarily because of educ'al deficiencies & minority racial status. Suggestions are offered to alleviate these conditions, such as the extension of existing industr labor & welfare legislation to agriculture workers. The problem caused by a basic resource misallocation can only be solved by the reallocation of workers from farm to nonfarm jobs. The Area Redevelopment Act, the Manpower Development & Training Act, & the Econ Opportunity Act are cited as steps in attempting to solve the problem. It is concluded that, contrary to accusations of a gov-created labor shortage, the problem in farm labor markets is one of labor surplus. 3 Tables. A. Heinrich.

This paper quantifies the contributions to poverty reduction observed in Sri Lanka between 2002 and 2012/13. The methods adopted for the analysis generate entire counterfactual distributions to account for the contributions of demographics, labor, and non-labor incomes in explaining poverty reduction. The findings show that the most important contributor to poverty reduction was growth in labor income, stemming from an increase in the returns to salaried nonfarm workers and higher returns to self-employed farm workers. Although some of this increase in earnings may point to improvements in productivity, defined as higher units of output per worker, some of it may simply reflect increases in food and commodity prices, which have increased the marginal revenue product of labor. To the extent that there have been no increases in the volumes being produced, the observed changes in poverty are vulnerable to reversals if commodity prices were to decline significantly. Finally, although private transfers (domestic and foreign) helped to reduce poverty over the period, public transfers were not as effective. In particular, the reduction in the real value of transfers of the Samurdhi program during 2002 to 2012/13 slowed down poverty reduction.

Traditionally societies and their governments have pursued agricultural development to ensure adequate food is available and affordable and incomes of farm households keep pace with those of nonfarm households. Today the farm sector is also expected to care for the natural environment, ensure the food it supplies is safe and nutritious, contribute to energy security, help reduce poverty and greenhouse gas emissions, and provide employment and investment opportunities for women as much as for men. Farm productivity growth can contribute to many of these goals and can be accelerated through more targeted investments in applied agricultural research and in rural infrastructure, education, and health. However, each society does not have to achieve these and their other goals in isolation and indeed will be less able to as climate changes add to the volatility of domestic production. Fortunately, each country's evolving consumption preferences and the wherewithal to satisfy them can be enhanced through trading more openly with other societies. This chapter shows how. It explains the contributions international trade openness can make—and has made—toward achieving these goals. In doing so, the chapter clarifies the role agricultural trade can play, in contrast to trying to remain self-sufficient in food. We draw out the implications for agricultural development prospects in various types of countries as the world economy grows. ; PR ; IFPRI4 ; MTID

Cover -- Half Title -- Title -- Copyright -- Contents -- List of Illustrations -- Acknowledgments -- 1 Introduction: Rural America in a Time of Change -- A Troubled Decade in Rural America -- The Fast Pace of Change in the Late 1980s -- Rural New York in a Time of Change -- The Purposes and Plan of This Book -- PART ONE THE FARM CRISIS AND ITS CHALLENGE TO RURAL COMMUNITY LIFE -- 2 Dairy Farms in a Time of Change: Struggle for Survival -- The Farming Way of Life -- Background: The Farm Crisis and Dairy Farm Losses -- Farms in Stress -- Families in Stress -- Strategies for Farm Survival -- Strategies for Family Survival -- The Crisis Recedes-For Now -- 3 Community Impacts: The Special Significance of Dairy Farm Losses -- Impacts of the Farm Crisis on Community Economies -- Social Impacts of Farm Financial Problems -- The Deeper Impacts: Effects on Rural Identity -- PART TWO SHIFTING NONFARM ECONOMIES -- 4 Paradox in Rural Economies: Vigor and Vulnerability -- A Case Illustration: Changes and Contradictions in the North Country -- Changing Components of New York's Rural Economies -- Rural Economic Indicators: A Mixed Picture -- Vulnerability of Rural Manufacturing -- 5 Plant Closings and Substitute Jobs: Labor Force for Sale -- Case Studies of Plant Closings -- Common Threads and Implications -- Job Creation: Shortchanged by New Jobs -- Rural Employment Issues for the Future -- PART THREE CHANGING RURAL POPULATIONS -- 6 People and Places: Demographic Change and Local Response -- Signs of the Times: Observations at a Rural County Fair -- Overview of Recent Demographic Trends -- Local Trends: Population Loss, Household Change, and Aging -- Return Migration to Rural Communities -- New Year-Round Residents -- Land Development and the Nonresident Population -- 7 Perceptions and Frictions: Problems in Accepting and Absorbing Newcomers.

This article presents estimates of the impact of China's accession to the World Trade Organization (WTO). China is estimated to be the biggest beneficiary (US$31 billion a year from trade reforms in preparation for accession and additional gains of $10 billion a year from reforms after accession), followed by its major trading partners that also undertake liberalization, including the economies in North America, Western Europe, and Taiwan (China). Accession will boost manufacturing sectors in China, especially textiles and apparel, which will benefit directly from the removal of export quotas. Developing economies competing with China in third markets may suffer small losses. Accession will have important distributional consequences for China, with the wages of skilled and unskilled nonfarm workers rising in real terms and relative to those of farm workers. Possible policy changes, including reductions in barriers to labor mobility and improvements in rural education, could more than offset these negative impacts and facilitate the development of China's economy.

The paper explores whether one of the largest programs in the world for women's empowerment and rural livelihoods, the Indira Kranti Patham in Andhra Pradesh, India, has had an impact on the economic and social wellbeing of households that participate in the program. The analysis usespanel data for 4,250 households from two rounds of a survey conducted in 2004 and 2008 in five districts. Propensity score matching was used to construct control groups and outcomes are compared with differences-in-differences. There are two major impacts. First, the Indira Kranti Patham program increased participants' access to loans, which allowed them to accumulate some assets (livestock and durables for the poorest and nonfarm assets for the poor), invest in education, and increase total expenditures (for the poorest and poor). Women who participated in the program had more freedom to go places and were less afraid to disagree with their husbands; the women participated more in village meetings and their children were slightly more likely to attend school. Consistent with the emphasis of the program on the poor, the impacts were stronger across the board for the poorest and poor participants and were more pronounced for long-term Scheduled Tribe participants. No significant differences are found between participants and nonparticipants in some maternal and child health indicators. Second, program participants were significantly more likely to benefit from various targeted government programs, most important the National Rural Employment Guarantee Scheme, but also midday meals in schools, hostels, and housing programs. This was an important way in which the program contributed to the improved wellbeing of program participants. The effects captured by the analysis accrue to program participants over and above those that may accrue to all households in program villages.

Uganda, where 85 % of the population live in rural areas, has experienced a rapid rise of rural and microfinance over the last ten years. There is a pronounced gender awareness in public policities and programs. Best practices have been mastered by institutions in the formal and the NGO sector. In the latter, women dominate as borrowers. Yet, as the vast majority still have no access to deposit and credit services, expansion of outreach remains as the biggest challenge. Rapid expansion of sustainable financial services to women is best achieved in Uganda not through women-only programs, but by a broad range of financial institutions with unbiased services to both women and men, the poor and the near-poor. NGO-supported microfinance institutions (MFIs), through group lending up to a ceiling, have provided start-up finance, particularly for women; but this has added borrower transaction costs and restricted growth. In Centenary Rural Development Bank and some MFIs, voluntary savings and individual lending to enterprising men and women have fostered sustainable farm and nonfarm business growth beyond the poverty line, creating at the same time employment opportunities for the very poor. Under the prevailing conditions of a conducive policy environment, diversified agricultural and microenterprise opportunities, good practices in agriculture and microfinance, and effective agency coordination, the most effective means of donor assistance are equity investments in rural banks to extend their branch network and staff; equity investments in MFIs to transform into regulated deposit-taking institutions; support to banks and MFIs for staff selection and training; the facilitation of linkages between MFIs and banks; and the development of gender-sensitive strategies in different culture areas of Uganda based on the differential analysis of customer information in each institution?s management information system.

This report is based on a field study of two large settlements, Satghara (a census town) and Bhagwatipur (a rural cluster with 10,000 plus population) in the Madhubani district of Bihar. The study explores the social dynamics of the rural non-farm economy by empirically mapping non-farm occupations in both the settlements. It examines the dynamics of caste, community, and gender within the social organization of the non-farm economy in terms of their economic and social hierarchies and the differential incomes and status they provide. The study also looks at the relationship of the local non-farm economy with patterns of outmigration. It further attempts to understand the manner in which the changes in the regional structures of power and domination have influenced the local economic processes and are being influenced by them with a specific focus on the non-farm economy in the two setting. The study also attempts an assessment of the possible development and urbanizing effects of the rather rapid growth of nonfarm economy in rural Madhubani.

It is clear that the important role of labor migration in development reflected through the impacts of remittance currently exists in many countries around the world. The complexed nature of migration that needs to interpret in a dynamic context and a changing society. Reviewing literature demonstrates the discourses of the motives of migration across many migration theories. Then, there are plenty of discussions of the motives of migration added from empirical research. However, there is still a lack of literature that requires discussion on why the domestic migrants leave their homes to work at places considered as exploitative and degrading, like industrial zones. In addition, migration is understood as an in and out process. Attempts have been made to explain the motive of out-migration, but few ones focus on return migration. Furthermore, existing literature focuses more on international return migration than internal return migration and the theories of return migration are subject to various debates. Since 1975, after the reunion of Vietnam, the government enforced a policy to restructure the population which led to inter-province migration. Many studies have been conducted on migration ever since, but few focused on return migration. This research survey 310 migrant workers in Que Vo and Yen Phong industrial zones of Bac Ninh province, and 68 returnees in Van Thang commune, Nong Cong district, Thanh Hoa province of Vietnam. Face to face interviews with two designed questionnaires have been applied to those samples. One is for migrant workers and the other is for returnees. Besides, some qualitative methods are also applied for supplementing the data collected by the questionnaires. Through those principle methods, this study found that the motives of migrant workers are complex. Push and pull theory by itself is not enough to explain these motives. The addition of the new economic theory of migration labor has made the explanation of migration motives more complete. Also, the research illustrated that the factors pushing rural people outmigration are, firstly, the local shortage of non-agricultural jobs, causing migrant workers to find alternatives in Bac Ninh industrial zones. More importantly, there is a shortage of cash for daily consumption. This itself, agricultural production, a prominent feature of rural areas, cannot be solved. Interestingly, the economic status of the household before the migration is not considered clearly as a push factor. But, migration to industrial zones is the rural youths' way of life. Experiencing in these zones aspires those people due to a life different from the areas of origin, acted as a pull factor. Furthermore, migrant workers are all attracted by high labor demand that created easier access to employment in the industrial zones of Bac Ninh. This study also found that social network acts as both push and pull factor for immigrating to the industrial zones. Furthermore, it revealed that migrant workers, a major labor force for industrial zones, now face challenges created by the unstable model of development. The sustainability of the development of industrial zones in Bac Ninh is threatened by the fact that these zones follow the footloose of their development model exposed in the 1990s. Additionally, this study found that migrant workers in industrial zones in Bac Ninh faced a trade-off between accepting a hard life and accumulating capitals as well as experiences for an expected better one afterward. Furthermore, the migration undertaken by migrant workers in industrial zones of Bac Ninh seems to be circular. Regarding return migration, this study demonstrated that the motive to return not only results from potential failures related to the increased living costs of the future married life but also associates with children left behind at the home village with stayers. Returnees are all driven by a filial obligation to their parents, shaped by the norms or culture of the home community. Non-farm employment opportunities around home villages are more of a motive to return for single migrants. This study also found that women play an important role in agriculture development in Van Thang. This sector is likely a buffer for the negative impacts of the return while the returnees seek better nonfarm employment around their home villages. ; Il est clair que le rôle important de la migration de la main-d'œuvre dans le développement, qui se reflète dans les effets des transferts de fonds, existe actuellement dans de nombreux pays du monde. La nature complexe de la migration doit être interprétée dans un contexte dynamique au sein d'une société en mutation. Une analyse de la littérature permet de mettre en évidence les motifs des migrations au travers de nombreuses théories. Par ailleurs, de nombreuses recherches empiriques ont été intégrées aux débats sur les causes des migrations. Cependant, il existe toujours un manque de littérature au sujet des raisons pour lesquelles les migrants domestiques quittent leurs foyers pour travailler dans des sites considérés comme abusifs et dégradants, tels que les zones industrielles. En outre, la notion de migration est considérée comme un processus d'entrée et de sortie. Certains ont tenté d'expliquer le motif de l'émigration, mais peu d'entre eux se concentrent sur celle du retour. De plus, la littérature existante se concentre davantage sur la migration de retour internationale que sur la migration de retour interne et les théories de la migration de retour font l'objet de divers débats. Depuis 1975, après la réunification du Vietnam, le gouvernement a appliqué une politique de réorganisation de la population qui a conduit à une migration interprovinciale. Depuis lors, de nombreuses études ont été menées sur la migration, mais peu d'entre elles se sont concentrées sur la migration de retour. Cette étude porte sur 310 travailleurs migrants dans les zones industrielles de Que Vo et Yen Phong de la province de Bac Ninh, et 68 rapatriés dans la commune de Van Thang, district de Nong Cong, province de Thanh Hoa au Vietnam. Des entretiens en tête à tête avec deux questionnaires spécifiques ont été appliqués à ces échantillons, l'un étant destiné aux travailleurs migrants et l'autre aux rapatriés. Par ailleurs, certaines méthodes qualitatives sont également appliquées pour compléter les données collectées par les questionnaires. Grâce à ces méthodes, cette étude a montré que les motivations des travailleurs migrants sont complexes. La théorie du "push and pull" ne suffit pas à elle seule à expliquer ces motivations. L'ajout de la nouvelle théorie économique de la main-d'œuvre migrante a rendu l'explication des motifs de migration plus complète. De plus, cette recherche a montré que les facteurs qui poussent les populations rurales à quitter le pays sont, en premier lieu, la pénurie locale d'emplois non agricoles, qui pousse les travailleurs migrants à trouver des alternatives dans les zones industrielles de Bac Ninh. Plus important encore, il y a une pénurie d'argent liquide pour la consommation de tous les jours. Ce problème ne peut être résolu par la production agricole, qui est une caractéristique importante des zones rurales. Il est intéressant de noter que le statut économique du ménage avant la migration n'est pas considéré comme un facteur de motivation. Toutefois, la migration vers les zones industrielles est devenue le mode de vie des jeunes ruraux. Le fait de vivre dans ces zones suscite des aspirations chez ces derniers en raison de la possibilité de mener une vie différente de celle de leur région d'origine, ce qui constitue un facteur incitatif au départ. En outre, les travailleurs migrants sont tous attirés par la forte demande de main-d'œuvre qui a créé un accès plus facile à l'emploi dans les zones industrielles de Bac Ninh. Cette étude a également montré que le réseau social agit à la fois comme un facteur d'incitation et d'attraction pour immigrer vers les zones industrielles. Elle a également révélé que les travailleurs migrants, qui constituent une main-d'œuvre importante pour les zones industrielles, sont maintenant confrontés aux défis engendrés par le modèle de développement instable. La durabilité du développement des zones industrielles de Bac Ninh est menacée par le fait que ces zones suivent le modèle de développement instable apparu dans les années 1990. Par ailleurs, cette étude a montré que les travailleurs migrants des zones industrielles de Bac Ninh sont confrontés à un compromis entre l'acceptation d'une vie dure et l'accumulation de capitaux et d'expériences pour une vie meilleure par la suite. En outre, la migration entreprise par les travailleurs migrants dans les zones industrielles de Bac Ninh semble être une migration circulaire. En ce qui concerne la migration de retour, cette étude a démontré que le motif du retour ne résulte pas seulement des échecs potentiels liés à l'augmentation du coût de la vie de la future vie conjugale, mais également des liens entre les enfants laissés au village d'origine et les personnes qui restent. Les migrants de retour sont tous motivés par une obligation filiale envers leurs parents, façonnée par les normes ou la culture de la communauté d'origine. Les possibilités d'emploi non agricole autour des villages d'origine sont davantage un motif de retour pour les migrants célibataires. Cette étude a également montré que les femmes jouent un rôle important dans le développement de l'agriculture à Van Thang. Ce secteur est probablement un tampon pour les impacts négatifs du retour, tandis que les rapatriés cherchent de meilleurs emplois non agricoles autour de leurs villages d'origine.

The last poverty assessment for Rwanda was conducted in 1997. Three years after the genocide, the country was characterized by deep and widespread poverty, rock-bottom health indicators, and pervasive hunger and food insecurity. In real terms, gross domestic product (GDP) per capita was lower than it had been in 1960. In real terms, the economy quadrupled between 1995 and 2013. Enrolment in primary school is near universal and infant and child mortality are among the lowest in Africa. A large part of the population, including the extreme poor, is covered by public health insurance. This poverty assessment focuses on the evolution of poverty and other social indicators over the past decade (2000-1 and 2010-11). Using data from a variety of sources, mainly the three household living standards surveys (EICV) and the three demographic and health surveys (DHS) conducted during the past decade, the poverty assessment documents trends in monetary and non-monetary dimensions of living standards and examines the drivers of observed trends. The aim of the poverty assessment is to provide policy makers and development partners with information and analysis that can be used to improve the effectiveness of their poverty reduction and social programs.

Norbert Michel and Jai Kedia


A few weeks ago, American Compass released Rebuilding American Capitalism, A Handbook for Conservative Policymakers. This Forbes column (American Compass Points To Myths Not Facts) provided a very brief critique of the handbook's "Financialization" chapter, and Oren Cass, American Compass's Executive Director, released a response titled Yes, Financialization Is Real.
Today's Cato at Liberty post is the second in a series that expands on the original criticisms outlined in the Forbes column. (The first in the series is available here.) This post deals with American Compass's claim that the financial sector has siphoned off "top business talent" to the detriment of the rest of the economy.
The evidence does not support American Compass's claims. The post also points out the inconsistency between American Compass's complaints about (allegedly) stagnant American income and an influx of people working in higher‐​paying fields.
To recap, American Compass's handbook states the following:
American finance has metastasized, claiming a disproportionate share of the nation's top business talent and the economy's profits, even as actual investment has declined." [Emphasis added.]

The original critique was that American Compass failed to provide supporting evidence for these claims, and that such supporting evidence doesn't exist. It also pointed out the number of people employed in the Finance and Insurance industry, as a share of total nonfarm employees, has barely budged from 4.5 percent since 1990.
To provide evidence that the nation is, in fact, losing its top business talent to the financial industry, Cass's response pointed to two paragraphs in a separate report that Cass wrote, Confronting Coin‐​Flip Capitalism. Our critique assumes that "coin‐​flip capitalism" is the same phenomenon as "financialization." The first of the two paragraphs is reproduced here:
Graduates of America's top business schools provide a useful proxy for the attraction of various industries and, from 2015 to 2019, nearly 30% of graduates from Harvard, Stanford, Wharton, Booth, Kellogg, Columbia, and Sloan went into finance. In 2020, the finance industry was the most popular and offered the most generous compensation packages for graduates of the MBA programs at both Harvard and Stanford. [See also, our Guide to Private Equity.]

This first paragraph does not provide evidence that finance has claimed a disproportionate share of the nation's top business talent. It merely refers to several years of placement data from some of America's top business schools, not a systematic study. The paragraph provides evidence that a large portion of top business school graduates choose to work in finance. That fact is hardly surprising, and it is not evidence that the proportion has changed or that businesses have been harmed.
The second paragraph is reproduced here:
Engineers have likewise flocked to Wall Street, as compensation at equivalent education levels surged in finance as compared to engineering after 1980. The probability of an engineer switching to a finance career increased more than four‐​fold from the 1980s to the 2010s; the share of "STEM" jobs in finance doubled over that period while the share in manufacturing fell by half. Lest one think these are the engineers who couldn't hack it in engineering, Nandini Gupta and Isaac Hacamo of Indiana University's Kelley School of Business find that "financial sector growth attracts exceptionally talented engineers from other sectors to finance."

Citing three research papers, American Compass bemoans the finding that "Engineers have likewise flocked to Wall Street." Our critique assumes that engineers should be included in the category of "top business talent."
First, even if business majors and engineers do choose finance versus other fields, that fact alone says nothing about why they make such choices, much less whether such choices cause harm to the nation's economy. Such choices could simply reflect that people tend to seek opportunities to earn higher compensation, and the outcome could be beneficial to the economy. And, in fact, between 1968 and 2022,[1] average annual real wage and salary growth was higher in finance than in several other sectors, including engineering. (See Figure 1.)









Figure 1: Real U.S. Annual Wage Growth Statistics by Sector, 1968 to 2022
Average annual real wage and salary growth is 1.73 percent in finance since 1968, but 1.26 percent in engineering and 1.36 percent in computer services. Thus, even though wages in finance are lower than in computer sciences or engineering (see Figure 2), their higher growth rate could help explain why many people would choose finance jobs relative to other fields.









Figure 2: Annual Wages in the U.S. by Sector, 1968 to 2022, inflation adjusted with Personal Consumption Expenditures (PCE)​
None of these facts are indicative of an economic problem. If American Compass believes that people earning so much more in the computer field harms Americans, they should say so. Similarly, if American Compass believes that a 0.47 percentage point difference in average income growth between the financial and engineering sectors reveals businesses have been harmed, they should state their hypothesis clearly and make an empirical case.
Surely, though, an organization such as American Compass, one that constantly complains about stagnant income, would not begrudge Americans for choosing to work in a higher paying field. (Figure 1 and Figure 2 also demonstrate that Americans' income is not stagnant. Real wage and salary growth has been positive across almost all sectors and time periods, with cumulative growth of 71 percent even in the manufacturing sector. We'll return to this issue in a future post.)
Of course, even this compensation growth data tells us very little about why the different rates of growth occurred in the various sectors. However, one of the academic research papers Cass cites in his response does provide an explanation for this difference. Specifically, we're referring to the paper by Thomas Philippon and Ariell Reshef, titled "Wages and Human Capital in the U.S. Finance Industry: 1909–2006," which was published in the prestigious Quarterly Journal of Economics in 2012.
In that paper, the authors show that the labor market in finance was artificially suppressed between 1940 and 1980 due to an over‐​bearing regulatory environment. In other words, overall wages and employment in finance would have been much higher without the heavy regulation in that sector. Consequently, the uptick in wages and employment after 1980 are likely due to the finance labor market reverting back to its non‐​suppressed state (similar to pre‐​1940) after the regulatory environment changed (precisely what economics would predict). Here's a quote from page 1552:
We find a tight link between deregulation and the flow of human capital in and out of the finance industry. In the wake of Depression‐​era regulations, highly skilled labor leaves the finance industry and it flows back precisely when these regulations are removed in the 1980s and 1990s. This link holds for finance as a whole, as well as for sub‐​sectors within finance. Our interpretation is that tight regulation inhibits the creativity of skilled workers.

So, this paper does not support American Compass's position that anything bad has happened; instead, it argues that any employment increase seen in finance is essentially a reversion to a state where skilled workers' creativity is no longer inhibited.
Another of the three papers is a Kelley School of Business working paper from 2022 by Nandini Gupta and Isaac Hacamo. This paper is an even stranger choice for American Compass to cite as proof of some kind of harm caused by financialization (or coin‐​flip capitalism). It shows that the net effects of people working in finance boost entrepreneurship. Here is the relevant language (from two separate paragraphs on page 4 of the paper):
Our results show that the finance wage premium increases overall entrepreneurship. This may occur because engineer‐​financiers are more likely to become entrepreneurs. Or, because talented engineers in finance facilitate entrepreneurship by others. We find that engineers who take finance jobs are less likely to subsequently start firms. Therefore, we study a potential peer effects mechanism where engineer‐​financiers may help their classmates become entrepreneurs.
…
We find the following results: First, we show that top engineers exposed to a higher finance wage premium at graduation are more likely to take jobs in entrepreneurial finance (EF) jobs in venture capital, private equity, and investment banking. Second, we show that engineers who don't take finance jobs are more likely to become transformational entrepreneurs the more classmates from the same school‐​major‐​graduation year who are in venture capital, private equity, and investment banking firms. For example, an engineer with 5 classmates in entrepreneurial finance jobs is 9% more likely to become an entrepreneur and 18% more likely to create a transformational firm that issues patents, employs workers, and has a successful exit, relative to the mean.

At the very least, the paper's results are consistent with the literature on peer‐​effects "whereby engineers in investment banking type jobs help their classmates start transformational firms." Obviously, it's very odd to cite this paper as evidence that financialization is some kind of blight on capitalism. It implies the opposite: the overall labor market trend is good for the economy.
The third paper is a 2022 working paper by Giovanni Marin and Francesco Vona, and the evidence it provides does not show that finance is now claiming a disproportionate share of STEM talent. For instance, the authors show that the probability a STEM graduate starts working in finance rose between 1980 and 2019, from 4 percent to 6.8 percent. However, they also report a substantial increase for non‐​STEM graduates – it rose from 6.5 percent in 1980 to 8.2 percent in 2019. (See page 9.)
The authors of this third paper also report (see pages 3 and 4) that they "observe a pronounced task reorientation towards math in finance and business occupations, which is associated with a change in the types of education required in these occupations." (Emphasis added.) In other words, they observe a change in education requirements for multiple occupations, one that (especially in finance) is "more pronounced among experienced workers."[2] Additionally, the paper corroborates that the drift of STEM graduates to finance is simply a result of people finding the best match of talent and innovation:
These empirical patterns are associated with profound technological changes affecting the financial industry more than the rest of the economy. Finance is an information‐​intensive industry that benefited from improvements in information and communication technologies (ICT) more than other industries did. The STEM biasedness in the demand of college graduates is consistent with the complementarity between ICT technologies and STEM graduates.

Finally, Marin and Vona report (see graph B on page 10) the share of hours worked by college graduates in the finance industry for both STEM and non‐​STEM graduates between 1980 and 2020. Both STEM and non‐​STEM groups display an increasing trend, and the share for non‐​STEM graduates remains roughly two percentage points higher than for STEM graduates for the full period. Though not quite as damning as the previous two papers, this one, too, fails to support the idea that finance has started claiming a disproportionate share of talent.
So, on balance, none of this evidence – especially not the papers cited by American Compass – supports the idea that finance is responsible for robbing the nation's businesses of talent. Nor, as American Compass argues in Confronting Coin‐​Flip Capitalism, does any of this evidence support that finance is robbing talent "from the real economy" and "further discouraging productive investment."
On page 102 of his book, Cass supports the "tracking of less academically talented students toward vocational training," so he may have some optimal employment arrangement in mind for the financial sector. Perhaps someone else at American Compass has some idea what the optimal quantity of workers should be in the financial sector, but the "Financialization" chapter does not mention it.
In the next post, we will discuss claims involving financialization's alleged effect on profits.


[1] Figure 1 and Figure 2 report annual average growth rates and actual amounts, respectively, for real annual pre‐​tax wage and salary income, by sector, from 1968 to 2022, using the IPUMS-CPS, University of Minnesota, www​.ipums​.org.


[2] Figure VI (on p. 1571) from Philippon and Reshef (2012) also confirms this finding. Finance jobs dramatically increased in complexity while tasks in the rest of the labor market became substantially less complex.

This article assesses the impact of the East Asian financial crisis on farm households in two of the region's most affected countries, Indonesia and Thailand, using detailed household level survey data collected before and after the crisis began. Although the natures of the shocks in the two countries were similar, the impact on farmers' income (particularly on distribution) was quite different. In Thailand, poor farmers bore the brunt of the crisis, in part because of their greater reliance on the urban economy, than did poor farmers in Indonesia. Urban-rural links are much weaker in Indonesia. Farmers in both countries, particularly those specializing in export crops, benefited from the currency devaluation. Although there is some evidence that the productivity of the smallest landholders declined over the period in question, it is difficult to attribute this directly to the financial crisis. At least in Thailand, a rural credit crunch does not seem to have materialized.

Poor rural and urban households in developing countries face substantial risks, which they handle with risk-management and risk-coping strategies, including self-insurance through savings and informal insurance mechanisms. Despite these mechanisms, however, vulnerability to poverty linked to risk remains high. This article reviews the literature on poor households use of risk-management and risk-coping strategies. It identifies the constraints on their effectiveness and discusses policy options. It shows that risk and lumpiness limit the opportunities to use assets as insurance, that entry constraints limit the usefulness of income diversification, and that informal risk-sharing provides only limited protection, leaving some of the poor exposed to very severe negative shocks. Public safety nets are likely to be beneficial, but their impact is sometimes limited, and they may have negative externalities on households that are not covered. Collecting more information on households vulnerability to poverty through both quantitative and qualitative methods can help inform policy.