Economics, Reviews

Review: Brown, Haltiwanger, and Lane, Economic Turbulence

jacket imageAs noted by a recent review in the Wall Street Journal, in Economic Turbulence: Is a Volatile Economy Good for America? Clair Brown, John Haltiwanger, and Julia Lane have come up with a surprising answer to the titular question. In their revealing new book, the authors argue that contrary to popular belief “job turnover and firm disappearance” may actually “have positive effects, in the aggregate.” Summarizing their argument for the WSJ, Tyler Cowen writes :

As workers lose jobs in one niche or sector, they gain in another, moving on to better jobs and higher pay. In the software sector new businesses are more productive, over a five-year period, than the firms they replace. This new business productivity gain, the authors show, is true generally across sectors—generating efficiency, products, and most importantly jobs.

The book has been the centerpiece of some recent discussions around the blogosphere as well. Free Exchange, an opinion forum moderated by the Economist, features a posting on the book, as does Cowen’s own blog, Marginal Revolution—with the latter posting generating some commentary and controversy. If you’d like to find out more we’ve posted an excerpt from the book online, check it out and join the debate!