January 2013 newsletter – Jules Theeuwes

Jules Theeuwes was born October 10, 1944 in Noorderwijk (Belgium). He obtained a degree in Commercial and Consular Sciences from UFSIA (Antwerp) in 1966, and in Economics from the Catholic University of Louvain in 1970, topping it off with a PhD from the University of British Columbia in Vancouver in 1975. From January 1970 until August 1971 he was a Research Assistant at the Center for Economic Studies of the University of Louvain. After obtaining his doctorate in Canada he returned to Louvain, where he worked as a Research Assistant at CORE, the Center for Operations Research and Econometrics. In August 1976, he moved to The Netherlands: 9 years at Erasmus University Rotterdam, interrupted by a sabbatical year at the University of British Columbia (1978-1979), and terminated by a switch to the Free University Amsterdam in 1985. In 1986 he was appointed professor of Economics in the Faculty of Law at Leyden University. From 1998 he was Director of SEO Economic Research and Professor of Applied Research in the Faculty of Economics of the University of Amsterdam. In 2010 he retired as a professor, but not as Director of SEO. He has been Visiting Professor at the University of Wisconsin-Madison (1988) and Stanford University (1996), Fellow at the Netherlands Institute for Advanced Studies (NIAS), Wassenaar (1990 – 1991) and member of the Scientific Council for Government Policies (WRR) from 2002 till 2006. He died November 6, 2012, after living with cancer for three years. During his doctorate training at UBC, Theeuwes was attracted to three new developments that would dominate labour economics for several decades to come: the strong increase in labour force participation of women, the theory of human capital and the analysis of micro-foundations for the Phillips curve that would lead to the development of search theory. In 1975, he finished his dissertation, ‘Family labour supply and labour force participation decisions’, supervised by Ernst Berndt, John Cragg and Terry Wales. An analysis of postwar developments of female labour supply in the Netherlands was presented at the international comparative workshop in Sussex (UK), organized by Richard Layard and Jacob Mincer, and later published in the Journal of Labour Economics (1985). A simple neoclassical model, with wage, non-labour income and (exogenous) number of children, proved remarkably successful in tracking the labour force participation rate between 1947 and 1979. Essentially the same model was used to highlight the differences among three stages in the lifecycle of married women (European Economic Review, 1983).

His interest in human capital theory led him to estimate the parameters of a model for optimal accumulation of human capital initially formulated by Sherwin Rosen, and later extended to employ information on job levels. Not only the rate of return to on-the-job training appears increasing in level of education; the same holds for the rate of depreciation. Both papers have been published in the European Economic Review (in 1985 and 1989).

All his life he maintained an intense interest in search theory. He kept a close eye on research developments, published work on labour market flows, and in the 1990’s participated actively in exploring data linking employees and firms. He also considered implications and restrictions relating to privacy and confidentiality. This work with John Haltiwanger, Julia Lane and others mostly appeared in edited books published by North-Holland.

Right from the start of his career he was drawn towards policy issues. Policy mostly meant Dutch economic policy, and it meant participation in Dutch public debates. He became a well-known and widely respected commentator in all the media. As a master of the pointed formulation and of entertaining metaphors, he became an excellent ambassador for the intellectual wealth of economics. He served for four years as a member of the Scientific Council for Government Policies, a publicly funded but independent think tank and in the final stage of his career he found himself a perfect match as Director of SEO, a research institute for commissioned research, mostly for public institutions and government.

Virtually all his publications on economic policy are in Dutch, inaccessible to an international audience. Let me therefore elaborate on just one example, from his early days. In The Netherlands, CPB Economic Policy Analysis is the headmaster of economic policy. Budget proposals, government policy initiatives, electoral programmes of political parties are only taken seriously if CPB has X-rayed them with an econometric model. Initially, forecasts and policy predictions were not published straight from the econometric model, but they were adjusted manually, in an unobserved process. In 1981 Theeuwes published an article in the leading Dutch economic weekly (ESB), under the catchy title ‘The secret of the blue train’. The blue train is a term from indoor cycling: it refers to the group of cyclists that dominates the race and has priority in the area above a blue line painted on the track. To create transparency and to provide the layman with an instrument for policy analysis, Theeuwes regresses the published predicted values of the endogenous variables on all exogenous variables and presents this policy menu including unobserved manual adjustments, in a highly entertaining style, departing from an adapted well-known line of Dutch poetry (‘between dream and act, laws are in the way, and also melancholy that no one can explain’) and finishing with another: ‘Never mount the train without your trunk with dreams’). Entertaining, informative, playful.

His interest in economic policies sent him off to other areas of economics, without ever abandoning his first love. He wrote on labour and taxes for the Royal Dutch Society of Economics, about employment protection for
the Council on Government Policies, but he also moved into competition policy, innovation policy, intellectual property and law and economics. On law and economics he co-authored a textbook in Dutch when he was working in Leyden’s law faculty, and later, in 2008, a text for the international market, ‘clearly the most comprehensive law and economics text for undergraduates’, according to one of the reviewers.

In the last stage of his career, as Director of SEO Economic Research, it all fitted together: focus on economic policy, application of old wisdoms and new truths from economic theory, advising, explaining and commenting, in his reports, on radio, television, in newspapers, in clear, precise yet delicious language that always reflected his sheer joy and passion. Vividly illustrating the advantages of division of labour: policy relevance of economics not only requires relevant theory, it also requires translating theory to the policy maker. Theeuwes had a comparative advantage in serving clean and clear economic reasoning as a key ingredient to policy makers and to every interested participant in the public debate.

Economics surely was his passion. But not the only one: English literature, movies, good food, good company, spirited conversations. Avidly and eagerly he absorbed life, and abundantly he spread his joy around.

In the early 1990’s we sensed that Europe needed its own outlet of the growing research output in labour economics. We approached Elsevier North Holland and then were invited to become founding editors of Labour Economics, as a broad journal with an international orientation. It was hard work but also lots of fun. We felt privileged that so many of the world's leading labour economists immediately accepted our invitation to become a member of the editorial board. Apart from the intellectual and professional joy and pride that we got from nursing the journal, we had immense pleasure in the Christmas cards that we sent to our board members, to keep their dedication fully alive. We would go to one of these intimate Amsterdam pubs, have a beer and started tossing up ideas. Jules always came up with the winner. So we showed that our dedication had no limit, by using an issue of Labour Economics as our fig leaf (‘help us dress up the journal’), by posing as junkies (‘don't send us your hash-beens’), asking angelical help in our efforts, sending a T-shirt inspired by Asterix (showing a Roman figure, thumb down and shouting ‘Reject!’). Yes, work is gratifying, economics is intellectually rewarding, but it all works better if you drench it in playful humour. In September 2013, EALE celebrates its 25th anniversary. It coincides with the 20th anniversary of Labour Economics and Jules and I were invited to set up a special event. Jointly, we selected topics, conference sessions, authors. We hoped intensely that Jules would make it to the celebrations at the Turin conference. But fate withdrew its courtesy and more delays were not to be. I shall miss him dearly, and I know I share this feeling with many.

Joop Hartog
University of Amsterdam