Krugman recently made the claim (noted here) that economics was more scientific three decades ago. Here’s a quote about labor economics with a completely opposite sentiment. This one’s from Richard B Freeman (What Do Unions Do? – Journal of Labor Research, Vol. XXVI (4)), who some years ago wrote about labor economics in the eighties. According to him, this was a period when
[…] structural modeling, usually of labor supply behavior, was the vogue among labor economists. To those lucky enough to have missed this phase of research, structural modeling meant developing sophisticated models of optimizing behavior and then estimating those models with as much econometric sophistication as possible on data that was rarely rich enough to yield clear conclusions nor to illuminate real behavior. Little time was given to finding the pseudo experiments or valid instruments that might truly identify responses to economic incentives. Since none of the modelers knew the right structure and most dismissed behavioral economics as outside the space of economic investigation, this research taught us more about modeling than about the world. My view then and now is that this approach does not add greatly to our knowledge of economies.