“ECONOMICS”, observed J.K. Galbraith, “is extremely useful as a form of employment for economists.” In the United States, plenty hope so. Applications to the PhD programmes of many leading American universities have risen sharply: those at MIT were up by 15% for 2002-03; those for the coming academic year at New York University, which has energetically been recruiting star professors, are 70% higher than for 2000-01. Americans account for most of the increase, reversing a long-term decline in their interest.

It may be that economics PhDs, which take longer than MBAs, are a welcome shelter from the difficulties of the real economy. But for Americans now gaining doctorates, prospects are bleak. In 2002, the number of job openings for economists tallied by the American Economic Association (AEA) fell by 10%, the second decline running. Graduate-student membership of the AEA, a measure of the future supply of economists, rose by 14% (see chart). Robert Schwab, dean of the University of Maryland's economics department, says that last year was “very difficult” and that this year is expected to be “horrible”.

A prime reason is that universities are short of money. Most economics PhDs go on to teach, yet states' spending cuts have choked off job opportunities: the University of California's income from the state is expected to be $248m lower in the year that began on July 1st than it was in 2002-03. Some are finding jobs at business schools, the World Bank, the International Monetary Fund or in government. Businesses take a few: Daniel Hamermesh, of the University of Texas, says that consultancies, under pressure to provide fancier technical analysis, have been hiring more PhDs in recent years. But now times are bad, demand has waned. Hiring by Wall Street banks has also dried up.

Across the Atlantic, it is a different story. In Britain, plenty of students are keen to study business, but economics is seen as something of a dead end, unless studied and practised in America. While doctoral programmes fill up with eager young things from France and Spain, there are few British students. Indeed, interest in undergraduate programmes has also sagged, even though attendance at university has soared. The number of A-level students (ie, in their final year at secondary school) studying economics fell from 40,000 in 1992 to 17,000 in 2002.

Nobody seems to want to be an economics professor in Britain now. Since the profession peaked in the 1960s and early 1970s, says Richard Portes of the Centre for Economic Policy Research, low salaries, worsening staff-student ratios and tiresome paperwork have turned talented Britons away from academia.

University-level research in economics has suffered especially, because of competition from both the government and the private sector. The Bank of England and Government Economic Services (GES) have been keen hirers in recent years. The number of economists employed by GES, mostly with masters or undergraduate degrees, has climbed from 530 to 810, thanks mainly to policymakers' increased appetite for analysis. GES cannot even fill all its places despite recruiting continental Europeans. On the continent, meanwhile, the European Central Bank has attracted plenty of eligible young economists. Maybe America's jobseeking PhDs should look across the Atlantic—assuming that Europe's labour market is open enough to admit them.

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