Macroeconomics

“Wealth inequality and wealth returns heterogeneity”

Luigi Pistaferri, Professor of Economics, Stanford University
Academic grant: $50,000 over two years

Recent research has clearly shown that the inequality of labor earnings, by itself, is not enough to explain the inequality of wealth. Utilizing a series of remarkable administrative records on the population of Norway from 1995 to 2015, where individuals were, until recently, subject to both income and wealth taxation, this research seeks to fill a gap in our knowledge by addressing both our theoretical understanding of how wealth is accumulated and our empirical understanding of the distribution of wealth across individuals and households.

“Manufacturing employment, trade, and structural change”

Guillermo Gallacher, Ph.D. student in Economics, University of Washington
Doctoral grant: $15,000 over one year

The political resonance of the decline in U.S. manufacturing employment has reached a fever pitch in recent years, with calls for a return of manufacturing jobs. But how feasible is such a goal in light of structural changes in the U.S. economy, such as technological growth? This project will try to answer this question by developing a model that will decompose the total decline in manufacturing into decline due to structural change and decline due to increased international trade. It also aims to put the decline of manufacturing in a global perspective. It proposes to study cross-country patterns of structural change by studying 25 Organisation for Economic Co-operation and Development countries, offering a new look at the current controversy of trade versus technology in employment.

“From Liberty Street to Main Street: Firms, monetary policy, and labor market outcomes”

Christina Patterson, Ph.D. student in Economics, Massachusetts Institute of Technology
Doctoral grant: $15,000 over one year

According to its mandate, the Federal Reserve is required to foster maximum employment. The central bank tries to do this by affecting aggregate demand by loosening or tightening the flow of credit. The distributional impact of these decisions is unclear when it comes to the labor market. This research assesses how changes in monetary policy affect the demand for different kinds of workers and redistribute labor income and represents an exciting extension of recent literature on firm effects.

Human capital and the labor market

“The impact of paid maternity leave: Evidence from temporary disability insurance in Rhode Island”

Justine Hastings, Professor of Economics and International and Public Affairs, Brown University; Eric Chyn, Assistant Professor of Economics, University of Virginia
Academic grant: $40,000 over one year

This research explores how maternity leave affects mothers and their children. Much of the work on paid maternity leave in the United States has focused on the labor supply effect for women, with a small literature on health effects for children. Using a set of linked administrative data from the state of Rhode Island, this project will examine a more extensive set of outcomes for both mothers and children. In addition, the research will look at maternal and child outcomes for individuals across the income distribution, providing needed nuance to assess various policy options.

“Unbundling worker and manager preferences for workplace organization: Understanding support for new forms of labor representation”

Alexander Hertel-Fernandez, Assistant Professor of International and Public Affairs, Columbia University
Academic grant: $36,135 over one year
This project is co-funded by the Russell Sage Foundation

The rate of unionization remains low in the United States, and as new forms of worker representation emerge, we need to better understand what workers want from labor organizations and how employee preferences differ across industries and occupations. This project will field a relatively large-scale survey, with embedded survey experiments, to examine what aspects of labor organization are preferred by workers and management.

“Effects of the new wave of minimum wage policies”

Michael Reich, Professor of Economics and Co-Chair of the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment or IRLE, University of California-Berkeley; Sylvia Allegretto, Assistant Research Economist at IRLE and Co-Chair of the Center on Wage and Employment Dynamics, University of California-Berkeley; Anna Godoy, Postdoctoral Scholar at the Center on Wage and Employment Dynamics, University of California-Berkeley

Academic grant: $68,000 over two years

This project will take advantage of the unusually large changes in the statutory minimum wages in eight states and nine cities to analyze wage and employment impacts. There is intense debate over the efficacy of increased minimum wages to address growing income inequality, and this research will provide useful evidence, directly contributing to discus-sions of how to improve the design of current and future minimum wage policies.

“Wages of power and wages of care: A source of increasing earnings inequality?”

Kristin Smith, Research Associate Professor of Sociology, University of New Hampshire; Nancy Folbre, Professor Emeritus of Economics, University of Massachusetts-Amherst
Academic grant: $60,000 over two years

There is growing evidence that wage differences between industries and firms are a primary source of contemporary wage inequality. Similarly, evidence suggests that gender segregation at the industry, occupation, and firm levels has persisted even as gender differences in human capital have declined. This project will draw a connection between the contribution of between-industry wage differences to overall wage inequality on the one hand, and occupational/industrial gender segregation and the wage penalty for care work on the other. The researchers will compare employment and wages, by gender, in the care versus financial sectors, thereby capturing the dynamics of gender by occupation in sectors that are the bookends in the structure of wages and wage inequality, tracking the extent to which the gender gap has grown or subsided in these two extreme groups.

“Sources of displaced workers’ long-term earnings losses”

Stephen Woodbury, Professor of Economics, Michigan State University;Marta Lachowska, Senior Economist, W.E. Upjohn Institute
Academic grant: $67,884 over one year
This grant is co-funded by the Russell Sage Foundation

Pervasive earnings losses are a well-documented feature of job displacement, yet the understanding of the sources of these earnings losses is limited. The decline could be due to a lower wage at a new job, a lower likelihood of finding a new job, working fewer hours, or the loss of firm-specific rents. This project proposes to take advantage of employer-employee matched administrative data from Washington state’s unemployment insurance program to better understand the sources of earnings losses and to analyze the role of employer characteristics in job losses. Obtaining a better diagnosis of the root causes behind the long-term earnings decline can lead to better-designed policy responses.

“Bias and labor market inequality”

Heather Sarsons, Ph.D. candidate in Economics, Harvard University
Doctoral grant: $15,000 over one year

This research asks how gender inequality influences the number of chances that individuals receive to succeed in the workplace and whether this affects skill development and/or contributes to wage and promotion gaps. Specifically, the research seeks to add to our understanding of how gender differences may affect whether an employee’s successes and failures are attributed to luck or ability, and if that has implications for career trajectory. The project uses a unique data set of primary care physicians’ referrals to surgeons.

“The optimal design of parental leave policies and gender equality: Mismatch of skills across genders”

Linh Tô, Ph.D. candidate in Economics, Harvard University
Doctoral grant: $15,000 over one year

The goal of this study is to understand the welfare consequences from long-term skill mismatches due to childbirth and how maternity leave policies can help alleviate such mismatches. This research focuses on job match quality between men and women through joint decision-making, and its contribution to the gender wage gap. While the gender wage gap has been studied in relation to occupation or sector type, the job match paradigm within the context of household decision-making is less understood. Findings will be relevant to discussions of effective federal paid leave policies, among others.

Innovation

“Digital discrimination: A case of Airbnb”

Abdul Raheem Shariq Mohammed, Doctoral student in Economics, University of Arizona
Doctoral grant: $15,000 over one year

This research will test a widely held perception that making ethnic information less prominent—rather than completely eliminating it—will reduce discrimination. The researcher will use a recent Airbnb policy change to empirically test this relationship empirically. Utilizing data from Airbnb, the research effectively builds on the literature using ethnic names on resumes to test for discrimination. This research will be able to focus attention on the continuing problem of racial discrimination for wages, particularly in the “gig,” or “platform,” economy.

Institutions

“The color of wealth in Boston”

William Darity, Jr., Arts & Sciences Professor of Public Policy and Professor of African and African American Studies, Duke University; Darrick Hamilton, Associate Professor of Economics and Urban Policy, The New School
Academic grant: $70,000 over one year

This project is an extension of the National Asset Scorecard for Communities of Color (NASCC), a city-level analysis of wealth inequality. Previously, the research team has surveyed five cities with large non-white populations with the aim of measuring household wealth at the level of detailed racial and ethnic categories. Specifically, this grant will sup-port the second wave of the NASCC in Boston, which will be representative of sub-groups of Asian households as well as the originally sampled groups from the previous wave. Findings will make an important contribution to the wealth inequality literature, going beyond the broad categories of “Black” and “Hispanic” to provide more granular data on the economic situation of racial and ethnic groups in the Boston metropolitan area.

“The historical shadow of segregation on human capital and upward mobility”

Trevon Logan, Logan Hazel C. Youngberg Trustees Distinguished Professor of Economics Department Chair, The Ohio State University; Rodney Andrews, Assistant Professor of Economics, The University of Texas at Dallas; Marcus Casey, Assistant Professor of Economics, University of Illinois at Chicago; Bradley Hardy, Associate Professor, Department of Public Administration and Policy, American University
Academic grant: $73,740 over one-and-a-half years

This project expands on recent path-breaking work that has documented substantial variation in rates of social mobility across locations in the United States. Where children grow up has a strong influence on the probability that they will earn more than their parents in adulthood, with some regions highly mobile and others lagging far behind. This research suggests that regional differences in opportunity might be explained not only by contemporary characteristics but also by historical disparities. The researchers will merge the Panel Study of Income Dynamics (PSID) with Raj Chetty and others’ Equality of Opportunity dataset, and the Logan-Parman index of inequality, providing a profound advancement in the literature with strong policy implications.

“Firm and market shocks, wage risk, and the protection provided by government institutions: Evidence from IRS tax data”

Magne Mogstad, The Gary S. Becker Professor in Economics, University of Chicago; Bradley Setzler, Postdoctoral Scholar, Department of Economics, University of Chicago
Academic grant: $76,050 over one-and-a-half years

Researchers and policymakers are increasingly discovering the important role of firms when it comes to earnings. Shocks to the productivity of firms or industry—for example, a firm closing, or an industry shrinking—appear to be an important contributor to workers’ earnings and employment volatility. This project will investigate how different shocks to firms and the market are passed onto employees of that firm and, importantly, the effectiveness of U.S. social insurance programs—for example, unemployment insurance, Social Security programs, etc.—in buffering households against shocks to their incomes. Whereas most of the work on these issues to date is limited to either looking at workers independently from firms or industries, or at shocks that result in substantial displacement, the researchers will utilize IRS data that allow them to link individuals to the firms that employ them, opening a rich field of research questions that it has not previously been possible to answer. Research findings will likely provide details to help us understand where problems may be greatest, or provide new evidence on places where institutions are more successful in mitigating negative shocks.

“Languages, laws, and labor contracts”

Suresh Naidu, Associate Professor of Economics and International and Public Affairs, Columbia University; Bentley Macleod, Sami Mnaymneh Professor of Economics and Professor of International and Public Affairs, Columbia University; Elliott Ash, Assistant Professor, Department of Economics, University of Warwick
Academic grant: $80,000 over two years

The decline in bargaining power for large groups of workers is at the core of rising inequality. This research aims to provide some of the first causal evidence that contractual language is not merely cheap talk but rather meaningfully shapes the decisions of contracting parties in the labor market. The grant will support an effort to digitize union contracts stored at the Kheel Center at Cornell University. In addition to digitization, the researchers will use language processing tools to extract norms, commitments, and entitlements from the text. The result will be a tool that can be used to understand the role of unions in the 20th century. The dataset will be uniquely detailed, including features of union contracts based on industry sector, union, firm, and year of the contract. The research questions that might be answered with the data range from the fundamental—How are labor contractual terms determined, and how do contractual terms affect workers and firms?—to the more subtle—How and why do contractual terms begin to reflect legal changes and judicial decisions?

“How local barriers to migration shape relocation and earnings in the wake of China trade shocks”

Abigail Wozniak, Associate Professor in the Department of Economics, University of Notre Dame; Kevin Rinz, Economist, Center for Administrative Records Research and Applications, U.S. Census Bureau
Doctoral grant: $67,120 over one year

In the past, migration was an important way Americans reacted to economic shocks. When one area was hit by a decline in labor demand, residents of the area could respond by moving to an area where demand for their labor was higher. But internal migration has been falling and may be a reason why incomes for most Americans have stagnated. In an era of low labor mobility, what determines who responds to the shock via migration? This research seeks to extend recent work that has studied the impact of the well-documented shock from increased Chinese imports on the mobility of affected workers across firms, industries, and local labor markets. The authors have access to rich census data that allows them to trace individuals over time and space, and to observe many variables that may affect the likelihood of an individual’s mobility response to the trade shock—for example, demographics, historical migration flows between locations, and presence of higher education opportunities. This project will look at the net mobility of each region, and also dig into the gross inflows and outflows to better understand the underlying mechanisms.

“Vertical disintegration and the reallocation of risk and revenues in production networks: The case of franchising”

Brian Callaci, Ph.D. candidate in Economics, University of Massachusetts-Amherst
Doctoral grant: $15,000 over one year

This research asks whether vertical disintegration strategies, such as outsourcing and franchising, are merely efficiency-enhancing or if they are also strategies to manipulate the legal boundaries of the firm to gain greater revenues and shift risk onto less powerful suppliers, contractors and franchisees. The research focuses specifically on franchises and proposes to build a unique new dataset based on financial data from court cases. Particular areas of exploration include questions of bargaining power, risk, royalty rates, and contract terms.

“Concentration of corporate ownership and inequality”

Alex Xi He, Ph.D. student in Economics, Massachusetts Institute of Technology
Doctoral grant: $15,000 over one year

This project will look at how the concentration of corporate ownership and mergers and acquisitions affects inequality and workers’ well-being by evaluating the relationship between growing market concentration and the declining labor share of income. The research proposes to distinguish two channels by which greater concentration could matter: reduced product market competition, which would directly increase the profit share of gross domestic product and thereby reduce the labor share, and reduced labor market competition—which would directly reduce the labor share.

“Prediction and the moral order”

Barbara Kiviat, Ph.D. candidate in Sociology and Social Policy, Harvard University
Doctoral grant: $15,000 over one year

A structural change in the U.S. economy—huge new flows of personal information stemming from technological innovation—has enabled companies to classify, sort and rank individuals in ways previously unimaginable. This research proposes to study car insurers’ use of big data and predictive analytics to understand how regulators, members of industry and other key actors together establish the market rules by which personal data determines economic opportunity. It asks on what grounds policy and market actors conclude that it is fair to treat people differently in the marketplace based on their personal data “traces,” and seeks to show how some, but not other, ideas get embedded in markets over time.

“Unions, managers, and monopolies: How concentration and managerial power contribute to rising wage inequality”

Nathan Wilmers, Ph.D. candidate in Sociology, Harvard University
Doctoral grant: $15,000 over one year

The extent to which income inequality can be traced to shifts in the distribution of rents and/or to declines of workers’ share of those rents is an open and important question, one that researchers have had difficulty answering due to data limitations. This research will link multiple administrative datasets to assess how concentration in managerial power con-tributes to rising wage inequality. The research will make an important contribution to our understanding of the larger forces generating income inequality—specifically, how corporate decision-making that fuels market concentration may also fuel income inequality.