ASSA 2024 Round-up: Day 2
Yesterday was the second day of the 2024 annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The 3-day conference, held in person in San Antonio, Texas, this year, features hundreds of sessions covering a wide variety of economics and other social science research. This year, Equitable Growth’s grantee network, Steering Committee, and Research Advisory Board and their research are well-represented throughout the program, featured in almost 60 different sessions of the conference.
Below are lightly edited abstracts from some of the papers and presentations that caught the attention of Equitable Growth staff during the second day of this year’s conference and which relate to the research interests laid out in our current Request for Proposals for early career scholars. We also include links to the sessions in which the papers were presented.
Come back tomorrow morning for more highlights from day three, and click here to review the highlights from day one.
“The Welfare Economics of a Data Driven Social Cost of Carbon”
Ishan Nath, Federal Reserve Bank of San Francisco; Michael Greenstone, University of Chicago; Solomon Hsiang, University of California, Berkeley
Abstract: This paper presents the first estimates of the social cost of a marginal ton of carbon dioxide emissions that combine theoretical insights on the welfare economics of climate change with a rich set of empirically grounded, probabilistic projections of future climate damages across five impact categories: human mortality, agricultural productivity, energy consumption, labor disutility, and coastal flooding. We find that accounting for the full welfare effects of uncertain and unequal climate damages raises the social cost of carbon substantially, relative to previous prevailing estimates based on deterministic projections and a global representative agent. The risk premium to avoid uncertainty in damages and realized global temperature change raises the social cost of carbon by more than 50 percent in low emissions scenarios, and by up to an order of magnitude or more in high emission scenarios, depending on a choice parameter that governs the valuation of a small proportion of extreme temperature draws that imply catastrophic losses. In high emission scenarios, the discount rate implied by standard intertemporal optimization can be close to zero as the possibility of severe damages reduces future welfare relative to present welfare. Finally, applying a welfare metric that accounts for differential marginal utility of damages incurred by poorer individuals can raise the social cost of carbon by up to an order of magnitude, as projected damages are heavily concentrated in poorer regions of the world.
“Not Just for Kids: Child and Dependent Care Credit Benefits for Adult Care”
Gabrielle Pepin, W.E. Upjohn Institute for Employment Research; Yulya Truskinovsky, Wayne State University
Abstract: We estimate effects of Economic Impact Payments and advance Child Tax Credit benefits on child care use and quality using mobile device location data linked to state child care licensing records. As low- and moderate-income households were eligible for larger Economic Impact Payments and advance CTC benefits, we estimate difference-in-differences models, comparing trends in child care visits from individuals living in census tracts with different pre-pandemic median income levels. Preliminary results using data from Virginia suggest that Economic Impact Payments and advance CTC benefits increased average child care visits per capita in low- and middle-income census tracts by 14 percent and increased the state-administered quality ratings associated with such visits by 7 percent on average.
Note: This research was funded in part by Equitable Growth.
“The Labor Market Impact of Shareholder Power: Worker-Level Evidence”
Antonio Falato, Federal Reserve Board; Daniel Gallego, Federal Reserve Bank of Chicago; Hyunseob Kim, Federal Reserve Bank of Chicago; Till von Wachter, University of California, Los Angeles, Equitable Growth grantee
Abstract: Using worker-level data from the U.S. Census Bureau’s LEHD program from 1993 through 2015, we show that shareholder power leads to large earnings losses for employees. We track the earnings of employees up to 5 years after their firms experience a material increase in concentrated ownership by block institutional shareholders, relative to employees of other firms that experience a similarly sized increase in ownership by diffused institutional shareholders. We find that over the next 6 years, the cumulative earnings of the affected employees decline by 10 percent of their pre-event annual earnings on average. Workers with “high skills” (such as those with earnings in the top tercile) and top managers (such as chief executives) bear the brunt of the negative impact, with the cumulative earnings declining by 16 percent and 63 percent, respectively. In contrast, shareholder power does not affect the earnings of employees with relatively low pay. There is also a negative impact on hiring but no impact on employee departures nor differential earnings losses conditional on departure, suggesting that separation is not the main channel underlying the earnings losses. The collection of evidence is consistent with concentrated ownership increasing shareholders’ bargaining power, which in turn reduces employees’ rents.
“U.S. Educational Mobility in the Twentieth Century”
Martha Bailey, University of California, Los Angeles, NBER, Equitable Growth grantee; A.R. Shariq Mohammed, Northeastern University, Equitable Growth grantee; Paul Mohnen, Federal Reserve Bank of Atlanta, Equitable Growth grantee
Abstract: This paper describes the geography of intergenerational educational mobility for both men and women born in the 20th century and its local correlates. We use supervised machine-learning to link 1.7 million men and women in the Social Security Application Records to the full-count 1940 census, while keeping Type I linking error rates very low, and reweight the linked sample to resemble the national population. We find that the geography of educational mobility was broadly similar to the geography of income mobility, with the highest rates of mobility in the Northeast and the West of the country and the lowest rates of mobility in the South. Counties with high rates of mobility had (i) lower income inequality, (ii) higher community-level literacy rates, (iii) higher levels of economic development, and (iv) greater public goods provision. The geography and the correlates of educational mobility were similar for men and women.
Note: This research was funded in part by Equitable Growth.
“Automation and the Rise of Superstar Firms”
Hamid Firooz, University of Rochester; Zheng Liu, Federal Reserve Bank of San Francisco; Yajie Wang, University of Rochester
Abstract: We document evidence that the rise in automation technology contributed to the rise of superstar firms in the past two decades. We explain the empirical link between automation and industry concentration in a general equilibrium framework with heterogeneous firms and variable mark-ups. A firm can operate a labor-only technology or, by paying a per-period fixed cost, an automation technology that uses both workers and robots as inputs. Given the fixed cost, more productive, larger firms are more likely to automate. Increased automation boosts labor productivity, enabling large, robot-using firms to expand further, which raises industry concentration. Our calibrated model does well in matching the highly skewed automation usage toward a few superstar firms observed in the Census data. Since robots substitute for labor, increased automation raises sales concentration more than employment concentration, also consistent with empirical evidence. A modest subsidy for automating firms improves welfare since productivity gains outweigh increased mark-up distortions.
“Equitably Targeting Climate Adaptation”
Derek Lemoine, University of Arizona, Equitable Growth grantee; Antonia Marcheva, Cornell University; Ivan Rudik, Cornell University, Equitable Growth grantee; Weiliang Tan, Cornell University
Abstract: We develop a framework for equitably targeting climate adaptation funding around the world. We use our new framework to answer three questions about equity and climate adaptation. First, how do different preferences about inequality over the distribution of global climate impacts affect how we should be directing adaptation investments around the world? Second, does there exist an equity-efficiency trade-off in where we direct climate adaptation, and if so, how severe is it? Third, how important is capturing spatial trade linkages that allow for adaptation investments in one region to be transmitted and provide benefits in another?
To answer these questions, we develop a theoretical framework where a planner aims to minimize inequality around the world subject to achieving a minimum level of aggregate welfare gains from adaptation. We provide theoretical results that show equality motives drive adaptation to be targeted toward regions that bear a greater share of global damage, or whose adaptation benefits tend to be transmitted to regions that bear a greater share of global damage. The most averse to inequality we are, the most concentrated adaptation becomes in a small handful of the most-harmed regions.
We quantify our model using global data on trade and production to compute equity-efficiency frontiers for climate adaptation. We find that there is an equity-efficiency trade-off. Adaptation budgets that can mitigate 20 percent of global damages exhibit almost perfect substitutability between increasing equality and reducing aggregate damages. However, almost the entire frontier leads to reductions in equality and improvements in aggregate welfare.
Last, we find that transmission of adaptation benefits is important. On average, a fifth of the benefits of global adaptation come from benefits spilling over through global trade. Adaptation funding should not necessarily be targeted solely on a region’s own climate exposure but also how its exposure harms other regions.
Note: This research was funded in part by Equitable Growth.
“Non-Disclosure Agreements and Externalities from Silence”
Jason Sockin, University of Pennsylvania; Evan Starr, University of Maryland; Aaron Sojourner, W.E. Upjohn Institute for Employment Research, Equitable Growth grantee
Abstract: Do non-disclosure agreements, or NDAs, distort labor markets? We address this question by leveraging new data on NDA use and state laws that prohibited employers from using NDAs to conceal unlawful workplace conduct. We find that this narrowing of NDAs increased worker’s willingness to share negative information, both in online reviews of employers and in sexual harassment complaints to the Equal Employment Opportunity Commission. In turn, employers’ average online ratings fell, dispersion in ratings across employers rose, and employee turnover slowed. Our results highlight how employers can use broad NDAs to silence workers and inflate their reputations, but doing so imposes negative externalities both on job-seekers who value such information and on competing employers who are less able to stand out.
“Induced Innovation, Inventors, and the Energy Transition”
Todd Gerarden, Cornell University; Eugenie Dugoua, London School of Economics
Abstract: We study how individual inventors respond to incentives to work on “clean” electricity technologies. Using natural gas price variation, we estimate output and entry elasticities of inventors and measure the medium-term impacts of a price increase mirroring the social cost of carbon. We find that the induced clean innovation response primarily comes from existing clean inventors. New inventors are less responsive on the margin than their average contribution to clean energy patenting would indicate. Our findings suggest a role for policy to increase the supply of clean inventors to help mitigate climate change.
Costas Arkolakis, Yale University; Conor Walsh, Columbia University, Equitable Growth grantee
Abstract: We provide a spatial theory of clean growth to assess the global impact of the rise of renewable energy. We model the details of the combined production and transmission network of electricity (“the grid”) that determine the supply and losses of energy in space. The local rate of clean energy adoption depends on learning-by-doing, the global electricity and trade network, and regional comparative advantage in renewable resources. To quantify the contribution of renewable adoption to global growth, we collect and harmonize global data on transmission lines, power stations, trade, and regional output. We use the model to measure the aggregate and spatial implications of clean growth, as well as the role of the Inflation Reduction Act in affecting the transition.
“An Equilibrium Model of the Impact of Increased Public Investment in Early Childhood Education”
Jessica H. Brown, University of South Carolina; Chloe Gibbs, University of Notre Dame; Chris M. Herbst, Arizona State University; Aaron Sojourner, W.E. Upjohn Institute for Employment Research, Equitable Growth grantee; Erdal Tekin, American University; Matthew Wiswall, University of Wisconsin-Madison
Abstract: Recent policy proposals call for significant new investments in early care and education. These policies are designed to reduce the burden of child care costs, support parental employment, and foster child development by increasing access to high-quality care, especially for children in lower-income families. In this paper, we propose and calibrate a model of supply and demand for different early care and education service and teacher types to estimate equilibrium family expenditures, participation in early care and education, maternal labor supply, teacher wages, market early care and education prices, and program costs under different policy regimes. Under a policy of broadly expanded subsidies that limits family payments for early care and education to no more than 7 percent of income among those up to 250 percent of national median income, we estimate that mothers’ employment would increase by 6 percentage points while full-time employment would increase by nearly 10 percentage points, with substantially larger increases among lower-income families. The policy would also induce a shift from informal care and parent-only care to center- and home-based providers, which are higher-quality on average, with larger shifts for lower-income families. Despite the increased use of formal care, family expenditures on early care and education services would decrease throughout most of the income distribution. For example, families in the bottom three income quintiles would experience expenditure reductions of 76 percent, 68 percent, and 55 percent, respectively. Finally, teacher wages and market prices would increase to attract workers with higher levels of education. We also estimate the impact of a narrower subsidy expansion for families with an income up to 85 percent of national median income.
