ASSA 2024 Round-up: Day 3
Yesterday was the third and final 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 were 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 third 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.
Click here to review the highlights from day one, and here for highlights from day two.
“Minimum Wage Effects and Monopsony Explanations”
Justin Wiltshire, University of Victoria, Equitable Growth grantee; Carl McPherson, University of California, Berkeley; Michael Reich, University of California, Berkeley, Equitable Growth grantee
Abstract: We present the first causal analysis of recent large minimum wage increases, focusing on 36 large U.S. counties that reached $15 or more by 2022q1. Using novel stacked county-level synthetic control estimators, we find substantial pay growth and no disemployment effects. These results hold even if we look at only lower-wage counties or counties that did not choose to pass local minimum wage legislation. We go on to document the presence of monopsony in the restaurant industry. We show that minimum wages reduce restaurant workers’ separation rates, and that they caused McDonald’s workers’ wages to grow faster than the prices of Big Macs, suggesting the presence of monopsony power and positive economic profits. Lastly, we discuss how the COVID-19 pandemic and its aftereffects can confound estimates of the impacts of these high minimum wages and propose a way to ameliorate this issue.
Note: This research was funded in part by Equitable Growth.
Juan Carlos Suarez Serrato, Stanford University, Equitable Growth grantee; Owen Zidar, Princeton University, NBER, Equitable Growth grantee
Abstract: This paper estimates the incidence of state corporate taxes using new data and methods for estimating the effects on profits. We extend Suarez Serrato and Zidar (2016) by developing two new identification approaches that use the effects of business taxes on the labor demand of incumbent firms and local productivity to identify profit effects. We estimate these reduced-form effects using data from the Census, show how reduced-form moments identify incidence and parameters, and provide incidence estimates using a variety of reduced-form approaches, as well as a structural model. Across these approaches, we find that owners bear a substantial portion of incidence. Our central estimate is that firm owners bear half of the incidence, while workers and landowners bear 35 percent to 40 percent and 10 percent to 15 percent, respectively.
“A Tale of Two Networks: Common Ownership and Product Market Rivalry ”
Florian Ederer, Yale University, Equitable Growth grantee; Bruno Pellegrino, Columbia University, Equitable Growth grantee
Abstract: We study the welfare implications of the rise of common ownership in the United States from 1995 to 2021. We build a general equilibrium model with a hedonic demand system in which firms compete in a network game of oligopoly. Firms are connected through two large networks: the first reflects ownership overlap, the second product market rivalry. In our model, common ownership of competing firms induces unilateral incentives to soften competition and the magnitude of the common ownership effect depends on how much the two networks overlap. We estimate our model for the universe of U.S. public corporations using a combination of firm financials, investor holdings, and text-based product similarity data. We perform counterfactual calculations to evaluate how the efficiency and the distributional impact of common ownership have evolved over time. According to our estimates, the welfare cost of common ownership, measured as the ratio of deadweight loss to total surplus, has increased about ninefold between 1995 and 2021. Under various corporate governance models, the deadweight loss of common ownership ranges between 3.5 percent and 13.2 percent of total surplus in 2021. The rise of common ownership has also resulted in a significant reallocation of surplus from consumers to producers.
Note: This research was funded in part by Equitable Growth.
Ryan Perry, Federal Reserve Bank of Chicago; Kristen Broady, Federal Reserve Bank of Chicago; Darlene Booth-Bell, Coastal Carolina University
Abstract: The COVID-19 pandemic has accelerated trends in automation as many employers seek to save on labor costs amid widespread illness, increased worker leverage, and market pressures to onshore supply chains. While existing research has explored how automation may displace nonspecialized jobs, there is typically less attention paid to how this displacement may interact with preexisting structural issues around gender and racial inequality. This analysis updates that of a 2021 Brookings paper by the authors, finding that Black and Hispanic workers continue to be overrepresented in the 30 occupations with the highest estimated risk of automation and underrepresented in the 30 occupations with the lowest estimated risk of automation. The updated analysis also includes new attention to automation’s impact on women workers, wage structures, a consideration of the broader implications of automation for global economics, and a discussion of the potential interplay of automation with recent developments in artificial intelligence.
“Racial Protests and Credit Access”
Alberto Ortega, Indiana University; Raffi García, Rensselaer Polytechnic Institute
Abstract: Do racial protests help or hurt access to credit for small businesses? This paper examines the effect of local racial demonstrations, such as Black Lives Matter protests, and the subsequent racial justice movement following the death of George Floyd on racial disparities in the Paycheck Protection Program loan disbursements. Using difference-in-differences, we find that local racial protests improve credit access for Black business owners. We find that social media and public attention after the death of George Floyd amplified the broader Black Lives Matter mission statement of racial equity, resulting in a positive moderating effect on loan amounts distributed to Black owners relative to other racial-ethnic groups. Our findings show that racial implicit and explicit bias diminishes after George Floyd’s death with stronger effects in finance occupations.
“The Role of State Policy in Reducing Disparities in Unemployment Insurance Recipiency”
Eliza Forsythe, University of Illinois-Urbana-Champaign, Equitable Growth grantee
Abstract: Many unemployed individuals are unaware they may be eligible for Unemployment Insurance, leading to low take-up among eligible individuals. To address this, some states have adopted policies by which employers must notify separating workers about UI eligibility. Using variation across states and the precise timing of policy adoption, I estimate the impact of separation notice requirements on UI recipiency, and investigate whether such policies may play a role in narrowing UI recipiency gaps across racial and ethnic groups.
Note: This research was funded in part by Equitable Growth.
“Merger Guidelines for the Labor Market”
David Berger, Duke University, Equitable Growth grantee; Kyle Herkenhoff, University of Minnesota, Equitable Growth grantee; Simon Mongey, Federal Reserve Bank of Minneapolis, Equitable Growth grantee; Eric A. Posner, University of Chicago
Abstract: While the labor market implications of mergers have been historically ignored as “out of market” effects, recent actions by the U.S. Department of Justice place buyer market power (i.e., monopsony) at the forefront of antitrust policy. We develop a theory of multiplant ownership and monopsony to help guide this new policy focus. We estimate the model using U.S. Census data and demonstrate the model’s ability to replicate empirically documented paths of employment and wages following mergers. We then simulate a representative set of U.S. mergers in order to evaluate merger review thresholds. Our main exercise applies the Department of Justice and Federal Trade Commission’s product market concentration thresholds to local labor markets. Assuming mergers generate efficiency gains of 5 percent, our simulations suggest that workers are harmed, on average, under the enforcement of the more lenient 2010 merger guidelines and unharmed, on average, under enforcement of the more stringent 1982 merger guidelines. We also provide a framework for further research evaluating alternative concentration thresholds based on assumptions about the efficiency effects of mergers and the resource constraints of regulators. Finally, we provide guidance for using the Gross Downward Wage Pressure method for evaluating the impact of mergers on labor markets.
Note: This research was funded in part by Equitable Growth.
“Gender, Race, and Denied Claims for Unemployment Insurance: The Role of the Employer”
Stephen Woodbury, Michigan State University, Equitable Growth grantee; Marta Lachowska, W.E. Upjohn Institute for Employment Research, Equitable Growth grantee
Abstract: Are female, Black, Hispanic, Asian American, and American Indian claimants for Unemployment Insurance more likely than White non-Hispanic claimants to see their claims disputed by an employer? And are these UI claimants ultimately more likely to have their UI claims denied, either by the UI agency or following a dispute? We address these questions by examining UI administrative wage and claim records from Washington state during 2005:Q1–2013:Q4. Overall, female claimants in the sample were statistically significantly more likely than males to have their claims disputed or denied; however, once we control for differences in observable characteristics of females’ claims, we find they were less likely to be disputed or denied than males’ claims in the sample. In particular, the findings suggest that females and males sort to employers with different propensities to dispute claims. Differences in denials and disputes by race/ethnicity are more difficult to characterize because they are divergent. Hispanic claimants were less likely than White non-Hispanics to have their claims disputed or denied; however, after accounting for observable characteristics of those claims, the differences were not statistically significant. Black, Asian American, and American Indian claimants were more likely than White non-Hispanics to have their claims disputed or denied, in some cases after controlling for observables.
“UI Benefit Generosity and Labor Supply from 2002-2020: Evidence from California UI Records”
Alex Bell, University of California, Los Angeles, Equitable Growth grantee; TJ Hedin, University of California, Los Angeles; Geoffrey Schnorr, University of California, Los Angeles, Equitable Growth grantee; Till von Wachter, University of California, Los Angeles, Equitable Growth grantee
Abstract: This paper provides estimates of the effect of Unemployment Insurance benefits on labor supply outcomes over the business cycle using 20 years of administrative claims, earnings, and employer data from California. A regression kink design exploiting nonlinear benefit schedules provides experimental estimates of behavioral labor supply responses throughout the unemployment spell that are comparable over time. For a given unemployment duration, the behavioral effect of UI benefit levels on labor supply is unchanged over the business cycle from 2002 to 2019. However, due to increased coverage from extensions in benefit durations, the duration elasticity of UI benefits rises during recessions. The behavioral effect during the start of the COVID-19 pandemic is substantially lower at all weeks of the unemployment spell.
“The Effect of Unemployment Insurance for Self-Employed and Marginally-Attached Workers”
Andy Garin, Carnegie Mellon University, Equitable Growth grantee; Dmitri K. Koustas, University of Chicago; Emilie Jackson, Michigan State University
Abstract: We study the temporary extension of Unemployment Insurance benefits to groups of workers typically excluded from the UI system—including gig workers, the self-employed more broadly, and labor market entrants with limited work experience—implemented as part of the United States policy response to the 2020 COVID-19 crisis. We document that, although enacted at the federal level, the state-level implementation resulted in large differences in the roll-out of benefits across jurisdictions in practice. We exploit this cross-state variation to estimate the causal impacts of these UI expansions on the labor supply, education choices, and mortality of affected groups using a spatial regression discontinuity design. We find that every additional dollar in UI payments received by self-employed workers led to a 28 cent reduction in their earnings, and find bigger reductions among platform-based gig workers of 48 cents. Our preferred explanation is that responses were larger among these gig workers because delivery remained a viable work option even as many other sectors were largely shut down by the pandemic. We find that the reduction in work done by older gig workers led to reductions in their mortality during the pandemic that can be plausibly linked to reduced exposure to COVID-19 through work—but find no effect among the self-employed more broadly.
