ASSA 2022 Round-up: Day 3


Yesterday was the third and final day of the annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The conference, held virtually again this year due to the ongoing coronavirus pandemic, features hundreds of sessions covering a wide variety of economics and other social science research. This year, Equitable Growth’s grantee networkSteering Committee, and Research Advisory Board and their research are well-represented throughout the program, featured in more than 60 different sessions of the conference.

Below are 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. 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.

Recent Longitudinal Evidence of Size and Union Threat Effects by Gender on Wages and Benefits

Phanindra V. Wunnava, Middlebury College

Abstract: It is evident that both male and female workers in medium/larger establishments not only receive higher wages but also have a higher probability of participating in benefit programs than those in smaller establishments. This reinforces the well-documented “size” effect. Further, the firm-size wage effects are much larger for men than women. The union wage effect decreases with establishment size for both genders. This supports the argument that large nonunion firms pay higher wages to discourage the entrance of unions (i.e., the “threat” effect argument). In addition, the union wage premium is higher for males across firm sizes relative to females. This implies that unions in the large establishments may have a role to play in achieving a narrowing of the gender union wage gap. Further, given the presence of noticeable gender differences in estimated union effects on benefits—such as health insurance, maternity leave, life insurance, and retirement—unions should not treat both genders similarly.

Monetary Policy, Labor Income Redistribution and the Credit Channel: Evidence from Matched Employer-Employee and Credit Registers

Martina Jasova, Columbia University-Barnard College; Caterina Mendicino, European Central Bank; Ettore Panetti, University of Naples Federico II; Dominik Supera, University of Pennsylvania

Abstract: We show that softer monetary policy reduces labor income inequality via the credit channel. For identification, we exploit administrative matched datasets in Portugal—employee-employer and credit register—and monetary changes since the Eurozone creation in 1999. We find that softer monetary policy conditions reduce labor earnings differentials across firms and workers in the economy. Small and young firms increase workers’ wages the most and the effects are particularly strong for firms that are more levered. We also find that workers that benefit the most from looser monetary policy are young, educated, and female. Similar results also hold for firm-level employment and workers’ total hours worked. Our findings uncover a central role for the firm balance sheet and the bank lending channels of the transmission of monetary policy to labor income inequality, with state-dependent effects that are substantially stronger during crisis times. Note: This research was funded in part by Equitable Growth.

Do Richer Parents Cushion the Fall? Disparate Impacts of Job Loss by Parental Income and Implications for Intergenerational Mobility

Emily Nix, University of Southern California; Martti Kaila, University of Helsinki; Krista Riukula, ETLA Economic Research

Abstract: Does job loss cause less economic damage if your parents are higher income, and what are the implications for intergenerational mobility? In this paper, we show that following a layoff, adult children born to parents in the bottom 20 percent of the income distribution have almost double the unemployment, compared with those born to parents in the top 20 percent, with 50.5 percent higher present discounted value losses in earnings. Second, we show that the unequal impacts of job loss are larger when the economy is growing than when it is in recession. Third, we show that these disparate impacts of job loss have important implications for inequality and intergenerational mobility. They increase the 80:20 income inequality ratio for those impacted by 5.2 percent and increase the rank-rank coefficient by 23 percent, implying large reductions in intergenerational mobility. In the last part of the paper, we explore mechanisms and show that much of these differences in the impacts of job loss between children of low- and high-income parents can be explained by “baked in” advantages.

Framing Job Quality: A Functional Definition

Sara Chaganti, Federal Reserve Bank of Boston; Erin Graves, Federal Reserve Bank of Boston

Abstract: Job quality—not just the fact of having a job, but also the conditions of the job—is a central concern for workers individually and for U.S. social policy. Going into the pandemic, a strong body of research showed that while the economy was generating lots of jobs, the quality of these jobs was increasingly poor, and this was especially the case for jobs held by non-White and female workers. The pandemic spotlighted not just economic inequality but also work inequality, where workers vary in wages and important working conditions. Policymakers are now committing to a recovery from the pandemic that includes equitable distribution of quality jobs. In this paper, we outline a policy-oriented framework for understanding job quality and options for improving it. First, we conceptualize a functional definition of job quality, one that defines a job less by its features than by the role it serves in people’s lives. We suggest that the essential function of a quality job is that the conditions of the job itself advance worker well-being. Second, we describe the conditions that make a job a quality job, distinguishing those that are endemic to the job and those that are conventionally (though not necessarily) tied to the job in the U.S. context. Third, we advance our argument that specific and deliberate post-Fordist policy interventions shifted the ecology of our labor (and product) markets, and these shifts created incentives to drive down the quality of jobs, especially for those workers with the least social and economic power. Finally, we identify policy responses—public, private, and cross-sectoral—that may increase the numbers of and equitable access to good jobs: jobs that advance worker well-being and strengthen contemporary links between worker well-being and conditions of the job.

The Historical Origins and Evolution of Criminal Records – Occupational Licensing Requirements

Peter Q. Blair, Harvard University; Darwyyn Deyo, San Jose State University; Jason F. Hicks, University of Minnesota; Morris M. Kleiner, University of Minnesota

Abstract: We collect data on the origins and evolution of state laws affecting the ability of people with criminal records to be issued an occupation license. The data range from year of initial licensure, which occurred as early as the mid-19th century, to 2020 for 30 occupations ranging across different industries but currently requiring licensure in all states. Additionally, we collected data on universal criminal records-occupational licensing, or CROL, requirements, which are requirements that apply to all occupations requiring licensure in a state. These requirements were typically enacted in states from the mid-1970s through the late-2010s. The CROL requirements we collected include (1) good moral character clauses, which allow licensing authorities to reject applicants who are deemed to not be of good moral character, (2) criminal records restrictions, which prevent an individual from being issued an occupational license due to a previous conviction, (3) the requirement of a relationship between an offense and the tasks and duties of an occupation, (4) consideration of rehabilitation, and (5) limitations on scope of inquiry, which limit the ability of licensing authorities to consider certain criminal records. We will describe how the distribution of CROL requirements varies across states, occupations, and industries. Additionally, we will describe how the stringency of the requirements have changed through time. We are using the data to examine the effects of different CROL requirements on labor market outcomes of minority populations who have disproportionate felony conviction and incarceration rates. Additionally, we are examining the political economy of CROL requirements by identifying the social, political, and economic factors that lead to the enactment of these requirements. Note: This research was funded in part by Equitable Growth.

Asymmetric Peer Effects: How White Peers Shape Black Turnover

Nina Roussille, London School of Economics; Elizabeth Linos, University of California, Berkeley; Sanaz Mobasseri, Boston University

Abstract: This study examines how working with White co-workers affects turnover rates for Black employees in a large professional services firm. Black employees are 10 percentage points more likely to turnover within 2 years, relative to similar White employees in the same office, whose average turnover rate is 21 percent. Drawing on conditional random assignment to their initial project for more than 9,000 newly hired employees in the United States, we find that a one standard deviation (20 percent) decrease in the percentage of White co-workers in the initial project decreases turnover for Black women (but not Black men, other non-White, or White employees) by 10 percentage points. We further collect performance review and talent surveys of employees to understand the mechanism behind this result. Early results suggest that when Black women are assigned to initial projects with more White co-workers, they are less satisfied at work and receive more negative performance evaluations: Evaluators are more likely to identify them as “at risk of low performance” and are less willing to “always want the [given employee] on their team.” We are currently collecting information on network formation and promotion at the firm to understand how the initial project assignment impacts career evolution at the firm.

The Broken Rung: Gender and the Leadership Gap

Ingrid Haegele, University of California, Berkeley

Abstract: Women are vastly underrepresented in leadership positions, but little is known about when and why gender gaps in representation first emerge in the leadership hierarchy. This study uses novel personnel data from a large manufacturing firm to document that gender differences in applications for first-level leadership positions create a key bottleneck in women’s career progression. Women are not less likely to learn about job openings at the firm and do not experience lower hiring likelihoods than male applicants. Instead, gender differences in revealed preferences for leading a team account for women’s lower propensities to apply for first-level leadership positions. Women who rise to the first leadership level are not less likely than men to apply to or to receive subsequent promotions, rejecting the common notion that a glass ceiling at higher-level leadership positions is the key barrier to gender equality.

Black Land Loss: 1920-1970

Dania V. Francis, University of Massachusetts Boston; Thomas Mitchell, Texas A&M University; Darrick Hamilton, TheNew School for Social Research; Bryce Wilson Stucki, nonaffiliated

Abstract: In this paper, we estimate the value of lost Black agricultural land. Countless Black farmers fell victim to violent dispossession of their land prior to the Civil Rights reforms of the 1960s. Many more, however, lost land due to discriminatory federal farm credit policies, and the discriminatory implementation of federal, state, and local agricultural policies, before, during, and after the Civil Rights era. We use Census of Agriculture data on Black ownership of agricultural land from 1910 to 1997 to estimate the present value of average yearly land losses to Black land owners. By our most conservative estimate, the dispossession of Black agricultural land resulted in the loss of hundreds of billions of dollars of Black wealth. However, in addition to its production value, land also has value as collateral for investing in education and other business ventures. Taking this additional value of land into account, depending on multiplier effects, rates of returns, and other factors, the value of lost Black agricultural land reaches into the trillions.

Intersectionality and Financial Inclusion the United States

Vicki Bogan, Cornell University; Sarah Wolfolds, Cornell University

Abstract: Recent estimates indicate that approximately 9 million households in the United States are unbanked, with an additional 24.5 million households being classified as underbanked. In this paper, we focus on intersectionality, specifically the intersection of race and gender, to better understand the probability of being unbanked and underbanked in the United States. Additionally, we look at which drivers could be chief contributors to this type of financial exclusion. We find that while White men and White women have similar levels of engagement with the banking system, Black women are significantly more likely than Black men to be both unbanked and underbanked.

Employment Response of Small and Large Firms to Monetary Policy Shocks

Anastasia Zervou, University of Texas at Austin; Aarti Singh, University of Sydney; Jacek Suda, Narodowy Bank Polski and Warsaw School of Economics

Abstract: We study the effects of monetary policy shocks on the growth (rates) of employment, hiring, and earnings of new hires across firms of different sizes. We find that a lower-than-expected policy rate increases hiring and employment growth in all firms, but it does so more in larger firms. We also find that as a consequence of a surprise monetary expansion, earnings of newly hired employees grow in a similar rate in all firms. In our empirical analysis, we use the publicly available Quarterly Workforce Indicators and employ local projections to compute impulse responses of the labor market variables to high frequency monetary policy shocks. We control for differential effects of monetary policy across industries and for differential effects of state unemployment across firm sizes. We also include a robustness exercise that corrects the reclassification bias. Using firm size as a proxy for financing constraints, we employ a theoretical model with heterogeneous firms, the financial accelerator channel, a working capital constraint, and an upward slopping marginal cost curve, as previously used in the literature. We incorporate in the model our empirical finding that the growth of earnings of new hires increases after monetary policy expansion. This new channel suggests that large firms increase hiring and employment growth more than small firms after a monetary policy expansion because large firms finance the wage increase cheaper than what small firms do. We find that our empirical results are consistent with our theoretical framework as long as the combined effect due to varying steepness of the marginal cost curve and the change in wages is stronger than the financial accelerator channel.

Does Entry Remedy Collusion? Evidence from the Generic Prescription Drug Cartel

Amanda Starc, Northwestern University; Thomas Wollmann, University of Chicago

Abstract: Entry represents a fundamental threat to cartels. We study the extent and effect of this behavior in the largest price-fixing case in U.S. history, which involves generic prescription drugmakers. We observe abrupt increases in generic drug prices linked to the collusive conduct of manufacturers. We link information on the cartel’s internal operations to regulatory filings and market data. A pairwise testing procedure shows that prices during the cartel period are consistent with collusion. Prices after an antitrust investigation are still consistent with collusion; enforcement alone does not discipline firm behavior. Yet we find that collusion induces significant entry, which, in turn, reduces prices, although regulatory approvals delay most entrants by 2–4 years. We find that reducing regulatory delays and fees would have reduced drug expenditures by billions of dollars.

Dual-Earner Migration, Earnings, and Unemployment Insurance

Joanna Venator, University of Rochester

Abstract: Dual-earner couples’ decisions of where to live and work often result in one spouse—the trailing spouse—experiencing earnings losses at the time of a move. This paper examines how married couples’ migration decisions differentially impact men’s and women’s earnings and the role that policy can play in improving post-move outcomes for trailing spouses. I use panel data from the NLSY97 and a generalized difference-in-differences design to show that access to Unemployment Insurance for trailing spouses increases long-distance migration rates by 1.9 percentage points to 2.3 percentage points (38 percent to 46 percent) for married couples. I find that women are the primary beneficiaries of this policy, with higher UI uptake following a move and higher annual earnings of $4,500 to $12,000 3 years post-move. I then build and estimate a structural model of dual-earner couples’ migration decisions to evaluate the effects of a series of counterfactual policies. I show that increasing the likelihood of joint distant offers substantively increases migration rates, increases women’s post-move employment rates, and improves both men and women’s earnings growth at the time of a move. However, unconditional subsidies for migration that are not linked to having an offer in hand at the time of the move reduce post-move earnings for both men and women, with stronger effects for women. Note: This research was funded in part by Equitable Growth.

The Career Costs of Children’s Health Shocks

Ana Costa-Ramon, University of Zurich; Anne-Lise Breivik, Norwegian Tax Authority

Abstract: We provide novel evidence on the impact of a child’s health shock on parental labor market outcomes. To identify the causal effect, we leverage long panels of high-quality Finnish and Norwegian administrative data and exploit variation in the exact timing of the health shock. We do this by comparing parents across families in similar parental and child age cohorts whose children experienced a health shock at different ages. We show that these families are comparable and were following very similar trends before the shock. This allows us to use a simple difference-in-differences model: We construct counterfactuals for treated households with families who experience the same shock a few years later. We also exploit this variation in an event study framework. We find a sharp break in parents’ earnings trajectories that becomes visible just after the shock. The effect is stronger for mothers than for fathers and is driven by health shocks that need persistent care after the event. We also document a strong impact on parents’ mental well-being.

The Other Side of the Mountain: Women’s Employment and Earnings Over the Family Cycle

Claudia Goldin, Harvard University; Sari Pekkala Kerr, Wellesley College; Claudia Olivetti, Dartmouth College

Abstract: Women earn less than men, and that is especially true of mothers relative to fathers. Much of the widening occurs with family formation. We estimate two earnings and hours gaps: (1) that due to the “motherhood penalty,” which is the difference between the earnings and hours of women who are currently mothers and those who are not; and (2) that due to the “parental gender gap,” which is the difference in outcomes between mothers and fathers. Women with young children work far fewer hours per week than do others. But what happens on the “other side of the mountain,” as the children grow up and eventually leave home? The answer is that women work more hours and transition to higher-earning positions. The motherhood penalty is greatly reduced, and by their 50s, women with and without children earn nearly the same amount. But fathers manage to maintain their relative gains and do monumentally better than mothers, women without children, and men without children. Fathers earn almost 7 log points more per child regardless of their age, whereas mothers lose more than 10 log points per child, holding hours of work constant.

Vertical Integration of Healthcare Providers Increases Self-Referrals and Can Reduce Downstream Competition: The Case of Hospital-Owned Skilled Nursing Facilities

David Cutler, Harvard University; Leemore Dafny, Harvard University; David Grabowski, Harvard University; Steven Lee, Brown University; Christopher Ody, Analysis Group

Abstract: The landscape of the U.S. healthcare industry is changing dramatically as healthcare providers expand both within and across markets. While federal antitrust agencies have mounted several challenges to same-market combinations, they have not challenged any nonhorizontal affiliations—including vertical integration of providers along the value chain of production. The Clayton Act prohibits combinations that “substantially lessen” competition; few empirical studies have focused on whether this is the source of harm from vertical combinations. We examine whether hospitals that are vertically integrated with skilled nursing facilities, or SNFs, lessen competition among SNFs by foreclosing rival SNFs from access to the most lucrative referrals. Exploiting a plausibly exogenous shock to Medicare reimbursement for SNFs, we find that a 1 percent increase in a patient’s expected profitability to a SNF increases the probability that a hospital self-refers that patient (i.e., to a co-owned SNF) by 2.5 percent. We find no evidence that increased self-referrals improve patient outcomes or change post-discharge Medicare spending. Additional analyses show that when integrated SNFs are divested by their parent hospitals, independent rivals are less likely to exit. Together, the results suggest vertical integration in this setting may reduce downstream competition without offsetting benefits to patients or payers.

January 10, 2022

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