ASSA 2023 Round-up: Day 2
Yesterday was the second day of the 2023 annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The 3-day conference, held in person in New Orleans 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 more than 80 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 second 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.
Come back tomorrow morning for more highlights from day three, and click here to review the highlights from day one.
“Minimum Wages and Employment Composition”
Ashvin Gandhi, University of California, Los Angeles, Equitable Growth grantee; Krista Ruffini, Georgetown University, Equitable Growth grantee
Abstract: This paper examines how minimum wages change the types of workers that firms employ and the allocation of hours across these workers. We leverage shift-level data for the universe of nursing home employees matched to more than 300 state, county, and city minimum wage changes between 2016 and 2019. We find that higher minimum wages shift the allocation of hours toward workers with high levels of firm-specific experience, driven by greater retention among the most experienced workers. We use our reduced-form estimates to simulate the long-term effect of a \$1 increase in the minimum wage and find such a reform would increase the share of hours worked by employees with more than 1 year of full-time employment by 14 percent.
Note: This research was funded in part by Equitable Growth.
“How Do Small Firms Accommodate Minimum Wage Increases? Evidence from Matched Employer-Employee Tax Returns”
Nirupama L. Rao, University of Michigan, Equitable Growth grantee; Max Risch, Carnegie Mellon University, Equitable Growth grantee
Abstract: Using new data matching the universe of U.S. tax returns of pass-through firms and their workers over a 15-year period, we examine the impact of higher state minimum wages on small and medium-sized businesses. We find that small firms incur significant wage bill increases when minimum wages are raised. Higher minimum wages do not, however, increase the exit rate of small firms or pass-through firms overall. Instead, pass-through entities accommodate higher minimum wages through higher revenue. For small firms, these revenue increases outpace wage bill increases, leading to higher average profits in the years after a minimum wage increase. We show that these surprising findings can be rationalized in a framework where smaller firms operate in product markets alongside a larger firm with price-setting power that is more affected by a given cost shock, as is the case with minimum wages. Our findings highlight the importance of understanding the heterogeneous impacts of wage floors on firms of different sizes and how product market dynamics affect the eventual incidence of these policies.
Note: This research was funded in part by Equitable Growth.
Corina Boar, New York University; Virgiliu Midrigan, New York University
Abstract: We characterize optimal product market policy in an unequal economy in which firm ownership is concentrated and mark-ups increase with firm market shares. We study the problem of a utilitarian regulator who designs revenue-neutral interventions in the product market. We show that optimal policy increases product market concentration. This is because policies that encourage larger producers to expand improve allocative efficiency and increase the labor share and the equilibrium wage. We derive these results both in a static Mirrleesian setting, in which we impose no constraints on the shape of interventions, as well as in a dynamic economy with capital and wealth accumulation. In our dynamic economy, optimal policy reduces wealth and income inequality by redistributing market share and profits from medium-sized businesses, which are primarily owned by relatively rich entrepreneurs, to larger, diversified corporate firms.
“The Intergenerational Mobility of LGBTQ+ Individuals”
Santiago Deambrosi, Princeton University; Cameron Deal, Vanderbilt University
Abstract: We study the intergenerational mobility rates of LGBTQ+ individuals in their prime age, utilizing data from various nationally representative surveys, including the NLSY Child and Young Adult, NLSY97, the PSID, and AddHealth. We report the existence of a LGBTQ+ mobility gap in the United States, shaped primarily by the outcomes of LGBTQ+ individuals born to lower-income parents. While a mobility gap exists for most LGBTQ+ individuals, those born to parents in the top of the income distribution are mostly shielded from this disadvantage.
While part of this gap can be explained by discrimination and household specialization, we go beyond these commonly studied factors and ask how norms and attitudes during childhood impact the later-life economic opportunities of LGBTQ+ individuals. Using data from multiple sources, we construct an index that captures changing LGBTQ+ attitudes at small regional levels since the 1990s. As general norms and attitudes change over time and families move across areas, we exploit the longitudinal and sibling-linkage aspects of our data to causally study how exposure to these factors during childhood impact the later-life outcomes of these individuals. We then interact these statistics with the Opportunity Atlas data to create an “opportunity atlas” for LGBTQ+ individuals.
“Automation and the Workforce: A Firm-Level View from the 2019 Annual Business Survey”
Daron Acemoglu, Massachusetts Institute of Technology; Gary Anderson, National Center for Science and Engineering Statistics; David Beede, U.S. Census Bureau; Catherine Buffington, U.S. Census Bureau; Pascual Restrepo, Boston University; Eric Childress, George Mason University; Emin Dinlersoz, U.S. Census Bureau; Lucia Foster, U.S. Census Bureau; Nathan Goldschlag, U.S. Census Bureau; John Haltiwanger, University of Maryland; Zachary Kroff, U.S. Census Bureau; Nikolas Zolas, U.S. Census Bureau
Abstract: This paper provides a comprehensive description of the adoption of automation technologies by U.S. firms across all economic sectors by leveraging a new technology module introduced in the Census Bureau’s 2019 Annual Business Survey. The module collects data from more than 300,000 firms on the use of five advanced technologies: artificial intelligence, robotics, dedicated equipment, specialized software, and cloud computing. We document that the adoption of these technologies remains low (especially for AI and robotics), varies substantially across industries, and concentrates on large and younger firms.
However, because larger firms are much more likely to adopt them, 12 percent to 64 percent of U.S. workers, and 22 percent to 72 percent of manufacturing workers, are exposed to these technologies. Firms report a variety of motivations for adoption, including automating tasks previously performed by labor. Consistent with the use of these technologies for automation, adopters have higher wages and lower labor shares. The use of these technologies is associated with a 15 percent increase in labor productivity, which accounts for 20 percent to 30 percent of the higher labor productivity achieved by the largest firms in an industry. Adopters report that these technologies raised skill requirements and led to greater demand for skilled labor but brought limited or ambiguous effects to their employment levels.
“The Historical Distribution of Black and White Wealth”
Ellora Derenoncourt, Princeton University, Equitable Growth grantee and contributing author; Chi Hyun Kim, University of Bonn, Equitable Growth Working Paper contributor; Moritz Kuhn, University of Bonn, Equitable Growth Working Paper contributor; Moritz Schularick, University of Bonn, Equitable Growth Working Paper contributor
Abstract: The racial wealth gap is the largest of the economic disparities between Black and White Americans, with a White-to-Black per-capita wealth ratio of 6-to-1. It is also among the most persistent. In this paper, we combine data and theory to illustrate the role of historical institutions, capital returns, income trends, and savings behavior in the level and persistence of the gap. We introduce a new time series of White-to-Black per-capita wealth ratios covering 1860 to 2020 that draw on census data, historical state tax records, and a newly harmonized version of the Survey of Consumer Finances (1949–2019), among other sources. Combining these data with a parsimonious framework of wealth accumulation by each racial group, we show that, given vastly unequal starting conditions under slavery, racial wealth convergence is an extremely distant scenario even if wealth-accumulating conditions were equal for the two groups post-Emancipation. We find that observed convergence has followed a slower path relative to this equal conditions benchmark, and today’s wealth gap is on track to diverge, rather than converge, due to overall rising wealth inequality. Our framework sheds light on the implications of policies such as reparations, which address the historical origins of today’s gap, versus less targeted policies for the future evolution of the wealth gap.
“The Geography of Child Penalties and Gender Norms: Evidence from the United States”
Henrik Kleven, Princeton University, National Bureau of Economic Research
Abstract: This paper develops a new approach to estimating child penalties based on cross-sectional data and pseudo-event studies around childbirth. Data from the United States show that child penalties can be accurately estimated using cross-sectional data, which are widely available and give more statistical power than typical panel datasets. Five main empirical findings are presented. First, U.S. child penalties have declined significantly over the past five decades, but almost all of this decline occurred during the earlier part of the period, explaining the slowdown of gender convergence during this period. Second, child penalties vary enormously over space—e.g., from 12 percent in the Dakotas to 38 percent in Utah. Third, child penalties correlate strongly with measures of gender norms, both across space and over time. Fourth, an epidemiological study of gender norms using U.S.-born movers and foreign-born immigrants shows that the child penalty for U.S. movers is strongly related to the child penalty in their state of birth, adjusting for selection in their state of residence. Parents born in high-penalty states (such as Utah or Idaho) have much larger child penalties than those born in low-penalty states (such as the Dakotas or Rhode Island), conditional on where they live. Finally, immigrants assimilate to U.S. culture over time such that differences by country of origin eventually disappear.
“New Estimates of Wealth Inequality in America and the Importance of Wealth for Entrepreneurship”
Matthew Smith, U.S. Department of the Treasury; Owen Michael Zidar, Princeton University, Equitable Growth grantee and contributing author; Eric Zwick, University of Chicago, Equitable Growth contributing author
Abstract: We present new estimates of the concentration and composition of top wealth in the United States through 2016. Our wealth estimates are based on new data that link people to their sources of capital income and new methods to estimate the degree of return heterogeneity within asset classes. Relative to an equal returns approach, we find a larger role for private business wealth and a smaller role for fixed income wealth. Given the importance of business ownership for top income and wealth inequality, we turn to exploring the determinants of entrepreneurship across the U.S. population since the late 1990s. Our longitudinal data permit an analysis of which new firms end up being highly successful, allowing us to distinguish start-ups that are destined to remain as small businesses from star job creators. We also develop a novel measure of the returns to founding owners using a high-dimensional matching strategy, which tracks total income and wealth in the decade following entrepreneurial entry, relative to that for a similar matched worker.
We first document new facts on the life cycle of star entrepreneurs, including their family backgrounds, where they grew up, and their labor market trajectories prior to entry. We then develop multiple research designs to evaluate the role of alternative mechanisms that might account for different entry rates and returns across groups. Our results support the class of explanations that highlight “pipeline” factors as the key supply-side constraints on the number of entrepreneurs from underrepresented groups, such as women or low-income kids. Such factors limit the number of potential entrepreneurs who might be responsive to later-stage interventions. For example, policies that target the point of entry, such as liquidity support or tax incentives, are unlikely to close entry gaps and narrow return differences.
“Air Pollution and Economic Opportunity in the United States”
Jonathan Colmer, University of Virginia, Equitable Growth grantee; John Voorheis, U.S. Census Bureau, Equitable Growth grantee; Brennan Williams, University of Virginia, Equitable Growth grantee
Abstract: Neighborhoods are an important determinant of economic opportunity in the United States. Less clear is how neighborhoods affect economic opportunity. Here, we provide early evidence on the importance of environmental quality in shaping economic opportunity. Combining 36 years of satellite-derived PM2.5 concentrations measured over roughly 8.6 million grid cells with individual-level administrative data provided by the U.S. Census Bureau and Internal Revenue Service, we first document a new fact: Early-life exposure to particulate matter is one of the top five predictors of upward mobility in the United States.
Next, using regulation-induced reductions in prenatal pollution exposure following the 1990 Clean Air Act amendments, we estimate significant increases in adult earnings and upward mobility. Combined with new individual-level measures of pollution disparities at birth, our estimates can account for up to 20 percent of Black-White earnings gaps and 25 percent of the Black-White gap in upward mobility estimated in Chetty et al. (2018). Combining our estimates with experiment-induced reductions in pollution exposure from the Moving to Opportunity experiment, we can account for 16 percent of the total neighborhood earnings effect estimated in Chetty, Hendren, and Katz (2016). Collectively, these findings suggest that environmental injustice may play a meaningful role in explaining observed patterns of racial economic disparities, income inequality, and economic opportunity in the United States.
“Unconventional Monetary Policy According to HANK”
Eric Sims, University of Notre Dame; Cynthia Wu, University of Notre Dame; Ji Zhang, Tsinghua University
Abstract: This paper studies the implications of household heterogeneity for the effectiveness of quantitative easing, or QE. We consider a heterogeneous agent New Keynesian, or HANK, model with uninsurable household income risk. Financial intermediaries are subject to an endogenous leverage constraint that allows QE to matter. We find that macro aggregates react very similarly to a QE shock in a HANK model, compared to a representative agent, or RANK, version of the model. This finding is robust across different micro and macro distributions of wealth.
“The Labor Demand Side of Involuntary Part-time Employment”
Hyeri Choi, University of Pennsylvania; Ioana Marinescu, University of Pennsylvania, Equitable Growth grantee and contributing author
Abstract: Involuntary part-time employment is a measure of labor market slack that goes beyond the unemployment rate and broadens our understanding of the state of the labor market. Our study examines the determinants of involuntary part-time employment rates by accounting for both supply and demand channels of the labor market. We investigate the role of labor demand by focusing on job vacancies and labor supply by focusing on unemployment. We use big data on the near universe of online job vacancies collected by Burning Glass Technologies and the Current Population Survey from 2003 to 2021. We find that, within the commuting zone by 6-digit SOC cell, a 10 percent increase in unemployment rate increases the share of involuntary part-time rate by 0.22 percentage points, while a 10 percent increase in job vacancies decreases the share of involuntary part-time rate by 0.06 percentage points. Overall, we conclude that higher labor supply and lower labor demand increase involuntary part-time employment. We also provide suggestive evidence that labor market power as measured by labor market concentration may additionally increase involuntary part-time employment. Our study shows that workers are more likely to have their preferred work hours when there are more employers that they can work for.
“Caring or Carceral: Understanding the Work of Social Reproduction”
Anastasia Wilson, Hobart and William Smith Colleges
Abstract: In this paper, I theorize that under the domination of capital, forms of socially reproductive work often take on a carceral logic, rather than one of care. Carceral logics rely on the threat or imposition of punishment to coerce, including coercing work. The family, as well as schools and social services, work to produce and reproduce the worker whose labor is ultimately coerced by capital. Are these forms of socially reproductive work then caring or carceral? To understand this contradiction, I examine the intersection of the waged work of schools and social services, as provisioned by the state, and the unwaged work of the household in the form of the family. By analyzing how carceral systems, such as school and family policing, are enmeshed in such forms of socially reproductive work, I argue that these sites of reproductive work—schools, social services, and the family—interlock under the domination of capital to reproduce gendered and racialized forms of coerced “care” that regulate and reinforce the unwaged work of the family. In tandem, these forms of coerced work reproduce fragmented, gendered, and racialized workers to be exploited by capital. I argue that liberatory ruptures beyond such carceral forms of “care” then require both an abolitionist method and critique of capitalist society.
“Robot Hubs: The Skewed Distribution of Robots in U.S. Manufacturing ”
Erik Brynjolfsson, Stanford University; Catherine Buffington, U.S. Census Bureau; J. Frank Li, Stanford University; Javier Miranda, Halle Institute for Economic Research; Nathan Goldschlag, U.S. Census Bureau; Robert Seamans, New York University
Abstract: In this paper we present results on the distribution of robots in U.S. manufacturing, using new establishment-level microdata collected by the U.S. Census Bureau. We use the data to present a number of facts about the location and use of robots. We find that the distribution of robots is surprisingly skewed across locations, even accounting for the different mix of industry and manufacturing employment across locations. Some locations – which we call “Robot Hubs” – have many more robots than one would expect if distribution of robots was uniform, after accounting for industry and manufacturing employment. We characterize these Robot Hubs along several industry, demographic, and institutional dimensions.
“New Frontiers: The Origins and Content of New Work, 1940–2018”
David Autor, Massachusetts Institute of Technology, Equitable Growth grantee and Research Advisory Board member; Caroline M. Chin, Massachusetts Institute of Technology; Anna Salomons, Utrecht University, Equitable Growth grantee; Bryan Seegmiller, Massachusetts Institute of Technology, Equitable Growth grantee
Abstract: Recent theory stresses the role of new job types (“new work”) in counterbalancing the erosive effect of task-displacing automation on labor demand. Drawing on a novel inventory of eight decades of new job titles linked to U.S. Census microdata, we estimate that the majority of contemporary employment is found in new job tasks added since 1940, but that the locus of new task creation has shifted—from middle-paid production and clerical occupations in the first four post-World War II decades, to high-paid professional and, secondarily, low-paid services since 1980. We hypothesize that new tasks emerge in occupations where new innovations complement their outputs (“augmentation”) or market size expands, while conversely, employment contracts in occupations where innovations substitute for labor inputs (“automation”) or market size contracts.
Leveraging proxies for output-augmenting and task-automating innovations built from a century of patent data and harnessing occupational demand shifts stemming from trade and demographic shocks, we show that new occupational tasks emerge in response to both positive demand shifts and augmenting innovations, but not in response to negative demand shifts or automation innovations. We document that the flow of both augmentation and automation innovations is positively correlated across occupations, yet these two faces of innovation have strongly countervailing relationships with occupational labor demand.
Note: This research was funded in part by Equitable Growth.
“Effects of International Tax Provisions on Domestic Labor Markets”
Daniel Garrett, University of Pennsylvania,Equitable Growth Working Paper contributor; Eric Ohrn, Grinnell College, Equitable Growth grantee; Juan Carlos Suárez Serrato, Duke University, Equitable Growth grantee
Abstract: We study the domestic labor market effects of two historical, but highly applicable, U.S. international tax provisions. The first provision, “Check-the-Box,” or CTB, decreased effective tax rates abroad by increasing the ability of multinational corporations to shift profits to low-tax jurisdictions. The second provision, the 2004 “repatriation holiday,” or RH, decreased the tax costs of repatriating foreign earnings by 85 percent. To study the effects of each provision, we use a difference-in-differences framework that estimates the effect of local exposure to each provision on employment and earnings. According to our preferred specification, CTB resulted in losses of 1.7 million jobs and $64 billion in total labor earnings annually. We find the RH did not have any statistically significant effects on domestic labor markets. These results confirm the long-held, but empirically unsupported, hypothesis that international tax systems have large effects on domestic workers.
“How Subsidies Affect Contraceptive Use, Pregnancies, and Abortion among Low-Income Women in the U.S.: A Randomized Control Trial”
Martha Bailey, University of California, Los Angeles, Equitable Growth grantee and contributing author; Vanessa Lang, University of Michigan; Iris Vrioni, University of Michigan; Lea Bart, University of Michigan; Alexa Prettyman, University of California, Los Angeles; Daniel Eisenberg, University of California, Los Angeles; Paula Fomby, University of Michigan; Jennifer Barber, Indiana University; Vanessa Dalton, University of Michigan
Abstract: This paper uses a randomized control trial to examine how subsidies affect the use of contraceptives among low-income women seeking reproductive health care in the United States. Study participants are randomized to receive vouchers which cover the costs of any contraceptive up to a maximum value of 50 percent or 100 percent of a name-brand intrauterine device. We find that women’s choice of contraception is highly sensitive to price, with the elasticity of long-acting reversible contraceptive, or LARC, take-up ranging from -2.3 to -3.4. The findings imply that a U.S. policy eliminating out-of-pocket costs for Title X women would reduce pregnancies by 5.4 percent, birth rates by 3.5 percent, and abortions by 8.1 percent.