#ASSA2019: Day two roundup
Today was the second day of the three-day annual meeting of the Allied Social Science Associations. The conference, held in Atlanta this year, features hundreds of sessions covering a wide variety of economics research. Interesting research is all over the place here, so below are some of the papers that caught the attention of Equitable Growth staff during the second day. Included below are the abstracts from those papers as well as links to the sessions at which they were presented. Check out yesterday’s highlights and come back tomorrow evening for even more.
“The Effect of Political Power on Labor Market Inequality: Evidence from the 1965 Voting Rights Act”
Abhay Aneja, Stanford University, and Carlos F. Avenancio, Massachusetts Institute of Technology’s Global Center for Finance and Policy & Indiana University-Bloomington
Abstract: A central concern for racial and ethnic minorities is having an equal opportunity to advance group interests via the political process. There remains limited empirical evidence, however, whether democratic policies designed to foster political equality are connected causally to social and economic equality. In this paper, we examine whether and how the expansion of minority voting rights contributes to advances in minorities’ economic interests. Specifically, we consider how the political re-enfranchisement of black Americans in the U.S. South, stemming from the passage of the 1965 Voting Rights Act (VRA), contributed to improvements in their relative economic status during the 1960s and 1970s. Using spatial and temporal variation arising from the federal enforcement provision of the VRA, we document that counties where voting rights were more strongly protected experienced larger reductions in the black-white wage gap between 1950 and 1980. We then show how the VRA’s effect on the relative wages of black Americans operates through two demand-side channels. First, the VRA contributed to the expansion of public employment opportunities. Second, in line with previous work on the importance of civil rights laws, the VRA contributed to and complemented the enforcement of labor market policies such as affirmative action and anti-discrimination laws.
“Returns in the Labor Market: A Nuanced View of Penalties at the Intersection of Race and Gender”
Mark Paul, New College of Florida; Khaing Zaw, Duke University; Darrick Hamilton, the Ohio State University; and William A. Darity, Duke University
Abstract: There have been decades of research on wage gaps for groups based on their socially salient identities such as race and gender, but little empirical investigation on the effects of holding multiple identities. Using the Current Population Survey, we provide new evidence on intersectionality and the wage gap. This paper makes two important contributions. First, we find that there is no single “gender” or “race” wage penalty. Second, we present evidence that holding multiple identities cannot readily be disaggregated in an additive fashion. Instead, the penalties associated with the combination of two or more socially marginalized identities interact in multiplicative or quantitatively nuanced ways.
“Anticompetitive Mergers in Labor Markets”
Ioana Elena Marinescu, University of Pennsylvania, and Herbert Hovenkamp, University of Pennsylvania
Abstract: Mergers of competitors are conventionally challenged under the federal antitrust laws when they threaten to lessen competition in some product or service market in which the merging firms sell. Mergers can also injure competition in markets where the firms purchase, including the labor market. Recent empirical work in economics has shown that market concentration is very high in many labor markets and that higher labor market concentration is associated with lower wages. Here, we offer an empirically based legal assessment of the problem of mergers that facilitate anticompetitive wage and salary suppression. We consider the most likely problems that courts will encounter in such litigation, including market definition, assessment of market concentration, the role of non-compete and non-poaching agreements as aggravating factors for concentration, and application of the government’s Merger Guidelines. Given the high level of concentration in many labor markets, a mature policy of pursuing mergers because of harmful effects in labor markets could yield many cases. Courts must be in a position to adequately deal with such cases based on the application of the existing merger review framework to the analysis of anticompetitive effects in the labor market.
“The Impact of Right-to-Work Laws on Worker Wages: Evidence from Collective Bargaining Agreements”
Sudheer Chava, Georgia Institute of Technology; Andras Danis, Georgia Institute of Technology; and Alex Hsu, Georgia Institute of Technology
Abstract: We analyze the impact of the introduction of right-to-work (RTW) laws across the US on wages. After the introduction of RTW laws, there is a decrease in wages negotiated through collective bargaining agreements (CBAs). Further, the number of CBAs decreases, and the gap between the fraction of workers covered by a CBA and the fraction of union members increases. Firms increase investment and employment, and reduce their financial leverage. Our results suggest a decline in union bargaining power after RTW laws are passed, which could be a contributing factor to the recent slowdown in wage growth in the US.
Daron Acemoglu, Massachusetts Institute of Technology, and Pascual Restrepo, Boston University
Abstract: We argue theoretically and document empirically that aging leads to greater (industrial) automation, and in particular, to more intensive use and development of robots. Using US data, we document that robots substitute for middle-aged workers (those between the ages of 36 and 55). We then show that demographic change—corresponding to an increasing ratio of older to middle-aged workers—is associated with greater adoption of robots and other automation technologies across countries and with more robotics-related activities across US commuting zones. We also provide evidence of more rapid development of automation technologies in countries undergoing greater demographic change. Our directed technological change model further predicts that the induced adoption of automation technology should be more pronounced in industries that rely more on middle-aged workers and those that present greater opportunities for automation. Both of these predictions receive support from country-industry variation in the adoption of robots. Our model also implies that the productivity implications of aging are ambiguous when technology responds to demographic change, but we should expect productivity to increase and labor share to decline relatively in industries that are most amenable to automation, and this is indeed the pattern we find in the data.
“Complements or Substitutes? Firm-Level Management of Labor and Technology”
Susan R. Helper, Case Western Reserve University; Raphael Raphael Martins, New York University; and Robert Seamans, New York University
Abstract: Labor and technology can be treated as complements or substitutes in a firm’s production function, and the approach can vary across firms. A firm’s adoption of new technologies may therefore have very different implications for labor across different types of firms. In this paper we study how labor in the U.S. automotive supply chain is affected by firm-level adoption of new technologies, including machine vision, robots, sensors and other forms of digitization. We also categorize firm management into two generic types, those pursuing a pragmatist approach and those pursuing a Taylorist approach, and study how effects of adoption vary by these types. We use new data from an in-depth plant-level survey of automation and employment practices in the automotive supply chain conducted in early 2018 that we match to earlier plant-level data from 2011 in some cases.
“When Dad Stays Home: Paternity Leave and Maternal Health”
Maya Rossin-Slater, Stanford University, and Petra Persson, Stanford University
Abstract: A significant share of new mothers experience mental and physical health issues after childbirth, yet the causal drivers of maternal postpartum health are poorly understood. While policy discussions often center on the role of the healthcare system, this paper analyzes whether the presence of the child’s father in the home post-childbirth affects maternal health. We leverage Swedish linked administrative population-level data together with quasi-experimental variation from the introduction of two “Daddy Month” reforms, which each earmarked one month of parental leave to fathers. We find that the first reform, which had a large extensive margin impact on the share of fathers taking any leave, increased the likelihood of maternal hospitalization in the year post-childbirth, driven by conditions related to mental health and external causes. The second reform, in contrast, predominantly extended paternity leave duration on the intensive margin, and led to a decline in the likelihood of maternal hospitalization in the postpartum year, an analogous reduction in non-primary-care outpatient visits, and lower consumption of anti-depressants among mothers with low education. Our findings suggest that the impacts of increased paternal time at home on maternal health may depend on the quality of the parental relationship; paternity leave can either buffer against the fatigue and stress associated with having an infant, or exacerbate conflict between new parents.
“The Effects of Residential Segregation on Mortality Disparities in the United States”
Nancy Breen, National Institutes on Minority Health and Health Disparities; Mark Fossett, Texas A&M University; Marcia Gómez, National Institutes on Minority Health and Health Disparities; and Ernest Moy, U.S. Centers for Disease Control and Prevention
Abstract: Public health studies have shown persistently higher rates of mortality among African-Americans compared to White Americans. Understanding the causes for this disparity has eluded researchers. Economic studies have shown that mortality is associated with a range of social determinants, including education, income, and wealth. Living in segregated areas—whether segregated by race/ethnicity or income—affects health, schooling, employment and other factors including quality of life, and the effects accumulate over the life course. Historically, laws, regulations, and zoning have crowded African Americans into areas isolated from jobs and schools, which has led to the poor schools, unemployment, and over policing seen in resource-deprived African-American neighborhoods today. Because segregation may have protective and negative aspects, the pathway considers the joint effects of two causal variables, namely social isolation and economic deprivation, or racialized poverty isolation (RPI). The pathway from RPI to premature mortality for African Americans is tested and compared with racial isolation alone. The outcome is age-adjusted mortality in metropolitan counties stratified by race (non-Hispanic White and non-Hispanic Black) from the US National Vital Statistics System. Structural, community, and household stressors from the 2010 US Census are used to test whether metropolitan areas with high rates of RPI are associated with stress-related mortality. The innovation of this approach is to consider the long-term effects of social isolation and economic deprivation in combination. The RPI is used to explore how working-class African American communities are uniquely impacted by the history of racial exclusion, and how race, class and gender intersect in the United States. The study finds that counties with RPI have higher rates of black mortality than counties with racial isolation alone.
“Financial Innovation for Rent Extraction”
Anton Korinek, University of Virginia
Abstract: We show that financial innovation greatly increases the scope for rent extraction from public safety nets, and this may generate a large redistribution of wealth from the public purse to the financial sector and a stark misallocation of real resources. We develop our results in a model in which bailouts arise endogenously: when financial sector capital is low, it is cheaper for the rest of the economy to provide a bailout than to suffer from a large credit crunch. It is well known that bailouts distort incentives to invest in risky securities. We show that bailouts also provide incentives to create new securities that crystallize risk-taking on states of nature in which bailouts will be obtained. This allows for more efficient rent extraction on a significantly larger scale. The incentives for rent extraction are mediated through market prices and do not require that the agents who engage in risk-taking are aware that they are extracting rents from public safety nets, as long as their creditors are. In aggregate, the described behavior leads to large financial sector profits during good times, higher consumption volatility, greater economy-wide risk premia and stark misallocations in real investment.
Jordan Shipley, University of Missouri-Kansas City
Abstract: From the experience of peoples in the autonomous regions of Native American reservations, declining rural communities, to those in segregated inner cities; this paper investigates processes of spatial injustice and uneven development within the United States during the neoliberal period. The paper explores the legacy of certain colonial processes and the continuing, and self-perpetuating, pattern of uneven development oppressing peoples through the 21st century (Darity, 1992, 2005). Uneven development will be investigated through the lens of (un)employment and the particular processes generating spatial inequities in access to meaningful, living wage employment. These processes are investigated alongside continued residential and activity space segregation based upon race and class, displacement and gentrification, and neoliberal development governance at the urban and regional level (Peck, 2012, 2016; Massey et. al, 2009). The paper connects the concepts of cumulative causation, post-colonial theory, and geographical political economy to create a theoretical framework which addresses the spatiality of development and underdevelopment. A comparative case-study of Kansas City, communities in the rural south and midwest, and semi-autonomous reservations is conducted using geographic information systems and exploratory spatial analysis. The combination of these analytical tools and novel political economic framework allow for a discussion of the implications of these processes of spatial injustice. The implications of this comparative spatial analysis will be discussed with a focus on prescriptions for historically, spatially, and culturally grounded development policies.