Brad DeLong: Worthy reads on equitable growth, March 1–7, 2019

Worthy reads from Equitable Growth:

  1. Time is almost up for dissertation/postdoc support proposals! Proposals for doctoral/postdoctoral grants and applications to the Dissertation Scholars Program are due by 11:59 p.m. EDT on Sunday, March 10, 2019. See Equitable Growth’s Request for proposals: “We consider proposals that investigate: the consequences of economic inequality on individuals’ economic outcomes and labor market dynamics, as well as group dimensions of inequality, including race, ethnicity, and gender; the causes of inequality to the extent that understanding these causal pathways will help us identify and understand key channels through which economic inequality may affect growth and stability; and the ways in which public policies affect the relationship between inequality and growth.”
  2. Nobody ever showed me credible numbers stating that New York’s proposed subsidies to Inc. were a good deal for the people of New York, let alone for the country as a whole. That makes me strongly suspect that credible numbers cannot be calculated. Unless a recession hits at the right (or, rather, wrong) moment, the people who would have worked in New York at Amazon HQ2 will work elsewhere, and the state economy as a whole is likely to be healthier. Read Nathan Jensen, “Economic Development Public Policy Lessons Abound in New York’s Amazon HQ2 Debacle,” in which he writes: “Most of these incentives are bad public policy. Virginia’s HQ2 bid was more public focused. It includes future payments based on a formula involving new, high-paying jobs, as well as other public subsidies, but it also includes a promise of infrastructure and education investments that would serve not only Amazon but also the entire community. The subsidies continue to face opposition. New York’s bid, in contrast, was designed primarily to put more money into the pockets of Amazon.”
  3. How did I miss this last week? Kate Bahn wrote about how it really is the case that holders of H-1 and H-2 visas are close to indentured servants—and suffer for it. Read “The Search for and Hiring of Guest Workers in the United States Displays the Complexity of Market Concentration and Monopsony Power,” in which she writes: “Eric M. Gibbons … Allie Greenman … Peter Norlander … and Todd Sorensen … [examine the] monopsonistic effects for workers who are employed under guest worker visas such as H-1 and H-2 … review lawsuits against employers of guest workers and confirm widely held beliefs about wage theft and abusive employment … The four researchers exploit the application process to the U.S. Department of Labor for guest worker visas to estimate employer concentration for guest workers and how this affects wages. … Guest workers are in a more concentrated set of occupations than the overall U.S. labor market, with more than a third of them working in computer and mathematical occupations on H-1B visas and nearly half working in building, grounds cleaning, and maintenance on H-2B visas … Herfindahl-Hirschman Index … is sufficiently high to warrant U.S. Department of Justice scrutiny of mergers in these sectors of the U.S. economy.”
  4. The brilliant Bhash Mazumder is in conversation this past week with Liz Hipple. He is right in his stress on siblings as an excellent test strip for measuring and understanding inequality in one easy-to-calculate number: Read “In Conversation with Bhash Mazumder,” in which he discusses: “The sibling approach … [which] boils everything down into one number by saying, what are all of the things that two siblings shared growing up? How much does that determine their overall outcomes? … That’s an important measure that we haven’t studied a lot. In the United States, there has been some research on sibling correlations, which I’ve contributed to a little bit, that suggests there’s much less intergenerational mobility in U.S. society than in other countries. … There is something about the nature of our society causing family background characteristics to strongly influence children’s long-run outcomes, thereby reinforcing inequalities.”
  5. Go watch Michael Kades testify on Capitol Hill on Thursday, March 7. But first, read his column, “To Combat Rising U.S. Prescription Drug Prices, Let’s Try Competition,” in which he writes: “Look at the variety of problems with anti-competitive practices engaged in by U.S. pharmaceutical companies. Take ViroPharma Inc. When faced with the possibility that the U.S. Food and Drug Administration would approve generic versions of its Vancocin product (a drug to treat a potentially life-threatening gastrointestinal infection), the company filed 43 petitions to delay or prevent generic approval. Although none were successful on the merits, it took years before the FDA approved any generic competitors. The Federal Trade Commission alleged the strategy increased costs by hundreds of millions of dollars.”

Worthy reads not from Equitable Growth:

  1. In England, at least, there was no “middle class” in the 20th century—if “middle class” is defined as the not-rich who can nevertheless expect some support from their parents and pass a nest egg down to their grandchildren. Read Neil Cummins, “The Missing English Middle Class: Evidence From 60 Million Death And Probate Records,” in which he writes: “Using a combination of old-fashioned archival research, mass scripted downloading, optical character recognition, text parsing, and sets of algorithmic programming tools, I have digitised every individual entry, 18 million records with estate values, from the Principal Probate Calendar from 1892 to 1992. To this I have added all 60 million adult English deaths … This simple finding is quite stark: despite the great equalisation of wealth over the 20th century, most English have no significant wealth at death.”
  2. Brilliant from a brilliant economist. Read David H. Autor, “Work of the Past, Work of the Future,” in which he writes: “Urban noncollege workers currently perform substantially less skilled work than in prior decades … Automation and international trade … have eliminated the bulk of noncollege production, administrative support, and clerical jobs, yielding a disproportionate polarization of urban labor markets … by: (1) shunting noncollege workers out of specialized middle-skill occupations into low-wage occupations that require only generic skills; (2) diminishing the set of noncollege workers that hold middle-skill jobs in high-wage cities; and (3) attenuating, to a startling degree, the steep urban wage premium for noncollege workers that prevailed in earlier decades. Changes in the nature of work—many of which are technological in origin—have been more disruptive and less beneficial for noncollege than college workers.”
  3. Pharmaceutical price reform is one of the very few equitable growth issues where there are actually Republican legislators willing to talk. Read the Coalition to Protect Patient Choice’s “Senate Finance Committee Grills Drug Executives on Rising Prices, Criticize Them for Terrible Practices,” which notes that “Sen. Chuck Grassley (R-IA) opened by saying that America has a problem with high prescription drug prices, that a balance can be struck between innovation and affordability, and that the Committee was here to discuss solutions. He and Sen. Wyden have launched a bipartisan investigation into the high price of insulin.”
  4. The 2017 tax cut increased inequality. Evidence mounts that it had no good ancillary effects at all. Read Chye-Ching Huang, “Fundamentally Flawed 2017 Tax Law Largely Leaves Low- and Moderate-Income Americans Behind,” in which he writes: “The fundamental flaws of the 2017 tax law: 1) it ignores the stagnation of working-class wages and exacerbates inequality; 2) it weakens revenues when the nation needs to raise more; and 3) it encourages rampant tax avoidance and gaming that will undermine the integrity of tax code …The 2017 tax law largely left behind low- and moderate-income Americans—and in many ways hurts them … A restructuring of the law can fix these flaws.”
  5. Building up the database we need to understand inequality on a global scale are Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. Read their “World Inequality Report 2018,” in which they write: “The World Inequality Report 2018 relies on a cutting-edge methodology to measure income and wealth inequality in a systematic and transparent manner. By developing this report, the World Inequality Lab seeks to fill a democratic gap and to equip various actors of society with the necessary facts to engage in informed public debates on inequality.”

March 7, 2019


Brad DeLong


Economic Inequality


working paper

Who’s afraid of sunlight? Explaining opposition to transparency in economic development

working paper

Monopsony power and guest worker programs

TOPICS: Monopsony

Are today’s inequalities limiting tomorrow’s opportunities?

Inequality & Mobility
Connect with us!

Explore the Equitable Growth network of experts around the country and get answers to today's most pressing questions!

Get in Touch