Brad DeLong: Worthy reads on equitable growth, March 15–21, 2019

Worthy reads from Equitable Growth:

  1. Alan Krueger’s passing is horrible and tragic news. All sympathy to his family. He was a light that shone very brightly for good into many dark corners. May his memory be a blessing. Please read Heather Boushey’s “Remembrance: Alan Krueger,” in which she writes: “We at the Washington Center for Equitable Growth are deeply saddened to learn of the death of Alan Krueger. He was devoted to serving the public and to ensuring that economics was not only about theory but about improving people’s lives … As a pioneer in the use of natural experiments as the basis for economic research, his work helped create a paradigm shift in the discipline itself … The lessons learned from the advances in economics in no small part pioneered by Alan underlay much of the cutting edge of economics—and the work we do at Equitable Growth to show how inequality affects economic growth.”
  2. I have been waiting for this research paper for a while, and it’s very good. Read David R. Howell and Arne L. Kalleberg’s “Declining Job Quality in the United States: Explanations and Evidence,” in which they write: “We group … explanations … into three broad visions … the competitive market model, in which supply and demand for worker skills in competitive external labor markets generates a single market wage by skill group … [the] contested market models, in which … firms typically have substantial bargaining (monopsony) power; and social-institutional models, which … place greater emphasis on the public policies, formal and informal institutions, and the dynamics of workplace cultures and conflict … The supply-demand explanation, which has focused on evidence of occupational employment polarization (driven by skill-biased production technologies) and the rise in the college-wage premium … We conclude by summarizing policy recommendations that follow from each of these visions.”
  3. Well worth your time chasing the links from this review of work Equitable Growth has published over the past several years on women’s roles. At the root, I think, is that a great many of our economic and societal practices reflect gender reality as it stood 50, 100, or 150 years ago—and both biological and even more societal reality as it stood then was hardly conducive to the empowerment of women. Recall that two centuries ago, an overwhelming proportion of women became mothers, that the typical mother stood a one-in-seven chance of dying in childbirth, and that the typical mother (if she survived) would spend 20 years eating for two—pregnant or nursing—in a world in which childcare by nonrelatives was a thing for only the upper class. Legacy institutions from that time are unlikely to serve today’s women—or men—well. Read “Equitable Growth’s History of Focusing on Women’s Role in the Economy: A Review,” which details: “How women are reshaping the American economy … Gender wage inequality … Paid family and medical leave … Women … [and] family economic security … The gender gap in economics … The link between bodily autonomy and economic opportunity … The wages of care … Motherhood penalties.”
  4. The Gap, Inc. asked researchers to quantify the benefits from offering its retail employees more regular schedules. The benefits are substantial. Read Alix Gould-Wirth, “Retail workers’ unpredictable schedules affect sleep quality,” in which she writes: “Retail outlets of The Gap … [r]andomly assigned 19 stores to a treatment group to implement the intervention and nine stores to a control group that did not implement the intervention. The Gap was so committed to increasing the amount of notice workers had of its scheduled shifts that the company extended two components that were originally planned to be part of the intervention—two-weeks advance notice and the elimination of on-call shifts—to all of its workers in North America prior to the beginning of the experiment. So, this experiment tells policymakers and businesses alike how the multicomponent intervention affects workers’ lives beyond advance notice alone … The intervention made a substantively (and statistically) significant impact on the sleep quality of workers.”

Worthy reads not from Equitable Growth:

  1. Put me down as someone who thinks that the Federal Reserve and the European Central Bank have not tried, and are not trying, hard enough to learn from the Bank of Japan. They still do not seem to be at the point of understanding the relevance of Japan for themselves as well as Paul Krugman did two decades ago, when he wrote his Return of Depression Economics, his “Japan’s Trap,” and his “It’s Baaaack: Japan’s Slump and the Return of the Liquidity Trap.” This is not a good situation to be in. Read Enda Curran and Toru Fujioka,” BOJ’s Never Ending Crisis Has Lessons for World’s Central Banks,” in which they write: “The underlying problems confronting the BOJ—slowing growth, tepid wage increases, lackluster productivity gains, and aging populations—are becoming more pronounced in other developed economies … ‘When Japan first confronted the problem of very low inflation, monetary economists pooh-poohed the problem, saying there was an easy fix,’ said Raghuram Rajan, former governor of the Reserve Bank of India and now a professor at the University of Chicago. ‘After confronting the same issue in their own countries and showing an inability to deal with it, there seems to be a general consensus that the problem is harder.’ Its latest experiment in yield-curve control … has drawn the attention of Federal Reserve Deputy Chair Richard Clarida amid an examination of strategy at the U.S. central bank.”
  2. The empirical evidence so far seems to be telling us that policies prohibiting employers from knowing early about applicants’ criminal records may be leading to employers not looking at all at young black men. If this holds up, it would be very distressing and suggest strongly that such policies are truly counterproductive: Read Jennifer L. Doleac, “Empirical Evidence on the Effects of ‘Ban the Box,’” in which she writes: “I have prepared this written testimony to review existing empirical evidence on policies that prohibit employers from asking job applicants about their criminal records until late in the hiring process … This evidence can be summarized as follows: Delaying information about job applicants’ criminal histories leads employers to statistically discriminate against groups that are more likely to have a recent conviction. This reduces employment for young, low-skilled, black men. This negative effect is driven by a reduction in employment for young, low-skilled, black men who don’t have criminal records … Effective approaches to this policy problem are likely to be policies that directly address employers’ concerns about hiring people with criminal records, such as investing in rehabilitation, providing more information about applicants’ work-readiness, and clarifying employers’ legal responsibilities.”
  3. A panel led by Jason Furman proposed predictable rules and platform regulation—a “code of conduct for the most significant digital platforms,” treating them as essential services—plus ensuring data mobility and open standards are essential for the creation of a digital economy in which competition and innovation can produce large benefits. Unfortunately, none of those are in the financial interest of current tech shareholders or their lobbyists. Read “Unlocking Digital Competition, Report of the Digital Competition Expert Panel,” which says: “An independent report on the state of competition in digital markets, with proposals to boost competition and innovation for the benefit of consumers and businesses … Chaired by former chief economist to President Obama, professor Jason Furman, the panel makes recommendations for changes to the U.K.’s competition framework that are needed to face the economic challenges posed by digital markets.”
  4. Read Austan Goolsbee, “You Never Know When a Recession Will Sneak Up on You,” in which he writes: “The 2001 recession developed when the internet bubble popped … But … the internet accounted for, at most, about 2 percent of the economy then. If we use the logic we’ve been applying to trade wars and government shutdowns, it would seem that popping the internet bubble shouldn’t have been enough to cause a recession. But it did. The reason it did was that the pop freaked out people outside just the internet sector … Virtually every recession in the past 40 years coincided with a signal of fear, like a significant drop in consumer confidence. Sometimes confidence fell and didn’t spiral into recession, but all recessions have started with a confidence spiral … Let us all hope for excellent jobs numbers in the months to come, along with a rebound … But it would be a mistake to be overconfident … If something scares people enough, it can start a recession, and you probably won’t know until it’s too late … The great pitcher Satchel Paige once advised: ‘Don’t look back. Something might be gaining on you.’ Had he been an economist, he might have added, ‘And don’t start a trade war, either.’”
  5. Read Noah Smith’s piece on Alan Krueger, “Alan Led a Quiet Economics Revolution,” in which Smith writes: “[Alan] Krueger’s work defined what a modern economist should look like … He relentlessly focused on issues of practical, immediate importance. He constantly concerned himself with the betterment of the lives of poor and working people, but refused to naively assume that programs designed to help these people always had the intended effect. He was always aware of relevant economic theories, but never let himself be bound by them. This eclectic, humble, humanistic but practical approach has set the tone for an entire generation of young economists. He was taken from us far too soon, but his impact on economics, and on the world, will last for a very long time to come.”

March 21, 2019


Brad DeLong


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