This project will bring together macroeconomic theory and large-scale microeconomic datasets to advance modern economics and inform monetary and public policy. Using employment records merged to credit reports, the authors will estimate the impact of credit access on the job-finding rates and re-employment earnings of displaced workers. Past research has examined the borrowing and credit use of the unemployed, and this study builds on that line of work to examine the direct impact of credit on future outcomes. In preliminary results, the authors find that credit access increases the time before re-employment, but also increases average salary once a new job is found. This work will develop a search model capable of explaining these new findings.

This project will study the rise of mass incarceration in relation to military downsizing. The author will determine whether the military-penal crossover, occurring in the 1990s and continuing through the present, has reinforced racial inequality in the labor market, with blacks experiencing more incarceration while decreasingly enlisting in the military.

The researchers will use an historical accounting methodology, established in earlier work, to examine the extent to which changes in household leverage have contributed to shifts in aggregate demand over the past 80 years. They will expand this accounting framework to analyze municipal debt—both an important asset in financial markets and a critical source of finance for local public goods. The results and underlying data will likely provide new evidence on how debt affects the macroeconomy and will have implications for monetary policy as well as policy responses to levels of private and public leverage.

Many argue that higher education is one of the best ways to increase intergenerationalmobility. Students from lower-income backgrounds can move up the income ladder if they attend the right college or university. But how equal is access to those schools? If qualified low-income students aren’t attending the schools that provide the most opportunity, then the college attendance process may be retarding upward economic mobility. This research project will look at the role of colleges and universities in transmitting income inequality into the next generation. Using gold-standard restricted-access tax data, the author will identify where students from across the income distribution attend college, and which colleges are improving the economic standing of students up and down the income ladder.

The authors will investigate how large increases in household debt affect the allocation of labor across geographical areas and industries. This project is a continuation of their previous research on household debt, and will result in the creation of a new historical county-level panel of household balance sheets and industry-specific employment—a harmonized data set (1946-2012) that will be available to other researchers. A second contribution is a test of whether the run-up in debt led to imbalances in employment, a corollary to the findings in Mian and Sufi (2014) about employment shocks during the Great Recession. A better understanding of the interaction between household debt and structural changes in the allocation of labor could help researchers better identify and understand the root causes behind the labor market slowdown.

Over the past two years, “secular stagnation” has been widely discussed within the policy community. Supporters of the secular-stagnation hypothesis believe that demand may be permanently below supply capacity, with low interest rates and inflation targets by central banks preventing real interest rates from falling to the point necessary to restore the supply and demand balance. Widening income inequality has been cited as one cause of secular stagnation. This project will develop a theoretical model to illuminate how income inequality affects aggregate income and therefore economic growth. The model has important implications for economic policy, particularly monetary policy.