This project will look at what alternative approaches could allow those in low-income communities—the majority of which are communities of color—to negotiate an exit from poverty. As the middle of the jobs market has hollowed out and the college wage premium has increased, much of the conversation around policy solutions has focused on upskilling or encouraging more people to pursue higher education. Two-thirds of Americans, however, still lack a bachelor’s degree, a proportion that hasn’t changed much over the decades. This raises the question of what alternative policies could encourage mobility. Hill will explore how economic inequality shapes the perceptions and knowledge of opportunities and options among those in low-income communities of color. In light of deeply racialized American inequality, this project aims to shed light on mechanisms creating and prohibiting social mobility among “low-skilled” or noncollege-educated workers of color.
Archives: Grant
The labor market effects of minority political empowerment: Evidence from the Voting Rights Act
This project looks at how the political enfranchisement of a group affects economic outcomes of those within that group. There are several mechanisms through which this could occur: Politicians might favor a newly enfranchised group in policymaking to earn their votes; the newly enfranchised group might find public-sector employment; or members of the group might run for and win a seat in office. Aneja and Avenancio will examine how African American enfranchisement through the Voting Rights Act affected a variety of economic outcomes for blacks in southern states. They will use a differences-in-differences approach, looking at bordering counties in states that were and were not subject to Section 5 of the Voting Rights Act. Although this study focuses on Civil Rights-era outcomes, the results will be relevant today, as states pass laws that could depress voter turnout among minority groups.
Minimum wages and racial inequality
This project will research how effective basic and universal labor standards are at reducing group inequality by looking at a major amendment to the Fair Labor Standards Act in 1966, which extended federal minimum wage coverage to several new industries. The expansion occurred at a time when the federal minimum wage was 40 percent higher in real terms than it is today. The newly covered industries were concentrated in services, retail, and agriculture, sectors with disproportionately high shares of women and black workers. The project proposes to take advantage of the scale of the reform and the racial and gender composition of treated industries to test the effects of high minimum wages and their ability to close the gender and racial wage gaps. This research promises to increase our understanding of the effects of introducing a high wage floor and whether universal federal labor standards can effectively reduce the racial and gender wage gaps.
The effects of paid sick leave on workers’ earnings dynamics: Evidence from Seattle
This project proposes to utilize administrative data from Washington state to study the impact of Seattle’s paid sick time ordinance on three specific research questions. First, how has the ordinance impacted earnings, hours, employment levels, and earnings volatility of workers covered by the new paid sick time law? Second, what share of worker volatility is due to within-job volatility (volatility due to changes in hours) versus between-job volatility (volatility from job turnover) as a result of the paid sick time ordinance? Third, do the above effects vary for workers in different firms, industries, firm sizes, and wage-rate employment subgroups? This work will add to what we know about the impacts of mandated employer-provided paid sick leave, including illuminating whether employer-mandated paid sick leave has employment effects and on whom. Wething’s study of earnings volatility has the potential to provide important evidence on the mechanism through which paid sick leave is impacting employment outcomes, including whether and how this might impact worker well-being and firm productivity.
Posted wage rigidity
This study will look at a key statistic for understanding wage rigidity: the rigidity of the wages of new hires. Theoretically, the wage level of new hires is important for making sense of variations in hiring across the business cycle. But there isn’t much empirical research on this statistic. Hazell is using data from online job vacancy postings to build a statistic that accounts for the changing composition of posted jobs as the labor market slackens and tightens.
Economic impacts of mentoring for disadvantaged youth: RCT evidence
This project investigates what role mentoring can play in economic mobility for disadvantaged youth. To answer the question, Bell plans to link tax records to a dataset of youth applicants to a Big Brothers Big Sisters youth mentoring program. Early economic thinking on the intergenerational perpetuation of disadvantage focused primarily on financial channels. Recent work, however, including some funded by Equitable Growth, has highlighted the importance of childhood environments as a key determinant of success. An initial study found significant positive social outcomes among youth who received mentorship at the close of the 18-month Big Brothers Big Sisters program. Outcomes of interest include college attendance, income and employment, teenage birth, incarceration, and reliance on government assistance. This project will build on Bell’s earlier work with Chetty et al. that shows children who grow up near inventors are not only more likely to become inventors, but also are more likely to invent in similar technologies. A better understanding of the role of social exposure will help identify mechanisms of mobility.
Race, entrepreneurship, and urban revitalization
This research project tackles questions about how gentrification-driven property redevelopment impacts black-owned businesses compared to white-owned businesses. Gentrification studies have largely ignored businesses in favor of examining residences, but commercial enterprises play a key role in shaping neighborhood conditions. Focusing on Detroit, this sociological study combines an analysis of the U.S. Census Bureau’s Survey of Business Owners with qualitative interviews and archival research to analyze how black-owned businesses’ growth, inclusion, and access to resources compares to that of white-owned businesses during periods of local redevelopment.
Automation threat and wage bargaining
This study proposes a novel mechanism through which automation in the labor market might have an impact on wages through the threat, rather than the actuality, of automation, which threatens to significantly change the structure of the labor market. Despite widespread popular accounts of a future where few work, the literature is more circumspect. How automation will affect both the demand for labor and wages is an important area of study. The project will build a model of bargaining over wages and the automation threat, and empirically test the impact of this threat using employer-employee matched data in the United Kingdom. Using heterogeneity of firms, Arnoud will identify occupations that are vulnerable to automation and look at firms that have yet to automate, implying the existence of the threat of automation. Arnoud will further investigate the extent to which this threat channel is mediated by the bargaining power of workers due to other institutional features.
Wealth taxation and evasion: Quasi-experimental evidence from Colombia
This study leverages administrative data from Colombia to estimate the impact of wealth taxes on reported wealth and on the use of tax-evasion strategies. In addition, Londoño-Vélez examines the impact of the Panama Papers, which sparked a change in public knowledge about tax evasion, on reported wealth. These results will help establish an evidence base on which to make the case for reforms to the taxation of capital income, and inform academics and policymakers on the appropriate role of wealth taxation in that mix.
The macro-effects of unemployment insurance: A simulation-based discontinuity design approach
Unemployment insurance was expanded several times during the Great Recession and its aftermath, with the maximum duration reaching up to 99 weeks in some states. Researchers have been debating the macroeconomic impact of those expansions on unemployment and employment, but little research exists on the macroeconomic effects of previous expansions. This project will fill this gap by looking at unemployment benefit expansions going back to 1976. Similar to previous research, the researchers will use “trigger notices” from the U.S. Department of Labor to see when programs were turned on. Their methodology, however, differs from previous research because rather than depending upon measurement error in the unemployment rate, their method allows them to look at the impacts when a program has multiple triggers. The researchers will then compare the effects of expansions during the Great Recession to previous expansions.