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.
Archives: Grant
Inequality, aggregate demand, and secular stagnation
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.
The impact of inequality on young workers’ career progression
Research shows that a worker’s first few years in the labor force have outsized effects over their entire lifetime earning’s trajectory. This project will look at how earnings, employment, and job transitions have changed for young workers over the past three decades. The researcher will also look at how rising income inequality affects career outcomes.
Student loans: vehicle of opportunity or trojan horse?
How does the dramatic increase of student loan debt affect how college graduates search for jobs in the labor market? Do the effects of student debt on job search differ across the distribution of family income? This project addresses these important questions, with immediate implications for contemporary policy conversations about student debt reform, as well as the broader fate of Millennials in the labor market.
Inequality of economic precarity and uncertainty and family formation and instability
Economic inequality and family insecurity have risen in the United States over the past several decades. The interaction between the two phenomena is a matter of debate, as many researchers and policymakers have pointed to family structure, particularly non-marital childbirth, as a key source of rising economic inequality. But what if the relationship went the other way, and rising inequality and economic insecurity were themselves causes of family insecurity? The researchers tackle this question by looking at individual families and their evolution over time. Family instability has major implications for the development of human capital, which in turn feeds directly into long-term economic growth prospects.
Intragenerational income mobility in the United States
Using federal income tax data, this project will investigate intragenerational income mobility in the United States. The researchers will explore the determinants of mobility—such as aging, employment history, industry trends, marriage or divorce, and geographical mobility—and examine how household income profiles respond to earnings shocks.
Financial behavior and uncertain tax refunds: a new test of precautionary saving among low-income households
This research seeks to better understand how readily low-income households spend an extra dollar of income by utilizing a novel quasi-experimental design based on the uncertainty of tax refunds. A better understanding of the marginal propensity to consume at the bottom of the income distribution has important implications for the design of fiscal stimulus and unemployment insurance systems, as well as the tax system.
The consequences of tougher sentencing and the prison boom: Recidivism, human capital accumulation, and intergenerational effects
This project examines the effect of incarceration on various outcomes, including recidivism, human capital accumulation, employment, and earnings. The authors will do so using a natural experiment leveraging variation in sentencing outcomes due to differences between randomly assigned judges. Taking advantage of the considerable administrative data capacities of University of Chicago’s Chapin Hall, the authors aim to make novel contributions extending well beyond the current literature, which largely relies on survey data. This research will address critical questions such as the flat lining of male labor force participation, and the importance of the prison boom in driving the black/white wage gap.
Harvest of struggle: Tracking inequality through first contract gains for low-wage workers
This project will quantify the gains that low-wage workers make via union membership, not only in terms of wages but also benefits, health and safety protections, grievance procedures, training, and work flexibility and regularity. Utilizing a database of first contracts gained under collective bargaining agreements, the researcher seeks to provide a broader view of unionization’s benefits which fully captures the human capital implications. In addition, this project focuses on women, workers of color, and low-wage workers, which the vast majority of the contemporary research on unions and labor market outcomes does not capture. Low-wage workers are disproportionately at the bottom of the income scale, and account for a significant share of the growth in income inequality. Understanding the diverse consequences of organizing and collective bargaining may provide insights into how and why inequality has grown.
Political inequality and financial rulemaking: A collaborative empirical project for the production of data
This project will undertake a quantitative, rigorous assessment of financial regulation in the United States, an underdeveloped area of research within the social sciences. While there is an extensive literature on regulatory politics, the focus on financial regulation has eluded many political scientists (and most economists as well). Moreover, research on the effects of unequal influence has largely focused on representation and legislation, with minimal attention paid to the final, critical step of rulemaking in the “sausage factory” of policymaking. This project will create a new database on financial rulemaking covering the past three decades, with a particular focus on the pre- and post-Dodd Frank Act. The dataset will be publically available and include rules changes, comments, and linkages of these variables to financial enforcement and appointments data. The possibilities for influencing the rules through lobbying of various sorts are enormous and may significantly contribute to economic inefficiencies, rent seeking, and inequality, which in turn have implications for growth.