Rising inequality has two implications for individuals’ ability to rebound from temporary setbacks and contribute to economic growth: poorer households don’t have savings to fall back on during temporary income losses, and richer households are able to self-insure and find social insurance programs less valuable. This research will investigate whether and how credit policies could help lower-income individuals better weather shocks and contribute to economic growth.
Archives: Grant
Inequality at home: The evolution of class-based gaps in young children’s home environments and pre-school age skills from 1986 to 2012
Researchers increasingly point out the importance of a child’s early years for the development of skills that will help them succeed later in life. Much of this scholarship focuses on the importance of cognitive skills, such as reading, but the development of non-cognitive skills, such as motivation and interpersonal skills, is also critical. These five researchers will look at how inequality across home environments affects the development of these non-cognitive skills. This channel could have major consequences for the life prospects of children, as economic inequality across families may be magnified for the next generation. Understanding these differences is vital to improving the prospects for disadvantaged children and the growth prospects for our economy.
The impact of need-based financial aid reform on the decision to attend college
Low-income students disproportionately attend for-profit colleges and universities where low graduation rates and high levels of student debt are common. This research will utilize administrative data to test whether new rules that require graduation and debt standards change matriculation at for-profit schools.
The effects of a progressive tax system on innovation and growth
This research will examine the implications of tax structures for inequality and growth, focusing on innovation. The researcher will investigate this question by looking at cross-national differences in tax policy and innovation.
The American taxpayer project
This research will explore political support for different kinds of tax structures. Better understanding tax preferences is key to better understanding the range of possible tax policies and their contribution to inequality and growth.
Inequality and fiscal balance: Is U.S. capital income actually taxed and why?
This research will look at how the wealthy re-label income and wealth to avoid taxes. This study will help us better understand the distribution of wealth and income at the very top of the distribution, as well as the implications of mislabeling for capital accumulation and economic growth.
Economic inequality and the stalled progress toward gender equality
Women’s participation in the formal economy increased for decades after the 1960s but stalled in the late 1990s. Researchers aren’t sure why this happened, but professors Cohen and Kleykamp propose one possible answer: rising inequality. As income inequality has increased, the pay-off to investing in children has increased as well, making it more attractive to have one parent stay at home—usually the mother. Rising work hours among women has had a large effect on economic growth. U.S. gross domestic product in 2012 would have been 11 percent lower if not for the rising working hours of women. If Cohen and Kleykamp’s hypothesis is right, then rising inequality has held back women’s entrance into the labor market and significantly slowed down American economic growth.
Declining labor shares and the relative price of investment: evidence from state investment tax credits
This research will explore the changing distribution of income between labor and capital. The project will look specifically at how tax policy focused towards investment may be responsible for the shift of income from labor to capital by looking at differences across states. The shift in the capital-labor distribution is critically important for understanding not just economic inequality, but growth as well.
School finance reform and educational equity
Improving school quality is a well-established way to improve student learning. But one specific approach is understudied: school finance reform. This project will examine state-level school finance reforms, intended to increase funding for schools serving poor children, over the past several decades. If school financing matters, then reforms that equalize funding will also tend to equalize student achievement across districts. This researcher will study the effects of these reforms on the absolute and relative test scores of students in low-income school districts. Policymakers can then understand if these reforms boost overall scores as well as reduce the inequality of outcomes.