As the U.S. economy emerges from the coronavirus recession, public policies to support women’s ability to return to work and stay in the workforce will be necessary for economic recovery. This study seeks to assess if paid sick leave reduces short-term income volatility and increases long-term economic security through improved job attachment among women, particularly those who are less likely to have access to paid sick leave in the absence of paid sick leave mandates. Using the American Community Survey, Slopen will conduct analyses at the state and county level using the five states and 21 counties that implemented paid sick leave as the treatment group. She will exploit the variation in the timing of the implementation of mandates at the state or county level using a difference-in-differences approach to estimate the effect of paid sick leave mandates on women’s labor force participation, continuity of employment, weekly hours worked, income, and poverty. She also will identify effects on subpopulations most likely to lack access to paid sick leave in the absence of mandates.
Archives: Grant
Sectoral bargaining and spillovers in monopsonistic labour markets
There is increasing evidence of monopsony power in labor markets, with implications of lower wages and higher inequality. One popular policy recommendation is to constrain such monopsony power through more organized unions of workers, such as in local bargaining councils—collections of trade unions and employers representing specific industry-regions that consultatively bargain over and set minimum wages and working conditions for those industry-regions. This project will study the effect of such “sectoral bargaining” using South African data. Using matched employer-employee tax data from the South African Revenue Service, Bassier will match these agreements to firms as demarcated by industry and location. There are currently 39 legally recognized bargaining councils in South Africa, each covering a specific industry-region. Bargaining councils are estimated to cover 40 percent of workers in the formal sector in South Africa, concentrated mainly in the manufacturing, construction, trade, and transport industries in addition to covering the public sector. This research could give insight into how sectoral bargaining could improve worker power and mitigate the effects of monopsonistic labor markets.
Understanding Amazon: Strategy and Welfare Implications
This project aims to provide a detailed, comprehensive analysis of the Amazon.com Inc. platform, its evolution, market power, and welfare implications. Gutierrez will utilize a massive dataset that has product information, alongside prices and sales ranks, for products sold on Amazon’s platform to produce three papers. The first will provide an overview of the Amazon platform and study the evolution and heterogeneity of fees in order to empirically test whether Amazon’s fees to sellers reflect market power. The second will consist of a structural analysis of reselling to test whether Amazon competing on its own platform is anticompetitive. And the third paper will analyze the impact of private label products. This research not only examines the Amazon platform but also provides empirical evidence on whether these types of activities can be anticompetitive.
Optimal Monetary Policy with Menu Costs is Nominal Wage Targeting
Central banks across the developed world are reconsidering their monetary policy frameworks and are frequently looking to academic research to inform the question of whether to stick with the dominant paradigm of inflation targeting or to adopt a new monetary policy regime. To address this question, Halperin and Caratelli will build a model where price stickiness is modeled in a substantially more realistic way, compared to other models, in order to explore whether it is optimal for central banks to use nominal income targeting rather than inflation targeting. The two researchers will examine whether nominal income targeting would mean that central banks would not have to tighten policy in response to strong wage growth, which could boost equitable growth.
Homeownership Disparities and Access to Family Child Care
This project will use longitudinal data from two states to explore racial disparities in access to family child care centers by looking at rates of homeownership and disparities in homeownership by race. Family child care centers—licensed child care centers located within an operator’s home—make up a declining but still substantial proportion of the supply of formal child care. There are many obstacles to licensing a family child care center in a rental property, so areas with low rates of homeownership may experience a lack of access to this often more affordable child care option. Family child care centers also tend to have more flexible hours, making them especially valuable for parents working irregular or unpredictable schedules. Borowsky will conduct a market-definition analysis intended to approximate regions of common demand and supply. He will then evaluate the extent to which low rates of homeownership in a region are associated with low supply of family child care centers.
Macroprudential Regulations, Income Inequality and the Redistribution Channel
The 2008 global financial crisis outlined the need for a policy toolkit that lessens the pain of financial cycles for the real economy. In particular, conventional macroeconomic policies undertaken by public authorities in the aftermath of the crisis lead to extremely low interest rates and put public finances under heavy strain. During this period, macroprudential regulation established itself as a new cornerstone of regulators’ toolkits. Yet most models evaluating the potential benefits from macroprudential regulation consider redistribution as a side effect by using representative agent models. This project asks whether the redistribution channel calls for stronger or weaker macroprudential regulations, how the effectiveness of prudential capital controls as a financial stability tool are affected by the distribution of income, and what the distributional implications are of prudential regulations. The authors will build on existing research that presents models showing that monetary policy may impact income inequality in ways that then turn out to affect the transmission mechanism for such policy. First, they will be extending models that focus on the closed economy context to the open economy context. Second, they will be providing both a theoretical and a quantitative analysis of the transmission channels associated with capital controls. Third, they will perform their analysis in a dynamic context.
Understanding Climate Damages: Consumption versus Investment
When humans undertake physically intensive tasks, the body must release heat to maintain a safe internal temperature. Worker safety organizations have strict guidelines for climate conditions under which it is safe for workers to perform strenuous manual labor. Rising temperatures from climate change will increase the risk of heat stress, making outdoor work more difficult. This study seeks to quantify these implications for capital accumulation, growth, and consumption by building a discrete time growth model of a closed economy. Unlike standard climate-economy models, Casey, Fried, and Gibson will account for differences in the way that climate affects the production of investment goods and services, compared to consumption goods and services. The model is designed to capture how vulnerability to climate change differs between consumption and investment sectors and how this difference evolves over time. It builds on past work by considering climate change as a determinant of productivity and considering a more disaggregated representation of the economy.
School-to-Work Pathway and Racial/Ethnic Inequality among College Graduates
This project examines the source of racial and ethnic inequality among the highly educated workforce in the United States by focusing on how educational credentials translate into U.S. labor market outcomes. The racial and ethnic wage divide is the largest and has expanded the most among highly educated workers, despite the fact that people of color in the United States are registering higher educational attainment. This project seeks to shed light on that by exploring how educational credentials translate into positions in the U.S. labor market and whether there are mismatches. Specifically, the project will investigate vertical and horizontal dimensions of education-occupation mismatches. Vertical mismatch refers to a mismatch between a worker’s educational credentials and the level of education required for the occupation, such as a college graduate working as a retail sales associate. Horizontal mismatch refers to a mismatch between a worker’s field of study and the type of education required for the occupation, for example, an engineering major working as an accountant. Lu will incorporate a demand-based measure of mismatch using online job-posting data compiled by Burning Glass Technologies, in addition to pooling two decades of nationally representative longitudinal data from the Survey of Income and Program Participation. She will investigate which dimensions of mismatch and which processes in the employment relationship drive racial and ethnic labor market inequality by exploring initial occupational allocation, subsequent occupational trajectory, and wage consequences of mismatch. Lu also will investigate how educational stratification factors into ethnic/racial disparities by looking at degree levels, fields of study, and college quality.
Is COVID-19 Exacerbating Inequities in Subsidized Child Care?: Policy Lessons to Strengthen the Home-Based Sector
An estimated 7.5 million children under 6 years old are cared for by home-based child care providers each year, which represents the majority of young children in regular nonparental care arrangements in the United States. Home-based child care programs are more affordable and accessible to a broad range of families, especially low-income, Black and Latinx, and rural families. The pandemic has drawn attention to longstanding racialized inequities in access to child care and the structural inequalities that are perpetuated due to insufficient investment in the home-based child care sector. This project will document trends over time (before, during, and after the pandemic) in access to child care subsidies for home-based care providers using administrative records data for the state of Illinois, paying particular attention to the racial composition of those receiving child care subsidies and those who serve racially diverse and economically disadvantaged families through the child care subsidy program. The analysis of the administrative records will be able to show how licensed and unlicensed providers’ access to child care subsidies were affected by the pandemic, compared with one another and compared with center-based care. The two researchers will augment this analysis with in-depth interviews with home-based care providers. These qualitative interviews will explore how home-based care providers fared during the pandemic.
Millionaire Migration After the Trump Tax Bill: Implications for Progressive Taxation
Progressive taxation is highly polarized in the United States because some states have millionaire taxes while others have no state income tax at all. The 2017 tax reform legislation, the Tax Cuts and Jobs Act, amplified these differences by capping the state and local tax, or SALT, deduction. This effectively reduced top tax rates in some states while increasing them in others, leading some, including governors, to worry that this new tax differential will set off a wave of millionaire tax flight and a new “race to the bottom” in state taxes on the rich. Using confidential data from IRS tax returns, the author will examine elite mobility and embeddedness in the wake of the 2017 tax reform. The author seeks to understand if the rich are more likely to move when their tax rates are high, whether the TCJA-induced tax differential led to greater migration, and, conditional on moving, how much this tax reform increased the likelihood that moves are to lower-tax destinations. These questions are of great importance as state and local taxes are essential for states’ capacity to provide services and alleviate inequality. And while previous work shows the existence of effects among particular job classes, this paper would provide policy-relevant estimates for the universe of high-earners in recent U.S. history.