Understanding the degree to which, and how, hurricanes have had disparate effects across disadvantaged and advantaged groups in the United States is key to policymakers’ ability to craft climate policy that ensures disadvantaged communities do not bear the brunt of our warming world. Most of the literature in this area has focused on average impacts, with relatively little attention paid to heterogeneity. But even in cases where no negative impacts of natural disasters are found, on average, some subgroups may experience substantial negative effects. This project leverages newly linked administrative tax data from the IRS and demographic information from the American Community Survey and decennial census with exogenous variation in individual-level exposure to all hurricanes in the United States between 1995 and 2019. The analysis seeks to uncover a deeper understanding of the consequences of and responses to hurricanes, and how these effects differ across socioeconomic and demographic groups.
Archives: Grant
Public Investment, Manufacturing Work Opportunity, and Upward Mobility in Midcentury America: Evidence from World War II
Manufacturing jobs in the United States were widely considered to provide an important opportunity for less-educated workers to climb the U.S. economic ladder by offering high pay and stable careers. Research shows that the decline in manufacturing jobs since the 1970s coincided with a decline in upward mobility: Children born in the 1980s are less likely to grow up to earn as much as their parents than children born in the 1950s were, particularly in the post-industrial heartland. This project examines how increases in high-wage manufacturing work opportunity affected individual opportunity following the industrial mobilization for World War II. Garin and Rothbaum will exploit the fact that the siting of new plants was based on idiosyncratic short-run strategic considerations, leading to the construction of massive new publicly financed manufacturing plants in places that would not have been chosen by private firms. This historical dynamic gives rise to an ideal laboratory for studying how public investments that create high-wage employment impact upward mobility in the long run. The authors have digitized data on the locations of World War II manufacturing facilities using the War Production Board data books. Focusing on children who grew up in those areas in the 1940s, the two researchers will then trace those individuals’ income trajectories using the later-20th century Current Population Survey data linked to Social Security Administration-based income histories to examine mobility rates.
The Effect of Government Safety Enforcement on Workers: Evidence from Linked Employer-Employee Data
Johnson and Levine seek to understand how enforcement of government safety regulations affects workers’ wages and how the effect differs across groups of workers based on income, race, and ethnicity in the United States. While prior work focused on whether inspections lower subsequent workplace injuries and affect overall establishment payroll, scholars don’t know much, if anything, about the impact of inspections on individual workers’ wages. If regulatory enforcement lowers wages at the same time it improves health and safety, then the overall effects on worker well-being may be mixed. The two researchers will utilize the randomness of inspections by the U.S. Occupational Safety and Health Administration. This setting offers a unique opportunity to evaluate the effects of inspections as if examining a randomized controlled trial. Johnson and Levine plan to compare the trajectories of establishments (and workers at those establishments) randomly selected for inspection to those eligible but not selected for inspection. Inspection data will be linked to the Longitudinal Employer-Household Dynamics data series. In addition to yielding new evidence about the impact of safety and health regulatory enforcement on workers’ wages, this work also has the potential to contribute to the current literature on monopsony power in labor markets by investigating whether the effect of inspections on wages varies by local labor market concentration.
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.
Joint Ventures in Dialysis Care: Improving Coordination or Enabling Market Power?
In virtually all areas of the U.S. healthcare service sector, physicians are barred from referring patients to entities in which they have an ownership stake. But this is not the case for the dialysis industry, which is exempt from such restrictions. Joint ventures between physicians and dialysis facilities exist at nearly 20 percent of facilities. This research will explore how physicians’ ownership ties with dialysis firms affect steering, spending, and outcomes. Using data obtained from a Freedom of Information Act request from the Centers for Medicare and Medicaid Services, Eliason, McDevitt, and Roberts will construct a first-of-its-kind dataset that tracks the ownership of dialysis facilities, including whether physicians have an ownership stake. They will add in data on dialysis providers and patients, including detailed Medicare claims and rich information on patient characteristics and health outcomes. An event-study analysis will allow the three researchers to test whether there is a clear trend-break in new patient arrivals and referrals when parties enter into a joint venture in order to examine how integration affects competition. The analysis will enable the researchers to study how patient caseloads and referrals at unintegrated facilities change after a nearby rival forms a joint venture, along with the impact of vertical integration on patient outcomes such as hospitalizations and mortality, as well as overall Medicare spending. Prior research has found that Black, Latinx, and low-income patients suffer disproportionately from kidney failure and often receive worse care, potentially making these groups especially vulnerable to providers’ growing market power and physicians’ conflicting interests.
Unequal Protections: Regional Disparities in Labor Standards Policies, Enforcement, and Violations
Fine, Galvin, Round, and Shepherd seek to understand the relationship between region, race, state enforcement capacities, and minimum wage violations in the United States, and what the mechanisms are by which weaker state enforcement capacities might produce a higher incidence of minimum wage violations. This exploratory, theory-building project involves three major empirical components. First, the four researchers will improve upon, merge, and expand separate datasets they previously compiled on subnational labor standards enforcement capacity to create a novel and flexible database of all the enforcement capacities of the 50 states and the District of Columbia. Data and coding rules will be made fully transparent to enable future researchers to use whichever combination of codes best suits their particular research questions. Second, the researchers will use CPS-MORG data to estimate the minimum wage violation rate in every state and region of the United States. Third, they will use exploratory, in-depth comparative case studies to identify and theorize a repertoire of mechanisms linking the legacy of slavery and the post-slavery racialized economy in the South to weak state enforcement capacity and minimum wage violations in order to understand the role of federalism in creating and maintaining Black-White racial disparities.
Voices of Home-Based Providers: Perspectives from the Early Childhood Field
This project will build on the relatively thin body of work on informal, home-based child care providers in the United States. It aims to better understand how that community can be supported in meeting societal priorities around increasing affordable access to high-quality early childhood care. Home-based care providers deliver essential care services but occupy a structurally challenging position. These providers are poorly compensated and face challenges when it comes to meeting licensing requirements or achieving high-quality ratings. This study will identify impediments to these child care providers’ abilities to provide high-quality, affordable child care that is accessible to the families that need it. The authors will take advantage of a collaboration with the Virginia Department of Education to conduct interviews with licensed and unlicensed providers in Virginia through participatory action research, a research design that helps create unsilencing opportunities for those who have been silenced. This is especially important since the voices of home-based providers are often not included in the conversation about quality care.
Buyer Power in the Beef Industry
Agricultural supply chains in the United States include hundreds or thousands of farmers and large agribusinesses that process and distribute the produce. Following a series of mergers over the past five decades, the farmers that contribute to the production of meat and grain each have the option of selling to only four predominant buyers, with the buyers varying by product. Given the disparity between the sizes of individual farmers and the agribusinesses, it is natural to wonder whether transaction prices reflect the marginal value of farmers’ product, as they would in a competitive market, or whether agribusinesses are able to exercise oligopsony power to artificially depress prices. These concerns are particularly salient now, given indictments for price-fixing and anticompetitive practices in the meatpacking industry. Yet farm bankruptcies have increased each year for the past decade. This project will study oligopsony power in cattle markets by quantifying the market power of the packers, assessing the causes and consequences of the market power, and examining how it has changed over the past two decades. Outcomes of interest include the degree of local market concentration, plant-specific mark-ups and the mechanisms that support the mark-ups, and evaluation of specific mergers.
Power and Dignity in Low-Wage Labor Markets: Evidence from Wal-Mart Workers
A growing body of evidence suggests that monopsony power is an important feature of the low-wage labor market. One reason why employers have some degree of wage-setting power is that jobs are differentiated, meaning workers differently value certain “amenities.” Existing research shows the valuation of nonwage characteristics such as control over schedules. Yet more evidence is needed to understand how nonwage amenities contribute to workplace power. This research will use a Facebook survey of workers at Walmart Inc. to shed new light on the degree of monopsony power in the U.S. labor market and the role of amenities in monopsony. The survey presents Walmart workers with hypothetical job offers, with random wage draws, to estimate the quit elasticity. This can be translated into the firm-specific labor supply curve, a measure of the degree of monopsony. Dube will then ask how amenities other than wages at the job affect quits, specifically using a regression framework to scale those factors into a money-metric valuation of different amenities. He will then zoom into “dignity at work” as a specific type of amenity and will test whether minimum wages may affect amenity provision by firms.
Do Mortgage Lenders Compete Locally? Implications for Credit Access
Jorring and Buchak propose to study the impact of local concentration of mortgage lenders on household credit access and homeownership. Homeownership is the primary channel through which most U.S. households build wealth. Existing literature finds little to no relationship between local lender concentration and mortgage interest rates. Therefore, federal regulators regard mortgage markets as national and view their local concentration as irrelevant to financial regulation and monetary policy. The two researchers argue that this view is incomplete, showing that although local concentration has no influence on interest rates, it strongly affects lending standards and upfront fees. In more concentrated areas, preliminary results show that lenders charge higher fees, mortgage application rejection rates are higher, and the pool of originated mortgages is less risky in terms of both credit scores and default. This may be particularly true for low-income, female, and applicants of color, suggesting that local lender concentration is particularly important when it comes to questions of credit access for traditionally underserved borrowers. Jorring and Buchak plan to combine public data from the Home Mortgage Disclosure Act, which covers the near universe of U.S. mortgage applications, as well as data from Fannie Mae and Freddie Mac on single-family loan origination and performance, with private data to explore the effects of local concentration in mortgage lending.