NBER Summer Institute 2022 Round-up: Week 3

On July 11, the National Bureau of Economic Research kicked off its summer institute, an annual 3-week conference featuring discussions and paper presentations on various topics in economics, including environmental justice and economic mobility, the effects of paid family leave for workers, and racial inequities in the U.S. Unemployment Insurance system. This year’s NBER event was virtual and was livestreamed on YouTube.

We were excited to see Equitable Growth’s grantee network, our Steering Committee, and our Research Advisory Board and their research well-represented throughout the program. Below are abstracts (in no particular order) of some of the papers that caught the attention of Equitable Growth staff during the third week of the conference.

Check out the round-up from week 1 here and week 2 here.

“Air Pollution and Economic Opportunity in the United States”
Jonathan M. Colmer, University of Virginia, Equitable Growth grantee
John L. Voorheis, U.S. Census Bureau, Equitable Growth grantee
Brennan Williams, University of Virginia

Abstract: “Neighborhoods are an important determinant of economic opportunity in the United States. Less clear is how neighborhoods affect economic opportunity. Here, we provide early evidence on the importance of environmental quality in shaping economic opportunity. Combining 36 years of satellite-derived PM2.5 concentrations measured over roughly 8.6 million grid cells with individual-level administrative data provided by the U.S. Census Bureau and Internal Revenue Service, we first document a new fact: Early-life exposure to particulate matter is one of the top five predictors of upward mobility in the United States. Next, using regulation-induced reductions in prenatal pollution exposure following the 1990 Clean Air Act amendments, we estimate significant increases in adult earnings and upward mobility. Combined with new individual-level measures of pollution disparities at birth, our estimates can account for up to 20 percent of Black-White earnings gaps and 25 percent of the Black-White gap in upward mobility estimated in Chetty and others (2018). Combining our estimates with experiment-induced reductions in pollution exposure from the Moving to Opportunity experiment, we can account for 16 percent of the total neighborhood earnings effect estimated in Chetty and others (2016). Collectively, these findings suggest that environmental injustice may play a meaningful role in explaining observed patterns of racial economic disparities, income inequality, and economic opportunity in the United States.”

“Distinguishing Causes of Neighborhood Racial Change: A Nearest Neighbor Design”
Patrick Bayer, Duke University, National Bureau of Economic Research
Marcus D. Casey, University of Illinois at Chicago, Equitable Growth grantee
William B. McCartney, Purdue University
John Orellana-Li, The Graduate Center, City University of New York
Calvin S. Zhang, Federal Reserve Bank of Philadelphia

Abstract: “U.S. neighborhoods remain largely stratified by race. The role of racial preferences in driving contemporary neighborhood racial change, however, remains surprisingly controversial. While theories of tipping typically emphasize racial preferences as a principal catalyst for neighborhood change, the emergence of gentrification and related processes in reshaping modern neighborhoods has led some to conclude that race is now of secondary importance. Reconciling these distinct views empirically has proven tough since credibly distinguishing whether households respond directly to the attributes of their neighbors or factors coincidental with the entry of new neighbors is difficult. This paper introduces a novel “nearest neighbor” research design that isolates a component of the household decision to move out of a neighborhood directly attributable to the identities of their neighbors. In particular, we contrast the move rate of homeowners who live immediately nearby a new entrant of a different race to that of homeowners who live farther away on the same block. This within-block comparison helps hold constant many other aspects of the neighborhood and its expected future evolution. Combining detailed data on housing transactions and race in North Carolina between 2005 and 2015, we estimate the causal effect of receiving a different-race neighbor on the likelihood of moving. The results suggest that Black and White homeowners are significantly more likely to move in response to receiving a close neighbor of a different race. However, this effect is heterogeneous across household types: While older White households exhibit the strongest exit responses overall, among Black households, younger households exhibit relatively high move rates. Move reactions among both Black and White households are stronger for homeowners born in the North or Midwest, where residential segregation is especially high, compared to those born in the South.”

“The (Lack of) Dynamic Effects of the Social Safety Net on Human Capital Investment”*
Manasi Deshpande, University of Chicago and National Bureau of Economic Research, Equitable Growth grantee
Rebecca Dizon-Ross, University of Chicago and National Bureau of Economic Research

Abstract: “How does the expectation of government benefits in adulthood affect human capital investments in childhood? Both economic theory and the experts we surveyed predict that expected future benefits decrease childhood human capital investments through income and incentive effects. We investigate whether this is true by conducting a randomized controlled trial with families of children who receive Supplemental Security Income, or SSI, a cash welfare program for children and adults with disabilities. The vast majority of parents whose children receive SSI overestimate the likelihood that their child will receive SSI benefits in adulthood. We provide randomly selected families with information on the predicted likelihood that their child will receive SSI benefits in adulthood and use this randomized information shock to identify the effect of expectations about future benefits. We find that reducing the expectation that children will receive benefits in adulthood does not increase parental investments in children’s human capital. This zero effect is precisely estimated, and we strongly reject the positive null hypothesis from our expert survey. Reducing the expectation that children will receive benefits in adulthood instead increases parents’ planned labor market effort.”
*Note: Email the author for draft, which is under agency review.

“The Broken Rung: Gender and the Leadership Gap”
Ingrid Haegele, Ludwig Maximilian University of Munich, Equitable Growth grantee

Abstract: “Women are vastly underrepresented in leadership positions, but little is known about when and why gender gaps in representation first emerge in the leadership hierarchy. This study uses novel personnel data from a large manufacturing firm to document that gender differences in applications for first-level leadership positions create a key bottleneck in women’s career progression. Women are not less likely to learn about job openings at the firm and do not experience lower hiring likelihoods than male applicants. Instead, gender differences in revealed preferences for leading a team account for women’s lower propensities to apply for first-level leadership positions. Women who rise to the first leadership level are not less likely than men to apply to or to receive subsequent promotions, rejecting the common notion that a glass ceiling at higher-level leadership positions is the key barrier to gender equality.”
Note: This research was funded in part by Equitable Growth.

“Certification and Recertification in Welfare Programs: What Happens When Automation Goes Wrong?”
Derek Wu, University of Chicago, Equitable Growth grantee
Bruce D. Meyer, University of Chicago and National Bureau of Economic Research

Abstract: “How do administrative burdens influence enrollment in different welfare programs? Who is screened out at a given stage? This paper studies the impacts of increased administrative burdens associated with the automation of welfare services, leveraging a unique natural experiment in Indiana in which the IBM Corporation remotely processed applications for two-thirds of all counties. Using linked administrative records covering nearly 3 million program recipients, the results show that Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families, and Medicaid enrollments fall by 15 percent, 24 percent, and 4 percent, respectively, one year after automation, with these heterogeneous declines largely attributable to cross-program differences in recertification costs. Earlier-treated and higher-poverty counties experience larger declines in welfare receipt. More-needy individuals are screened out at exit while less-needy individuals are screened out at entry, a novel distinction that would be missed by typical measures of targeting that focus on average changes overall. The decline in Medicaid enrollment exhibits considerable permanence after IBM’s automated system was disbanded, suggesting potential long-term consequences of increased administrative burdens.”

“Racial Inequality in the U.S. Unemployment Insurance System”
Daphne Skandalis, University of Copenhagen
Ioana Marinescu, University of Pennsylvania and National Bureau of Economic Research, Equitable Growth grantee
Maxim N. Massenkoff, Naval Postgraduate School

Abstract: “The U.S. Unemployment Insurance, or UI, system operates as a federal-state partnership, where states have considerable autonomy to decide on specific UI rules. This has allowed for systematically stricter rules in states with a larger Black population. We study how these differences in state rules create a gap in the Unemployment Insurance that Black and White unemployed workers receive. Using administrative data from random audits on UI claims in all states, we first document a large racial gap in the UI benfits that unemployed workers receive after filing a new claim. Black claimants receive an 18 percent lower replacement rate (i.e., benefits relative to prior wage, including denials) than White claimants. In principle, the replacement rate of each claimant mechanically depends on the rules prevailing in her state and on her work history (e.g., the earnings before job loss and the reason for separation from prior employer). Since we observe claimants’ UI-relevant work history and state, we are in a unique position to identify the role of each factor. After accounting for Black-White differences in work history, differences in rules across states create an 8 percent Black-White gap in replacement rate (i.e., slightly less than half of the overall gap). Using a standard welfare calculation, we show that states with the largest shares of Black workers would gain the most from having more generous UI rules. Altogether, our results highlight that disparate state rules in the UI institution create racial inequality without maximizing overall welfare.”

“The Impact of Paid Family Leave on Families with Health Shocks”
Courtney Coile, Wellesley College and National Bureau of Economic Research
Maya Rossin-Slater, Stanford University and National Bureau of Economic Research, Equitable Growth grantee
Amanda Su, Stanford University

Abstract: “This paper analyzes the impact of paid family leave, or PFL, policies in California, New Jersey, and New York on the labor market and mental health outcomes of individuals whose spouses or children experience health shocks. We use data from the restricted-use version of the Medical Expenditure Panel Survey over the years 1996–2019, which allows us to observe individuals’ states of residence, employment status, and the precise timing of their spouses’ and children’s hospitalizations and surgeries (our health shock measures). We use difference-in-difference and event-study models to compare the differences in post-health-shock labor market and mental health outcomes between spouses and parents surveyed before and after PFL implementation, relative to the analogous differences among those in states that did not implement PFL over our analysis time period. We find that the (healthy) wives of individuals with medical conditions or limitations who experience a hospitalization or a surgery are 7 percentage points less likely to report “leaving a job to care for home or family” in the post-health-shock rounds of the data. These women also experience improved mental health, measured based on both self-reports and the use of mental health-related prescription drugs. We find no consistent impacts on the outcomes of men whose spouses have health shocks or on parents of children with health shocks.”

“The Radius of Economic Opportunity: Evidence from Migration and Local Labor Markets”
Nathaniel Hendren, Harvard University and National Bureau of Economic Research, Equitable Growth grantee
Sonya Porter, U.S. Census Bureau
Ben Sprung-Keyser, Harvard University

Abstract: “We examine the geographic incidence of local labor market growth across locations of childhood residence. We ask when wages grow in a given U.S. labor market, do the benefits flow to individuals growing up in nearby or distant locations? We begin by constructing new statistics on migration rates across labor markets between childhood and young adulthood. This migration matrix shows 80 percent of young adults migrate less than 100 miles from where they grew up. Ninety percent migrate less than 500 miles. Migration distances are shorter for Black and Hispanic individuals and for those from low-income families. These migration patterns provide information on the first-order geographic incidence of local wage growth. Next, we explore the responsiveness of location choices to economic shocks. Using geographic variation induced by the recovery from the Great Recession, we estimate the elasticity of migration with respect to increases in local labor market wage growth. We develop and implement a novel test for validating whether our identifying wage variation is driven by changes in labor market opportunities rather than changes in worker composition due to sorting. We find that higher wages lead to increased in-migration, decreased out-migration, and a partial capitalization of wage increases into local prices. Our results imply that for a 2 rank point increase in annual wages (approximately $1,600) in a given commuting zone, or CZ, approximately 99 percent of wage gains flow to those who would have resided in the CZ in the absence of the wage change. The geographically concentrated nature of most migration and the small magnitude of these migration elasticities suggest that the incidence of labor market conditions across childhood residences is highly local. For many individuals, the “radius of economic opportunity” is quite narrow.”

“Gender Differences in Labor Supply: Experimental Evidence from the Gig Economy”
Sydnee Caldwell, University of California, Berkeley, Equitable Growth grantee
Emily Oehlsen, Uber

Abstract: “We use field experiments to study market-level and firm-level labor supply. Market-level elasticities govern how labor supply responds to temporary productivity shocks. Firm substitution elasticities determine wage markdowns in frictional markets. We find that women are twice as elastic to the market as men. This is true even among high-hours individuals. We find no evidence that women are less likely to switch between firms when relative wages change. Our results suggest that in environments without differences in firm location or amenities, firms with market power have little incentive to pay equally productive women less.”

“Collective Bargaining for Women: How Unions Create Female-Friendly Jobs”
Viola Corradini, Massachusetts Institute of Technology
Lorenzo Lagos, Brown University
Garima Sharma, Massachusetts Institute of Technology

Abstract: “Why aren’t workplaces better designed for women? We show that changing the priorities of those who set workplace policies creates female-friendly jobs. Starting in 2015, Brazil’s largest trade union made women central to its bargaining agenda. Neither establishments nor workers choose their union, permitting a difference-in-differences design to study causal effects. We find that “bargaining for women” increases female-centric amenities in collective bargaining agreements and in practice (more female managers, longer maternity leaves, higher job protection after maternity). These gains do not come at the expense of women’s or men’s wages or employment, or of firm profits (proxied by exit). They cause women to queue for jobs at treated establishments and quit them less; both men and women revealed preference measures of firm value, but men do not quit more. Prioritizing women in collective bargaining thus lowers within-firm gender inequality through more efficient bargaining, adding amenities highly valued by women without removing those highly valued by men.”