Worthy reads from Equitable Growth:

1. An excellent conversation with Janet Currie on how, in the United States today, choosing the right parents does a lot to determine your life chances. But it does not have to be that way. Read “In Conversation with Janet Currie,” in which she observes: “It is hard to talk about prenatal influences without sounding deterministic, but outcomes aren’t deterministic at all. One way that you can see that is that the same negative shock, such as a given level of air pollution, will typically have a much greater effect on a poor infant than on a richer infant. What that observation tells you is that there is something that can be done to mitigate the effects of a harmful shock, and the richer parents are doing it, whatever it is. If you could find that and put it in a bottle, or put it in a program, then you would be able to mitigate the effects of these early-childhood insults. And in fact, we have had reasonable success in mitigating the effects of some types of prenatal disadvantage through public programs. There is a great deal of evidence, some to which I have contributed, on the positive effects of the Supplemental Nutrition Program for Women, Infants, and Children during pregnancy on infant health outcomes. These positive effects are striking, given that the dollar value of WIC benefits is fairly small. It may well be that modest amounts of money combined with improved access to medical care and some psychosocial support can go a long way toward improving the health of mothers and their babies.”
2. Kate Bahn tweets that she is “Looking forward to the day when economists stop interpreting constraints as preferences. E.g. women just choose to earn less at jobs that give them flexibility to do all of the caregiving and unpaid household work in their families!”

Worthy reads not from Equitable Growth:

1. It has been known since the late 1990s by those who cared to think about it—and the Federal Reserve certainly ought to have cared to do so—that it was worth substantial compromises with respect to other goals in order to make sure that your policy excursions to the zero lower bound were rare and short. This should have been happening two decades ago. Indeed, I thought this was happening two decades ago. Read Joseph E. Gagnon and Christopher G. Collins, “Changes Are Coming to the Fed’s Monetary Policy Strategy,” in which they write: “The most likely outcome of the review is that the Fed will commit itself to intentionally overshooting its inflation target after episodes at the zero bound in which it has undershot the target.”
2. There’s a 2.5 percent reduction in suicides with a 10 percent rise in two dimensions of the safety net. That seems, to me, to be large effect. Read William H. Dow, Anna Godøy, Christopher A. Lowenstein, and Michael Reich, “Can Economic Policies Reduce Deaths of Despair?,” in which they write: “Midlife mortality has risen … largely reflect[ing] increased mortality from alcohol poisoning, drug overdose, and suicide … We leverage state variation in policies over time to estimate difference-in-differences models of drug overdose deaths and suicides, using data on cause-specific mortality rates from 1999—2015 … Higher minimum wages and the Earned Income Tax Credit significantly reduce nondrug suicides … Increasing both the minimum wage and the EITC by 10 percent would likely prevent a combined total of around 1,230 suicides each year.”
3. I confess that I am a profound skeptic about deep negative nominal interest rates. A slightly higher inflation target and policies to fight the asset price configuration called “secular stagnation” would largely obviate the need and leave behind a problem easily and straightforwardly dealt with via expansionary fiscal policy. And we really do not know how such an institutional reconfiguration would actually work. Confronted with a choice between known and understood policies that would work, and new ones with unknown side effects and effects that might, I do not understand the enthusiasm for the second. Read Ruchir Agarwal and Miles Kimball, “Enabling Deep Negative Rates to Fight Recessions: A Guide,” in which they write: “We (i) survey approaches to enable deep negative rates … (ii) establish … enabling negative rates while remaining at a minimum distance from the current paper currency policy and minimizing the political costs; (iii) discuss why standard transmission mechanisms … are likely to remain unchanged in deep negative rate territory; and (iv) present communication tools that central banks can use.”

This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is the work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Raksha Kopparam writes about a new paper in the May edition of the Quarterly Journal of Economics by Equitable Growth grantee Xavier Jaravel, who is an assistant professor at the London School of Economics, which finds that price competition for the dollars spent by the wealthy results in more product innovation for those goods, leading to less inflationary pressure on those products compared to products bought by everyone else.

In the latest edition of our In Conversation series, Equitable Growth Executive Director Heather Boushey talks with Janet Currie about what her research shows about the role of early childhood health, environments, and learning in the formation of human capital and later-in life outcomes.

Catch up on Brad DeLong’s latest worthy reads from Equitable Growth and around the web.

Links from around the web

A profile of University of California, Berkeley economist and Equitable Growth grantee Gabriel Zucman by Ben Steverman discusses Zucman’s research into measuring wealth inequality and offshore tax havens. [bloomberg businessweek]

Dylan Matthews profiles Harvard University’s “Economics 1152” course, taught by economist and former Equitable Growth Steering Committee member Raj Chetty. The course, which draws heavily from Chetty’s empirical research and use of data to explore questions related to inequality, mobility, and race, is seen as an antidote to the overly theoretical approach in traditional “econ 101” courses. [vox]

Eduardo Porter and Guilbert Gates discuss why superstar cities are losing population to other, less dynamic parts of the country, drawing on new research by Massachusetts Institute of Technology economist and Equitable Growth Academic Advisory Board member David Autor. [nyt]

Peter Reuell writes about new research that finds increased exposure to harsh environments—such as toxicity, violence, and incarceration—in childhood results in worse outcomes later in life, deepening academics’ understanding of the pathways via which poverty impacts outcomes. Harvard Professor of Social Sciences Robert Sampson says this research broadens understanding of what potential policy solutions could improve mobility. “What this study suggests is that environmental policy and criminal justice reform can be thought of as social mobility policy,” he writes. “ I think that’s provocative, because that’s different than saying it’s just about poverty itself and childhood education and human capital investment, which has traditionally been the conversation.” [harvard gazette]

Friday Figure

Figure is from Equitable Growth’s,“Competitive Edge: Principles and presumptions for U.S. vertical merger enforcement policy” by Jonathan B. Baker, Nancy L. Rose, Steven C. Salop, and Fiona Scott Morton.

Worthy reads from Equitable Growth:

1. Alice Rivlin has died at the age of 87. Alice never lost her optimism, and she built one of the few parts of the U.S. government that serves as a technocratic model of what government should and could be: the Congressional Budget Office. Read Heather Boushey’s obituary, “Alice Rivlin: An Inspiration for Generations Of Women Economists,” in which she writes: “Dr. Rivlin too often found herself to be the only woman in the room … But it is … highly unlikely that anybody knew more about the topic in most of those meetings. Robert Reischauer … refers to her as ‘the decathlete of public policy’… Belle Sawhill says Dr. Rivlin never lost her optimism … She was, and remains, an inspiration … Somebody who … strived every day, year in and year out, to develop and enact policies that she believed would benefit families and strengthen the country. We will all miss her a great deal.”
2. The full text of “Recession Ready: Fiscal Policies to Stabilize the American Economy,” by Heather Boushey, Ryan Nunn, and Jay Shambaugh is online. Go read it!
3. I missed this when it came out, from Chris Blattman in praise of our network’s Trevon Logan 3 years ago. Read Chris Blattman, “Black Lives Matter, Economic History Edition,” in which he writes: “Trevon Logan’s presidential address to the National Economics Association … calculates the productivity of his sharecropping ancestors relative to slave-holding estates a century before (a persistent question in American economic history). But mainly, he makes an argument for doing more qualitative interviews, which seems like an obvious point, except that systematic qualitative work is the exception in economic history (as it is in development economics): That richer, fuller picture reveals that the work behind the estimates came to define the way that the Logan children viewed racial relations, human capital, savings, investment, and nearly every aspect of their lives … We also learn that it is impossible to divorce the work from its social environment, an era in which Jim Crow, segregation, and other elements of overt racial oppression were a fact of life.”

Worthy reads not from Equitable Growth:

1. I missed this too, when it came out 3 years ago. Read Melany De La Cruz-Viesca, Zhenxiang Chen, Paul M. Ong, Darrick Hamilton, and William A. Darity, Jr., “The Color of Wealth in Los Angeles,” in which they write: “White households in Los Angeles have a median net worth of $355,000 … Mexicans and U.S. blacks have a median wealth of $3,500 and $4,000, respectively … Japanese ($592,000), Asian Indian ($460,000), and Chinese ($408,200) households had higher median wealth than whites … African blacks ($72,000), other Latinos ($42,500), Koreans ($23,400), Vietnamese ($61,500), and Filipinos ($243,000) … The median value of liquid assets for Mexicans and other Latinos is striking, zero dollars and only $7, respectively, whereas, the median value of liquid assets for white households was $110,000.”
2. Interesting numbers on multipliers. The problem I am having is that I am not sure whether there are Keynesian demand multipliers, or something more like Enrico Moretti regional-export multipliers. The decision by U.S. Department of Defense to support a factory in congressional district X looks, to me, a lot like a regional positive productivity shock. Read Alan Auerbach, Yuriy Gorodnichenko, and Daniel Murphy, “Local Fiscal Multipliers and Spillovers in the US,” in which they write: “Our baseline estimates imply that a dollar of DOD spending in a city increases [Gross Domestic Product] in that city by a dollar and increases labour earnings by 0.35, and that an increase of DOD spending equal to a percent of local earnings increases employment by 0.2 percent.”
3. Smart analysis from Carmen Reinhart on inflation, “Explaining Inflation Inertia,” in which he writes: “Price-stability targets have proved elusive in countries like Argentina, where inflation is soaring, and Japan, which can’t shake the specter of deflation … The BOJ now holds about 50 percent of the outstanding stock of government bonds. This is no small achievement, as Japan’s government debt ratio, at 238 percent of GDP, is the highest in the world. And yet, despite these policies, inflation expectations 5 years out are still anchored close to 1 percent … Argentina[’s] … inflation … has accelerated … to about 55 percent … Pass-through from the exchange rate to the price level is only part of the story. And an overheated economy has played no role at all … What can governments do to induce turning points in stubborn inflation expectations when central banks’ policies prove insufficient to the task?… Japan, convincing the private sector that higher inflation is the path of the future, requires a break from the current practice of indexing public-sector wages to the previous year’s inflation. Bold increases in public-sector wages may provide the official signal … As for Argentina … de-indexation requires significant reductions in real wages, starting with the public sector. The political difficulty of doing this (especially when the public sector is large, as it is in Argentina) is daunting.”

This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is the work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Following up on Mother’s Day, Equitable Growth Senior Policy Analyst Alix Gould-Werth wrote a blog post this weekend outlining changes in the social policies that support parenthood in the United States. She builds on this history to suggest directions for contemporary pro-family policies (including affordable, high-quality childcare and paid leave for all parents) that are based on recent economic and other social scientific research.

Equitable Growth Director of Markets and Competition Policy Michael Kades responded to the House Judiciary Committee’s passing of four bills to address the market-bending actions that drug manufacturers take to reduce competition. Having testified on three of these pieces of legislation, Michael provides some key insights into how and why they will help reduce skyrocketing pharmaceutical drug prices.

Equitable Growth Policy Director Alyssa Fisher summarized some of the key findings of Equitable Growth’s joint book with the Hamilton Project at the Brookings Institution titled “Recession Ready: Fiscal Policies to Stabilize the American Economy.” In the book, economists and other scholars in Equitable Growth’s network explain how policymakers can reduce the harms of recessions by proactively crafting and investing in policies such as unemployment insurance, the Supplemental Nutrition Assistance Program, the Children’s Health Insurance Program, Medicaid, automatic infrastructure funding, and direct payments to individuals to boost consumer demand during downturns.

In his weekly “Worthy Reads” column, University of California, Berkeley economist and Equitable Growth columnist Brad Delong highlighted recent research and writing in economics from Equitable Growth and other economists. This week, Brad provides some additional thoughts on Alyssa’s, Michael’s, and Alix’s blogs summarized above while also pointing to Equitable Growth grantee Samir Sonti’s work on the politics of inflation from the 1930s and 1980s as well as recent work on artificial intelligence and the internet of the future.

To close out the week, Equitable Growth Executive Director Heather Boushey wrote a column in memory of economist and founding CBO Director Alice Rivlin. On top of being a pioneer for women in the field of economics, Heather argues that Dr. Rivlin was one of our country’s most effective leaders as well as a model of committed, compassionate, hard-headed public service.

Links from around the web

P.R. Lockhart of Vox notes that today marks the 65th anniversary of the Supreme Court’s Brown v. Board of Education decision but reviews the findings of a recent report demonstrating startlingly high levels of income- and race-based segregation across the country today. Among other findings, the report by scholars Erica Frankenberg, Jongyeon Ee, Jennifer B. Ayscue, and Gary Orfield documents that the share of severely racially isolated schools that enroll 90-100 percent non-white students has more than tripled since 1988, the peak of school integration. [vox]

Berkeley economist Rucker Johnson wrote an op-ed in The Washington Post discussing some of the findings of his recently-published book “Children of the Dream: Why School Integration Works.” He finds clear empirical evidence that the early wave of school integration had undeniable benefits for black students’ long-term educational, labor market, and other economic outcomes. Furthermore, he argues that the most effective strategy to improve our public schools must include school integration, school funding equalization, and early childhood expansion. [wapo]

Andrew Ujifusa in Education Week compares some recent legislative proposals to combat pervasive segregation with the demands of pro-integration advocates. While the bills introduced in Congress importantly address federal incentives and funding for school districts, emboldened civil rights enforcement, and diversity-conscious student assignment plans, Ujifusa points out these proposals fail to incorporate proposals to combat exclusionary zoning, to require federal pre-clearance for school district secessions, to recalibrate Title I funding for schools with low-income students to encourage integration, and to set diversity standards for charter schools. [edweek]

In the New York Daily News, Shino Tanikawa and Leonie Haimson discuss how school integration can be strengthened via lower class sizes. Citing evidence from the United States and Finland, they argue that smaller class sizes wouldn’t just open up possibilities for integration, but would also improve the relationships between teachers and students and thus the quality of public-school teaching. [nydn]

Friday Figure

Figure is from Equitable Growth’s, “Can school finance reforms improve student achievement?”

Worthy reads from Equitable Growth:

1. Here’s the current scorecard on House of Representatives action on drug price reform, courtesy of Michael Kades, “U.S. Congress Continues to Make Progress on Drug Price Competition,” in which he writes: “Measures passed by the Judiciary Committee on April 30 focus on company efforts to block or delay the development and marketing of generic drugs, medications that are essentially identical to the original brand drugs but that are sold at far lower prices, saving consumers billions of dollars on both drug purchases and insurance premiums. The introduction of generic drugs, originally made possible by the Hatch-Waxman Act 35 years ago, provides meaningful competition where there essentially was none and therefore threatens the profits of drug companies. Some companies have adopted the strategy to prevent or delay the introduction of generics. And they have used gaps in Hatch-Waxman and in other laws, as well as in enforcement standards, to develop successful tactics for preventing competition.”
2. If you miss Alyssa Fisher at the joint Equitable Growth-Hamilton Project event today on automatic stabilizers, then read her “Planning for the Next Recession by Reforming U.S. Macroeconomic Policy Automatic Stabilizers,” in which she writes: “Six big ideas … to be triggered when the economy shows clear, proven signs of heading into a recession [include] Gabriel Chodorow-Reich … and … John Coglianese [who] propose to expand eligibility for Unemployment Insurance and encourage take-up … Jason Furman and Wilson Powell III [who] aim to reduce state budget shortfalls during recessions … by increasing the federal matching rate for Medicaid and the Children’s Health Insurance Program … Hilary Hoynes … and … Diane Whitmore Schanzenbach [who] propose to limit or eliminate work requirements for supplemental nutrition assistance during recessions … Indivar Dutta-Gupta [who] proposes a countercyclical stabilization program through … Temporary Assistance for Needy Families … Andrew Haughwout [who] proposes an automatic infrastructure investment program … [and] Claudia Sahm [who] proposes to boost consumer spending during recessions by creating a system of direct stimulus payments to individuals.”
3. I am not sure that it is right to say that advocates of “Mothers’ Pensions” believed that the woman’s sphere was in the home. They certainly believed that women’s work was important and believed that the first and most dire need for social insurance was to make sure that mothers of children had the resources they needed to raise the next generation. But they—and here, I am generalizing from my own family: my great-grandmother Fonnie and my great-great-grandmother Florence—also recognized that women in their generations were having four pregnancies, on average, while their grandmothers had had eight, and that they were assisted in the home by an increasing amount of modern technology in the form of consumer durables. And my mother-in-law Barbara maintains to this day that the thing that most changed her life was the clothes-washing machine. Half the number of pregnancies plus consumer durables meant that a lot of female energy could be—and was—directed outside the home. For another view, read Alix Gould-Werth, “After Mother’s Day: Changes in Mothers’ Social Programs Over Time,” in which she writes: “As Anna Jarvis was crusading to get Mother’s Day a place on the nation’s calendar, her peers—wealthy, white women who shared her progressive, reform-minded impulses—were laying foundation for our modern social safety net. Though most of these women chose to pursue social change rather than traditional family life, as architects of Mothers’ Pensions, they sided firmly with the view that the woman’s sphere was in the home. Mothers’ Pensions—which were passed into law state by state from 1911 to 1920—were targeted at widows and provided cash payments designed to simultaneously keep children out of orphanages and mothers out of the workplace.”
4. Let me direct your attention to one of Equitable Growth’s young whippersnapper grantees writing smart things: Samir Sonti, who “studies 20th century U.S. labor and economic history. Sonti’s dissertation focuses on the politics of inflation in the United States from the 1930s to the 1980s. He received a bachelor of arts degree in political science and a bachelor of science degree in economics from the University of Pennsylvania.”

Worthy reads not from Equitable Growth:

1. Replacing the legions of humans working as software bots doing routine and not-quite-so-routine information-classifying tasks may become one of the leading sectors of the next generation. It may not. But it may. As with all write-once, run-anywhere, basic-programs-easy-to-copy industries, it is hard to see how a profit-seeking market economy could focus its work productively here. Yet so far in the information age, the government has been useful more in throwing money and resources at problems than in directing activity. Read Martin Wolf, “China Battles the U.S. in the Artificial Intelligence Arms Race,” in which he writes: “What counts is implementation not innovation, and here the Chinese have big advantages … China [has] more internet users than the [United States] and Europe combined … a supportive government … [with] ambitious goals …. ‘internet AI’… tracks what you do on the internet; ‘business AI’… allows businesses to exploit their data … ‘perception AI’… that sees the world … and ‘autonomous AI’… interacts with us in the real world. At present … China is equal to the [United States] in the first, vastly behind in the second, a little ahead in the third, and, again, far behind in the fourth. But 5 years from now…”
2. The next internet is a 50-year issue, not a 5-year or even a 20-year issue. But it is a rather important issue because a lot turns on whether the United States retains a middle-class income distribution. A wealthy middle class will have very strong demand for human connection in the form of individualized personal services. A plutocracy will not, if only because one plutocrat can only employ one psychiatrist each. Read Kara Swisher, “Can Anyone Tame the Next Internet?,” in which she writes: “which jobs will be impacted? … Not just factory workers, burger flippers, and long-haul truckers. Highly paid lawyers, skilled doctors … and, yes, even lowly journalists will need to find new lines of work … To thrive in this environment will require being in a profession that is creative, where analog interactions are critical … art … caring … anything in which being human trumps cyborg. And since AI becomes ever smarter, it will make sense to allow it to do more and more as we become ever less so.”
3. At least as I read it, the decline in the female nonmotherhood penalty was primarily driven by the end of wage suppression in female-heavy occupations and is now over. Yes, blue-collar—and increasingly white—collar—American men do not have the standard of living that they expected. But that is overwhelmingly due to income redistribution upward and a productivity slowdown or two—not to gender dynamics. Read John Authers, “A Series of Non-Events Alters Fed Rate Cut Odds,” in which he writes: “The recovery … has still left male unemployment worse than at any point post-war … There are many men who are less productive than their fathers, and have reason to feel angry. That said, women have reason for unhappiness as well … Women are still putting up with [non]employment rates 10 points higher than for men. And so it does indeed seem possible, from my extremely swift look at the top-down data, that gender dynamics help explain why improving employment is not making many Americans happier.”
4. People need productive and useful things to do, not necessarily jobs that are the focus of their lives. Read Per Kurowski, “We Need Worthy and Decent Unemployments,” in which he writes: “Two decades ago, concerned about growing unemployment, half in jest, in an Op-Ed in El Universal of Caracas, I asked something like whether it was better to have one hundred thousand unemployed running each on his side as broody hens, or to seat them all in a huge human circle where everyone would scratch the backs of one of his neighbors, charging a lot for his services, while his own back was scratched by his other neighbor, at an equally high price. The tragedy is that this question seems to me now less and less hypothetical.”
5. I confess that I am much less optimistic about changing how macroeconomists think in American academia. Outside of a few places—the University of California, Berkeley among them—academic economists talk too little to forecasters and register too little of reality. This was brought home to me when I read how Robert Lucas and Edward Prescott decided that monetary policy did not affect employment just as Paul Volcker was hitting the U.S. economy on the head with a brick and sending it into the deep recession of 1982. Read Olivier Blanchard and Lawrence H. Summers, “Evolution or Revolution: An Afterword,” in which they write: “The notion that low rates largely reflected the after-effects of the financial crisis and would slowly fade away has simply proven wrong … Fiscal policy has … turned … expansionary … Inflation remains below target … Output is still below potential … For a long time, economists looking at Japan pointed to mistakes in policy and excessive reliance on deficits; it is now clear that the Japanese macroeconomic response was, on net, the right one … We noted … that both the Depression and the Great Inflation of the 1970s led to dramatic changes in macroeconomic thinking—much more dramatic than have yet occurred in response to the events of the last decade. We think it is increasingly likely that this gap will close in the next few years.”