Equitable Growth’s Jobs Day Graphs: July 2018 Report Edition

Posted on by Austin Clemens

Earlier this morning, the U.S. Bureau of Labor Statistics released new data on the U.S. labor market during the month of July. Below are five graphs compiled by Equitable Growth staff highlighting important trends in the data.

1.

While employment rate for all workers was little changed in July, prime age workers saw an increase in their employment rate of 0.2 percentage points. Employment rates for prime-age workers are converging toward their pre-recession peak.

2.

Wages continue to grow, but still at lower levels than expected for a tight labor market

3.

Employment growth remains strong in healthcare and education, and continues upward in construction and manufacturing despite the expectations of tariffs impacting these sectors.

4.

More of the unemployed population had lost their job or left their job in July, rather than re-entering the labor force to look for new opportunities.

5.

Workers are reentering the labor force for new jobs, while the proportion of the unemployed, actively looking for work, who were previously out of the labor force has declined.

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Brad DeLong: Worthy reads on equitable growth, July 26–August 2, 2018

Posted on by Emilie Openchowski

Worthy Reads from Equitable Growth:

  1. Anybody looking back at economic history cannot help but note that female physical autonomy and its absence have played an absolutely huge role. Kate Bahn and company are pulling together the evidence that this is not just history—that it still matters a lot in the United States today. Read Kate’s “Understanding the link between bodily autonomy and economic opportunity across the United States.”
  2. Seattle is pursuing (a version of) social democracy in one metropolitan area. In the 2010s, we learned from some of our laboratories of democracy (cough, Kansas and Wisconsin) what really not to do. Will Seattle provide a model for what we should do? Hilary Wething, a 2018 Equitable Growth grantee, will “utilize administrative data from Washington state to study the impact of Seattle’s paid sick time ordinance on earnings, hours, employment levels, and earnings volatility of workers covered by the new law” in her forthcoming research: “Seattle: Paid Sick Leave And Workers’ Earnings Dynamics.”
  3. In my opinion, Arindrajit Dube is one of the best economists around figuring out what we should control for and why in order to achieve real econometric identification. The contrasting pole is simply to throw in a bunch of controls until you have produced the numbers you want. In my view, we do not teach enough what should be controlled for and how, so people pick it up on the fly. Arindrajit has picked it up and is a master. Read Arindrajit Dube’s “Minimum wages and the distribution of family incomes in the United States,” in which he writes: “I find that a 10 percent increase in the minimum wage reduces poverty among the nonelderly population by 2.1 percent and 5.3 percent across the range of specifications in the long run.”
  4. Lyndon Johnson said: “You do not take a person who, for years, has been hobbled by chains and liberate him, bring him up to the starting line of a race and then say, ‘You are free to compete with all the others,’ and still justly believe that you have been completely fair. Thus it is not enough just to open the gates of opportunity. All our citizens must have the ability to walk through those gates. … Equal opportunity is essential, but not enough.” One of our problems in the United States today, however, is that that does not seem to be working for even those African Americans who can and do walk through all of our society’s formal and status gates to opportunity. Read “A College Degree and Marriage Fail to Yield Significant Wealth Gains for Black Women,” by Khaing Zaw, Jhumpa Bhattacharya, Anne Price, Darrick Hamilton, and William Darity, Jr., in which they write: “[In] the story of the American Dream … a college education is viewed as a key driver of upward mobility and the primary vehicle to eradicate racial differences.”

Worthy reads not from Equitable Growth

  1. Martin Wolf in “What really went wrong in the 2008 financial crisis?” reviews Adam Tooze’s book Crashed: How a Decade of Financial Crises Changed the World, in which Tooze writes: “There is a striking similarity between the questions we ask about 1914 and 2008.”
  2. A plea of despair for our politics and public sphere discourse from Duncan Black in “Nobody Who Works Full Time Should Live In Poverty.”
  3. Vijay Govindarajan, Shivaram Rajgopal, and Anup Srivastava note in “Why We Need to Update Financial Reporting for the Digital Era” that “The market caps of just four companies, Apple, Alphabet, Amazon, and Microsoft, now exceed $3 trillion.”
  4. Duncan Black comments in “Remember When Bill Clinton Ended Welfare As We Know It And Took That Off The Table Forever?” that “There’s barely anything resembling ‘welfare’ (aside from rich people welfare) but that doesn’t stop them: ‘(CNN) Republican Rep. Jason Lewis has repeatedly demeaned recipients of welfare and government assistance, calling them “parasites” and “scoundrels,” and said the black community had “traded one plantation for another.’ Conservative white people believe there’s a secret welfare system for black people. You cannot convince them otherwise, no matter what you do.”
  5. The view that all government should do in the economic realm is establish property rights and enforce contracts was never true. Smart governments always did much, much more. (Dumb governments did much, much more too.) Indeed, it is only with proper regulation that a market can fulfill its appropriate social role as a consumer surplus-generating mechanism. Read Diane Coyle in “Three Cheers for Regulation,” in which she writes: “One of the striking changes any rich-world traveler to low-income countries cannot fail to have missed during the past decade or so is the rapid spread of mobile phone use.”
  6. This is a brilliant 10-minute talk on economics as it really is—or should be—by Trevon Logan: “Ohio State University Masterminds,” in which he suggests, “Think of the first questions you ask someone when you meet them: ‘What do you do?’…”
  7. I badly need to find a usable mental model of how employer-side monopsony in labor markets interacts with downward nominal wage rigidity and search and involuntary unemployment. Analyzing just one of these market failures at a time is just not cutting it for me as I try to understand what is going on. Read Heidi Shierholz and Elise Gould, “Why is real wage growth anemic? It’s not because of a skills shortage,” in which they write: “Despite an unemployment rate at 4.1 percent or less since last October, wage growth has been anemic.”
  8. People should read a very nice article from the very sharp Justin Lenhart on one of the three things the Federal Reserve is missing right now. The first thing the Fed misses is that, at least as long as the current interest rate configuration holds, they need an inflation rate of 4 percent per year, not 2 percent per year, in order to have enough running room to fight the next recession. The second thing the Fed misses is that the slope of the Phillips Curve has changed, and so going for faster growth and higher employment right now is not risky but, rather, harvesting low-hanging fruit. The third thing the Fed misses is that a near-inverted yield curve is a danger sign—and yet the Fed is, as in 2006, finding reasons to pretend that “this time is different.” I confess that Fed thought—the governors, the bank presidents, and the staff—is quite opaque to me right now. I do not understand why they are making the analytical judgments that they are making. Justin Lahart makes the effort in “What the Fed Is Missing, Again,” in which he writes: “The Federal Reserve isn’t worried about the yield curve, and it has reason why. The problem: It is pretty much the same reason it wasn’t worried about the yield curve before the financial crisis.”
  9. I very much want everybody to notice that it has now been two-and-a-half years since Jared Bernstein wrote this, and there is still no sign that the economy has reached “full employment” or that the pace of wage and price growth is even beginning to spiral upwards. Thus the Federal Reserve continues to work with a model of the economy in which we should have very little confidence, if any. Read Jared Bernstein from back in 2016: “Important new findings on inflation and unemployment from the new ERP.”
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Understanding the link between bodily autonomy and economic opportunity across the United States

Posted on by Emilie Openchowski
New research shows that access to reproductive health care and the ability to decide if, when, and how to start a family influence women’s opportunities in the U.S. labor market.

On top of all the many work-life challenges women face in the U.S. labor market, there is one that is uniquely female: the need to be able to count on their ability to control their own decisions about if, when, and how to have a child in order to invest in their careers and take risks in the labor market. Economic, political, and social structures that influence control over a woman’s personal life such as family planning decisions are key determinants of how she engages in the economy via the U.S. labor market.

Access to reproductive rights is part and parcel of other structural factors women encounter with wage discrimination, labor market segregation, and lack of access to policies such as paid leave to help balance family responsibilities with working—all of which limit women’s labor market opportunities. While women’s employment has risen from one-third of the labor force in 1950 to almost half (46.8 percent) in 2018, women still carry out the majority of the responsibilities for raising their families and adjust their careers in order to do this work at home. This is why access to family economic security, including to reproductive rights, is an issue of particular importance to women.

The employment outcomes of every worker in the United States also depend, of course, on a variety of factors beyond the simple Econ 101 trade-off between time spent at work and time spent on life’s other demands. Or, put another way, this so-called labor-leisure trade-off often depends on whether the value of not working is less than the amount one would earn from working. Women and men decide whether to invest their time and effort in developing skills through education or training to increase their productivity—their “human capital” in economic parlance—if they think it will increase future earnings and job satisfaction. But business cycles can also impact outcomes—for example, a downturn increasing levels of unemployment, leading to long-term effects of unemployment on human capital development and lifetime earnings for workers affected. And frictions in how workers transition between jobs can give employers wage-setting power, so that they pay workers less than the value workers contribute to their firms.

All of these connective threads are examined in a forthcoming paper of mine, along with co-authors Adriana Kugler at Georgetown University, Melissa Mahoney at the University of North Caroline, Asheville, and Annie McGrew at the University of Massachusetts Amherst—to be published in 2019, in a special issue of Feminist Economics on reproductive rights. In the paper, we examine the past history of evidence of how bodily autonomy, through the availability of contraception and abortion, contributed to women’s economic advancement and what it means for women’s current labor market opportunities. We examine in particular the patchwork of simultaneous expansions and attacks on reproductive health services in the United States and its impact on women in the U.S. labor market.

Underlying empirical evidence on how access to reproductive health care influences economic factors is the notion that what people are able to do and to be—what Nobel Laureate economist Amartya Sen calls capabilities—are a key determinant of economic well-being. As such, Sen’s capabilities approach takes into account how cultural and social determinants may reinforce economic inequality in one’s ability to access and exercise their capabilities. These fundamental concepts have long been understood in the world of reproductive justice, which is defined by movement co-founder Loretta Ross as “the social reality of inequality, specifically, the inequality of opportunities that we have to control our reproductive destiny.”

Economics research provides evidence on the ways in which variable access to reproductive health care—which ensures one can control one’s reproductive destiny—affects women’s ability to fully engage in the economy with equitable opportunities. In the late 1960s and early 1970s, certain states began to grant unmarried women legal access to the contraceptive pill before it was legalized nationally. Women who lived in these states during their early reproductive years (before age 21), which are prime years for investing in human capital, had better economic outcomes subsequently, evident in increased attendance in law school and medical school, and subsequent higher levels of working as lawyers and doctors. Overall, early legal access to the pill increased women’s labor force participation and contributed to the convergence of the gender wage gap.

Research on the economic impact of access to abortion is more ambiguous, but some evidence suggests that it has had positive impacts on high school completion and employment rates for black women. In addition, the research indicates that being denied an abortion leads to a higher incidence of living in poverty afterward.

After the sweeping changes to access to reproductive health care in the early 1970s that came with broad access to the contraceptive pill and the national legalization of abortion, very little research exists on the economic impact of the current and shifting landscape of access to reproductive health care. In particular, the passage of the Affordable Care Act in 2010 increased women’s access through ensuring no-cost contraception, as well as insurance coverage for family planning services and fertility services in some states. At the same time, restrictions on abortion have been passed by state legislatures since the Roe v. Wade Supreme Court decision in 1973 but have increased in both pace and scope since 2010, after the Affordable Care Act went into effect and when abortion opponents gained greater political power in the 2010 midterm elections.

Our forthcoming paper examines the current variations in occupational mobility between states for women and men, as a comparison group, based on the variety of positive and negative indicators of access to reproductive health care. Occupational mobility measures whether workers are able to take risks in the labor market by changing jobs that can lead to rewards such as higher earnings. It’s a measure of labor market dynamism that tells us how well the labor market is functioning for workers.

Our paper uses the U.S. Census Bureau’s Current Population Survey—specifically its Merged Outgoing Rotation Group for 2015 to 2016—merged with data gathered from the Guttmacher Institute on reproductive health care. Measures of restrictions to reproductive health care include Targeted Restrictions of Abortion Providers, or TRAP, laws and mandatory waiting periods to obtain an abortion procedure. Measures of increased access include state Medicaid funding for abortions and state requirements for insurers to provide a broad range of contraceptives. My co-authors and I employ a linear probability model to examine the impact of access to reproductive health care on year-over-year occupational transitions for reproductive age women compared to men as a control group.

TRAP laws are one of the most extreme measures of limited access to reproductive health care since these laws are designed to foster the closure of health care and family planning clinics that provide abortion services. We find that TRAP laws reduce the likelihood of women moving from one occupation to another by 5.8 percent—a phenomenon known as “job lock” in economics—with no effect on men. The results are robust to the inclusion of regional effects, attitudes toward abortion, Gross State Product, and Medicaid expansion after the Affordable Care Act.

Furthermore, TRAP laws reduce transitions into higher paid occupations by 7.6 percent, with no effect on men. Increased access to abortion had a positive impact on reducing job lock, with state Medicaid funding for abortion increasing the likelihood of changing occupations by 6.5 percent when controlling for region and attitudes toward abortion, but not robust to the inclusion of Gross State Product and Medicaid expansion. Medicaid funding for abortion also had a positive impact on men’s transition from nonemployment to employment, robust across specifications. And while contraception usage is a common and widely accepted form of family planning, broad insurance coverage of contraception had less of a robust impact on job lock, with the exception of increasing women’s transitions from nonemployment to employment by 3.4 percent.

Importantly, we also find empirical evidence that access to reproductive health care affects women differently based on their racial and ethnic identity. Expanded contraceptive access didn’t have an impact on the entire sample of women, but it did have a positive impact on women’s transition from nonemployment to employment for female African Americans and Asian Americans.

This research provides evidence for what many women intuitively understand: that the ability to decide if, when, and how to start a family influences their opportunities in the U.S. labor market. The expansion of Medicaid to include robust reproductive health care services are core to the ability of every working-age female to participate in the economy. In contrast, policies that limit bodily autonomy have negative consequences for how women can invest in their careers. This evidence demonstrates how areas previously considered outside the realm of economics are actually crucial to engagement in the economy. Policies that impact individual lives and families outside of the market must be viewed through an economic lens as well so that women and men can advance broadly shared growth.

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Why market competition matters to equitable growth

Posted on by Emilie Openchowski
The logos for Time Warner and AT&T appear on the floor of the New York Stock Exchange. Earlier this year, a federal judge approved the $85 billion mega-merger of the two companies, potentially ushering in a wave of media consolidation.

With the launch of our new website, we are reintroducing visitors to our policy issue areas. Informed by the academic research we fund, these issue areas are critical to our mission of advancing evidence-based ideas that promote strong, stable, and broad-based economic growth. Through June and July, expert staff have been publishing posts on our Value Added blog about each of these issue areas, describing the work we do and the issues we seek to address. The following, and final, post is about Competition. For previous posts on other issue areas, please go to our Value Added home.

At first glance, competition in the U.S. economy may seem far afield of the topic of equitable growth. What could free markets have to do with wage stagnation? How could monopoly power impact macroeconomic growth? How could anticompetitive conduct or mergers exacerbate economic inequality? In other words, what could antitrust enforcement have to do with maintaining a healthy economy? As Sen. Amy Klobuchar (D-MN) has explained, “Everything. Let me repeat that. Antitrust has everything to do with our broader economy.”

Competition became a dominant issue in U.S. politics in the late 19th century. In response to fears of undue accumulation of economic power, the U.S. Congress passed the Sherman Antitrust Act of 1890, establishing that the government had a role to protect free markets and prevent the undue accumulation and abuse of monopoly power. Over time, antitrust enforcement ebbed and flowed, reaching a high point in the mid-1960s when Justice Potter Stewart quipped that the sole consistency in merger law is “the government always wins.”

By the late 1960s and 1970s, with the U.S. economy facing inflation and stagnant growth, a new critique, born at the University of Chicago, unsettled that consensus. It saw antitrust enforcement as more likely to be the problem than the solution. Based on economic theory and research, the “Chicago School” concluded that most mergers were efficient and beneficial. Aside from the most egregious conduct such as price-fixing, bid rigging, and mergers to monopoly, the Chicago School theorized that anticompetitive conduct was unlikely to work. When it did, the conduct would generate anticompetitive profits that would attract new competitors, so the anticompetitive effects were likely transient.

Much ink has been spilled about the actual impact of the Chicago School on antitrust enforcement. It has faced significant criticisms within the antitrust community, but even those critics agreed with many of its principles. By the turn of the past century, these principles shared broad agreement: Antitrust law had a limited but important role—a highly technocratic endeavor, relying on sophisticated economic analysis. Monopoly power and anticompetitive activity were the exception rather than the rule in the U.S. economy. As a result, the courts, often with the blessing of antitrust enforcers, were more skeptical of antitrust claims, narrowed the scope of the antitrust laws, and raised procedural barriers to antitrust claims, particularly in cases brought by private plaintiffs. There was a general sense that antitrust law and its impact on enforcement had struck the right balance, solving the problems it could without restricting market forces. Even the conservative federal judge Robert Bork, who had written the polemic The Antitrust Paradox in 1978, could write in the early 2000s, “The antitrust laws, in my opinion, are performing well, in fact better than at any time in the past seventy-five years.”

Recently, however, that consensus has begun to fray. First, courts—sometimes over the objection of government enforcers, as with the California Dental and American Express decisions, for example—continued their rightward turn. More importantly, new research questions how competitive the economy actually is. Labor economists have documented the pervasiveness of monopsony power, long thought to be a theoretical issue but not a practical one. There is increasing evidence that mark-ups and corporate profits are growing and are persistent. Firms are not just earning higher profits; they are also more likely to maintain that profitability over time. A falling share of national income is going to wages and a higher share is going to corporate profits. Macroeconomists are even beginning to include measurements of monopoly power in their macroeconomic models.

This all is important because the benefits of competition are broad, and research increasingly shows that the elimination of competition can contribute to problems that the Washington Center for Equitable Growth is dedicated to examining. Monopoly power, improperly gained or used, increases prices and raises the cost of living for consumers, contributing to economic inequality. Employers with monopoly power, known as monopsony power, are partially responsible for wage stagnation. Others argue that it is suppressing innovation and stifling entrepreneurship, which is at a historical low.

Certainly, no consensus has developed about whether the U.S. economy suffers from a monopoly problem. If there is a monopoly problem, then there may be many causes. So, it is worth asking to what degree competition policy in general—and the antitrust laws in particular—are responsible. Antitrust law should be the principle bulwark protecting competition in the marketplace. There are growing concerns that antitrust doctrine has become too lenient to business practices and too worried with the dangers of overenforcement to adequately protect competition.

Equitable Growth has been participating in this discussion for some time, with work addressing market power in the U.S. economy, the relationship between market power and stagnant wages, the impact of the current merger wave, and the role of competition, or lack thereof, in the communications industry. We have also begun examining the state of antitrust laws, analyzing important cases, highlighting scholarly work proposing new avenues for antitrust enforcement, and assessing the need for increased enforcement resources.

There are three related questions for competition policy in the United States today:

  1. Is monopoly power prevalent in the U.S. economy?
  2. If the answer to the first question is yes, then to what extent is lax antitrust doctrine responsible for the existence of monopoly power?
  3. If the answer to the second question is to a significant extent, then what are the solutions to failures in antitrust doctrine in particular and competition policy more generally?

Going forward, Equitable Growth will continue to pursue these issues by promoting important research, connecting academic scholars to policymakers, and advocating for policies that will enhance competition. This month we launched a new series, “Competitive Edge,” in which antitrust experts will provide their thoughts on how to improve competition policy.

The stakes are much higher than an ideological battle or technical adjustments to a legal regime. The less competition in the marketplace, the harder it will be for the economy to expand and for economic opportunity to flourish.

Competition is a little like good health: You only appreciate it once you’ve lost it.

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Weekend reading: “low unemployment, low wages” edition

Posted on by Ed Paisley

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

 

Equitable Growth this week announced that it will be awarding 24 grants this year, totaling close to $900,000 to economists and social scientists conducting research on how economic inequality affects economic growth and stability. This brings Equitable Growth’s total in grant awards to more than $3.8 million to more than 150 researchers in the last five years.

As part of the recent launch of our new website, Equitable Growth’s Elisabeth Jacobs authored a reintroduction of our work on family economic security. Jacobs discusses how the rise in income inequality over the past four decades was accompanied by shifts in families’ economic lives as women, particularly mothers, participation in the labor market expanded.

Links from around the web

 

Kristin Butcher and Diane Whitmore Scanzenbach from the Center on Budget and Policy Priorities released their report “Most Workers in Low-Wage Labor Market Work Substantial Hours, in Volatile Jobs.” The report details the detrimental consequences that policy recommendations like taking away supplemental nutrition assistance and Medicaid benefits would have on exacerbating poverty and inequality.  (CBPP)

How can it be that the U.S. labor market is so strong while wage growth remains so flat? University of Notre Dame economist Teresa Ghilarducci argues that wages aren’t increasing because productivity has been running ahead of wages, which led to stable prices but increased profits. (Forbes)

Inequality in the U.S. economy isn’t just visible through wages. Housing price inequality is an increasingly hot issue, but is it necessarily a bad thing? Megan Leonhardt discusses how states with greater home value inequality have a wider distribution of home values, meaning low-income families might have a better opportunity for homeownership. (CNBC)

The Economic Policy Institute released an interactive report showing just how dominant income growth at the top 1 percent has been. The report breaks down the ratio for the top 1 percent of earners to the bottom 99 percent of earners for every county across the United States.  (EPI)

With record low unemployment, has there been a Trump bump in the economy? Matt O’Brien discusses how perhaps populism hasn’t paid off because fewer jobs have been added than expected and investments from the tax cut have been nonexistent. (WashingtonPost)

Friday figure

Figure is from “Equitable Growth’s: Assessing the economic effects of the Tax Cuts and Jobs Act”

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Rethinking 20th century policies to support 21st century families

Posted on by Emilie Openchowski
The Washington Center for Equitable Growth’s Family Economic Security portfolio focuses on understanding how risks to family economic well-being is shaping both microeconomic and macroeconomic outcomes.

With the launch of our new website, we are reintroducing visitors to our policy issue areas. Informed by the academic research we fund, these issue areas are critical to our mission of advancing evidence-based ideas that promote strong, stable, and broad-based economic growth. Through June and July, expert staff have been publishing posts on our Value Added blog about each of these issue areas, describing the work we do and the issues we seek to address. The following post is about Family Economic Security. For previous posts on other issue areas, please go to our Value Added home.

As a raft of research illustrates, economic growth is increasingly concentrating at the top of the U.S. income distribution—a trend beginning in the 1980s and running right through to the present day, with historically high shares of national income flowing into the pockets of those at the very, very top of the income ladder. This rise in income inequality stands in stark contrast to the period of broadly shared economic growth that characterized the U.S. economy from the aftermath of the World War II through the early 1980s.

This rise in income inequality over the past four decades was accompanied by monumental shifts in families’ economic lives. Women’s labor market participation, especially that of mothers, shot upward. At the same time, the risk-sharing relationship between firms and workers fundamentally shifted, as new forms of health insurance, retirement benefits, and other forms of nonwage compensation pushed downside economic risk onto the shoulders of workers and their families. The result: destabilized household balance sheets and families’ lives, problems that are not adequately mitigated by outdated public policies grounded in New Deal-era assumptions about the way people live their day-to-day lives.

The Washington Center for Equitable Growth’s Family Economic Security portfolio focuses on understanding how this shifting constellation of risks to family economic well-being is shaping both microeconomic and macroeconomic outcomes. A focus on the family as a core economic concept allows for the examination of a host of concepts that are too often relegated to the sidelines in “serious” economic conversations. In the vast majority of both academic and policy research and analysis, the central unit for understanding economic well-being is the individual worker.

Consider the regular conversations about the health of the labor market, which is shaped by the U.S. Bureau of Labor Statistics’ monthly jobs report on individual unemployment rates and employer-based reports on individual jobs created. These numbers are obviously important, yet understanding the health of the economy requires putting each of those individual data points in the context of the economic relationships that shape the actual, lived experience of the individuals in question. And as hundreds of millions of Americans know from experience, nearly every worker is embedded in a family of some variety.

Understanding individual workers’ economic well-being requires understanding them in the context of their families. This is all the more true as family structures in the United States continue to evolve. A family perspective also allows for a multigenerational lens. We know that children’s long-term outcomes are shaped in important ways by their early experiences, but the impact of family may matter well beyond childhood. For instance, access to parental wealth may shape risk preferences in ways that impact innovation and entrepreneurship for adults. And the needs of elderly parents may fundamentally shape adult children’s economic well-being.

The idea of the family as a central focus for understanding broader questions of national economic importance is not new. Nobel Prize winner Gary Becker introduced the concept to mainstream economics, illuminating the idea of the family’s role in developing human capital through investments in children, the central importance of family-based consumption decisions for shaping both economywide demand and family well-being over time, the division of time between market work and household work, and the maintenance and development of adult human capital. More recent contributions include MacArthur Fellowship award-winner Nancy Folbre’s pathbreaking work on the central role of care work and other nonmarket labor in shaping the economic well-being of families, communities, and economies as a whole.

A growing body of research suggests that stabilizing families’ economic lives is good not only for the economic well-being of individual beneficiaries but also for the broader U.S. economy. The rise in women’s labor market participation, for example, creates a new set of challenges for many families, as women’s traditional role as family caregivers—for babies but also for elder relatives—is chaotically upended. Yet research on the consequences of providing paid family and medical leave show that well-designed policies may improve the outcomes of the children and elders receiving childcare and elder care, boost women’s long-term labor market outcomes, and decrease the likelihood that recipients need other public benefits such as supplemental nutrition assistance, Temporary Assistance for Needy Families, and Medicaid.

Equitable Growth’s paid leave research and analysis is illustrative of a broader set of underlying questions that shape our approach to advancing evidence-based ideas and policies that promote strong, stable, and broad-based economic growth. We want to better understand how structural economic shifts and demographic change affect the risks to family economic stability. How have public policies evolved—or failed to evolve—to mitigate these risks? What do these risks mean for the health of the U.S. economy as a whole? And what kinds of policy interventions are best suited to solving these challenges, particularly in the context of a rapidly changing labor market where the future of work may be organized very differently—with dramatically different consequences for families depending on their places on the U.S. income and wealth ladders. This is the core set of questions that our Family Economic Security portfolio seeks to answer.

Posted in Uncategorized

Brad DeLong: Worthy reads on equitable growth, July 20–26, 2018

Posted on by Emilie Openchowski

Worthy reads on Equitable Growth:

  1. We economists spend a lot of time looking at aggregates and averages. But it is equally important to get thick descriptions of what happens to individual people’s lives so that you know what your aggregate and average numbers mean. Blythe George does so in her working paper, “Them old guys … they knew what to do: Examining the impact of industry collapse on two tribal reservations,” in which she uses “46 in-depth interviews conducted on the Yurok and Hoopa Valley reservations.”
  2. GDP has its place in our national public-sphere conversation because a new number is released roughly once a month—each quarter of the year has its own GDP number, and the U.S. Commerce Department’s Bureau of Economic Analysis releases advance, second, and third estimates for each quarter. And then there are benchmarking revisions. To attain an equal place in public-sphere consciousness, the distributional national accounts component would have to appear also once a month. It is not clear to me how to do that, but for some insights read Equitable Growth’s “Measuring U.S. economic growth.”
  3. Back in the 1990s, we in the Clinton administration put Stephen Breyer on the U.S. Supreme Court in the belief that the court needed somebody who genuinely understood antitrust. But the Republican justices have given him zero deference, even though he knows the issues and they do not. This is an increasing problem, as noted by Fiona Scott Morton in a piece titled “There is a lot to fix in U.S. antitrust enforcement today,” the first in Equitable Growth’s new blog series, “Competitive Edge.” She starts with this: “Last month’s court decision allowing AT&T Inc. to acquire Time Warner Inc. is an example of the inability of our current system of courts and enforcement to prevent the decline in competition in the modern U.S. economy … Judge Richard Leon demonstrated a lack of understanding of the markets, the concept of vertical integration, corporate incentives, and the intellectual exercise of forecasting what the unified firm would do … a poor decision.”
  4. It seems highly likely that more money for teachers (and less money for financiers and specialists) would produce a richer and a happier America. Read Meg Benner, Erin Roth, Stephenie Johnson, and Kate Bahn’s “How to Give Teachers a $10,000 Raise,” in which they write: “While CAP believes that a new federal investment is necessary to dramatically improve teacher pay, other efforts at the federal, state, and local levels are essential to maximize compensation for all teachers.”

Worthy reads not on Equitable Growth:

  1. I continue to fail to find a single credible competitor in terms of providing the highest-quality daily tickler-to-read list than Mark Thoma’s “Economist’s View.”
  2. At least as true now as it was when John Kenneth Galbraith began saying it half a century ago: “The modern conservative … not even especially modern … is engaged … in one of man’s oldest, best financed, most applauded, and, on the whole, least successful exercises in moral philosophy. That is the search for a superior moral justification for selfishness.”
  3. Perhaps the biggest hole in growth economics is its inability to properly wrestle with the problem of how to build and entertain the communities of engineering practice that have the externalities that fuel so much of economic growth. The 2 percent per year rate of growth of labor efficiency seen over the past century comes from somewhere, after all. If it comes from activities such as research and development and science that together consume 2 percent of national income, that is a 60 percent per year net rate of return on such activities. We badly need to understand more about them. Read Pierre Azoulay, Erica Fuchs, Anna Goldstein, and Michael Kearney’s working paper, “Funding Breakthrough Research: Promises and Challenges of the “ARPA Model”.”
  4. We really do not know what effect a trade war would have on the global economy. All of our baselines are based on what has happened in the past, long before the age of highly integrated global value chains. It could be small. It could be big. The real forecast is: We just do not yet know, writes Dan McCrum in “Trade tension and China.” He observes: “The war on trade started by the Trump administration is percolating through the world’s analytical apparatus. … Tariffs could be bad for the global pace of economic activity, but only if the economic warfare escalates.”
  5. A very interesting paper by Achyuta Adhvaryu, Steven Bednar, Anant Nyshadham, Teresa Molina, and Quynh Nguyen: “When It Rains It Pours: The Long-run Economic Impacts of Salt Iodization in the United States.” My first reaction is that the effect of salt iodization is just too large—that iodine deficiency in utero is highly unlikely to rob you of 11 percent of your lifetime income. Thus I suspect that something has gone wrong with the identification. But I cannot figure out what. Great kudos to Nguyen and company for being willing to put this out there for us to look at.
  6. Tim Duy writes in “Powell Wants to Create Some Mystery Around Fed Meetings” that “A slower or faster pace of rate hikes, an extended pause, or even a cut are all possibilities at this point.”
Posted in Uncategorized

Equitable Growth announces 2018 class of grantees

Posted on by David Evans

The Washington Center for Equitable Growth announced today that it will award 24 grants this year, totaling close to $900,000, to economists and other social scientists conducting research on the channels through which economic inequality affects economic growth and stability. This robust body of research, now totaling more than $3.8 million in grant awards to more than 150 researchers over 5 years, is the foundation on which Equitable Growth advances a deeper understanding of the role that public policy plays in promoting strong, stable, and broad-based economic growth.

In its 2018 round of grantmaking, Equitable Growth will award 12 grants to university faculty and 12 grants to doctoral students at universities across the United States. Awards in this year’s grant cycle total $895,000, an increase of almost 16 percent from 2017 funding. There will also be an additional $39,000 in co-funding from the Russell Sage Foundation.

The categories of research in which the organization awards grants are human capital and the labor market, innovation, macroeconomics, and how institutions (including government, corporations, and other large organizations) affect inequality and growth. Equitable Growth is especially interested in research that uses government and other new or innovative data sources to shed light on important economic questions.

“Equitable Growth is excited to support another round of scholars who are deepening our understanding of how economic inequality affects overall economic well-being and how we can promote more equitable growth,” said Washington Center for Equitable Growth’s Executive Director and Chief Economist Heather Boushey. “Each research question is an opportunity to fill in another piece of the puzzle,” she added, “and after 5 years of grantmaking, a clearer picture is emerging of the channels through which economic inequality may affect economic growth and stability. With this growing body of research, scholars are advancing our understanding of how to create a stronger economy—one that works for Americans up and down the income ladder.”

Equitable Growth’s academic grants are open to researchers affiliated with a U.S. university, and its doctoral grants are open to graduate students currently enrolled in a U.S. doctoral program. Here is the 2018 Request for Proposals.

Download full descriptions of the 2018 grants and a profile of each grantee below.

Download File
2018 Full grant descriptions

 

Human capital and the labor market

Seven academic grants and five doctoral grants will support research on how economic inequality affects the development of human capital and the smooth functioning of the labor market:

Academic

  • “Using IRS tax data to measure the long-term effects of California’s 2004 Paid Family Leave Act”

    Tanya Byker (Middlebury College) and Martha Bailey (University of Michigan) will use IRS tax records to study the effects of California’s 2004 paid family leave insurance on labor market and family formation outcomes for both men and women.

  • “Using linked Census data to examine occupation mobility in the United States”

    David B. Grusky (Stanford University), Jonathan Fisher (Stanford University),
    Matthew Snipp (Stanford University), and Timothy Smeeding (University of Wisconsin, Madison) will develop a new dataset to analyze occupational mobility and economic mobility, creating a more nuanced understanding of what opportunity looks like in the United States.

  • “The organizational bases of discrimination”

    David Pedulla (Stanford University) and Devah Pager (Harvard University) will use innovative field-based experimental methods to understand the dynamics of discrimination.

  • “Understanding men’s nonemployment using longitudinal data: Wage opportunities, employment dynamics, and long-term effects”

    Ann Huff Stevens (University of California, Davis) will utilize new approaches to data analysis to investigate the role of declining wages in the long-term fall in male employment rates.

  • “The long-run impact of Temporary Disability Insurance on SSDI claims, earnings stability, and labor force participation”

    Emily Wiemers (University of Massachusetts Boston), Randy Albelda (University of Massachusetts Boston), and Michael Carr (University of Massachusetts Boston) will use administrative data to explore the role of Temporary Disability Insurance policies in shaping long-term labor market outcomes, as well as the receipt of long-term Social Security Disability Insurance.

  • “Undirected migration”

    Danny Yagan (University of California, Berkeley) seeks to understand whether out-migration is a channel through which people respond to and solve for local economic shocks.

  • “Trends in earnings volatility using linked administrative data”

    James P. Ziliak (University of Kentucky) and Christopher R. Bollinger (University of Kentucky) will use survey-linked administrative data to develop a better understanding of earnings and earnings volatility, especially for those at the top and bottom of the distribution.

Doctoral

  • “Economic impacts of mentoring for disadvantaged youth: RCT evidence”

    Alex Bell (Ph.D. candidate, Harvard University) will investigate the role mentoring can play in economic mobility for disadvantaged youth, including impacts on college attendance, employment outcomes, incarceration, and reliance on government assistance.

  • “What works and what workers try: Social mobility paths beyond the bachelor’s degree and the impact of racialized inequality”

    Jasmine Hill (Ph.D. candidate, Stanford University) will explore how economic inequality shapes the perceptions and knowledge of opportunities and options among those in low-income communities of color in order to shed light on the mechanisms creating and prohibiting social mobility among “low-skilled” or noncollege-educated workers of color.

  • “Race, entrepreneurship, and urban revitalization”

    Candace Miller (Ph.D. candidate, University of Virginia) will combine an analysis of the U.S. Census Bureau’s Survey of Business Owners with qualitative interviews and archival research to analyze how black-owned businesses’ growth, inclusion, and access to resources compares to that of white-owned businesses during periods of local redevelopment in Detroit.

  • “Parental resources and the career choices of young workers”

    Matthew Staiger (Ph.D. candidate, University of Maryland) will use U.S. administrative data to investigate how parental resources influence the career choices of young workers, with a specific focus on the impact of parental resources on entrepreneurship and job mobility.

  • “The effects of paid sick leave on workers’ earnings dynamics: Evidence from Seattle”

    Hilary Wething (Ph.D. candidate, University of Washington) will utilize administrative data from Washington state to study the impact of Seattle’s paid sick time ordinance on earnings, hours, employment levels, and earnings volatility of workers covered by the new law.

Macroeconomics

Two academic grants and three doctoral grants will support research on how economic inequality affects macroeconomic growth and stability:

Academic

  • “Income-specific consumption baskets and the interaction between inequality and monetary policy”

    Andrei Levchenko (University of Michigan) and Javier Cravino (University of Michigan) will investigate how differences in consumption baskets among households may affect the transmission of U.S. monetary policy.

  • “The macro-effects of unemployment insurance: A simulation-based discontinuity design approach”

    Andreas I. Mueller (Columbia Business School), Emi Nakamura (University of California, Berkeley), Jón Steinsson (University of California, Berkeley), and Miguel Acosta (Ph.D. candidate, Columbia University) will employ new methodology to explore the macroeconomic effects of previous unemployment insurance expansions to compare them to those triggered during the Great Recession.

Doctoral

  • “Posted wage rigidity”

    Jonathon Hazell (Ph.D. candidate, Massachusetts Institute of Technology) will create new statistics to measure the rigidity of wages posted for new hires to understand employment dynamics during tight and slack labor markets.

  • “Wealth taxation and evasion: Quasi-experimental evidence from Colombia”

    Juliana Londoño-Vélez (Ph.D. candidate, University of California, Berkeley) will leverage administrative data from Colombia and information released in the Panama Papers to estimate the impact of wealth taxes on reported wealth and on the use of tax-evasion strategies.

  • “Do pass-through owners pass tax burdens through to their workers?”

    Max Risch (Ph.D. candidate, University of Michigan) will investigate whether and to what extent the compensation of employees of certain pass-through businesses changes in response to changes in the tax rates on the businesses owners.

Innovation

One doctoral grant will support research on how economic inequality affects the quantity and quality of innovation, and whether technological innovations, in turn, impact inequality:

  • “Automation threat and wage bargaining”

    Antoine Arnoud (Ph.D. candidate, Yale University) proposes to study a novel mechanism through which automation in the labor market might have an impact on wages through the threat, rather than the actuality, of automation.

Institutions

Three academic grants and three doctoral grants will support research on how levels and trends in economic inequality impact the quality of social, economic, and political institutions contributing to economic well-being and growth, including changes in market structure:

Academic

  • “Firm wage policies and inequality: Evidence using matched employer-employee data”

    Arindrajit Dube (University of Massachusetts Amherst) will investigate the source of differences in wages being paid to similar workers at different establishments, after accounting for individual differences, to quantify how sensitive wages are to local labor market conditions.

  • “The impact of antitrust on competition”

    Fiona Scott Morton (Yale University School of Management) will collect empirical metrics of antitrust enforcement outcomes to create a novel dataset, which she will use to analyze merger effects beyond prices such as employment, and to determine whether mergers in the high-tech sector are motivated by increased efficiencies or by the elimination of competitors.

  • “Tax evasion by the wealthy: Measurement and implications”

    Gabriel Zucman (University of California, Berkeley) and Daniel Reck (London School of Economics) will use administrative data and data leaked from financial and legal entities to improve estimates of tax evasion by the wealthy, which they will then use to construct revised estimates of income and wealth inequality in the United States.

Doctoral

  • “The labor market effects of minority political empowerment: Evidence from the Voting Rights Act”

    Abhay Aneja (J.D. and Ph.D. candidate, Stanford Law School and University of California, Berkeley) and Carlos Avenancio (Postdoctoral fellow, Massachusetts Institute of Technology and assistant professor, Indiana University) will examine how African American enfranchisement through the Voting Rights Act affected a variety of economic outcomes for blacks in Southern states.

  • “Minimum wages and racial inequality”

    Claire Montialoux (Ph.D. candidate, CREST and visiting Ph.D. candidate, University of California, Berkeley) and Ellora Derenoncourt (Ph.D. candidate, Harvard University) will research how effective basic and universal labor standards are at reducing group inequality in order to increase our understanding of how a higher wage floor and universal federal labor standards can impact the racial and gender wage gaps.

  • “Consumer protection law and mortgage markets”

    Manisha Padi (Bigelow Fellow and Postdoctoral Fellow, University of Chicago Law School) will explore the role of consumer protection laws on U.S. mortgage market outcomes and consumer welfare.

The Washington Center for Equitable Growth is a nonprofit research and grantmaking organization dedicated to advancing evidence-backed ideas and policies that promote strong, stable, and broad-based economic growth. For more information, see www.equitablegrowth.org and follow us on Twitter and Facebook @equitablegrowth.

Posted in Uncategorized

Weekend reading: “Metrics that matter for workers” edition

Posted on by Ed Paisley

Equitable Growth round-up

 

Equitable Growth this week released a new factsheet breaking down how gross GDP statistics obscure other metrics that better track the ways growth affects Americans’ standards of living up and down the income ladder. In addition to recommending that a distributional component be incorporated into the National Income and Product Accounts collected by the federal government, this factsheet assembles Equitable Growth’s various research products on “disaggregating growth,” including Heather Boushey and Austin Clemens’ recent report on the topic.

Kate Bahn wrote a column this week reflecting on the recent Freedom & Justice Conference jointly hosted by the National Economic Association and the American Society of Hispanic Economists at Salish Kootenai College. The conference elevated contemporary research on economic challenges and opportunities facing Native American communities. In addition to reviewing several recent research papers in this field, Kate concludes with recommendations for policymakers for improving economic data collection on Native American communities.

In his weekly “worthy reads” column, Brad Delong highlights the work of our new wages lead economist Kate Bahn as well as a blog on U.S. wage growth by Equitable Growth alumnus Nick Bunker. Brad also summarizes recent research papers in macroeconomics, including work on optimal taxation by University of California, Berkeley economist and Equitable Growth steering committee member Emmanuel Saez and Harvard University economist and Equitable Growth grantee Stefanie Stantcheva as well as papers on tax evasion by UC-Berkeley economist and frequent Equitable Growth guest author Gabriel Zucman.

Capping off the week, we launched “Competitive Edge,” our new blog focused on antitrust enforcement, with Yale University economist Fiona Scott Morton’s inaugural post. In addition to introducing the aims of this new initiative, Professor Scott Morton discusses some of the avenues for reinvigorated antitrust enforcement, grounded in economic theory and legal precedent, that were highlighted by a recent volume of The Yale Law Journal. This volume brought together papers by top antitrust scholars from a conference last fall co-hosted by Equitable Growth and the American University Washington College of Law.

 

Links from around the web

 

Reflecting on the current state of the job market, Patricia Cohen points out that wages remain stagnant despite soaring corporate profits and almost eight years of consistent job growth. As this state of affairs stands in contrast to the heightened wage pressure typically expected from low unemployment numbers, Equitable Growth’s researchers have emphasized the role of monopsony—the labor market condition in which a small number of employers boast disproportionate power to set low wages without having to compete for workers. [nyt]

Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, delves into other causes of persistent wage stagnation. In particular, Bernstein points to inflation risks from a potential trade war, interest rate risks from the Federal Reserve’s expected monetary policy, and legal and policy decisions driving declining worker power vis-à-vis employers. [nyt]

Chandra Bozelko and Ryan Lo illustrate another widespread problem created by skewed power within labor markets: employment discrimination, in this case against formerly incarcerated workers. Despite evidence that ex-offenders are no more likely to be fired than other workers and that these workers are in many cases more productive than other workers, this population of Americans has an unemployment rate of 27 percent—higher than the total U.S. unemployment rate during the Great Recession—largely due to pervasive stereotypes among employers. [nbc news]

Unfounded sex stereotypes also persist in the contemporary U.S. labor market with negative consequences for women’s wages—consequences that in one case were challenged in court with facts and data. Tyler Pager details how nurses in New York state received a $20.8 million settlement after filing a lawsuit against the state for its exclusion of nurses from its male-dominated list of physically taxing jobs entitled to a wage premium. This case is consistent with Equitable Growth research demonstrating that wage penalties for female-dominated occupations are widespread and without basis in objective productivity levels. [nyt]

Claire Cain Miller summarizes recent research verifying that sex stereotypes persist in the home as well. Indeed, a new study by U.S. Census Bureau economist and Equitable Growth grantee Marta Murray-Close and her colleague Misty L. Heggeness comparing Census Bureau data with IRS tax returns finds that gender norms influence women and men’s self-reporting of their incomes. Notably, in heterosexual couples in which the woman earns more than her husband, the IRS data show that women report incomes 1.5 percentage points less than their true incomes whereas men report incomes 2.9 percentages points greater than their true level. [nyt]

 

Friday figure

 

Figure is from Equitable Growth’s, “Measuring U.S. economic growth.”

Competitive Edge: There is a lot to fix in U.S. antitrust enforcement today

Posted on by Emilie Openchowski

Antitrust and competition issues are receiving renewed interest, and for good reason. So far, the discussion has occurred at a high level of generality. To address important specific antitrust enforcement and competition issues, the Washington Center for Equitable Growth is launching a new blog entitled “Competitive Edge.” This series will feature leading experts in antitrust enforcement on a broad range of topics: potential areas for antitrust enforcement, concerns about existing doctrine, practical realities enforcers face, proposals for reform, and broader policies to promote competition. We are honored that Fiona Scott Morton, has authored our inaugural entry.

The octopus image, above, updates an iconic editorial cartoon first published in 1904 in the magazine Puck to portray the Standard Oil monopoly. Please note the harpoon. Our goal for Competitive Edge is to promote the development of sharp and effective tools to increase competition in the United States economy.

Fiona Scott Morton

Last month’s court decision allowing AT&T Inc. to acquire Time Warner Inc. is an example of the inability of our current system of courts and enforcement to prevent the decline in competition in the modern U.S. economy. In the case of that merger, the Antitrust Division of the U.S. Department of Justice gets credit for making an attempt to block what it viewed as an anti-competitive transaction. What’s more, that view proved prescient after the now-merged firm almost immediately raised prices after executives testified that the synergies from the deal would immediately cause lower prices.

The court decision of U.S. District Judge Richard Leon demonstrated a lack of understanding of the markets, the concept of vertical integration, corporate incentives, and the intellectual exercise of forecasting what the unified firm would do. And so, not surprisingly, it produced a poor decision. The Supreme Court decision in Ohio v. American Express Company further weakens antitrust enforcement by complicating the analysis and raising the standard of proof for platform business cases.

There are many other settings where consumers deserve similar efforts to protect competition and where the two federal antitrust agencies have yet to take enforcement steps. This spring, both Bruce Hoffman, director of the Bureau of Competition in the Federal Trade Commission, and Makan Delrahim, assistant attorney general at the Department of Justice’s Antitrust Division, have publicly called for assistance in both finding new cases to bring and developing theories of harm. Fortunately, a new volume of The Yale Law Journal—bringing together top antirust scholars and papers presented at a conference last fall that was co-hosted by the American University Washington College of Law and the Washington Center for Equitable Growth—has just come out to meet this pressing need.

The recommendations in the issue do not require novel applications of antitrust law or innovative interpretations of antitrust law. They are low-risk and high-return cases for U.S. antitrust agencies to bring. But enforcement in these areas will require the agencies to look beyond old markets with lots of precedent, and instead analyze the products that consumers are now buying such as online hotel bookings, credit cards, technology standards, and mutual funds, or markets where consumers are selling such as labor markets. These are markets that do not have established jurisprudence or a recent history of enforcement, with the notable exception of American Express. More novel cases are harder to bring because an existing draft complaint is not already sitting in the files of the enforcement agencies.

The papers in the issue of The Yale Law Journal identify the types of cases the agencies should be pursuing such as anti-competitive most-favored-nation clauses. Consumers are buying ever-more goods and services online, and yet the contracts governing those prices have been subjected to no scrutiny in the United States. In Europe, an online travel agent such as Expedia Group Inc. may not require a hotel to keep its price equal or higher at all travel agencies that compete with Expedia; hotels are expressly allowed to give whatever discounts they prefer to different travel sites. In contrast, this price-increasing behavior remains effectively legal in the United States.

The Yale Law Journal issue also lays out the rationale for the agencies’ bringing cases involving harm to sellers, including employees, as this is a source of anti-competitive harm as much as higher prices. With some exceptions, antitrust enforcement has typically stayed away from these kinds of cases. Whether due to fear, doctrinal uncertainty, or misperceptions, this disclination should change.

Then there is the argument for using antitrust enforcement to end abuse by standard-setting organizations. New technologies are a key area where enforcement must keep up with consumers’ purchasing habits. Communication standards (such as those found in cellular technology—for example the so-called Long-Term Evolution standard), which are set by a standard-setting organization, often define the boundaries of competition. By a variety of conduct, some patent holders have exploited this standard-setting process across many technologies to undermine competition and harm consumers. Absent antitrust enforcement, this abusive conduct could delay the roll-out of the Internet of Things or increase its cost. The Yale Law Journal articles make a compelling case that economic theory and empirical evidence strongly support such actions. Although under Assistant Attorney General Delrahim—an acknowledged patent hawk—DOJ action protecting consumers in this area is unlikely, but at the FTC, Chairman Joe Simons was active in this area in his previous role as the FTC’s director of the Bureau of Competition, bringing the Rambus and Unocal cases.

Second, there are areas where the agencies may need to defend current doctrine or push back against mistaken doctrine. This category includes reaffirming the presumption in horizontal merger cases, redoubling efforts on vertical mergers after the AT&T-Time Warner decision (with full credit to the DOJ for bringing the case), and pushing back on doctrines that appear to limit the role of antitrust in pursuing predation cases. Further, in times of deregulation, active and vigorous antitrust enforcement is even more critical.

Multisided platforms such as credit cards, news sites, and auctions present old economic theories in a new setting, which courts find confusing. Although the Supreme Court’s recent decision in the American Express case limits the government’s ability to enforce the antitrust laws, the agencies must continue to be aggressive in their defense of competitive markets. Many platform cases will need to be brought promptly in order to clarify just how much protection from the antitrust laws the American Express decision will give these businesses.

Finally, there are important new areas for enforcement that require study of the kind only the agencies can do. Mutual funds that hold significant stakes in competing firms, such as the largest four domestic airlines, have the potential to lessen competition. The agencies have the power to examine communications between mutual funds and the companies they hold. Without such study, policymakers cannot learn the true impact on markets of many large, common owners. If that impact turns out to be significant and enforcers have done nothing to learn about it, then they will contribute to exposing U.S. consumers to more anti-competitive harm.

In its entirety, The Yale Law Journal issue lays out an initial roadmap of cases that are well-grounded in economic analysis and legal precedent. Enforcement in these areas would make U.S. markets more competitive. I have mailed a copy of this issue to both Chairman Simons and AAG Delrahim in the hopes that they find the content responsive to their call for enforcement assistance from the academic community. Each author has kindly agreed to answer any questions the agencies might have about their articles. I look forward to seeing the enforcement choices of these agencies in the year ahead.

I will close by, noting that this recent issue does not even analyze the conduct of the large technology companies that we often hear concerns about today. In the legislative realm, the U.S. Congress needs to increase the staff (with a larger budget) at both agencies to allow them to match their enforcement efforts to Gross Domestic Product. Competitive problems grow with the economy, but we have let our enforcement efforts stagnate. There is much still to do in this area to protect competition in the United States and the American consumer.

—Fiona M. Scott Morton is the Theodore Nierenberg Professor of Economics at the Yale University School of Management.

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