What does the research say about the FAMILY Act provisions?

Posted on by Maria Monroe

In February 2019, the Family and Medical Insurance Leave Act was reintroduced in the 116th Congress as H.R. 1185/S. 463. Five states have implemented paid leave programs: California (2004), New Jersey (2009), Rhode Island (2014), New York (2018), and Washington state (2020), while Massachusetts, the District of Columbia, Connecticut, and Oregon are all in the process of implementing paid leave programs. This fact sheet examines these existing paid leave programs in light of Congress’ consideration of the FAMILY Act.

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What does the research say about the FAMILY Act provisions?

Here is the evidence from the states on the effects of leave-taking:

  • The research suggests paid parental leave has a range of positive outcomes for children and parents. One in 10 first-time mothers who work during pregnancy go back to work within the first month of their child’s life. In the absence of paid leave, too many families face an impossible choice between economic security and the health and well-being of their family. A growing body of research suggests that paid parental leave can improve a range of early child outcomes including infant mortality, low birth weight, preterm births, breastfeeding rates, and pediatric head trauma, as well as later-in-life outcomes, including lower rates of attention deficit/hyperactivity disorder, obesity, ear infections, and hearing problems. (Census/Equitable Growth)
  • Early research on paid caregiving leave shows a diverse set of positive outcomes for both care recipients and caregivers. A growing body of evidence suggests that caregiving leave supports positive outcomes for care recipients, including mental and physical health outcomes for disabled children with a family caregiver receiving paid leave. Evidence from California suggests that paid caregiving leave reduced nursing home occupancy among the elderly, possibly because enhanced access to family caregivers reduced nursing home stays. Research also suggests positive emotional health outcomes for paid leave for parents of children with special needs, as well as positive emotional and physical health outcomes for family caregivers providing care to aging relatives. (Equitable Growth)
  • The demand for paid medical leave is high, and early research findings suggest positive labor market outcomes for those who take it. The vast majority of claims recipients are taking paid leave for their own medical needs. In the first 10 years of California’s program, workers registered more than 9 million medical leave claims, as compared to nearly 1.6 million parental leave claims and 175,198 caregiving claims. A recent study on paid medical leave in Rhode Island suggests that recipients who received paid leave along with vocational rehabilitation services were more likely to return to work and to receive higher wages than those who were not in the program. (Equitable Growth)
  • The research to date demonstrates that comprehensive paid family and medical leave has minimal impacts on employers. Data from California find no evidence that employee turnover at firms increases or that wage costs rise when paid leave-taking occurs. In New York, New Jersey, and Rhode Island, two-thirds of employers were supportive of their state’s paid leave programs, and another 15 percent to 20 percent were neutral. (Bedard and Rossin-Slater/Equitable Growth)

Here’s the evidence from the states on who needs leave:

  • Research tells us that today’s families include a diverse range of caretaking relationships. In addition to the 3.9 million babies born annually in the United States, nearly 18 million individuals in the United States are family caregivers for an individual over the age of 65 who needs help because of a physical, cognitive, or emotional limitation. For many, parental caregiving responsibilities don’t stop once a baby is old enough to leave with a childcare provider—children with disabilities and/or physical illnesses need care throughout childhood. For instance, more than 16,000 children are diagnosed with cancer in the United States annually; cancer and birth defects are the two most commonly listed reasons for a care claim in California’s program. (American Society of Clinical Oncology)

Here’s the evidence from the states on the length of leave:

  • Research suggests that maternity leave entitlements under 1 year can have significant positive impacts for women and children. Leave entitlements under a year can improve job continuity for women and can increase their employment rates and wages several years after childbirth. For instance, extensions in job-protected maternity leave up to 1 year in Canada led to a 22 percent increase in the probability that a mother returned to her prechildbirth employer. The International Labour Organization’s standard for the duration of maternity leave has been 14 weeks since 2000, and 98 out of 185 counties with paid leave policies and available data meet or exceed this standard. (Baker and Milligan/International Labour Organization)
  • Data from state programs indicate that recipients only take as much medical leave as their condition warrants, which is typically less than 12 weeks. Medical leave lengths vary depending on the specific needs of the condition, e.g. cancer treatment may require a longer leave than recovery from a broken ankle. (Bedard and Rossin-Slater)

Here’s the evidence from the states on wage replacement:

Here’s the evidence from the states and Great Britain on job protection:

  • The evidence suggests that job-protected leave may have positive impacts on women’s labor market outcomes. Job protection and wage replacement work together to promote both short- and long-term employment outcomes for mothers. The expansion of job protection for maternity leave in Great Britain finds that job protection had even stronger impacts than wage replacement on long-run maternal employment rates and job tenure, while wage replacement had stronger effects in the short run. The study, however, also finds that the introduction of job protection for maternity leave may have had negative impacts for mothers on other measures of career success such as promotions to managerial positions. It is important to note that the British case examined the expansion of a maternity leave-only policy, rather than a broader paid family and medical leave policy that would extend job protections to all categories of care leave. The impacts of broader job-protected leave may look quite different in the case of the FAMILY Act, which simply extends FMLA’s broad job protections to apply to paid parental, medical, and caregiving leave. (Stearns)

This fact sheet summarizes evidence from the research literature to discuss key provisions of the FAMILY Act.

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To move beyond GDP, put alternatives front and center

Posted on by Maria Monroe

Economists increasingly believe it is important to do more to measure the economic well-being of the families who make up the economy and to deemphasize Gross Domestic Product growth, the one-number-fits-all measure of economic progress that currently dominates popular discourse. That’s the takeaway from a panel of high-profile economists, including Nobel Laureate Angus Deaton, titled “Beyond GDP,” held at this year’s annual conference of the American Economic Association.

The panelists are right—new metrics of well-being are long overdue. But the panel also highlighted the difficulty of communicating the deficiencies of GDP and the value of new measures to noneconomists. While virtually all of the panelists agreed that GDP is not a very useful gauge of economic success, most also said they would leave the U.S. GDP report untouched and focus instead on creating new “satellite accounts” at the U.S. Bureau of Economic Analysis. Satellite accounts are separate publications, distinct from the monthly GDP release. Current satellite accounts are primarily about transportation and tourism.

But satellite accounts do not command the attention of the press and the public. If economists really believe GDP growth is a deficient statistic, and that extensions will make it better, then they should be willing to elevate those extensions and include them in quarterly reports. The quarterly reports are well-known and are covered extensively by journalists already, guaranteeing visibility for statistics that appear in them.

Economists on the panel proposed a number of excellent ideas for extending the current national accounts, among them putting a value on housework, making better estimates of quality improvements in healthcare, and measuring subjective well-being. Each of these could make the national accounts more useful for understanding the economy and improve economic policy discussions in the United States. But the way these statistics are delivered matters. To make an impact, they should be released on a regular schedule, in a significant agency release, with similar billing to our more established metrics, such as GDP itself.

Despite widespread hesitancy to include changes to GDP in the existing accounts, the panel underscored that there is broad consensus that significant improvements can be made to GDP. The most frequently mentioned area for improvement was adding a distributional component to our national metrics. Though opinions about the exact method may vary, these calls mirror Equitable Growth’s own campaign for a GDP 2.0, which proposes that the Bureau of Economic Analysis break out economic growth by income so we can observe who prospers when the economy grows. The BEA, which produces the National Income and Product Accounts, recently announced that it expects to publish statistics distributing the growth in personal income in 2020.

Angus Deaton suggested that U.S. statistical agencies should also take up measurement of subjective well-being. This means conducting a survey to ask people how happy they are. Deaton noted that collecting this information on a regular basis could be a useful way to evaluate whether gains that are perceived as important to a family’s welfare do, in fact, result in increased well-being. Dale Jorgenson of Harvard University and Dan Sichel of Wellesley College argued in favor of better measures of consumption by households, which they believe better approximates individual welfare.

Panels such as this one reflect the broad consensus among many different types of economists that policymakers can and should do a better job of measuring the well-being of Americans in our economic statistics. The BEA is committed to pursuing at least some of these options (see slide 3 here), although the agency is frequently underresourced. In fact, economists, politicians, and other observers have been writing about and talking about the deficiencies in GDP for decades. It is promising that action appears to be close at hand.

But the unfortunately common impulse to silo improvements into satellite accounts risks leaving GDP growth unchallenged as the statistic reporters and politicians turn to when they assess economic prosperity. Simon Kuznets, the economist most responsible for the creation of GDP as a metric, knew the folly of this tactic well: “The welfare of a nation,” he noted in a report to Congress, “can scarcely be inferred from a measure of national income.”

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Persistent economic gaps frustrate the dream of racial economic equality in the United States

Posted on by Maria Monroe
The Martin Luther King, Jr. memorial seen here, Stone of Hope, is located in Washington, D.C., next to the National Mall.

As the United States observes the birthday of the Rev. Martin Luther King Jr., we honor his dream not only of social and political equality but also of economic equality. The moral and political leadership he brought to bear on the fight for civil rights deepened into broader advocacy of fundamental economic change that he hoped would lead to an economy that benefited all Americans, regardless of race. While African Americans have experienced significant gains since Dr. King’s death in 1968, he would undoubtedly be saddened to know that more than a half-century later, the economic gaps between black people and white people in this country—particularly in terms of earnings and of wealth—remain profound.

Dr. King probably would not be surprised at the role governmental policies have played in these differences—and can play in reducing them. In a paper added recently to the Equitable Growth Working Paper series, Equitable Growth grantees Ellora Derenoncourt of Princeton University and Claire Montialoux of the University of California, Berkeley find that 20 percent of the reduction in the racial earnings gap during the late 1960s and early 1970s was due to a significant expansion in the scope of the federal minimum wage. Specifically, the researchers noted that the 1966 Fair Labor Standards Act “extended federal minimum wage coverage to agriculture, restaurants, nursing homes, and other services which were previously uncovered and where nearly a third of black workers were employed.” This reversal of what was arguably a racist policy of exclusion showed how policy can effect change.

Probably the starkest economic gap is the racial wealth gap, which might be better termed a chasm. As of 2016, the median wealth of white families in the United States was $171,000, while that of black families was essentially one-tenth of that, only $17,600. The work of Equitable Growth Research Advisory Board member William Darity, Jr. of Duke University has pointed out how decades of policy choices affecting housing, education, and other issues have contributed to this dramatic difference for black and white households. In 2018, he and co-authors Darrick Hamilton of The Ohio State University, an Equitable Growth grantee, and Melany De La Cruz-Viesca, Paul M. Ong, and Andre Comandon, all of the University of California, Los Angeles, wrote about wealth disparities in Los Angeles, focusing on the role of homeownership. While they did not estimate the share of the role played by policy, they pointed to racially discriminatory local implementation of Federal Housing Administration loans and G.I. Bill benefits, emphasizing that “people of color were excluded from post-Depression and World War II (1939–45) policies that were largely responsible for the asset development of an American middle class.” They added that “the staggering disparities identified in this analysis should urge us to find policies that can help narrow racial wealth inequality by providing opportunities for asset development; ensuring fair access to housing, credit, and financial services; ensuring equal opportunity to well-paying jobs regardless of race or ethnicity; strengthening retirement incomes; promoting access to education without overburdening individuals with debt; and providing access to health care while helping minimize medical debt.”

Black women face the obstacles of both the gender and racial earnings gaps. A 2018 working paper by Hamilton, Darity, Mark Paul of the New College of Florida, and Khaing Zaw, then of Duke University, also part of the Equitable Growth Working Paper series, sought to quantify how they interact. The co-authors concluded that, in general, black women face a particular burden due to the intersectionality of the gender and race earnings gaps, earning only 64 cents for every dollar that white men earn. They noted that more than half of the gap cannot be explained by differences in such factors as education, family structure, occupation, and industry.

In a 2018 column for Equitable Growth, Harvard Ph.D. student Robert Manduca showed that much of the economic progress made by African Americans since the 1960s, in part because of policies to reduce discrimination, had been thwarted by growing overall inequality. Average income for African American families as a share of average income for white families is essentially what it was a half-century ago. While black families have been making their way up through the bottom half of the income distribution, the bottom half of the income distribution has been falling away from the upper half, especially the top 10 percent. “Efforts to reduce discrimination, equalize access to education, ensure equal treatment by the legal system, and otherwise end racial stratification should continue since they seem to be making real, if slow, progress,” he writes. “But these policies should be paired with broader economic policies to end wage stagnation for Americans of all races and, in so doing, reduce the gaps between racial groups.”

Another paper by Derenoncourt focuses on the Great Migration of African Americans from the southern states to the North in the 20th century. She points to the lack of significant difference between the two regions in intergenerational mobility for black children relative to white children and suggests that one reason is the reaction of people and policy to the migration. White families withdrew from public schools, which had an impact on spending for public schools, and additional resources were spent on policing, further crowding out education spending.

Indeed, differences in human capital development—education in particular—are an element of the racial earnings gap. Government policies that create differences in ability to develop human capital, such as school segregation, play a role in creating those differences. It’s another example of government policy having an enormous economic impact on African Americans. As former Equitable Growth Research Assistant Will McGrew pointed out in a 2019 paper on school segregation in the 21st century, segregation in the 20th-century South was the result of policies that forced African Americans into separate, inferior schools, but today, schools are segregated by different kinds of government policies, with the result that African Americans are more likely to attend schools that are more poorly funded and therefore have larger class sizes and lack access to the best teachers. Those underfunded schools, McGrew wrote, have a long-term impact on student outcomes, and therefore on long-term earnings and economic mobility.

Dr. King believed strongly that governmental policy has a critical impact on economic prospects. The reason Dr. King was in Memphis when he was assassinated was to support striking sanitation workers in that city. Dr. King recognized that economic progress for African Americans required the ability of workers to be organized into labor unions, a goal the Memphis strikers sought. Today, we know better than ever how right he was. In the 21st century U.S. economy, the decimation of unions caused by policy decisions at the state and national level is a significant impediment to racial economic equality and to wage growth more generally.

When we think about why Martin Luther King’s dream remains elusive, racism in our society and the legacy of slavery are both, of course, deeply salient. But they are not solely responsible for these persistent gaps. Explicit policy decisions over many decades have sustained those gaps. Yet some decisions have helped to reduce them. Change is possible. Our country is duty bound to continue seeking evidence for what works and then implement such policies. That is how Dr. King would want to be honored.

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Weekend reading: Wages and work edition

Posted on by Maria Monroe

This is a post we publish each Friday 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 relevant and interesting articles 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

Every month, the U.S. Bureau of Labor Statistics releases data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS. Today, the BLS released the data for November 2019, showing that the number of new hires remained about the same, while the rate of job openings decreased slightly. Raksha Kopparam and Kate Bahn put together four graphics to illustrate this and other observations about the data.

A new working paper looks at how the extension of the federal minimum wage in the 1960s led to the decrease in earnings differences between black and white workers in the late 1960s and early 1970s. After the 1966 Fair Labor Standards Act expanded the federal minimum wage to new industries such as agriculture, restaurants, nursing homes, and other service industries—areas where nearly one-third of black workers were employed—wages rose dramatically for workers in these newly covered industries, with no effect on employment. Ellora Derenoncourt and Claire Montialoux show that the impact on black workers was nearly twice as large as the impact on white workers, and argue that their research suggests that “minimum wage policy can play a critical role in reducing racial economic disparities.”

Head over to Brad DeLong’s latest worthy reads for his takes on recent must-reads from Equitable Growth and around the web.

Links from around the web

A few years ago, West Virginia passed stricter work requirements for its supplemental nutrition assistance program—similar to the ones embraced the Trump administration that will go into effect in April—mandating at least 20 hours per week of work or training for work in order to receive access to the safety net program. Campbell Robertson of The New York Times followed up on the new state-level regulations, looking at how the change affected both state employment rates and the daily lives of people who rely on the program. “The policy seems straightforward,” he writes, “but there is nothing straightforward about the reality of the working poor, a daily life of unreliable transportation, erratic work hours and capricious living arrangements.” His investigation found that employment rates have not increased noticeably under the restrictions—often the argument for implementing such a change—while the most apparent impact has been “at homeless missions and food pantries, which saw a big spike in demand that has never receded.”

“If there’s one thing many Americans agree on,” write Scott Lanman and Stephanie Flanders for Bloomberg, “it’s the importance of education as a bedrock of the U.S. economy.” In an episode of the news outlet’s Stephanomics podcast, education and the disparities in outcomes and resources between school districts as a result of funding being left to state and local governments takes center stage. The episode looks at how difficult it can be to improve access and quality of education when districts are subject to the whims of the real estate market and demographic shifts—and what states can do about it.

As the gig economy expands further, where can we expect it to stop? The gigantic spread of app-based companies into various aspects our lives arrives with drastic consequences for many full-time employees, from taxi drivers to bellmen to chefs. “The service sector, in contrast to manufacturing, is just beginning to contend with automation and technological displacement—in the form of robots, apps and algorithms,” writes E. Tammy Kim in The New York Times. And while it seems there may be no limit to where the gig economy can go, how the service sector adapts and reacts to app-based employment may act as a guide for the future, Kim posits that “only a broad-based fight for fair treatment and lawful classification [as full-time employees, not contractors] can dismantle the ideology of labor built into Uber and its ilk: that all workers should be as productive and loyal as lifetime employees, and expect nothing in return.”

Friday Figure

Figure is from Equitable Growth’s “JOLTS Day Graphs: November 2019 Report Edition” by Raksha Kopparam and Kate Bahn.

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Brad DeLong: Worthy reads on equitable growth, January 10-17, 2020

Posted on by Maria Monroe

Worthy reads from Equitable Growth:

  1. Lisa Cook and Jan Gerson provide a large estimated benefit of leveling the gender and racial playing field with respect to innovation in “The implications of U.S. Gender and Racial Disparities in Income and Wealth Inequality at Each Stage of the Innovation Process.” They write: “Since the 1960s, both women and underrepresented minorities in the United States have obtained an increasing share of bachelor’s … and other advanced degrees in … STEM … [y]et there has been no similar increase in patenting activity among these groups … The core problem is the continued discrimination experienced by disadvantaged minorities and women at every stage of the innovation process, from childhood and youth exposure and mentoring in the STEM fields to postsecondary educational barriers to advancement, and from discriminatory denials of patent applications to the lack of opportunity to participate in the development of patentable ideas in the technology workplace. Closing this gender and racial gap in the U.S. innovation process could increase U.S. Gross Domestic Product per capita by 2.7 percent.”
  2. Here are some of my thoughts, now two decades old, on Piketty and other issues. Surprisingly, I still think much the same as I did then, in “Bequests: An Historical Perspective,” in which I wrote: “Practically every major aspect of our system of inheritance today is less than two hundred and fifty years old. Two hundred and fifty years ago, inheritance proceeded through primogeniture—as if those leaving bequests cared not for the well-being of their descendants but only for the wealth and power of the lineage head. Before the industrial revolution, inheritance played an overwhelming and crucial role in wealth accumulation and wealth distribution that it does not play today. Migration to the New World was accompanied by a rapid shift in the perception of the purpose of inheritance as the old patterns failed to flourish in a land-rich, rapidly-growing frontier-settler economy. By the start of the twentieth century inherited wealth was regarded with suspicion in America, with even some of the richest calling for estate taxes to keep the rich from diverting the public trust of their fortunes into the pockets of their descendants. Thus the coming of social democracy to America brought with it high statutory rates of tax on large estates, which nevertheless did not raise a great deal of revenue.”

 

Worthy reads not from Equitable Growth:

  1. This is a must must read. This is a great paper by Alberto Alesina and Stefanie Stantcheva about why “Americans continue to regard their economic prospects more optimistically than Europeans, who fear that the poor are stuck in poverty.” Coming to grips with what generates this may be the most important question in political economy today. Read “Mobility: Real and Perceived,” in which they write: “Americans, by and large, view the market economy as fair: if one works hard, poverty can be left behind; and wealth is generally deserved by those who have accumulated it … Europeans, by contrast, believe that the poor will remain stuck in poverty, no matter how hard they try, and that many of the rich don’t deserve their wealth, which originated mostly from birth and connections in an “unfair” economy, based upon privileges. They believe that social mobility is low and that something like an American dream in their country is an illusion … A key difference in the responses of Europeans and Americans is … [that] European respondents are more pessimistic than Americans, though their statistical chances now look better … Individuals more pessimistic about social mobility favored government spending on programs designed to equalize opportunities and favored a progressive tax system. Interestingly, the respondents who believed that social mobility is low seem to favor equal-opportunity policies more than ex-post-redistribution of income. American respondents showed a distinctive—and counterintuitive—geographical pattern. In areas such as the South and the Southeast, where upward mobility is relatively low, Americans were overly optimistic about prospects of upward mobility. The opposite was the case in areas where mobility is higher, as in the North and Northwest. This is an intriguing pattern that will require more study to understand.”
  2. Populism—in today’s climate, neo-fascism would be a better phrase because the original populists actually had policies that were popular and effective (in some cases at least) in boosting the well-being of the people—is only strengthened by a small amount via the economic insecurity channel. But other factors boosting populism have currently made it influential enough that that small boost can be politically decisive. Read this excellent piece of work by Yotam Margalit, “Economic causes of populism: Important, marginally important, or important on the margin,” in which he writes: “A common explanation for the rise of populism is economic insecurity driven by forces such as trade, immigration, or the financial crisis. This column, part of the Vox debate on populism, argues that such view overstates the role of economic insecurity as a driver. In particular, it conflates economic insecurity being important in explaining the overall populist vote and being important by affecting election outcomes on the margin. The empirical findings indicate that the share of populist support explained by economic insecurity is modest.”
  3. Economics’ woman-underrepresentation problem appears due to a drip, drip, drip, drip of small factors everywhere along the pipeline. Here Nagore Triberri and her coauthors find that there is a substantial slice of papers of high enough “quality” (as measured by future citations) to get published that do not get published because they are written by women. Yet referees assess papers written by men and women similarly. And editors do not seem biased in their use of referees. Read “Gender Neutrality in Economics: The Role of Editors and Referees,” in which they write: “Women economists are under-represented across the discipline, from university departments to academic conferences and publishing houses. This column focuses on the editorial process and asks whether the referees and editors of four leading economics journals made gender-neutral publishing decisions between 2003 and 2013. The findings suggest that the gender of the referee does not affect the valuation of a paper and that editors are gender-neutral in valuing advice from referees. However, papers written by women appear to face a higher bar in the quest to be published.”
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JOLTS Day Graphs: November 2019 Report Edition

Posted on by Raksha Kopparam

Every month the U.S. Bureau of Labor Statistics releases data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS. Today, the BLS released the latest data for November 2019. This report doesn’t get as much attention as the monthly Employment Situation Report, but it contains useful information about the state of the U.S. labor market. Below are a few key graphs using data from the report.

1.

The quits rate held at 2.3% in November, maintaining a healthy rate in an expansionary labor market.

2.

The vacancy yield increased to 0.86 in November, from 0.79 in October, as the rate of hires stayed the same while the rate of job openings declined.

3.

The ratio of unemployed workers to job openings increased slightly as job openings declined in November, but it remains at historically low levels under 1.0.

4.

The Beveridge Curve continues to reflect an expansionary labor market, above its level during the early 2000s expansion.

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Weekend reading: Happy New Year edition

Posted on by Ed Paisley

This is a post we publish each Friday 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 relevant and interesting articles 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

 

Weekend Reading is back, after a few weeks off! We hope you had a wonderful holiday season and wish you the best in 2020.

Given the nature of politics these days, it was a nice surprise that right before Christmas Congress passed and President Donald Trump signed into law historic, bipartisan legislation that will lower prescription drug prices. The measures were folded into the year-end omnibus spending bill, and will strengthen market competition in the industry by limiting the various tactics, including sample blockades and safety protocol filibusters, which drug companies use to prevent generics from entering the market. Michael Kades explains how the pharmaceutical industry uses these tactics to keep competition at a low, and discusses how the new CREATES Act targets these practices specifically in order to lower prices for consumers.

Equitable Growth’s academic grants program is now entering its seventh year. Since 2014, we have provided grants to more than 200 researchers, and distributed more than $5.6 million in grants. We recently wrote up a report covering what we’ve learned from researchers over the past six grantgiving cycles, as well as our new lines of inquiry for this coming year. (And don’t forget to check out our 2020 RFP and 2020 RFP specifically for paid family and medical leave research!)

Last week, Equitable Growth staff attended, spoke at, and co-organized a panel at the American Economics Association’s Allied Social Science Associations annual meeting in San Diego. The three-day event brings together more than 13,000 of the best minds in economics to network and celebrate new achievements in their lines of research. Read our coverage from day one, day two, and day three of the event.

The U.S. Bureau of Labor Statistics issued its monthly report on the U.S. labor market for December, showing high prime-age employment (above 80 percent) and high labor force participation, as well as continued short periods of time spent unemployed. The data also show wage growth flattening out after months of relatively steady increases. Raksha Kopparam and Austin Clemens put together five graphs highlighting these and other important trends in the monthly announcement.

 

Links from around the web

 

The United States is the only industrialized nation in the world that does not guarantee paid family leave to workers. But even though there is no federal paid family leave standard in place, eight states and the District of Columbia have passed laws to expand these kinds of benefits to workers, and President Trump recently signed into law a bill that guarantees such leave to around 2.1 million federal government workers—and private companies are taking notes, reports Jena McGregor for The Washington Post. McGregor writes about the various ways in which employees are using expanded access to paid leave, including to care for a new child, an ill family member, and an ailing pet. Here’s hoping a federal paid family leave guarantee for all workers is coming next.

Millionaires who aren’t against paying more in taxes? Yes, there is a group of ultra-wealthy individuals who think they should be doing more to fight income inequality. Led by Abigail Disney (yes, of those Disneys), the Patriotic Millionaires are a collection of rich Americans who are concerned about rising economic disparities— and, writes Sheelah Kolhatkar for The New Yorker, often speak out “in favor of policies traditionally considered to be antithetical to their economic interests.” Disney said she decided to start the group after realizing that the privileges she and her family experienced were cutting them off from the world and making it too easy for them to ignore the economic realities faced by most Americans. Kolhatkar tells the story of how Disney got to this point, and what she and her peers are doing about it.

As student loan debt rises and wages stagnate or drop, many younger Americans are now asking themselves if the costs of getting a university degree are still worth it. While some studies show that college graduates do earn more than their peers without a degree, a new study shows that these higher earnings don’t necessarily translate into higher prosperity and long-term economic security, reports Annie Lowrey for The Atlantic. “College still boosts graduates’ earnings, but it does little for their wealth,” she writes, going on to say that “if going to college is still important for young people’s earnings and employment, it is less of a clear economic boon that it was 30 years ago.”

California may take steps to be the first state that releases its own brand of generic prescription drugs in an effort to curb rising healthcare costs. The proposal is expected to be included in Gov. Gavin Newsom’s (D) new state budget, reports Melody Gutierrez for the Los Angeles Times, and allegedly would allow the state to contract with one or more generic drug companies to manufacture certain prescriptions under the state’s own label, which would be available to Californians at a lower cost. While we wait for more details on the plan, Gutierrez explains much of the motivation behind the proposal, as well as what critics and proponents are saying.

 

Friday figure

Figure is from Equitable Growth’s “Equitable Growth’s Jobs Day Graphs: December 2019 Report Edition” by Raksha Kopparam and Austin Clemens.

Equitable Growth’s Jobs Day Graphs: December 2019 Report Edition

Posted on by Raksha Kopparam

On January 10th, the U.S. Bureau of Labor Statistics released new data on the U.S. labor market during the month of December. Below are five graphs compiled by Equitable Growth staff highlighting important trends in the data.

1.

Prime age employment ticked up to 80.4%, exceeding the high in the last expansion.

2.

The headline unemployment rate was unchanged while U6 dropped slightly, reflecting higher labor force participation.

3.

Wage growth is flattening out after months of steady increases.

4.

Employment in construction has almost recovered to its pre-recession level.

5.

Time spent in unemployment continues to be relatively short.

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ASSA Round-up: Day 3

Posted on by David Evans

Today was the final day of the three-day annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The conference, held in San Diego this year, featured hundreds of sessions covering a wide variety of economics and other social science research. We’ve already posted the abstracts of some of the papers that caught the attention of Equitable Growth Staff during Day One and Day Two, as well as links to the sessions at which they were presented. Following are additional papers from the first two days as well as some from today’s final slate of sessions and an important report from AEA.

AEA Professional Climate Survey: Final Report

American Economic Association Committee on Equity, Diversity and Professional Conduct

Introduction: In April 2018, the Ad Hoc Committee on the Professional Climate in Economics recommended that the AEA conduct a professional climate survey to assess the status quo in the profession, and repeat this survey at regular intervals to monitor changes over time. The AEA charged a new standing committee, the Committee on Equity, Diversity and Professional Conduct, to carry out this work.

A survey was designed to gather critical information about the professional climate in economics, with particular focus on aspects that limit inclusiveness, demean and/or harass individuals, or otherwise engender incivility in work environments. The survey was sent to all current members of the AEA (as of December 2018) as well as all individuals who had been AEA members at any point in the prior 9 years.

This report summarizes the Committee’s work. The report is organized as follows. In Section 1, we describe the survey methodology, survey population and response rate, and data collection procedures; we also include a discussion of possible survey response bias. Section 2 summarizes the main findings of the survey in a set of tables. Among other things, we report on the perception of the overall climate in economics, experiences of discrimination in and outside of academia, behavioral changes to avoid discrimination and unfair treatment, and experiences of exclusion and harassment. Section 3 provides brief descriptions of the key findings along the following dimensions: gender, race and ethnicity, LGBT status, disability, ideology and religion; whenever possible, we use comments provided by survey respondents to provide concrete examples of the experiences of, and concerns raised by, members of the Association. Section 4 highlights some of the patterns of responses to an open-ended question on the climate within the profession and attempts to summarize some of the most commonly expressed views. These views include frequent references to the elitism of the field of economics, a dimension of the climate the survey instrument did not otherwise cover. Finally, Section 5 offers comparisons of some of the survey results to those obtained in similar climate surveys carried out by other professional associations.

 

Corporate Tax Cuts and the Decline of the Manufacturing Labor Share

Baris Kaymak, University of Montreal, and Immo Schott, University of Montreal

Abstract: We document a strong empirical connection between corporate taxation and the manufacturing labor share across OECD countries as well as across U.S. states. Our estimates associate 30% of the observed decline in the labor share with the global fall in corporate taxation. We present an equilibrium model of an industry where firms differ in their capital intensities. Lower corporate tax rates reduce the labor share by raising the market share of capital intensive firms. The tax elasticity of the aggregate labor share depends on the distribution of labor intensities at the micro level. Given the observed distribution of factor intensities in the U.S. manufacturing industry, the model predicts that corporate tax cuts explain about 40% of the decline in the manufacturing labor share since the 1950s.

 

Do Wage-setting Shocks Propagate Across Firms? Evidence from Employer Minimum Wage Increases

Ellora Derenoncourt, Princeton University, David Weil, Brandeis University, and Clemens Noelke, Brandeis University

Abstract: Low unionization rates, a falling real federal minimum wage, and prevalent non-competes characterize the low-wage sector in the United States and contribute to growing inequality. In recent years, a number of private employers in the U.S. have opted to institute or raise company-wide minimum wages for their employees, sometimes in response to public pressure. To what extent do these policy changes at major employers spill over to other employers in a local labor market? This paper examines spillover effects of recent company minimum wage increases, including Amazon’s recent increase to $15 an hour in 2019 and Walmart to $9 an hour in 2015. We estimate the impact of these policies on other low-wage employers in the same county using data on minimum posted wages from online job ads. We find large spillover effects from both Amazon’s 2019 and Walmart’s 2015 increases. We discuss potential mechanisms and plans to extend the analysis to over 100 recent employer minimum wage increases across the U.S.

 

“The Educational Progress of United States-Born Mexican Americans”

Stephen Trejo, University of Texas at Austin, and Brian Duncan, University of Colorado Denver

Abstract: Using microdata from the decennial U.S. Censuses of 1970-2000 and the American Community Survey from 2006 forward, we track changes in the educational attainment U.S.-born Mexican Americans over seven decades. We compare the schooling gains of Mexican Americans with the corresponding gains made by African Americans and by non-Hispanic whites. Our analyses produce several important findings. First, Mexican Americans have experienced enormous gains and have closed most of their large initial schooling deficit relative to non-Hispanic whites and all of their deficit relative to African Americans. Second, progress for Mexican Americans has been greatest in the lower tail of the schooling distribution. For many years, rates of high school completion were dramatically lower for Mexican Americans than for other Americans, but this gap is much smaller for recent birth cohorts. In contrast, although rates of college enrollment and college completion have been rising for Mexican Americans, these rates still fall far short of the corresponding rates for non-Hispanic whites. Finally, the initial schooling deficits and subsequent gains of Mexican Americans vary with their state of birth. These geographic differences suggest the potential importance of state-specific policies and institutions for shaping the educational progress of Mexican Americans.

 

“Killer Acquisitions”

Colleen Cunningham, London Business School, Florian Ederer, Yale University, and Song Ma, Yale University

Abstract: This paper argues incumbent firms may acquire innovative targets solely to discontinue the target’s innovation projects and preempt future competition. We call such acquisitions “killer acquisitions.” We develop a parsimonious model illustrating this phenomenon. Using pharmaceutical industry data, we show that acquired drug projects are less likely to be developed when they overlap with the acquirer’s existing product portfolio, especially when the acquirer’s market power is large due to weak competition or distant patent expiration. Conservative estimates indicate about 6% of acquisitions in our sample are killer acquisitions. These acquisitions disproportionately occur just below thresholds for antitrust scrutiny.

 

The Labor Market Effects of Immigration Enforcement

Chloe N. East, University of Colorado-Denver, Annie Hines, University of California, Davis, Philip Luck, University of Colorado Denver, Hani Mansour, University of Colorado Denver, and Andrea Velasquez, University of Colorado Denver

Abstract: We examine the labor market effects of Secure Communities (SC)–an immigration enforcement policy which led to over 454,000 deportations between 2008-2015. Using a difference-in-differences model that takes advantage of the staggered rollout of SC, we find that SC significantly decreased the employment share of likely undocumented male immigrants. Importantly, the policy also led to a decrease in the employment rate of citizens. The employment effects are concentrated among male citizens working in higher-skilled occupations, particularly in sectors that traditionally rely on likely undocumented workers. This is consistent with complementarities in production between low-skilled immigrants and higher-skilled citizens.

 

Outside Options in the Labor Market

Sydnee Caldwell, Massachusetts Institute of Technology, and Oren Danieli, Harvard University

Abstract: This paper develops a method to estimate the employment opportunities available to each worker, and to assess the impact of these outside options on the gender wage gap. We outline a matching model with two-sided heterogeneity, from which we derive a sufficient statistic, the “outside options index” (OOI), that captures the effect of outside options on wages, holding productivity constant. This OOI uses the cross-sectional concentration of similar workers across job types to quantify the availability of outside options as a function of workers’ commuting or moving costs, preferences, and skills. Higher concentration in a narrower range of job types implies lower OOI and higher dispersion across a wide variety of job types means higher OOI. We use administrative data to estimate the OOI for every worker in a representative sample of the German workforce. We estimate the elasticity between the OOI and wages using two sources of quasi-random variation in the OOI, that holds workers’ productivity constant: the introduction of high-speed commuter rail stations, and a shift-share (“Bartik”) instrument. Using this elasticity and the observed distribution of options, we find that differences in options explain 30% of the gender wage gap. The differences in (similarly skilled) men and women’s option sets are driven primarily by differences in the implicit costs of commuting and moving.

 

“’Prep School for Poor Kids’: The Long-Run Impact of Head Start on Human Capital and Productivity”

Martha Bailey, University of Michigan, Shuqiao Sun, University of Michigan, and Brenden Timpe, University of Michigan

This paper evaluates the long-run effects of Head Start using large-scale, restricted 2000-2013 Census-ACS data linked to date and place of birth in the SSA’s Numident file. Using the county-level rollout of Head Start between 1965 and 1980 and state age-eligibility cutoffs for school entry, we find that participation in Head Start is associated with increases in adult human capital and economic self-sufficiency, including a 0.29-year increase in schooling, a 2.1-percent increase in high-school completion, an 8.7-percent increase in college enrollment, and a 19-percent increase in college completion. These estimates imply sizable, long-term returns to investing in large-scale preschool programs.

 

Sharing the Burden: Responses of Business Owners to Changes in the Top Personal Income Tax Rate

Max Risch, University of Michigan

Abstract: This paper analyzes the role of the firm in mediating responses to changes in top marginal tax rates using a new linked owner-firm-employee dataset created from the universe of deidentified administrative tax records from the IRS. The majority of business income in the United States is held by pass-through businesses whose income is taxed at the personal income tax rates of firm owners, as opposed to being taxed at the corporate level. I study whether changes in the top marginal tax rate faced by business owners affect the compensation of the employees in their firms. I use panel difference-in-differences methods to estimate the sign and magnitude of these within-firm spillovers by comparing the earnings of employees in similar firms but whose owners were differentially exposed to a recent increase in the top marginal income tax rate. I find that employees in firms whose owners were more exposed to a tax increase reported lower relative earnings following the tax reform; approximately 18 cents per dollar of new tax liability was passed through to employee earnings. The observed response was a result of lower earnings paid to employees attached to their firms, and not due to compositional changes in employment. The earnings responses were larger in states with slack labor markets and larger among employees in the lower portion of their firms’ earnings distribution. These results provide some of the first direct evidence of pass-through from changes in the top marginal personal income tax rate to lower-bracket workers not directly subject to the top rate. I show that the presence of within-firm spillovers implies that the elasticity of taxable income of those facing a given rate change is not a sufficient statistic for welfare analysis.

 

Taxation and Innovation in the 20th Century

Stefanie Stantcheva, Harvard University

Abstract: This paper studies the effect of corporate and personal taxes on innovation in the United States over the twentieth century. We use three new datasets: a panel of the universe of inventors who patent since 1920; a dataset of the employment, location and patents of firms active in R&D since 1921; and a historical state-level corporate tax database since 1900, which we link to an existing database on state-level personal income taxes. Our analysis focuses on the impact of taxes on individual inventors and firms (the micro level) and on states over time (the macro level). We propose several identification strategies, all of which yield consistent results: i) OLS with fixed effects, including inventor and state-times-year fixed effects, which make use of differences between tax brackets within a state-year cell and which absorb heterogeneity and contemporaneous changes in economic conditions; ii) an instrumental variable approach, which predicts changes in an individual or firm’s total tax rate with changes in the federal tax rate only; iii) event studies, synthetic cohort case studies, and a border county strategy, which exploits tax variation across neighboring counties in different states. We find that taxes matter for innovation: higher personal and corporate income taxes negatively affect the quantity and quality of inventive activity and shift its location at the macro and micro levels. At the macro level, cross-state spillovers or business-stealing from one state to another are important, but do not account for all of the effect. Agglomeration effects from local innovation clusters tend to weaken responsiveness to taxation. Corporate inventors respond more strongly to taxes than their non-corporate counterparts.

 

Temporary Work Agencies, Outsourcing, and Wage Inequality: Evidence from Administrative Data

Andres Drenik, Columbia University, Simon Jäger, Massachusetts Institute of Technology, and Benjamin Schoefer, University of California, Berkeley

Abstract: We paint a comprehensive picture of the prevalence and nature of temp agency work, its underlying drivers as well as the distributional consequences of this phenomenon. We draw on unique administrative data from Argentina that allow us to observe the universe of workers in temporary work arrangements both with their temp agency as well as the client firms that rely on their services. This unique feature – “dual registration” – combined with matched employer-employee data permits us to tackle three long-standing, interrelated questions empirically: First, we characterize the prevalence of temp agency work and outsourcing across the economy. Starting on the firm side, we describe and analyze which type of firms draw on temp agencies to outsource labor. Second, we estimate temporary work pay penalties. Here, our data permits us to hold fixed both the characteristics of the worker as well as the workplace, using data across all industries and occupations. In addition, we estimate how rent-sharing differs for workers within the same workplace that are only separated by the contractual arrangement at the same workplace and in the same occupation. Third, we investigate the economic and social mechanisms leading firms to contract out work to temp agencies, testing several core theoretical hypotheses in the literature.

 

Tipping Points in the Climate System and the Economics of Climate Change

Simon Dietz, London School of Economics, James Rising, London School of Economics, Thomas Stoerk, European Commission, and Gernot Wagner, New York University

Abstract: Tipping points in the climate system are a key determinant of future impacts from climate change. Current consensus estimates for the economic impact of greenhouse gas emissions, however, do not yet incorporate tipping points. The last decade has, at the same time, seen publication of over 50 individual research papers on how tipping points affect the economic impacts of climate change. These papers have typically incorporated an individual tipping point into an integrated climate-economy assessment model (IAM) such as Bill Nordhaus’s DICE model to study how the tipping point affects the social cost of carbon dioxide (SC-CO2). This literature, has, however, not yet been synthesized to study the joint effect of the large number of tipping points on the SC-CO2. SC-CO2 estimates currently used in climate policy are therefore too low, and they fail to reflect the latest research. Our paper brings together this large and active literature and proposes a way to jointly estimate the impact of tipping points. In doing so, we bridge an important gap between climate science and climate economics, and hope to bring climate policy onto more solid foundations.

 

“Water Trade in General Equilibrium: Theory and Evidence”

Muyang Ge, Nanjing Audit University, Eric Edwards, North Carolina State University, Reza Oladi, Utah State University, and Sherzod Akhundjanov, Utah State University

Abstract: In arid regions, rural-to-urban water markets can reduce shortfalls among high-value urban consumers by allowing irrigators to voluntarily reduce production and sell conserved water. Such sales have been criticized for reducing economic activity and the availability of water for ecosystem services in the originating region. However, there are few studies examining the theoretical rationale for such an argument against water markets, or testing it empirically. In this study, we examine the impact of a 2003 agreement in California to transfer water primarily from the Imperial Irrigation District to San Diego County, a sale billed as the largest agriculture-to-urban water transfer in US history. We develop a basic general equilibrium representation of a hydrologic-ecological-economic system to explore the theoretical effect of this trade on the economy of the water exporting region. The model predicts increases in the value of water and a decrease in employment, in both high- and low-skill sectors. We test these predictions using data on agricultural labor and production in Imperial County before and after the agreement using a synthetic counterfactual constructed using California counties. Post-2003, the divergence in crop acreage and agricultural production between Imperial County and the control closely resembles the acreage reduction requirements of the water transfers. The effect also appears in the agricultural labor market, where we show a decline in the number of both high- and low-skill employment. Increased crop yields relative to the control also indicate higher water value in Imperial County in the post-trade period. The increase in value intensified water use, and we document how greater efficiency by irrigators has decreased flows into the nearby Salton Sea, leading to corresponding declines in ecosystem services, especially habitat for migratory birds. We conclude with a discussion of the magnitude of these costs relative to the gains from water trade.

 

What Is the Optimal Lottery Tax?

Benjamin Lockwood, University of Pennsylvania

Abstract: Publicly-sponsored lotteries in the U.S. collect more than $60 billion annually in revenues, and are alternatively viewed as either a regressive tax on consumers who misunderstand their low expected value, or as sensible way to raise revenue for valuable public goods while generating consumer surplus. This paper studies the question of whether lotteries are welfare-enhancing, and if so, what is the optimal implicit tax rate on them? We present a model of lottery demand sufficiently flexible to allow for demand that is driven either by bias or by normatively valid consumer preferences, and we characterize the optimal implicit lottery tax (which may be infinite, corresponding to a ban) in terms of empirically estimable sufficient statistics. We then estimate these statistics using observational data on sales and lottery prizes over time, and using a new experimental survey of lottery consumption preferences.

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ASSA Round-up: Day 2

Posted on by David Evans

Today was the second day of the three-day annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The conference, held in San Diego this year, features hundreds of sessions covering a wide variety of economics and other social science research. Below are some of the papers and presentations that caught the attention of Equitable Growth staff during the second day. Included below are the abstracts from those papers as well as links to the sessions at which they were presented. Check out the highlights from yesterday as well, and come back after tomorrow’s program for more highlights.

“Biased Programmers? Or Biased Data? A Field Experiment in Operationalizing AI Ethics”

Bo Cowgill, Columbia University, and Fabrizio Dell’Aqua, Columbia University

Abstract: Why does “algorithmic bias” occur? The two most frequently cited reasons are “biased programmers” and “biased training data.” We quantify the effects of these using a field experiment on a diverse group of AI practitioners. In our experiment, machine learning programmers are asked to predict math literacy scores for a representative sample of OECD residents. One group is given perfectly representative training data, and the other is given a “dataset of convenience” — a biased training sample containing who confirm to common expectations about who is good at math. Using this field experiment, we quantify the benefits of employing programmers who are diversity-aware vs obtaining more representative training data. We also measure the effectiveness of training interventions to reduce algorithmic bias, including both reminders and technical guidance.

 

“Changes in Firm Inequality and Market Power”

John Michael Van Reenen, Massachusetts Institute of Technology

Abstract: Firms have become increasingly different in terms of size (concentration), wages and productivity. Alongside these trends there appears to be an increase in aggregate price-cost markups. Using firm-level panel data from the US and EU, we investigate four hypotheses to explain these trends: (i) an increase in platform competition; (ii) a rise in fixed costs; (iii) a decline in antitrust enforcement and (iv) an increase in competition.

 

“Diversity, Immigration, and Redistribution”

Alberto Alesina, Harvard University, and Stefanie Stantcheva, Harvard University

Abstract: This paper provides a simple conceptual framework that captures how different perceptions, attitudes, and biases about immigrants or minorities can shape preferences for redistribution and reviews the empirical evidence on the effects of increasing racial diversity and immigration on support for redistribution.

 

“Earnings Inequality for Asians and Hispanics: An Examination of Variation across Subgroups”

Randall Akee, University of California-Los Angeles, Maggie R. Jones, U.S. Census Bureau, Sonya R. Porter, U.S. Census Bureau, and Emilia Simeonova, The Johns Hopkins University

Abstract: Our analysis uses a novel data set that combines data from the confidential-use US Census American Community Survey linked to administrative records from the IRS. In this new panel, we follow the earnings (as indicated by individual level W-2 and 1099 forms) at the individual-level over time for the Asian and Hispanic population in the U.S. for 11 years (2005-2015). Importantly, we disaggregate these two race and ethnic categories into smaller subgroups to examine how aggregation obscures different average outcomes across these groups. Our analysis focuses on several measures of inequality and immobility. This paper is a follow-up to our prior analysis which examined income inequality across the following race and ethnic groups: Non-Hispanic white, Black, American Indian/Alaska Native, Asian American, Native Hawaiian/Pacific Islander, Hispanic and Other Races (Akee et al, 2017). In this analysis, we disaggregate Asian into the following groups: Asian Indian, Chinese, Filipino, Japanese, Korean and Vietnamese. For Hispanics, we disaggregate into the following groups: Mexican, Puerto Rican, Cuban, Central American, Latin American. We use the self-identified race and ethnic categories as provided in the American Community Survey for each individual. We are also able to identify new immigrants (post 2005 arrival) and show how including this group affects measures of earnings inequality and immobility.

 

“Economic Foundations of Real Freedom for All”

Samuel Bowles, Santa Fe Institute, and Wendy Carlin, University College London

Abstract: A common one-dimensional paradigm models the conflict over where to position policies along a continuum between the poles of government and market. Drawing on ideas from mechanism design as well as political philosophy, we explore the normative, modeling and policy challenges arising if we locate policies and institutions in a two-dimensional space by adding a third pole: community, based in important respects on social norms rather than state imposed laws or contractual exchanges.

 

“Economics Is Not a Man’s Field: A History of CSWEP and of the First Gender Reckoning in the Economics Profession”

Beatrice Cherrier, University of Cergy-Pontoise and CNRS, Cleo Chassonnery-Zaigouche, University of Cambridge, and John Singleton, University of Rochester

Abstract: Our paper is a history of this first gender reckoning in US economics, one beginning in the early 1970s. Based on hitherto closed AEA archives, comprehensive oral interviews with major protagonists, and quantitative data from the first decade of the CSWEP’s Roster, we reconstruct the historical context that led to the establishment of the CSWEP in order to unpack its successes and failures, the enthusiasm it generated, and the resistance it encountered. We show that then (as now), the birth of CSWEP was tied to larger social movements: the feminist and civil rights movements, growing public awareness of issues surrounding discrimination, and the shifting legal context that drew many scientific societies toward such a reckoning. But we also emphasize how economists’ peculiar approach to social phenomena shaped their views of their own gender issues. For economists both study and experience discrimination, which led them to approach gender issues within the profession as an economic phenomenon. The status of women in economics was thus tied to ongoing debates within labor economics. The theories, models, and empirical evidence that labor economists – from Becker and Arrow, Bell and Bergmann, Ashenfelter and Blinder, Ferber and Blau, among many others – developed and produced to understand the role of women in the economy also shaped economists’ understanding of gender issues within their profession. CSWEP pursued actions common to most scientific societies, such as mentorship programs and the development of a roster, but also very specific changes to the profession, such as the establishment of Job Openings for Economists (rationalized in economic terms), and the sponsorship of conferences on women’s labor supply, discrimination, and occupational segregation.

 

“GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy”

Erik Brynjolfsson, Massachusetts Institute of Technology, Avinash Collis, Massachusetts Institute of Technology, W. Erwin Diewert, University of British Columbia, Felix Eggers, University of Groningen, and Kevin Fox, University of New South Wales

Abstract: The welfare contributions of the digital economy, characterized by the proliferation of new and free goods, are not well-measured in our current national accounts. We derive explicit terms for the welfare contributions of these goods and introduce a new metric, GDP-B which quantifies their benefits, rather than costs. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive compatible choice experiments. For example, including the welfare gains from Facebook would have added between 0.05 and 0.11 percentage points to GDP-B growth per year in the U.S.

 

“Gender Job Segregation, Labor Regulation and the Labor Share of Income”

Elissa Braunstein, Colorado State University, and Stephanie Seguino, University of Vermont

Abstract: This paper looks at the role of gender job segregation and inequality through the effect of gender job segregation on labor’s share of national income. An earlier paper found this relationship was true in both advanced and emerging market nations. Further, among advanced economies, it was found that weakening protections for dismissal increased women’s job segregation, which then lowered labor’s share of income. This paper focuses on advanced economies and digs deeper on regulations that protect dismissal to include the role of unions in protecting workers. So, this includes an analysis of type of collective bargaining – centralized, decentralized, sectoral – and union density to also examine those effects.

 

“Global Stars”

Thomas Philippon, New York University

Abstract: We study the evolution of super star firms in the Global economy over the past 30 years. We estimate their contribution to global productivity growth using Hulten’s formula and using a measure of global reallocation of economic activity.

 

“How to Get Away with Merger: Stealth Consolidation and its Real Effects on U.S. Healthcare”

Thomas Wollmann, University of Chicago

Abstract: Most U.S. mergers are not reported to the federal government on the basis of their size. This can effectively exempt them from antitrust scrutiny, resulting in mergers to monopoly and duopoly, even in industries where enforcement is otherwise robust. This paper studies the impact of premerger notification exemptions in the context of US dialysis providers. First, I find large effects on enforcement. For instance, many proposed dialysis facility acquisitions that would otherwise be blocked over 95% of the time are blocked less than 5% of the time when exempt from premerger notification requirements. Second, I find equally important effects on market structure. Exempt facility acquisitions account for most of the rise in industry-wide within-market concentration over the last two decades. In fact, applying the enforcement rates faced by reportable mergers to exempt mergers stalls the dramatic consolidation of the dialysis industry. Finally, facility acquisitions associated with exempt mergers compromise the quality of care received by patients.

 

“How to Increase Racial/Ethnic Diversity in Economics”

Amanda Bayer, Swarthmore College, Gary Hoover, University of Oklahoma, and Ebonya Washington, Yale University

Abstract: The goal of the article is twofold: 1) To give readers a sense of the minority experience in the economics profession and 2) To give readers action steps that they can take to improve racial/ethnic diversity in the economics profession. The black percentage of Economics PhD recipients has hovered around 4 percent since the 1980s, while the fraction of blacks receiving PhDs and, particularly, PhDs in math or science has grown over this time period. Blacks make up about 12 percent of the US population. Similarly, Hispanics have seen increases in Economics PhDs as other STEM PhDs and PhDs in general. However, the Hispanic fraction of degrees remains below the Hispanic fraction of the population. We will describe the experience of being a minority in economics with the goal of identifying difficulties for which we will provide approaches to remedy. We finally offer advice to profession-shareholders including: Help to correct misconceptions about economics starting even before minority students arrive on campus. When hiring (beyond the rookie market) start with a census of those in field. Mentor a minority student.

 

“The Impact of Agency on Time and Risk Preferences”

Ayelet Gneezy, University of California, San Diego, Alex Imas, Carnegie Mellon University, and Ania Jaroszewicz, Harvard University

Abstract: Scholars have long argued for the central role of agency in the human experience. In this paper, we demonstrate the importance of agency in shaping people’s patience and risk tolerance. We focus on the context of resource scarcity, which has been associated with both impatience and a lack of agency. Using data from a representative sample of over 86,000 individuals worldwide and two experiments, we replicate the decrease in patience among those exposed to scarcity. However, we show that endowing individuals with agency over scarcity fully moderates this effect, increasing patience substantially. We further show that agency’s impact on patience is partly driven by greater risk tolerance. These results hold even though individuals with greater agency do not exercise it; simply knowing one could alleviate one’s scarcity is sufficient to change behavior. Finally, we demonstrate that these effects of agency generalize beyond scarcity, highlighting the potential for agency-based policy and institutional design.

 

“Money Versus Time: Family Income, Maternal Labor Supply, and Child Development”

Francesco Agostinelli, University of Pennsylvania, and Giuseppe Sorrenti, University of Zurich

Abstract: We study the effect of family income and maternal hours worked on child development. Our instrumental variable analysis suggests different results for cognitive and behavioral development. An additional $1,000 in family income improves cognitive development by 4.4 percent of a standard deviation but has no effect on behavioral development. A yearly increase of 100 work hours negatively affects both outcomes by approximately 6 percent of a standard deviation. The quality of parental investment matters and the substitution effect (less parental time) dominates the income effect (higher earnings) when the after-tax hourly wage is below $13.50. Results call for consideration of child care and minimum wage policies that foster both maternal employment and child development.

 

“Who Bears Firm-level Risk? Implications for Cash Flow Volatility”

Mindy Xiaolan, University of Texas at Austin

Abstract: Public firms in the United States that provide better insurance against productivity shocks to their workers experience higher cash flow volatility. The difference in intra-firm risk sharing between workers and capital owners accounts for more than 50% of the variation in firm-level cash flow volatility. I develop a theory in which wages can serve either as a hedge or as leverage, depending on the history of the productivity shocks the firm has faced. Heterogeneous roles of workers in the firm are derived by analyzing the dynamic equilibrium wage contracts between risk-neutral owners and risk-averse workers who can leave the firm with a fraction of accumulated human capital. Owners of the firm will optimally bear more risk when the current value of the firm’s human capital is lower than the peak value it has reached. The model explains the joint dynamics of cash flow volatility and the wage-output sensitivity. Also, the model produces predictions for the dynamics of cash flow volatility that are consistent with the time series properties of the firm-level data.

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