Brad DeLong: Worthy reads on equitable growth, October 26–November 12, 2019

Posted on by Maria Monroe

Worthy reads from Equitable Growth:

  1. Be sure to apply by January 26 for Equitable Growth’s 2020 Request for Proposals: “Equitable Growth considers proposals that investigate the link between economic inequality and individuals’ economic outcomes and well-being, poverty and mobility from poverty, the macroeconomy, and sustainability. We are particularly interested in dimensions of inequality, including race, ethnicity, gender, and place, as well as the ways in which public polices affect the relationship between inequality and growth.”
  2. The Economist quotes Equitable Growth’s Kate Bahn in “Belligerent unions are a sign of economic health.” The article says that when “economists argue that unions impose economic costs, they typically assume that markets are competitive. Across much of the American economy that is not always the case. Sometimes one or a few big employers dominate local labour markets, and can thus impose below-market wages on vulnerable workers, a condition economists call ‘monopsony.’ In recent testimony in a congressional hearing on antitrust issues, Kate Bahn of the Washington Centre for Equitable Growth, a think-tank, noted that though wages in manufacturing industries are close to the level one would expect in competitive markets, those in some others, like healthcare, are not. For workers frustrated by stagnant pay, a work stoppage may be the only way to determine if an employer is constrained by competitive markets or abusing its market power.”
  3. An excellent podcast on Heather Boushey’s new book, Unbound: How Inequality Constricts Our Economy and What We Can Do About It, featuring her and Matthew Yglesias at Vox.

 

Worthy reads not from Equitable Growth:

  1. The U.S. economy now has a manufacturing recession. Paul Krugman correctly explains why. Read his “Manufacturing Ain’t Great Again. Why?,” in which he writes: “Many of Trump’s economic promises were obvious nonsense. The hollowing out of coal country reflected new technologies, like mountaintop removal, which require few workers, plus competition from other energy sources, especially natural gas but increasingly wind and solar power. Coal jobs aren’t coming back, no matter how dirty Trump lets the air get. And farmers, who export a large fraction of what they grow, should have realized that Trump’s protectionism and the inevitable retaliation from other countries would have a devastating effect on their incomes.”
  2. The marketplace can work well when it is competitive. I am still waiting to hear the argument made coherently that it works well when it is characterized by monopolies, monopoly platforms, or cozy oligopolies—and I think I will wait a long time. Read Thomas Philippon, “The U.S. Only Pretends to Have Free Markets,” in which he writes: “From plane tickets to cellphone bills, monopoly power costs American consumers billions of dollars a year: When I arrived in the United States from France in 1999, I felt like I was entering the land of free markets. Nearly everything—from laptops to internet service to plane tickets—was cheaper here than in Europe. Twenty years later, this is no longer the case. Internet service, cellphone plans, and plane tickets are now much cheaper in Europe and Asia than in the United States, and the price differences are staggering. In 2018, according to data gathered by the comparison site Cable, the average monthly cost of a broadband internet connection was $29 in Italy, $31 in France, $32 in South Korea, and $37 in Germany and Japan. The same connection cost $68 in the United States, putting the country on par with Madagascar, Honduras, and Swaziland. American households spend about $100 a month on cellphone services, the Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics indicates. Households in France and Germany pay less than half of that … None of this has happened by chance. In 1999, the United States had free and competitive markets in many industries that, in Europe, were dominated by oligopolies. Today the opposite is true.”
  3. I have been quite surprised to discover that the 2019 Economics Nobel laureates have not received enough praise since the announcement. So, go read Oriana Bandiera, “Alleviating Poverty with Experimental Research: The 2019 Nobel Laureates,” in which she writes: “Development economics had no Ph.D. courses, no group at the NBER or CEPR, and hardly any publications in top journals until the early 2000s. What this year’s Nobel laureates did was to build the infrastructure to make fieldwork widely accessible and the methods to make the analysis credible. What they did, and what they were awarded for, is to put development economics back on center stage … What is unusual and relevant is that the nomination explicitly mentions that the winners lead a group effort … What is even more unusual and extremely relevant is that the nomination emphasizes the practical applications of their methods, which ‘have dramatically improved our ability to fight poverty in practice.’ This is a monumental change, and one that the profession should welcome for the obvious reason that making the world a better place is a desirable goal.”
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Weekend reading: Equitable Growth’s 2020 Request for Proposals 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

Equitable Growth released our 2020 Request for Proposals this week, kicking off the next cycle of our academic grants program. We are looking for proposals that investigate the link between economic inequality and individuals’ economic outcomes and well-being, poverty and mobility from poverty, the macroeconomy, and sustainability. We are particularly interested in dimensions of inequality, including race, ethnicity, gender, and place, as well as the ways in which public polices affect the relationship between inequality and growth. For more information, eligibility requirements, deadlines, and more, visit our 2020 RFP website.

This year, Equitable Growth also released a 2020 Request for Proposals on Paid Family and Medical Leave specifically. We are seeking proposals in this category that advance the evidence on how paid leave affects engines of economic growth such as labor force participation, the development of human capital, consumption, and macroeconomic stability. For more details, eligibility requirements, deadlines, and more, visit our 2020 RFP for Paid Family and Medical Leave website.

While many of us have been following the Varsity Blues college admissions scandal—in which wealthy celebrities paid various bribes to get their children into elite colleges—the bigger scandal ought to be the completely legal way that wealth buys access to these institutions: through expensive tutors and college prep courses, financial contributions to universities, and legacy preferences, to name a few, writes David Mitchell. Research shows that many of these mechanisms reinforce the unequal status quo, allowing rich students to get into elite colleges and universities, and restricting access for bright and talented low-income students to the very opportunities that could help them improve their economic outcomes in adult life. Mitchell details the various ways elite colleges give wealthy students advantages, how this affects the student bodies at these institutions, and concludes with some of the policy solutions that have been put forward to address these issues.

The U.S. Bureau of Labor Statistics late last week issued its monthly report on the U.S. labor market for October. The employment rate for prime-age workers is continuing its upward trend, but black and Hispanic unemployment rates remain higher than those of white workers, as do employment rates in service-sector jobs (as opposed to manufacturing and construction). The data also show that the share of unemployed workers re-entering the labor market has been declining for the past six months. Raksha Kopparam put together five graphs highlighting these important trends in the monthly announcement.

The U.S. Bureau of Labor Statistics also released the September data from the Job Openings and Labor Turnover Survey, or JOLTS. Kopparam and Austin Clemens produced four graphs using the data, which demonstrate that while the job opening rate has declined slightly, the number of hires made per job opening appears to be trending upward and the quits rate has remained steady for more than a year.

Links from around the web

This month’s jobs report continues to show decreasing unemployment and more jobs being created in the U.S. economy. But, write Arne Kalleberg and David Howell for Business Insider, there’s more to the story than meets the eye. While job quantity may be rising, job quality has been steadily decreasing for the past 40 years. In other words, U.S. workers may be employed, but many are working in jobs that pay less and are less able to provide a decent standard of living—especially for young, less-educated workers. Kallenberg and Howell suggest two main courses of action to reverse this decades-long trend—resetting corporate norms to protect workers over profits and giving workers more power at work by passing state and federal labor laws.

New research shows the prices of products that the bottom income quintile buys have increased faster than the prices of products the top income quintile purchases, leading low-income families to experience an annual rate of inflation that is almost 0.5 percentage points higher than that of wealthy families, writes Annie Lowrey for The Atlantic. And income inequality is exacerbating this inflation inequality: Richer people have more and more disposable income, which incentivizes retailers to cater to higher-end clients, increasing the number of these retailers, leading to more competition for those consumers, more product innovation and product choice for those consumers, and lower prices for the goods those consumers purchase. Unfortunately, the same cannot be said for retailers of products that low-income Americans tend to purchase.

Amit Kapoor and Bibek Debroy argue that it is “time to acknowledge the limitations of GDP and expand our measure of development so that it takes into account a society’s quality of life.” In the Harvard Business Review, the two look at India as an example, where they are working with the government to develop a so-called Ease of Living Index to measure quality of life, economic ability, and sustainability as a complement to GDP to provide a more comprehensive view.

Many families in the United States today face an unfathomable choice: taking care of unwell family members or retaining a meaningful, well-paid job. Kristina Brown, a fourth-year medical student, describes her family’s own experience with this impossible choice in The Washington Post: “Like many families, we could not afford full-time coverage. This posed a life-altering dilemma: One of us had to stay home to care for [our mother].” Brown continues to describe the setbacks she and her sister will almost inevitably face as a result of their difficult situation and the lack of resources and support available to people like them: “Caregiving fuels generational poverty, disproportionately affecting millennials and women who take on that role in their families.”

Friday Figure

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

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Higher education is not the U.S. mobility engine it could be because admissions practices are rigging the system

Posted on by Maria Monroe
Harvard University students and family gather for graduation ceremonies on Commencement Day on May 29, 2014 in Cambridge, MA.

Higher education in the United States has historically been a source of economic mobility—a ticket to the middle class and higher—for millions of Americans. But at a time of sustained high economic inequality, there is growing evidence that admission practices such as legacy preferences have turned some elite colleges and universities into protectors of the economic—and racial—status quo.

One by one, the rich and famous are going to jail in the Varsity Blues scandal, the college admissions imbroglio in which the culprits used bribery and other means to get their children into the college of their parents’ dreams. But did the wealthy parents of their college-bound kids really need to rig the system? In fact, their scheming has focused attention on the enormous routine advantages already possessed by students from families of means, all of which are entirely legal.

The far greater societal scandal than the pitiful actions of these few desperate, wealthy parents is the tutors, the SAT classes, the costly extracurricular activities, the resources to make contributions to colleges, the ability to make early action decisions without needing to wait for financial aid packages, and, for some, legacy preferences that the children of wealthy families enjoy. As Richard Reeves of The Brookings Institution writes, “The difference between this illegal scheme and the legal ways in which money buys access is one of degree, not of kind.”

Research over the past few years makes it clear that elite institutions enroll elite—meaning relatively wealthy—student bodies. Former Washington Center for Equitable Growth Steering Committee member and Harvard University economist Raj Chetty and several colleagues have shown in their paper “Mobility Report Cards: The Role of Colleges in Intergenerational Mobility” that among the “Ivy-Plus” colleges (the eight Ivy League schools, plus four other top universities), “more students come from families in the top 1 percent of the income distribution (14.5 percent) than the bottom half of the income distribution (13.5 percent).” Fewer than 4 of every 100 students at these schools come from the bottom one-fifth of the income distribution.

Disturbingly, the percentage of students from this bottom 20 percent at these universities did not change between 2000 and 2011, despite substantial tuition reductions for low-income students (as well as middle-class students at some schools) and specific outreach efforts, according to Chetty and his co-authors.

This is not a question of ability. According to Chetty and his co-authors, children from low- and high-income families who attend these elite schools generally achieve similar earnings outcomes. So, these colleges do represent an opportunity for significant mobility for poor students. Indeed, 60 percent of students at these schools who come from the bottom fifth of the income ladder reach the top fifth as adults.

But they have to get into the elite college in the first place. And there’s the rub.

Such efforts as the American Talent Initiative and the CLIMB Initiative bring together four-year colleges and universities at all levels across the country to try to help more low-income students enroll and succeed in college. And research by University of Michigan economist Susan Dynarski and her colleagues shows that elite institutions can expand their applicant pools and enrollments among high-achieving low-income students by encouraging them to apply and offering them unconditional full tuition grants.

Yet elite institutions’ own admissions practices might be standing in the way, giving wealthy white students distinct advantages over others—advantages that they hardly need. Many or most of these schools pile specific preferences on top of the routine advantages of wealth:

  • For children of alumni with legacy preferences
  • For children of donors to the institution
  • For children of faculty members and other employees
  • For student athletes who participate in a vast array of mostly upper-class sports

Legacy admissions are an especially pernicious practice. A wide range of commentators have called for its elimination. “I really don’t see how our best universities can continue to justify this practice,” said William Dudley, Federal Reserve Bank of New York president, in an October speech quoted by Melissa Korn in The Wall Street Journal. “Such an approach only preserves the status quo and constrains economic mobility.”

Between 2010 and 2015, Korn notes, legacy applicants at Harvard were five times as likely to be admitted to the school as nonlegacies. At the University of Notre Dame, the University of Virginia, and Georgetown University, she added, the legacy admission rate is double the rate for all applicants. At Princeton University, it is four times that rate. And at Notre Dame, legacies outnumber first-generation college students by more than three-to-one. In fact, writes Richard D. Kahlenberg in his introduction to Affirmative Action for the Rich: Legacy Preferences in College Admissions, nearly all liberal arts colleges and almost three of every four research universities offer a legacy preference.

Colleges and universities—especially private institutions—jealously guard their admissions policies and practices from public view. But a recent lawsuit against Harvard University yielded a treasure trove of data about how the school decides whom to admit from the 40,000 or so students who apply every year. With only 1,600 spots in the freshman class available, there is intense interest in every admission decision.

Earlier this year, Peter Arcidiacono of Duke University, Josh Kinsler of the University of Georgia, and Tyler Ransom of the University of Oklahoma published two papers that describe the impacts of Harvard’s admission preferences—legacy, children of donors, children of faculty or staff, and student athletes. They estimated, based on a Harvard Crimson survey of the incoming freshman class in 2015 (known as the class of 2019, for their anticipated year of graduation) that 40.7 percent of respondents with legacy status have parents who earn more than $500,000 annually (the top 1 percent in U.S. income). The corresponding share for all respondents, including legacies, is only 15.4 percent—still large but far lower than for legacies alone.

The racial effects of the four preferences at Harvard are stark, according to Arcidiacono, Kinsler, and Ransom. More than 43 percent of white students admitted to the Harvard classes of 2015—2019 (admitted 2011—2015) received a preference of some kind, whether legacy, donor, children of faculty and staff, or athletic. For African American, Asian American, and Hispanic admits, the share with such a preference was less than 16 percent.

What’s more, it is white students who get the biggest admissions boost from the preferences. Indeed, the authors estimate that only one-quarter of white students admitted to Harvard with one of these four preferences would have been admitted had they been treated as “regular” applicants. Compare that to the more than one-half (53 percent) of Hispanic legacies who would likely have been admitted even without a parent alumnus. Harvard, of course, is not the only school that uses a legacy preference, and while we can’t perfectly extrapolate these findings to other schools, there is reason to believe that the policy also biases admissions against the poor and people of color at other schools.

While the number of preferential admissions—even across all the colleges that use them—is not very high as a percentage of all college students, there is no denying that the practice limits the number of openings for highly talented low-income students and students of color. Perhaps just as importantly, it also corrodes trust in institutions that hold themselves out to be bastions of American meritocracy.

Equitable Growth President and CEO Heather Boushey writes in her new book, Unbound: How Inequality Constricts Our Economy and What We Can Do About It, that concentrated economic power subverts the institutions that shape society, protecting the wealth and status of the rich. She also writes about the ability of parents of means to devote far more time and energy than other parents to their children’s preparation for and participation in the college admissions competition, one of countless ways inequality obstructs too many children from fulfilling their potential. Elite, well-endowed colleges and universities could help push back against both these troubling trends if they were willing to buck their rich and powerful alumni.

A number of policy ideas have been put forward to address this issue. Wealthy colleges argue that the recent tax on large endowments imposed by the Tax Cuts and Jobs Act of 2017 was mainly a political gesture that infringes on their missions of research, education, and community service. But Aaron Klein and Reeves suggest that the tax could be modified to create incentives for colleges to enroll more students from lower-income families, including by the elimination of legacy admissions.

A New York Times editorial calling for the elimination of legacy admissions points to a bill introduced in the California state legislature that would bar any school with legacy or donor preferences from participating in the state’s need-based grant program. The editorial writers suggest other ideas, such as requiring colleges to make public the number of their students admitted with a legacy preference or barring schools from asking applicants where their parents went to college. The editorial also suggests a voluntary approach—that a group of competitor schools “take the leap together, a mutual stand-down.”

In his book introduction, Kahlenberg cites data showing that legacy status “is worth the equivalent of scoring 160 points higher on the SAT.” He notes that legacy preferences “were born of anti-immigrant and anti-Jewish discriminatory impulses,” adding that they “are an unfair and illegal anachronism … [T]hey are fundamentally anti-American, at odds with the very founding of this nation … That this remnant of ancestry-based discrimination still survives—in American higher education of all places—is truly breathtaking.”

The leaders of higher education need to change these discriminatory, out-of-date practices if they want to restore their institutions’ role as the key to economic mobility our country so desperately needs.

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New paid leave research demonstrates challenge of balancing work and caregiving

Posted on by David Evans
Aimé Perret, The lettuce patch

Paid leave supports people who hold dual roles as members of the workforce and members of families. Effort expended in worksites from office buildings to restaurant kitchens to factory floors provides crucial goods and services to people living in the United States. So, too, does work done in homes—from the production of goods such as home-cooked meals to the provision of services such as house cleaning and assistance to family members trying to access medical care. New research on paid leave in California demonstrates the challenge of balancing the dual nature of our obligations as employees and caregivers.

Four economists—Martha Bailey of the University of Michigan, Tanya Byker of Middlebury College, Elena Patel of the University of Utah, and Shanthi Ramnath of the Federal Reserve Bank of Chicago recently released a new paper that draws on rich administrative data and high-quality surveys to examine how an expansion in paid leave in the state of California in 2004 affected both the parenting experienced by the next generation and the work effort of the current generation.

The key takeaway of their research is that between 2004 and 2006, mothers who were having their first child and accessed paid leave in response to the policy change parented more intensively but earned less and were less likely to work both in the short term and long term. These first-time mothers who took up paid leave after the policy change were 2.8 percent less likely to work in the short term and 5.4 percent less likely to work in the long term.

To arrive at this conclusion, the researchers took advantage of a “natural experiment.” Since 1946, women giving birth in California have had access to publicly funded temporary disability insurance—medical leave that women can take for 6–10 weeks depending on their medical condition preceding and following the birth of a child. In the third quarter of 2004, the state added an additional 6 weeks of bonding leave, available to both mothers and fathers to care for a new child. So, on July 1, 2004, the maximum length of paid leave available to new mothers increased from 10 weeks to 16 weeks.

This change spurred many more women to take paid leave. Mothers exposed to the policy change after 2004 were 18 percentage points more likely to use paid leave than similar women who were not exposed to the change prior to that year. (See Figure 1.)

Figure 1

The researchers compared women who wouldn’t have taken up paid leave but for this policy change to similar women who did not experience the policy change—women who gave birth just prior to July 1, 2004, and women in similar states without paid leave policies. They look at women at many points across time, which allows them control for characteristics of the leave-takers that don’t vary over time. They also look at a variety of different groups of women—across age groups, marital status, and income level.

Perhaps the key subgroup whose experiences they examine are women who are giving birth for the first time. These are women who have not yet settled into a routine of parenting, so their experiences are likely to be different from women who established routines when they could not access the expanded paid leave for their first child. And this is likely to be the most policy-relevant group going forward: In the future, hundreds of thousands more women will have first children with access to state-provided paid leave in the state of California, but never in the future will women who continuously live in California have one or more children without access to paid leave and then have another child with access to paid leave.

Using survey data from the U.S. Census Bureau’s Survey of Income and Program Participation, the research team finds that first-time mothers who took up paid leave in response to the policy change spend more time reading to their children, taking them on outings, and eating breakfast as a family, compared to similar mothers not exposed to the paid leave policy change. The researchers surmise that when women take time off for paid leave, they develop a more intensive parenting style than women who have to balance work and parenting from the very beginning of their children’s lives.

This finding squares well with evidence from other studies that suggests that paid leave increases the duration of breastfeeding, reduces pediatric head trauma, and lowers rates of attention deficit/hyperactivity disorder among children, as well as their rates of obesity, ear infections, and hearing problems. Intensive parenting doesn’t just improve child health in the short term, but also improves the long-term educational and labor market outcomes of those children.

The study finds, however, that this critical work at home comes at the price of lost opportunity in the paid labor force for new mothers. Bailey, Byker, Patel, and Ramnath find that first-time mothers who took up paid leave in response to the policy change were 2.8 percent less likely to work when their child was between 1 and 5 years old, and 5.4 percent less likely to work when their child was between 6 and 12 years old than similar mothers not exposed to the policy change. The four economists find that this effect holds for almost all subgroups of mothers. (See Figure 2.)

Figure 2

Among mothers who do work, earnings are also affected. First-time mothers who took up paid leave in response to the policy change earned 6.1 percent less in reported wages when their child was between 1 and 5 years old, and 5.3 percent less in reported wages when their child was between 6 and 12 years old (note that these figures don’t include earnings from self-employment or unreported earnings). Similar to the employment findings, this effect holds for almost all subgroups of mothers. (See Figure 3.)

Figure 3

Importantly, the four researchers measure earnings by looking at the wage earnings reported by workers on tax forms, so they can’t determine the number of hours worked, the types of jobs worked, or wage rates. But because they uncover large effects for first-time mothers only, they hypothesize that changes are being driven by changes in family behaviors—such as mothers spending more time parenting and less time in paid work or working at more flexible jobs with lower pay. This suggests that the increased investment in parenting encouraged by paid leave is not compatible with strong labor market attachment in our current policy context.

Without a doubt, the change to California’s paid leave policy that occurred in 2004 made big changes in the lives of California women with children. They were more likely to take up paid leave and take it for longer. They parented more intensively, were less likely to work outside the home, and earned less in reported wages.

In contrast, the lives of men with children in California didn’t change much. Fathers took up paid leave at low rates (3 percent to 4 percent). In heterosexual married couples, when women intensified their work in the home and ramped down their paid work, their husbands did not increase their earnings to compensate. If heterosexual men felt the effects of paid leave, then it was through the changed behavior of their partners and the changed experiences of their children, not through changes in their own behaviors.

Taken as a whole, the study’s findings sit in sharp contrast to earlier work that indicates that the labor force participation of women in the United States is unaffected by paid leave, or even increases. As is the case for any research study, careful readers are likely to raise further questions about the findings. For example: Would the effects on earnings seem so large if we included earnings that are not recorded as wages on W-2 tax forms? The researchers report on average experiences, but might there be two types of responses from women—one type that increases attachment to the labor force and one type that diminishes that attachment—which average to the effect sizes they uncover?

Still, the rich data and rigorous methods underpinning the findings by Bailey, Byker, Patel, and Ramnath suggest that the findings hold water overall, and the key questions relate to their generalizability rather than their veracity.

The cohorts of mothers in the “treatment” group took up paid leave at a time when the paid leave policy was new and did not include job protection, in an economic context of expansion, and in a social context in which their male partners were unlikely to take full advantage of the leave available to them.

Since then, California women have had children in contexts that differ from that of the women in the study period. They have taken paid leave when the policy was more widely known about and included job protection and higher wage-replacement rates. They have entered motherhood during moments of serious economic recession and parented elementary-schoolers in moments of economic expansion—in contrast with the women in the study, whose children entered school age during the Great Recession and sluggish recovery. And they have shared household responsibilities with men who are far more likely to take paid leave themselves. Men’s rates of take-up of paid leave to care for a new child increased from 3 percent to 4 percent in 2004 to 15 percent in 2017, which is a rate almost equal to that of women—40 percent of bonding claims were filed by men in 2017.

So, given the context of the research, what lessons can policymakers take away from this new research? This is a rigorous study that should be taken seriously by the policy community. For the women in the treatment group—and for more than 200,000 Californians each year—paid leave to care for a new child makes a difference. Families can care for their children with less worry about short-term financial insecurity and subsequently the more-intensive parenting appears to persist at least until their children complete elementary school.

But perhaps the key takeaway from Byker, Bailey, Patel, and Ramnath’s research is that our economy, our workplaces, and the way our economy and society divide labor along gendered lines may prevent families from simultaneously prospering financially and parenting intensively. This study illustrates the challenge of designing a single policy that can overcome these cultural and structural barriers. In California at the time the study was conducted—and still today—childcare was expensive and in short supply. A more effective and affordable system of childcare provision that could support parents in providing the high-quality supervision that children need through elementary school, while allowing both parents to work.

Yet other research does point to tweaks to paid leave policy that could improve labor market outcomes for mothers. When countries from Canada to Denmark implement policies that encourage fathers to use paid leave, work inside the home is divided more equitably between members of heterosexual couples, and mother’s earnings from work outside the home increase.

Future research in the U.S. context will show whether the findings from Bailey and co-authors’ study persist in other contexts. If they do, these other cases will offer instructive examples of tweaks to paid leave policies and policy pairings that could yield large dividends for parents’ productivity at home and at work.

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JOLTS Day Graphs: September 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 September 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 has been stable at 2.3% or 2.4% for more than a year.

2.

The number of hires made per job opening appears to be trending up now.

3.

There has been little movement in the number of unemployed workers per job opening.

4.

The job opening declined slightly, to its lowest point since March of 2018.

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

Posted on by Raksha Kopparam

On November 1st, the U.S. Bureau of Labor Statistics released new data on the U.S. labor market during the month of October. Below are five graphs compiled by Equitable Growth staff highlighting important trends in the data.

1.

The employment-to-population ratio for prime-age workers continued its upward trend from 80.1% in September to 80.3% in October, after a steady increases over the prior months.

2.

Average hourly earnings grew at 3.0% year over year, however there is no evidence that the tight labor market is exerting upward pressure on wages.

3.

The unemployment rate for Black workers continued to decline to 5.4% in October, while the Hispanic workers’ unemployment rate increased slightly to 4.1%, but both still remain significantly higher than the unemployment rate for White workers.

4.

The share of unemployed workers who are re-entering the labor market has been trending downward for 6 months.

5.

Employment growth continues to be dominated by service sector jobs like healthcare, which increased by 34,000 jobs in October, while manufacturing saw a decrease in 36,000 jobs.

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Weekend reading: Vision 2020 edition

Posted on by David Evans

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

Emblematic of Equitable Growth’s mission to promote ways to encourage strong, stable, and broad-based economic growth is our Vision 2020 conference today. Coming together at our event are leading policymakers, academics, journalists, and thought leaders to discuss and advance specific policies for the next Congress and administration to consider. Speakers include Federal Trade Commissioner Rohit Chopra, International President of the Service Employees International Union Mary Kay Henry, Equitable Growth President and CEO Heather Boushey, and many more, covering topics ranging from boosting labor power to busting monopolies, from addressing structural racism to incorporating climate change into economics. The event also introduces our Equitable Growth 2020 project, which will feature around 20 essays to be published in January 2020, cataloguing these and other policy ideas. Read more here about today’s sessions and speakers.

How does exposure to strikes affect the way workers see striking and labor organizing more broadly? A new Equitable Growth working paper suggests that firsthand exposure to strikes and those participating in them increases public support for both the strikes and the workers. Looking at schools where teachers had walked out of classrooms, the researchers found that support for the teachers and knowledge of their demands among parents of students in those schools was quite high—and parental support for future strikes, especially those regarding school funding, was equally high. In a column covering the research’s findings, Kate Bahn and co-author of the original study Alexander Hertel-Fernandez write that “the most striking finding was that parents exposed to the teacher walkouts also became more interested in taking labor action such as strikes at their own jobs.”

Bahn also testified before the House Judiciary Committee this week in a hearing on “Antitrust and Economic Opportunity: Competition in Labor Markets.” In her testimony, she focused on monopsony—when a labor market lacks competition among employers when hiring workers—and its effect on the U.S. labor market and on stagnating wages as well as its contribution to U.S. economic inequality and gender wage gaps. She concluded with a summary of why understanding monopsony and its powerful effects is such a vital part of advancing policies that will grow the economy for everyone.

Equitable Growth announced two exciting new hires this week: soon-to-be Director of Macroeconomic Policy Claudia Sahm, currently a section chief at the Federal Reserve Board; and Mehrsa Baradaran, professor at University of California, Irvine School of Law, who will join our Board of Directors. We are looking forward to welcoming both Sahm and Baradaran to our team and learning from their expertise and valuable experience.

Links from around the web

What does the walkability of your neighborhood growing up have to do with your future economic outcomes? Apparently quite a lot, according to a new study covered by Richard Florida for CityLab. The study finds that even considering other factors, the more walkable a child’s neighborhood, the higher their earnings will be in adult life. The study uses Walk Score, an economic mobility measure based on data developed by Harvard University economist Raj Chetty and his research team, to compare walkability and its effects on school quality, income inequality, race, social capital, and the share of single-parent families across more than 380 commuting zones in the United States. The study’s co-authors write that “the more walkable an area is … the more likely Americans whose parents were in the lowest income quintile are to have reached the highest income quintile by their 30s.”

After the Great Depression, political upheaval and an intellectual revolution changed the way we thought about economic policy solutions in order to boost employment and productivity and grow the economy. The world economy today is “stuck in a low-growth trap, argues Mervyn King for Bloomberg “This time around, we’ve got the political turmoil but no comparable questioning of the ideas underpinning economic policy. This needs to change,” The economy these days is different than it used to be, King continues, and as such, traditional economic models and policies must be adapted to reflect the reality of the 21st century—before the next financial crisis hits.

The United States, once considered a free-market haven where market competition drove down the cost of everything from internet service to cellphone plans to plane tickets, is now dominated by market concentration. Many services “are now much cheaper in Europe and Asia than in the United States, and the price differences are staggering,” writes Thomas Philippon for The Atlantic. “In 1999, the United States had free and competitive markets in many industries that, in Europe, were dominated by oligopolies,” he writes. “Today the opposite is true.” Philippon attributes this change to two phenomena: first, that other countries were inspired by the United States and caught up, and second, that the United States became complacent about antitrust enforcement and fell behind. This process has contributed to the erosion of the middle class and the expansion of inequality in the United States.

Looking solely at the unemployment rate and Gross Domestic Product in the United States, you would think that the economy is booming for everyone. But, writes Patricia Cohen for The New York Times, these statistics largely ignore the many Americans who can’t find a job that provides them with a decent living. Despite the impressive labor market gains over the past few years, there are many Americans whose realities are not reflected in low unemployment rates and who continue to be left behind by the economy recovery. “One in four workers say they have unpredictable work schedules.” Cohen writes. “One in five adults who are employed say they want to work more hours. Annual wage growth has struggled to reach 3 percent. And nearly 40 percent of Americans, a Federal Reserve report found, are in such a financially precarious state that they say they would have trouble finding $400 for an unexpected expense like a car repair or a medical bill.”

Friday figure

Figure is from Equitable Growth’s “Testimony by Heather Boushey before the Joint Economic Committee” and part of her presentation at our Vision 2020 event today in Washington, DC.

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New board member Mehrsa Baradaran brings expertise on economic inequality and the racial wealth gap

Posted on by Maria Monroe
Mehrsa Baradaran joins the Washington Center for Equitable Growth’s Board of Directors.

The Washington Center for Equitable Growth is pleased to announce that Mehrsa Baradaran, professor at University of California, Irvine School of Law, will join the Board of Directors. Baradaran is a leading scholar on banking law and financial inclusion and has developed a number of policies to address economic inequality and the racial wealth gap.

In her most recent book, The Color of Money: Black Banks and the Racial Wealth Gap, Baradaran explores the history behind the racial wealth gap and the reasons for which it has persisted for more than 150 years. Baradaran focuses on the role of black banks, ostensibly created to help build wealth in the black community, that emerged in the late 1960s.

In response to demands from black activists for reparations and race-specific economic redress following the Civil Rights Act of 1964, the Nixon administration offered the solution of “black capitalism,” of which black banking was a crucial feature. It allowed President Richard Nixon to maintain a segregated economy and keep the support of white voters. In the context of housing segregation, racism, and Jim Crow, all of which were still prevalent in the United States at the time, “not only was it impossible for black banking to be separate and equal, they could not even be separate and profitable,” Baradaran observes in The Color of Money.

Baradaran will be speaking on the racial wealth gap at Equitable Growth’s Vision 2020 conference on November 1. The event will bring together leading voices from the policymaking, academic, and advocacy communities in Washington, D.C., to highlight the most pressing economic issues facing Americans today.

Baradaran argues that even today, policymakers push tax breaks and incentives purported to revitalize black or low-income neighborhoods—such as the “opportunity zones” program created by the 2017 tax law—without awareness of the racist origins of these market-based solutions. Black ghettos that suffered from generations of forced racial segregation under federal law were rebranded as enterprise zones, then as opportunity zones.

These ideas build on work from her earlier book, How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy, which documents the demise of community-based banks and credit unions—“banks with souls”—and the shift toward check­-cashing services, payday lenders, and title vendors charging fees and interest higher than any chartered bank could legally impose among families in the bottom 50 percent of the income distribution. (See her video about How the Other Half Banks here.)

Baradaran proposes restoring postal banking, which existed in the United States in the early 20th century, as a way to help those who are “underbanked,” or insufficiently served by banks and have to turn to alternative and often predatory financial services as a result. As the world’s largest retail network with more than 30,000 retail locations, the U.S. Postal Service is already equipped to handle essential banking services. Not only is the postal service an institution that is not motivated by profit and must legally serve all Americans, but also more than half of locations are found in ZIP codes that currently aren’t served by any banks, putting them in an ideal position to serve the underbanked.

Baradaran’s research and ideas to address U.S. economic inequality go beyond banking. She proposes “A Homestead Act for the 21st Century” to build wealth for Americans who were excluded from historical programs that supported intergenerational wealth. Her program would create a public trust to purchase abandoned properties in target cities and grant them to qualified residents, combined with a holistic suite of public investments in infrastructure and jobs to revitalize local communities.

Notably, Baradaran has underscored the importance of thinking critically about reparations, starting with the measurement of wealth that was extracted and deprived from communities. She said in a recent interview, “though I talk a lot about fixing the racial wealth gap through housing and through a variety of different policies, I think what is the most important policy thing that we can do is to talk about reparations in a serious methodological way. Just to measure the harms done, to look at the theories of justice that would justify a solid and robust reparations program.”

The racial wealth gap, Baradaran argues, isn’t an issue limited to the well-being of a subset of the U.S. population. The racial wealth gap is intimately tied to the issue of wide economic inequality in the United States and must be central to solutions to reduce inequality. In her words, “You can’t understand why we have the gaps that we do and the inequalities that we do until you understand it was all based on anti-black racism and segregation.”

Baradaran’s work has played an immensely important role in drawing attention to the institutions and financial structures that have created and perpetuated economic and racial inequalities in the United States. We are thrilled for this opportunity to learn from and work in partnership with professor Baradaran to advance a new economic vision.

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Equitable Growth hosts Vision 2020 Conference in Washington, highlighting connection between economic inequality and growth

Posted on by Maria Monroe

Economic inequality in the United States has grown over the past few decades to levels not seen in nearly a century. As a result, more than any presidential election in recent memory, the 2020 campaign has become an arena for debating transformative ideas to address the generational challenges of income and wealth inequality. Inequality and the need to achieve strong, broad-based economic growth are the structural problems that underlie fundamental issues from taxation to lagging wages, from healthcare and higher education to climate change and competition.

Equitable Growth is committed to providing a platform for bold policy ideas that can be adopted in 2021 by the new Congress and whoever the president might be. To help advance the conversation about these and other evidence-based policy proposals and the research behind them, Equitable Growth is hosting Vision 2020: Evidence for a Stronger Economy, an all-day conference in Washington on Friday, November 1. The event will bring together leading voices from the policymaking, academic, and advocacy communities to explore bold new ideas and discuss how the issues that candidates are debating are affected by ongoing shifts in economic thinking about how inequality obstructs, subverts, and distorts broadly shared economic growth.

Speakers will include:

  • Federal Trade Commissioner Rohit Chopra, who will discuss his vision for modernizing federal antitrust power and enforcement
  • Mary Kay Henry, international president of the Service Employees International Union, who will address her agenda for workers, “Unions for All,” which would, among other things, enable unions to bargain at the sectoral level
  • Sarah Bloom Raskin, a Rubinstein Fellow at Duke University, a former U.S. deputy secretary of the Treasury, and a former member of the Federal Reserve System Board of Governors, who will participate in a panel on the causes and consequences of economic inequality
  • Bucknell University economist Nina Banks, who will tell the story of Sadie Alexander, the first African American economist, and describe why her ideas are increasingly relevant today (Alexander, who was not able to practice economics when she received her doctorate in 1921 due to racial and gender exclusion, became, in 1945, one of the first U.S. economists to champion a federal jobs guarantee.)
  • Cecilia Muñoz, former director of the White House Domestic Policy Council and current vice president for Public Interest Technology and Local Initiatives at New America, who will serve on a panel on the role of state and local stakeholders in addressing structural inequality and boosting broadly shared growth

The day’s sessions will include:

Toward a New Economy

Raskin, Dania Francis of the University of Massachusetts Amherst, and Equitable Growth President and CEO Heather Boushey will discuss the causes and consequences of economic inequality, along with bold policy solutions to tackle inequality and promote strong, sustained, and broad-based economic growth.

Macroeconomic Implications of Inequality

Harvard University economist Karen Dynan, University of California, Irvine School of Law professor Mehrsa Baradaran, and Claudia Sahm, currently a section chief at the Federal Reserve Board and soon to join Equitable Growth as its new director of macroeconomic policy, will join moderator Ylan Mui of CNBC to discuss the growing research evidence of the impact of inequality on economic growth. The panelists will discuss these findings and their implications for fiscal and monetary policymaking, as well as housing and financial regulation issues.

Envisioning a New Climate Economy

Historian Lizabeth Cohen of Harvard University will discuss what we can learn from how working Americans came to embrace President Franklin D. Roosevelt’s New Deal policies in the midst of the Great Depression, and its relevance to engaging Americans in the economic, social, and political change required by today’s climate crisis.

The Rise of Monopsony Power in the Labor Market

Equitable Growth director of Labor Market Policy and economist Kate Bahn will moderate a conversation with economist Arindrajit Dube of the University of Massachusetts Amherst and Columbia University political scientist Alexander Hertel-Fernandez about the role in the labor market of monopsony power, the ability of employers to suppress wages regardless of tightening labor supply. The panel will discuss the evidence of monopsony power and potential policies to address it.

Trust Busting in the 21st Century

The U.S. economy is increasingly dominated by a few firms. This has led to higher profits for shareholders but lower wages for workers, and has had additional impacts on innovation, entrepreneurship, and inequality. A clear consensus for how U.S. policymakers should combat concentration and anticompetitive behavior remains elusive. In this session, Federal Trade Commissioner Rohit Chopra will provide his vision for modernizing antitrust power and enforcement in a conversation with CNN reporter Brian Fung.

A Conversation About Structural Racism in the Economy

This panel, consisting of Camille Busette, director of the Race, Prosperity, and Inclusion Initiative at The Brookings Institution, Equitable Growth board member Byron Auguste, who is CEO and co-founder of Opportunity@Work, economist Monica García-Pérez of St. Cloud State University, and moderator Gillian White, deputy editor of The Atlantic, will discuss ideas for social, political, and economic policy changes to address persistent income and wealth gaps between racial groups and advance racial equity in the United States.

Fighting Power with Power: Unions for All

The history of the U.S. labor movement illustrates that unions play a critical role in mitigating inequality and empowering workers across the economy. Recent research also illustrates that an increasing proportion of nonunion workers have a desire to form a union in their workplace. In this session, Mary Kay Henry will address her agenda for workers, “Unions for All.”

The Front Line of Structural Change

Joining Muñoz in a conversation about the economics of place and race, with a focus on the role of state and local stakeholders will be Tom Perriello, executive director of Open Society-US, Maya Rockeymoore Cummings, president and CEO of Global Policy Solutions and chair of the Maryland Democratic Party, economist Bradley Hardy of American University, and moderator Anmol Chaddha, research director for the Equitable Futures Lab at the Institute for the Future.

Building Worker Power

Carmen Rojas, co-founder and CEO of The Workers Lab, will close out the event with a discussion of promising new strategies for building worker power, particularly for low-income workers, in today’s changing economy.

Equitable Growth is planning a number of other actions in the coming months to inform the 2020 policy conversation. Stay tuned!

Testimony by Kate Bahn before the U.S. House of Representatives Judiciary Committee

Posted on by Maria Monroe


Kate Bahn
Washington Center for Equitable Growth
Testimony before the U.S. House of Representatives Judiciary Committee hearing on “Antitrust and Economic Opportunity: Competition in Labor Markets”

October 29, 2019


Thank you Chair Nadler, Ranking Member Collins, Subcommittee Chair Cicilline and Subcommittee Ranking Member Sensenbrenner for inviting me to testify today. My name is Kate Bahn and I am the Director of Labor Market Policy and an economist at the Washington Center for Equitable Growth. We seek to advance evidence-backed ideas and policies that promote strong, stable, and broad-based growth.

The United States is in the longest labor market expansion in U.S. history, yet many workers still feel stuck with few opportunities or they are changing jobs but without advancing their skills or improving their incomes. The U.S. economy has been suffering from stagnant wage growth, rising income inequality, and a general decline in the dynamism that once produced a vibrant labor market. Economists and policymakers are increasingly recognizing that monopsony is a major cause of these dynamics.

Monopsony refers to a labor market that lacks competition among employers when hiring workers—the equivalent to the product-and services markets phenomenon “monopoly” that refers to a lack of competition among sellers of products or services. While monopoly means consumers pay higher prices or receive lower quality than in a competitive market, monopsony in labor markets means workers receive lower wages or worse working conditions than if there were a competitive market for their services. Monopsony has traditionally been thought of as a rare circumstance where a labor market only has one or very few employers, such as would be the case in a geographically remote mining town where workers don’t have outside options. But it also encompasses any situation in which workers aren’t moving between jobs in search of higher pay in part because they face so-called frictions that inhibit their ability to search for and find jobs that would be a better match.

New sources of data and innovative econometric methods have allowed researchers to test and confirm the premise that employers have geographic concentration over jobs that lead to lower pay. Using new data from CareerBuilder.com, economists Jose Azar at the IESE Business School at the Universidad de Navarra, Ioana Marinescu at the University of Pennsylvania, and Marshall Steinbaum at the University of Utah, Salt Lake City find that going from a less concentrated labor market to a more concentrated one was associated with a 17 percent decline in the wages employers were posting to the website.1 While mining towns may be more rare, increasing concentration in a number of sectors of the U.S. economy can still lend market power to individual employers, which leads to low wages.

While empirical estimations of concentration are one way to measure how anticompetitive markets are, many economists instead use something called labor supply elasticity, or how sensitive workers appear to be to wage changes, to then estimate the degree to which employers are able to exploit lower pay sensitivity by undercutting wages. This way of understanding and estimating monopsony was pioneered by economist Alan Manning of the London School of Economics in his 2003 book Monopsony in Motion. Manning applied the empirical estimation techniques of the job-search model to demonstrate that anytime workers are not switching jobs in response to wage changes, employers have monopsony power to suppress wages.

The once prevailing competitive labor market model predicts that firms that cut wages would immediately lose all their workers, but new research shows that workers do not behave as the competitive model predicts. In a recent meta-analysis of the monopsony research, economists Todd Sorensen and Anna Sokolova of the University of Nevada, Reno find that, on average, if an employer cuts wages by 5 percent, they only lose 10 percent to 20 percent of their workers over time, not all of them as a competitive model would predict. In these circumstances, individual employers are empowered to suppress wages without risking losing their supply of workers to their competitors.

In a dynamic monopsony model such as this, so-called search frictions and differences between jobs and workers—including workers having imperfect information about employers, caregiving responsibilities outside of work, and other constraints to job mobility—would give employers more power to set wages below competitive levels while still maintaining a sufficient supply of workers. These dynamics fosters inequitable outcomes for workers.

Research by Doug Webber of Temple University uses high-quality restricted-access data from the U.S. Census Bureau’s Longitudinal Employer Household Dynamics Survey to estimate economywide elasticity of 1.08. Webber’s estimations would imply wages 50 percent lower than economists would expect in a competitive labor market.2 Yet there is still a lot of variation among firms. Examining monopsony by industry, he finds that wages in manufacturing appear to be more competitive, while health care and administrative support are the least competitive, giving employers the most wage-setting power in these industries.

Dynamic monopsony across the U.S. economy may be one of the reasons we experience high income inequality in our nation, and why most workers have not been able to share in the economic growth of the world’s wealthiest nation. Webber calculates a “counterfactual earnings distribution,” hypothesizing what things would look like without the patterns of monopsony that he finds. He presumes a one-unit increase in firms’ labor supply elasticity and finds that it would be associated with a 9 percent reduction in the variance of the earnings distribution. In other words, reducing the impact of monopsony across the economy would make it more equitable for workers.

Evidence points to monopsony being particularly detrimental to women workers. Further research by Webber finds that monopsony contributes to the overall gender wage gap.3 This research estimates that women’s greater job-search frictions compared to men leads to 3.3 percent lower earnings. This is equivalent to $131 monthly penalty for the median female worker. This is essentially a tax on women workers, equivalent to half the taxes that workers pay on their income under the Federal Insurance Contributions Act.4 Webber’s analysis concludes that a majority of this difference is due to the marriage and child penalties that women face and that have no similar effect on men. The gender-specific social expectations that women face not only impact their disproportionate burden for caretaking in their families, but also reduces their economic opportunities in the labor market.

Monopsony also appears to be more prevalent in industries that have a disproportionate amount of women. Recent research by Elena Prager at Northwestern University and Matt Schmitt at the University of California, Los Angeles published by Equitable Growth finds that hospital mergers reduced wage growth for nurses and pharmacists, both occupations that are heavily dominated by women.5 They estimate that healthcare workers impacted by a merger had earnings that were 4.1 percent lower for skilled workers and 6.3 percent lower for health care professionals compared to workers not impacted by a merger.

A significant body of research in the monopsony literature also estimates that monopsony reduces earnings for teachers where women are overrepresented, and finds significant monopsony among teachers, especially women teachers.6 Economists Michael Ransom and Val Lambson of Brigham Young University find that these differences are due to women teachers being paid less than men even within the same school districts. These outcomes persist despite supposed pay rigidity in school districts with clearly defined salary scales.

Furthermore, gender-based discrimination in hiring and treatment at work may leave women captive to accept jobs in less-than-ideal conditions or quit and go into a potentially lower-paying, lower-quality jobs. Research suggests that sexual harassment is significantly underreported due to barriers in the complaint process and fears of retaliation.7 This often leaves women workers with two options: leave their jobs without a better employment opportunity or put up with harassment with little recourse. A 2017 study by sociologists Heather McLaughlin of Oklahoma State University, Christopher Uggen of University of Minnesota, and Amy Blackstone of the University of Maine finds that sexual harassment has negative financial costs on women.8 Rather than changing changes based on better opportunities, woman are changing jobs to avoid sexual harassment and taking jobs that pay less or offer less growth, thus stifling their career trajectory. This is reinforced by additional research from the U.S. military, finding that sexual harassment increases turnover of servicewomen, even when controlling for factors that one would predict would increase job attachment, such as job satisfaction and organizational commitment.9

In cases of decreased competition for workers, workers who have experienced harassment on the job may just simply not be able to find another adequate job and could stay in a hostile work environment. As McLaughlin, Uggen, and Blackstone note in their recent study on the financial consequences of sexual harassment, firm-specific human capital is closely linked to earnings, which means workers may be disinclined to leave their jobs when they’ve invested in their skills at their current employers. Employer monopsony power, such as exists in many rural labor markets today,10 may just make it impossible to find another job.

When women workers are more likely to quit their jobs for reasons other than seeking a better fit and higher pay or they stay in bad jobs, they ultimately will appear to have lower pay sensitivity. Employers are able to take advantage of women’s revealed lower pay sensitivity by offering them lower pay, without being worried about not being able to compete for a sufficient supply of labor. Contrary to theories of discrimination that believe discrimination would be competed away, in monopsony markets, women will have worse outside options when experiencing harassment at work.

Why is understanding monopsony power so important today? Evidence that helps policymakers understand the structure and the dynamics of the U.S. labor market will illuminate the importance of policies and institutions such as unions that ensure workers receive fair wages and that economic growth is broadly shared. This is the main thrust of Equitable Growth’s work on the U.S. labor market—endeavoring to improve our understanding of the forces and barriers that shape the lives of workers. A clearer picture of the labor market helps policymakers understand why workers earn what they do, what opportunities they have, and what policies can help all workers share in strong, stable, and broad-based growth.

Understanding the myriad of causes of U.S. labor market monopsony is crucial to implementing policies to address employer wage-setting power. No silver-bullet policy solution can solve monopsony when it is the result of multiple factors such as historical barriers and repressive social norms faced by women, so research that looks at the several causes of wage exploitation is a crucial step in increasing worker well-being. Instituting policies that increase the outside options available to workers, including policies that reduce search costs or make it easier for workers to change jobs, is a necessary step toward limiting the ability of employers to suppress wages and take advantage of workers. Similarly, policies that reduce discrimination and empowers workers help to make the market more operational. Ultimately, when workers are able to freely move about the labor market in search of better pay and a better fit, they will be more productive and be able to share in the economic growth that they create.

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