Equitable Growth Announces Second Annual Class of Grantees

More than $800,000 in new academic grants will add to growing body of research examining whether and how economic inequality affects economic growth.

The Washington Center for Equitable Growth is pleased to announce the new 2015 class of grantees. Equitable Growth’s academic grants program aims to build a portfolio of cutting-edge scholarly research that investigates the channels through which economic inequality may or may not impact economic growth and stability.

Equitable Growth will award a total of $784,000 through 24 grants in the 2015 grant cycle, with an additional $49,800 in co-funding from the Ewing Marion Kauffman Foundation, a private, nonpartisan foundation that aims to foster economic independence by advancing educational achievement and entrepreneurial success. This builds upon the inaugural 2014 grant cycle, during which Equitable Growth awarded $541,000 in grants with an additional $68,000 in co-funding from the Russell Sage Foundation.

“We’re thrilled to support cutting-edge research that will investigate the structural changes happening in the U.S. economy,” says Equitable Growth’s Executive Director and Chief Economist Heather Boushey. “Through new and novel data sources and by using micro data to answer macroeconomic questions, an exciting array of rising scholars and established academics will do the hard work to answer the big questions related to whether and how economic inequality affects growth. I hope that those interested in policy-relevant research pay close attention to this talented slate of researchers and this area of scholarship in the years to come.”

Equitable Growth awarded grants within the four categories identified in our Request for Proposals: household balance sheets and macroeconomic stability, human capital development across the generational arc, governance, and innovation, invention and creativity. Each category represents a primary channel through which to explore the relationship between economic inequality and economic growth and stability. Academic grants are open to researchers affiliated with a U.S. university, and doctoral grants are open to graduate students currently enrolled in a doctoral program. You can find the full text of the Request for Proposals on the Equitable Growth website.

“Equitable Growth’s grantees are filling a void in the research landscape that only a few years ago might have been unimaginable,” says Equitable Growth’s Senior Director of Policy and Academic Programs Elisabeth Jacobs. “Each grantee’s research question is vital in and of itself, but the scholars’ questions and the interdisciplinary nature of their work comes together to help paint a more comprehensive picture about the trends and channels through which economic inequality, is, and is not, affecting economic growth.”

Expanded descriptions of the 2015 grants can be found here.

Building on the research projects of the inaugural class of grantees, Equitable Growth’s 2015 grantees will contribute to the new and growing fields of research in the following areas:

Human capital

Six academic grants will support research on the role of human capital—the talent needed to boost our economy’s productivity.

  • Michael Carr & Emily Wiemers of the University of Massachusetts-Boston will estimate the effect of income inequality on long-run earnings mobility over a working lifetime.
  • Princeton University economist Ezra Oberfield and Devesh Raval of the Federal Trade Commission will explore differences in skills among workers as a potential explanation for the decline in the labor share of income.
  • Armin Rick of Cornell University and the University of Chicago’s Derek Neal will investigate the impact of incarceration on recidivism, human capital accumulation, and labor market outcomes.
  • Daniel Schneider of the University of California-Berkeley and Kristen Harknett of the University of Pennsylvania will quantify the relationship between economic insecurity and family instability.
  • Till von Wachter of the University California-Los Angeles will study the impact of income inequality on young workers’ career progression.
  • Danny Yagan of the University of California-Berkeley will estimate the role of colleges and universities in transmitting income inequality.

 

Three doctoral grants will support further research on human capital:

  • JooHee Han of the University of Massachusetts-Amherst will explore the relationship between military downsizing and rising incarceration, specifically regarding racial inequality in the labor market.
  • Janelle Jones of Duke University will estimate the impact of the intergenerational transfer of wealth through gifts and inheritances on wealth inequality and the racial wealth gap.
  • Carlos Olmedo of the University of Texas-Austin will study school-to-work transitions for impoverished high school students from Texas’ border cities.

 

Household balance sheets and macroeconomic stability

Four academic grants will support research that looks at the demand side of the economy, including debt and consumption, in order to broaden our understanding of how demand drives growth by creating markets for goods and services and allowing investors to plan for the future.

  • Enghin Atalay of the University of Wisconsin-Madison, Sebastian Sotelo of the University of Michigan-Ann Arbor, and Daniel Tannenbaum of the Becker Friedman Institute at the University of Chicago will build a novel new dataset to conduct a historical analysis of the change in skill requirements for jobs.
  • Kyle Herkenhoff of the University of Minnesota and Gordon Phillips of the University of Southern California Marshall School of Business will study the impact of household credit access on job finding rates and earnings.
  • Arjun Jayadev of the University of Massachusetts-Boston and Josh Mason of the City University of New York will assess the effects of changing levels of household and municipal debt on aggregate demand.
  • Atif Mian of Princeton University and Amir Sufi of the Booth School of Business at the University of Chicago will investigate the effect of the increase in household debt on the allocation of labor across geographical areas and across industries.

 

Four doctoral grants will support further research on household balance sheets and macroeconomic stability.

  • Adrien Auclert of Stanford University will construct a model to measure the effects of income inequality on aggregate income and economic growth.
  • Stephanie Chapman of Northwestern University will estimate the effect of student loan debt on recent college graduates’ job search.
  • Jacob Mortenson of Georgetown University will use federal income tax data to investigate intragenerational income mobility, particularly determinants of and responses to earnings shocks.
  • Scott Nelson of the Massachusetts Institute of Technology will utilize a novel quasi-experimental design based on the uncertainty of tax refunds to better understand how readily low-income households spend an extra dollar of income.

 

Governance

Four academic grants will fund investigations into the quality of government and labor market institutions in fostering economic growth and stability.

  • Kate Bronfenbrenner of Cornell University will conduct an analysis of first contracts to quantify human capital gains for organized low-wage workers, specifically women and minorities.
  • Daniel Carpenter of Harvard University will quantify unequal influence over financial regulation through a large new database of rules changes and comments.
  • Nathan Jensen of George Washington University will study the efficacy of state-and-local tax incentives for job creation and their effects on tax burdens, budgets, and inequality. The Ewing Marion Kauffman Foundation will co-fund this project.
  • Joan Williams of the University California-Hastings, College of the Law, will continue her study of a large-scale intervention testing whether more stable schedules for employees result in cost savings and increased productivity for businesses.

 

Two doctoral grants will fund further research on governance and labor market institutions.

  • John Voorheis of the University of Oregon will estimate the relationship between rising income inequality and political polarization at the state level.
  • Samir Sonti of the University of California-Santa Barbara will complete a historical study of the Federal Reserve’s target inflation rate and its effect on broader structural shifts in the economy, especially those bearing on the labor market.

 

Innovation                                                                              

One academic grant will fund research into whether and how inequality affects the development of the next generation of inventors and entrepreneurs.

  • Qingfang Wang of the University of California-Riverside will study the role of race, ethnicity, and gender in successful entrepreneurship, with particular attention to the role of community-level, place-specific factors. The Ewing Marion Kauffman Foundation will co-fund this project.

Expanded descriptions of the 2015 grants can be found here.

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The Washington Center for Equitable Growth is a research and grantmaking organization founded to accelerate cutting-edge analysis into whether and how structural changes in the U.S. economy, particularly related to economic inequality, affect economic growth. Core to our mission is helping to build a stronger bridge between academics and policymakers so that new research is relevant, accessible, and informative to the policymaking process. 

Closing U.S. educational achievement gaps will increase GDP growth & raise revenue

Washington, D.C. – Improving educational outcomes and narrowing the educational achievement gaps of future workers would significantly increase long-term U.S. economic growth and raise government revenues, a new Washington Center for Equitable Growth report finds. The study, authored by Equitable Growth Visiting Fellow and Everett E. Nuttle Professor of Economics at Washington College Robert Lynch, calculates the key economic and tax benefits of raising the educational achievement of children from less advantaged socioeconomic backgrounds over the next 35 years (by 2050) and 60 years (by 2075). The analysis also includes a new interactive allowing readers to explore the economic ramifications of closing the educational achievement gaps.

The report utilizes three scenarios to illustrate the economic consequences of raising the educational achievement of children from the bottom three quarters of families who are most socioeconomically disadvantaged to more closely match those of children born into the top quarter of families. The bronze scenario looks at the impact economic impact of matching the Organisation for Economic Co-operation and Development average in math and science achievement scores among its developed-nation members. The silver scenario models the cumulative impact if the United States were to bring the U.S. educational outcomes in line with Canada’s achievement scores. The gold scenario calculates the impact of bringing the U.S. average math and science achievement score up to par with the scores of the most advantaged U.S. students.

“The reality in the United States is that persistent educational achievement gaps are generating a massive waste of both human talent and economic potential,” says Equitable Growth Visiting Fellow and report author Robert Lynch. “By merely maintaining the status quo, research shows us that the United States is throwing away enormous economic benefits that we could capture if we pursued policies that raised education achievement. The good news is that by making investments that raise educational achievement and narrow achievement gaps through a broad array of reforms, which include education reform and a host of family friend worklife policies, the improvements would pay for themselves through higher GDP growth rates and increased government revenues. The result of such investments is a 21st century economy where children can thrive and more fully contribute to America’s future economy as highly-skilled workers.”

 

Key facts from the report:

  • The analysis quantifies various economic and fiscal outcomes under these three educational scenarios over the next 35 years, between 2015 and 2050 when the pressure of supporting the retired baby boomers will have largely abated, and over the next 60 years, to 2075, when the benefits of narrowing educational achievement gaps will have been fully phased in.
  • For each scenario, a simulation model is used to estimate the economic effects of potential policy reforms that raise U.S. scores on the Program for International Student Assessment tests—the best way to measure global educational competitiveness—and improve the  educational achievement of U.S. children and reduce disparities in  educational outcomes among them.
  • Specifically, the study quantifies how much greater U.S. economic growth and tax revenues would be. The analysis also assesses the reductions in economic inequality that result from the narrowing of education gaps.

 

A summary of the findings:

Economic Consequences of Improving Educational Outcomes                       

The implications of these findings include:

  • Improving the education of future workers across the income spectrum accelerates economic growth and can promote more equal opportunity over the long run.
  • Closing educational achievement gaps can boost tax revenue gains that would amply pay for themselves in the long run.
  • Expanding educational opportunities well beyond school-specific reforms to include early childhood care and education, parenting support, criminal justice reform, and family friendly workplace policies can help close these achievement gaps.

Click here for the interactive
Click here for the report
Download the full pdf report
Download the Fast Facts pdf

Heather Boushey on the Economic Benefits of Paid Leave

Heather Boushey, Executive Director and Chief Economist at the Washington Center for Equitable Growth, issued the following statement in reaction to the Obama Administration’s announcement of several paid leave initiatives:

Research tells us that the U.S. economy could benefit greatly from paid leave policies such as those put forward by the Obama Administration on Thursday. What is often sorely missed in economic policy debates is that paid leave programs not only benefit families but also boost family economic security, worker productivity, the supply of labor, and overall economic growth. Paid leave allows more families to fully contribute to our nation’s economic growth and actually boosts household income by enabling parents, especially mothers, to sustain their careers while caring for their kids and elderly parents.  And while there is much we know about the economic benefits of paid leave, it is encouraging that the Obama administration proposed a plan to launch feasibility studies in several states and cities to help design evidence-based, paid-leave programs of their own.

 

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Heather Boushey on Presidential Medal of Freedom Recipient Robert Solow

Robert M. Solow, Institute Professor, emeritus and Professor of Economics, emeritus at the Massachusetts Institute of Technology, Nobel Laureate in Economics, and a member of Washington Center for Equitable Growth’s Steering Committee will be one of 19 individuals awarded the Presidential Medal of Freedom at a White House ceremony on November 24, 2014.

Heather Boushey, Executive Director and Chief Economist at the Washington Center for Equitable Growth, issued the following statement:

We applaud President Barack Obama’s selection of Robert Solow as a Presidential Medal of Freedom recipient. Solow’s transformative research in the field of economics and ongoing contributions to our understanding of long-term economic growth, productivity and inequality cannot be overstated.

Even judging by contemporary standards, Solow remains a scholar ahead of his time. Few intellectuals can effectively communicate the real-world implications of theoretical economic research, but Professor Solow’s brilliance is his ability to engage with diverse audiences and at the same time influence how generations of emerging scholars participate in empirical debates. Our nation is without a doubt better equipped to deal with tough economic challenges because of Professor Solow’s theoretical contributions to the field, but above all else because of his influence as a teacher to generations of scholars and policymakers.

Washington Center for Equitable Growth Announces Inaugural Class of Grantees

New Research Will Lead to Better Understanding of How Human Capital, Consumer Demand, and the Role of Government and Institutions Affects Economic Growth and Productivity

Washington, D.C. – The Washington Center for Equitable Growth is pleased to announce its inaugural class of grantees for 2014. Equitable Growth will award $481,000 to 15 grantees, with additional funding for two of those grantees provided by the Russell Sage Foundation, the century-old foundation devoted to funding research in the social sciences.

“Motivating academic economists to investigate whether and how structural changes in the U.S. economy, particularly those related to the distribution of wealth and the provision of opportunity, affect economic growth is exceedingly important,” says Heather Boushey, executive director and chief economist at Equitable Growth. “Encouraging new academic thinking will offer important contributions to understanding what is good and bad for our economy and lay the groundwork for even more data-driven research in the years to come.”

Equitable Growth is awarding 9 distinguished scholars a total of $391,000 to conduct seminal research on these possible effects, with the Russell Sage Foundation co-funding an additional $68,000 for two of those grantees. In addition, Equitable Growth is providing six grants of $15,000 each to young scholars engaged in graduate-level or post-doctoral work. The total research support for this inaugural set of grantees from both grantmaking institutions is $550,000. (Update: on September 19, 2014, an additional grantee was announced, Ethan Kaplan, an assistant professor of economics at the University of Maryland, who was awarded a $60,000 grant. See page 52 of our conference report in September for details on this grant.)

“Strong empirical evidence in economics and other social sciences suggests that the strength of the middle class and the level of income inequality play an important role in driving economic growth and productivity,” says Elisabeth Jacobs, senior director for policy and academic programs. “Our grantees will accelerate research in the coming year by focusing on three channels through which inequality impacts growth: human capital, consumer demand, and the role of government and labor market institutions.”

Building on foundational research done by Washington Center for Equitable Growth’s in-house research team, the inaugural class of grantees will contribute to the new and growing fields of research in the following areas:

Three grants will examine the role of human capital—the talent needed to boost our economy’s productivity. They were awarded to:

• University of Maryland sociologist Philip Cohen, who will investigate the implications of economic inequality for women’s employment patterns.
• University of Chicago development psychologist and public policy professor Ariel Kalil, who will research the role of inequality in parenting and the acquisition of skills in pre-school aged children.
• University of California-Berkeley economist Jesse Rothstein, who will explore the consequences of school finance reforms on educational equity.

Taken together these grants will explore whether and how inequality affects human capital, specifically examining the importance of investments in early childhood and public primary and secondary schooling.

Three grants will support research on the demand side of the economy, including both debt and consumption, in order to broaden our understanding of how demand drives growth by creating markets for goods and services and allowing investors to plan for the future. They were awarded to:

• University of Michigan law professor Michael Barr, who will study how families manage different kinds of debt.
• Princeton University economist Will Dobbie, who will generate new data to explore the impact of debt forgiveness on economic stability and recoveries from recessions.
• University of Wisconsin-Madison public affairs and economics professor Timothy Smeeding, who will explore how inequality in the distribution of income and wealth affect consumption.
These grants focus on whether and how inequality affects patterns of indebtedness and consumption, which affects economic growth and stability.

Three grants will fund investigations into quality of government and labor market institutions in fostering economic growth and stability. They were awarded to:

• The New School economist David Howell, who will examine cross-country trends in “good jobs” with a focus on how different institutional settings can affect the relationship between economic growth, employment growth, and the generation of good jobs.
• University of North Carolina-Chapel Hill urban planning professor William Lester who will look at how regional variations in labor market regulation influence business decisions.
• University of California-Hastings College of the Law professor Joan Williams, who will investigate how workplace scheduling practices conflict with family care-giving needs, and how improving these practices could improve business productivity.
These grants will examine how labor market institutions and public policies affect employment and business outcomes and will inform a variety of employment policies at the local, state, and federal levels.

Equitable Growth’s six young scholar grantees—either graduate students or newly minted Ph.Ds—are:

• Pascal Noel at Harvard University, who will investigate the implications of social insurance for equitable growth.
• Shayak Sarkar and Ryan Sakoda at Harvard, who will study the impact of need-based financial aid on college attendance for low-income students.
• Stefanie Stancheva at the Massachusetts Institute of Technology, who will look at the effects of progressive taxation on innovation and growth.
• Vanessa Williamson at Harvard, who will explore public support for different tax structures.
• Danny Yagan at the University of California-Berkeley, who will examine the U.S. tax structure for capital income.
• Owen Zidar at the University of Chicago’s Booth School of Business, who will research tax policy and the distribution of income between labor and capital.
Several of these scholars are beginning tenure-track positions at top universities beginning in the next academic year. Encouraging these up-and-coming researchers to pursue these lines of inquiry will create a pool of academics engaged early in their careers in investigating critical questions for understanding how to create equitable growth.

For a more detailed list of our 2014 grantee awards click here.
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The Washington Center for Equitable Growth is a new research and grantmaking organization founded to accelerate cutting-edge analysis into whether and how structural changes in the U.S. economy, particularly related to economic inequality, affect growth.

To learn more, please visit: www.equitablegrowth.org. Follow us on Twitter at www.twitter.com/equitablegrowth.

Examining Intergenerational Economic Mobility

Washington, D.C. – A newly released study from the Washington Center for Equitable Growth finds that opportunity is not equally distributed across the United States and that economic mobility actually differs in critical ways for children born in different regions of the country. The new report, “Patterns of Economic Mobility in the United States—What Does the Most Recent Academic Research Tell Us About U.S. Economic Mobility?,” aims to decipher the latest scholarship on intergenerational economic mobility across the nation.

The authors of the report define economic mobility as movement up and down the income ladder from one generation to the next. They highlight a collection of research that shows economic mobility nationwide has been roughly stagnant in recent decades but there are telling regional differences in economic mobility across the country. The Rust Belt region has a particularly high gap in mobility between the children from low-income and high-income families, while much of the Great Plains and the West have a substantially smaller gap in mobility. Among large commuting zones, the smallest gap in income ranking indicating the highest mobility is in Santa Barbara, California, while Cincinnati, Ohio has the largest gap.

“By summarizing much of the recent literature and data, we hope to show that there are regional lessons to be learned on how to improve opportunity nationally and in areas struggling to provide more equal access to opportunity and mobility,” says Washington Center for Equitable Growth’s senior mathematician Carter Price. “Economic factors such as a high inequality and low wage growth are associated with lower economic mobility and could be suitable targets for policy.”

To address the economic factors related to low mobility, the authors recommend examining both short and long-term policy solutions, including:

  • Policy levers aimed at reducing economic inequality, raising income growth, and reducing unemployment.
  • Policies targeting social factors associated with lower mobility, which could include efforts to reduce segregation by race and income.
  • Policies to support families such as paid parental leave laws.

“What this collection of scholarship shows us is that there is no one-size-fits-all approach for improving economic mobility,” says Washington Center for Equitable Growth’s junior economist Pedro Spivakovsky-Gonzalez. “To effectively increase access to opportunity, we need to further examine both national and regional economic, social, and family trends as well as investigate the causal mechanisms that drive such relationships and ultimately impact economic mobility and growth.”

The new report from the Washington Center for Equitable Growth is the first in a collection of papers examining whether and how economic inequality and growth are linked.

 

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The Washington Center for Equitable Growth is a research and grantmaking organization founded to accelerate cutting-edge analysis into whether and how structural changes in the U.S. economy, particularly related to economic inequality, affect economic growth. To learn more, please visit: www.equitablegrowth.org. Follow us on Twitter at www.twitter.com/equitablegrowth.

Amir Sufi presents House of Debt

Please join Equitable Growth for a presentation by Amir Sufi on the findings in his new book, House of Debt: How They (And You) Caused the Great Recession, and How We Can Prevent It from Happening Again.

Sufi and his co-author, Atif Mian, argue that the Great Recession was the result of a sharp fall-off in consumption due to the unequal distribution of household debt run up in the first six years of the 21st century. In that period, mortgage credit growth grew more than twice as fast in neighborhoods with low credit scores than the growth of mortgage credit in neighborhoods with high credit scores, in a clear contrast to previous decades. When the housing bubble burst, the economic consequences were amplified by the way debt was distributed across households and communities.

Combining real world examples and strong economic evidence, Mian and Sufi argue that the run-up in household debt they found to cause economic catastrophes is a preventable occurrence. They conclude by further arguing that governments must implement smarter financial systems before crises strike, move away from a reliance on debt, and share risk more broadly if we are to prevent such crises in the future and cultivate sustained economic growth.

Copies of House of Debt will be available for purchase at the event.

Featured author:
Amir Sufi, co-author, House of Debt and Associate Professor of Finance, University of Chicago Booth School of Business

Discussants:
Michael Barr, professor of law, University of Michigan Law School; former Assistant Secretary for Financial Institutions, U.S. Treasury Department

Atif Mian, co-author of House of Debt; Professor of Economics and Public Policy, Department of Economics, Woodrow Wilson School, Princeton University

Moderated by:
Heather Boushey, Executive Director and Chief Economist, Washington Center for Equitable Growth

RSVP HERE

Light refreshments will be served.

When: Thursday, May 29, 2014
Time: 2:00 p.m. – 3:30 p.m.
Where: Hotel Monaco
700 F Street, NW
Athens Room, 4th Floor
Washington, D.C.