Tag: Jason Furman

Must-Read: Jason Furman: Is This Time Different? The Opportunities and Challenges of Artificial Intelligence

Posted on by Brad DeLong

Must-Read: Super-smart–naturally intelligent, one might say…

Jason Furman: Is This Time Different? The Opportunities and Challenges of Artificial Intelligence: “I see little reason to believe that the economic impact of AI will be very different from previous technological advances…

…But unlike many of the optimists, I do not find that similarity fully comforting, as technological advances in recent decades have brought tremendous benefits but have also contributed to increasing inequality and falling labor force participation. However, as I will emphasize this morning, the effects of technological change on the workforce are mediated by a wide set of institutions, and as such, policy choices will have a major impact on actual outcomes. AI does not call for a completely new paradigm for economic policy—for example, as advocated by proponents of replacing the existing social safety net with a universal basic income (UBI) —but instead reinforces many of the steps we should already be taking to make sure that growth is shared more broadly. But before turning to concerns about some of the possible side effects from AI, I want to start with the biggest worry I have about it: that we do not have enough of AI. Our first, second and third reactions to just about any innovation should be to cheer it—and ask how we get more of it, the issue I will discuss first in my remarks. But I will then discuss the potential labor market downsides of AI. Finally, I will conclude with the role of public policy in addressing these issues…

Must-Read: Jason Furman: on Residential Housing Supply, NIMBYism, and Economic Growth

Posted on by Brad DeLong

Must-Read: Jason Furman on residential housing supply, NIMBYism, and economic growth:

Nick Timiraos: Why White House Economists Worry About Land-Use Regulations: “White House economic advisers have produced a steady diet of white papers this year…

…Their latest target: land-use restrictions. Housing is growing less affordable because there’s more demand for rental and, increasingly, owner-occupied housing, but little new supply…. [Some] cities make things worse with zoning and other land-use restrictions that discourage production, said Jason Furman…. Peter Ganong and Daniel Shoag… examines the slowdown in income convergence… more common in states during the 1960s and 1970s regardless of constraints on housing supply. By the 1990s, states with more constrained housing supplies saw far less income convergence than those with less constrained housing supplies…. Only high-income workers can afford to relocate to those high-productivity cities that have tighter land-use regulations…

Must-Read: Jason Furman and Peter Orszag: A Firm-Level Perspective on the Role of Rents in the Rise in Inequality

Posted on by Brad DeLong

Must-Read: Jason Furman and Peter Orszag: A Firm-Level Perspective on the Role of Rents in the Rise in Inequality: “In Joe [Stiglitz]’s honor, we thought it appropriate to collaborate on a paper…

…that explores two of his core interests: the rise in inequality and how the assumption of a perfectly competitive marketplace is often misguided. Joe has been a leading advocate of the hypothesis that the rising prevalence of economic rents—-payments to factors of production above what is required to keep them in the market—and the shift of those rents away from labor and towards capital has played a critical role in the rise in inequality (Stiglitz 2012). The aggregate data are directionally consistent…. But this aggregate story does not fully explain the timing and magnitude of the increase in inequality…. This paper… argue[s] that there has been a trend of increased dispersion of returns to capital across firms, with an increasingly large fraction of firms getting returns over 10, 20 or 30 percent annually–a trend that somewhat precedes the shift in the profit share.

Longstanding evidence (e.g. Krueger and Summers 1988) has documented substantial inter-industry differentials in pay–a mid-level analyst may have the same marginal product wherever he or she works but is paid more at a high-return company than at a low-return company. Newer evidence (Barth et al. 2014 and Song et al. 2015) suggests that much of the rise in earnings inequality represents the increased dispersion of earnings between firms rather than within firms. This is consistent with the combination of a rising dispersion of returns at the firm level and the inter-industry pay differential model, as well as with the notion that firms are wage setters rather than wage takers in a less-than-perfectly-competitive marketplace…