Weekend reading

This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth has published this week and the second is work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Researchers have known for a while that income inequality and political polarization in the United States have been increasing at the same time, but they really could only show a correlation between the two trends. A new paper tries to show that income inequality actually causes political polarization.

Tax havens are a significant problem for the global economic system, as University of California-Berkeley economist Gabriel Zucman explains in his new book, The Hidden Wealth of Nations. In fact, you’ll find very few economists who support tax havens in principle or practice. So why do they continue to exist? Failed democracy, says Marshall Steinbaum.

In the wake of the Great Recession, the Federal Reserve followed the playbook written up with lessons of the Great Depression in mind: Flood the banking system with credit. Despite pushing interest rates all the way down to zero, monetary stimulus wasn’t as effective as we might have expected. A new paper shows why.

Employers are increasingly running credit checks on prospective employees, in the belief that an applicant’s past credit use will predict their performance in the workplace. But as Bridget Ansel shows, such efforts may well perpetuate past discrimination.

Links from around the web

Inflation has been below the Federal Reserve’s 2 percent inflation target for more than three years now, yet the central bank is on pace to start raising interest rates this year. Federal Reserve Chair Janet Yellen lays out her case for why inflation will soon head back toward their target in a recent speech at the University of Massachusetts, Amherst. [federal reserve]

Policymakers and activists have floated a number of proposals for raising the federal minimum wage in recent years, but calls for a $15 minimum wage have gained quite a bit of traction in the past couple of years. The Initiative on Global Markets Forum asked a number of leading economists what they think of this proposal. [igm]

If you want to look at the health of the labor market, you can choose from a number of statistics. The unemployment rate, at 5.1 percent, paints one picture of the labor market, while the employment-to-population ratio, which is 3 percentage points below its 2007 level, paints another. John Robertson and Ellyn Terry suggest a new metric: the Z-POP. [atl fed]

As income and wealth inequality have risen in the United States, economists and political scientists have wondered why redistribution hasn’t increased. Wouldn’t voters see rising inequality and express a desire for higher taxes and transfers? There are many reasons why this hasn’t happened, but a new report published in the journal Science offers one explanation: Elites care less about equality. [huff post]

Equality of opportunity is, according to members of both political parties in the United States, a key aspiration of Americans and a goal for public policy. But as Dylan Matthews argues, “Pursuing true equality of opportunity would require turning America into a dystopian, totalitarian nightmare — and even then, it would still prove impossible.” [vox]

Friday figure

Figure from “The intellectual history of the minimum wage and overtime” by Oya Aktas.