Weekend reading: “Adjusting to the new borders” edition

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 published this week and the second is the 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

If you don’t pay much attention to labor law, you’d be forgiven for thinking that for a worker to be covered by a union she had to be a member of a union. But that’s not correct. And as Matt Markezich shows, the difference can be quite large in some countries.

Economists have studied extensively the effects of increasing the minimum wage on the U.S. labor market. Yet boosting the wage floor is likely to have consequences on more than the labor market. John Schmitt writes up new research on access to credit for workers affected by a higher minimum wage.

The border-adjustment aspect of the House Republican plan for corporate tax reform has drawn the most attention. But don’t forget that the plan also calls for cutting the corporate rate. Policymakers should be skeptical that’ll do much to boost business investment.

Links from around the web

Perhaps the biggest question for the U.S. economy in 2017 is how much slack, or underutilized potential, remains. Neil Irwin takes a look at the state of slack and explains how the debate about how hot the economy can get will impact policy. [the upshot]

Relatedly, the concept of a “non-accelerating inflation rate of unemployment,” or NAIRU, has come under attack recently. Simon Wren-Lewis defends the concept from attacks, saying it’s critical for talking about macroeconomics. [mainly macro]

Over the past six years or so, the International Monetary Fund has increasingly grappled with the question of how inequality affects economic growth. Prakash Loungani and Jonathan D. Ostry write on how research on inequality weighs in the IMF’s work. [imf direct]

President Trump and his administration may not be fans of running trade deficits, but they sure do like foreign investment. But as Ana Swanson, there’s some tension there as trade deficits and capital account surpluses are different sides of the same coins. [wonkblog]

Mary Amiti, Oleg Itskhoki, and Jozef Konings don’t think border adjustment aspect of corporate tax reform will do much to increase exports. In fact, their analysis finds that it may actually depress exports in the short term. [liberty street economics]

Friday figure

Figure from “Why is collective bargaining so difficult in the United States compared to its international peers?” by Matt Markezich

February 24, 2017


Nick Bunker
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