Weekend reading: Hysteresis, wage setting, market concentration, and more

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

After recessions, there’s usually quite a bit of geographic variation in employment rates. Some areas of the country are hit much worse by a recession than others, but eventually those differences erode. But that hasn’t happened in the wake of the Great Recession—and a new paper says it might not happen until 2021.

The role of firms in income inequality is an increasingly popular topic of conversation for researchers and analysts. But sometimes those conversations conflate two different trends that result in firms paying more on average than other firms. Untangling the two has important ramifications for how we understand the labor market.

Tax credits have become some of the more popular policy interventions when it comes to improving the living standards of workers at the lower end of the wage distribution. While programs like the Earned Income Tax Credit have been quite successful, they certainly can be improved, as new research shows.

As the global economy seems to weaken, investors complain about the communications strategy of the Federal Reserve, and commentators ponder the usefulness of policies once deemed radical, a debate about the proper tools of monetary policy is raging. But maybe it’s time to expand that conversation even further.

Links from around the web

The last two decades have seen high levels of corporate profits, an increasing return to capital, and high levels of market concentration in the United States. In other words, the U.S. economy has a competition problem. The Economist details the extent of this problem. [the economist]

Despite continued gains, there’s still a significant gap between the earnings of men and women in the United States. While there are a number of reasons for that gap, a major cause is occupational segregation. Claire Cain Miller digs into new research on the topic. [the upshot]

The research Miller cites is an example of work that takes into account the role of gender and identity when it comes to economic matters. As Martin Sandbu argues, ignoring the role of gender can lead to economic analysis that misses major trends and significant issues. [free lunch]

“We’re out of the frying pan of speculative excess and into a subtler and more insidious problem of chronic undersupply.” Matt Yglesias details the next housing crisis the U.S. economy is facing. [vox]

Over the past four years, members of the Federal Open Markets Committee—the Federal Reserve’s policymaking arm—have been steadily lowering their estimate of “longer-run” interest rates. Matthew C. Klein notes that this indicates the central bank is starting to come to grips with the idea of secular stagnation. [ft alphaville]

Friday figure

Figure from “Can school finance reforms improve student achievement?” by Julien Lafortune, Jesse Rothstein, and Diane Whitmore Schanzenbach.

March 25, 2016

AUTHORS:

Nick Bunker
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