Category Archive: Sources

  1. The Banquet

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    ADVANCE MECHANISM

    The role of the state in economic development

    Major accounts of the role of the state in economic development have held that the state is essential for ensuring private property rights—that democratic checks and balances encourage investment and therefore economic growth. Other schools of development stress the importance of promoting economies of scale and export oriented production. In these, the state takes on a far more active role in planning and coordinating investment.

    In a remarkably comprehensive 2016 paper, PRANAB BARDHAN brings together disparate literatures to develop a more nuanced understanding of the state’s role in economic development:

    “Beyond being a ‘nightwatchman’ of property rights and markets, the state often needs to be a guide, coordinator, stimulator, and a catalytic agent for economic activities in situations where, for various historical and structural reasons, the development process has been atrophied and the path forward is darkened by all kinds of missing information and incomplete markets.

    In general, different types of governance mechanisms are appropriate for different tasks. The state can provide leadership to stimulate individuals to interact cooperatively in situations where noncooperative interactions are inefficient. But the state officials may have neither the information nor the motivation to carry out this role. They may be inept or corrupt or simply truant, and the political accountability mechanisms are often much too weak to discipline them. We thus need a whole variety and intermixture of institutional arrangements to cope with the strengths and weaknesses of different coordination mechanisms, and the nature of optimal intermixture changes in the development process.”

    Link to the essay.

    • Acemoglu, Johnson, and Robinson’s 2001 paper “The Colonial Origins of Comparative Development.” Link. And Acemoglu, García-Jimeno, and Robinson’s 2015 “State Capacity and Economic Development: A Network Approach.” Link.
    • James Scott’s 1999 Seeing Like a State examines failures of large-scale state development projects. Link.
    • In a paper from 1983, Bardhan draws on econometric evidence from cross-sectional data in rural India to challenge researchers in development economics to rethink the relationship between active labor markets and economic growth: “Contrary to its common characterization as a feudal relic and a symptom of economic stagnation tied-labor may actually be strengthened by capitalist agricultural development.” Link.
    ‡ development states politics

    New Researchers

    The balance sheet effect

    University of Oxford PhD candidate GENEVIEVE NELSON’s job market paper looks at the relationship between securitization and house price growth. Expanding on the standard story of securitization and the Great Recession, Nelson explicitly models the the private securitization of mortgage credit, producing a new “balance sheet effect.” From the abstract:

    “Innovation in the private mortgage securitization market drove at least two-thirds of house price appreciation and about one-third of the increase in non-conforming mortgage credit in the US between 2000 and 2006. This is the only driver of house price growth that is consistent with the simultaneous increase in mortgage credit and decrease in mortgage spreads in the data. A key feature in my model is the financial constraint placed on the balance sheet of mortgage securitizers. It is the ultimate limit on the quantity of mortgage credit the aggregate financial sector can absorb given the mortgage spread. This balance sheet effect is missed by standard DSGE models with housing.”

    Link to the full paper, link to Nelson’s website.

    ‡ housing credit new_researchers

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    + + +

    • In the second iteration of our new blog series, Phenomenal Works, sociologist Beth Popp Berman discusses Alice O’Connor’s book, Poverty Knowledge: “O’Connor shows both the promise and the limits of social science to usefully inform our understanding of the persistent problem of poverty.” Link.
    • Next Friday in the office in New York: a research session with Doug Webber titled “When Do Students and Taxpayers See a Return?” Sign up here.
    • In a new working paper, Robert Kelchen and Zhuoyao Liu present the first ever evidence on whether gainful employment regulations induce colleges to close low-performing programs. The results: “Although the regulations were repealed before any program lost federal funding, we found that passing GE was associated with a lower likelihood of a program or college closing.” Link.
    • “Prices have risen more quickly for people at the bottom of the income distribution than for those at the top.” Christopher Wimer, Sophie Collyer, and Xavier Jaravel find that accounting for “inflation inequality” adds 3.2 million people to poverty estimates in 2018. Link to the study and link to coverage by Annie Lowrey.
    • At VoxEU, Adam Brzezinski, Yao Chen, Nuno Palma, and Felix Ward “investigate the effects of money supply shocks on the economy using the case of maritime disasters in the Spanish Empire.” Link.
    • “I use the individual-level records from my own family in rural Mississippi to estimate the agricultural productivity of African Americans in manual cotton picking nearly a century after Emancipation, 1952–1965.” From 2015, Trevon Logan on economic roles and racial identity. Link.
    • Forthcoming at Demography, David Brady and Zachary Parolin analyze trends in deep and extreme poverty in the United States from 1993-2016: “We find significant increases from lows in 1995 to peaks in 2016 in both deep and extreme poverty. Adding homelessness, deep poverty would be 7-8% higher and extreme poverty would be 19-23% higher in 2016, which suggests our estimates are lower-bounds.” Link.
    • “Work restructuring arising from fissuring alters wage determination inside and outside firms and provides an alternative explanation for a growing empirical literature on earnings inequality.” David Weil discusses labor policy for fissured workplaces. Link.
    • In the America Journal of Public Health: an issue dedicated to the history, politics, and public health implications of SNAP. Link.
    • “Buying time promotes happiness.” New evidence on wealth and well-being. Link.
    • Boško Mijatović and Branko Milanović “provide the first calculation of the welfare ratio for Serbia in the second part of the 19th century and the first decade of the 20th.” Link. On his blog, Milanović considers geographical and demographic challenges faced by late industrializers. Link.
    • “I never thought that the single best predictor of getting a paper accepted would be clear and accessible writing.” David Slusky interviews Amitabh Chandra, editor of the Review of Economics and Statistics. Link.
    • From 2017, an INET report in which William Lazonick et. al estimate price gouging in the US pharmaceutical industry, concluding that “US drug prices are by far the highest in the world.” Link.
    • “Can limits to arbitrage explain historical asset price reversals? During the ‘British Bicycle Mania’ of 1896-1898, cycle share prices rose by 200 per cent before falling 76 per cent from their peak value. This paper argues that arbitrage during this episode was limited by the risk of being cornered after short selling shares. Three corners in cycle company shares occurred during the ‘mania’, two of which resulted in substantial losses for short-sellers. The first corner corresponded with a structural break in cycle share prices, and cross-sectional analysis reveals that companies for which cornering risk was greater experienced more pronounced mispricing.” Link.

  2. Hanging Scheme

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    TEN BILLION HOURS

    Administrative burden and welfare politics

    In addition to lagging behind many European economies in the breadth, amount, and quality of welfare provision, the United States also exhibits relatively low rates of take-up among the benefits it does make available. Non-take-up rates can be accounted for—at least in part—by the various bureaucratic barriers that welfare recipients face; multiple qualitative studies have documented the humiliating and arduous nature of applying for benefits. Even in the case of the ostensibly less-burdensome Earned Income Tax Credit, a large share of the transfer is captured by tax preparers.

    In their 2019 book, Administrative Burden, Pamela Herd and Donald Moynihan argue that these difficulties are not incidental. Through a close inspection of the administrative design of a series of domestic welfare policies (including the Affordable Care Act, SNAP, and Social Security) they demonstrate that difficulty accessing benefits is a core, and intentional, feature of America’s welfare state.

    From the book’s introduction:

    “Burdens matter. They affect whether people will be able to exercise fundamental rights of citizenship, such as voting; they affect whether people can access benefits that can improve quality of life, such as health insurance. Burdens can alter the effectiveness of public programs. Ultimately, administrative burdens are the fine print in the social contract between citizens and their government.

    Administrative burdens are the product of political choices. In many cases, political actors see burdens as a policy tool to achieve ideological goals. Such choices are demonstrated by the maintenance of burdens even when changing circumstances call for governments to minimize them: The failure of the American administrative state to adapt Depression-era burdens on immigrants from Europe is one example of how not acting is itself a choice. Once the war began, Congress and the State Department increased restrictions under the justification that immigrants posed a security threat. In 1943, the new State Department visa application was four feet long.”

    Link to the book, and link to a January interview with the authors on the New Books Network.

    • Via a review of Herd and Moynihan’s book: the Information Collection Budget report from the OMB, which estimates that “the public spent an estimated 9.78 billion hours on federal paperwork in 2015, a net increase of 350 million burden hours from 2014.” Link.
    • Francis Fox Piven and Richard Cloward made a powerful case for non-take-up rates as a central clarifying element of the American welfare system: their 1971 book, Regulating the Poor, advocated mass enrollment in welfare programs to reveal the inadequacy of the benefits system. Link to the book, link to seminal 1966 essay that first proposed the “Cloward-Piven Strategy.”
    • “This article explores the relationship between revolution and the bureaucratization of tax administration in early modern England and France.” Edgar Kiser and Joshua Kane on the history of bureaucracy. Link. Tangentially related: a “history of file-keeping and bureaucratic paperwork in Maoist China” by Jian Ming Chris Chang. Link.
    ‡ welfare politics bureaucracy

    New Researchers

    Palm Oil & Land Redistribution

    In a 2018 working paper, SOAS PhD student CAROLINE HAMBLOCH examines the impact of buyer-driven value chains in the palm oil industry and finds that agrarian land reform has not resulted in redistribution of land to small, independent farmers, as intended. Her research stems from field work in Agusan del Sur, Philippines.

    “The chain literature has remained surprisingly silent about land as a factor of production and as the basis for chain configuration, overemphasizing capital and to a lesser extent labor. I fill this gap by investigating the interaction of land reform, chain governance, and their implications on economic and social up- and downgrading in the oil palm chain in the Philippines. I argue that the Comprehensive Agrarian Reform Program (CARP) introduced in 1988 under the Department of Agrarian Reform (DAR) limited the physical expansion of oil palm plantations profoundly, driving companies to extract as much profit as possible from existing plantation. Thereby, the CARP has not led to the desired redistribution of power from the landed to the landless, i.e. from the palm oil plantation companies to the landless workers, but rather has exacerbated the unequal power distribution between plantation and milling companies and agrarian reform beneficiaries (i.e landowners), producing economic and social downgrading trajectories for reform beneficiaries and farmworkers, and worsening distributional outcomes.”

    Link to the full paper. (And link to a report on thirty years of agrarian land reform by the Philippine Institute for Development Studies.)

    ‡ distribution land_reform new_researchers

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    + + +

    • New on the blog: Patrick Robbins surveys the history of the Rural Electrification Administration to draw lessons for a Green New Deal. Link. And next Friday JFI is thrilled to host Alyssa Battistoni—political theorist, Environmental Fellow at Harvard, and co-author of the new book A Planet to Win—to present on labor and the Green New Deal. Link to the sign-up form.
    • Incredible new work by Xiaowen Lin, Paul J. Ruess, Landon Marston and Megan Konar maps—for the first time—the food flows between counties in the United States. Link to the paper, and link to coverage in Fast Company.
    • “Do political coalitions actually have the power to influence the performance metrics used for retrospection on the timeline introduced by elections?” John Holbein and Adam Dynes on accountability and electoral timelines. Link.
    • Liberalization and the post-communist transition. Link.
    • The Labor Center at Berkeley looks at the changing nature of warehouse work. Among the findings: uptake of new technology will continue to be uneven in the low-margin warehousing industry; new technologies are likely to increase work intensity, deskilling, and workplace control measures. Link to the full report.
    • Ben Casselman on “The White Collar Job Apocalypse That Never Happened.” Link.
    • Arindrajit Dube’s report for the UK government reviewing the international evidence on the impacts of minimum wages: “Overall, existing research therefore points to a muted effect of minimum wages on employment, while suggesting that minimum wages significantly increase the earnings of low paid workers.” Link.
    • “Sprawl has outpaced densification.” Link.
    • “Using a sample of bonds issued by school districts in coastal counties, we show that municipal bond markets began pricing sea level rise (SLR) exposure following upward revisions in SLR projections in 2013.” By Paul Goldsmith-Pinkham, Matthew Gustafson, Ryan Lewis and Michael Schwert. Link.
    • From Autonomy, a “starter pack” on new progressive economic thought, featuring writing from James Meadway, Alice Martin Matthew Lawrence, Grace Blakeley, and others. Link.
    • SCOTUSBlog interviews Corey Robin about his new book on Clarence Thomas. “Where legal scholars, focused on doctrinal questions, can only see inconsistency and opportunism in Thomas’ opinions, I tend to see deeper consistencies and visions, which don’t track tidy doctrinal or even partisan lines but do reflect a larger political imagination.” Link.
    • A new report from JPAL examines the gender differential in returns to loans and grants. Link. h/t Halah
    • Ran Abramitzky, Leah Boustan, Elisa Jácome, and Santiago Pérez examine intergenerational mobility of immigrants in the US over two hundred years. “Using millions of father-son pairs spanning more than 100 years of US history, we find that children of immigrants from nearly every sending country have higher rates of upward mobility than children of the US-born.” Link.
    • “In a Honduran field experiment, sequences of cash transfers to poor households varied in amount of the largest (peak) and last (end) transfers. Larger peak-end transfers increased voter turnout and the incumbent party’s vote share in the 2013 presidential election, independently of cumulative transfers.” Link. h/t Sidhya
    • “After the emancipation of the serfs in 1861, Tsarist Russia’s pace of industrial development, urbanization, and economic growth accelerated. Despite these changes, Russian society was riven by formal social, political, and class divisions, which observers have long tied to the revolutionary events of the early twentieth century. However, for all the debate over class differentiation in Russia before the Bolshevik Revolution, scholars have yet to develop a comprehensive measure of inequality. Careful handling of an eclectic data set reveals the unequal incomes of different classes of Russians on the eve of Revolution. We estimate incomes by economic and social class in each of the fifty provinces of European Russia.” By Peter Lindert and Steven Nafziger. Link.jainfamilyinstitute.us16.list-manage.com/track/click

  3. Radius

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    RELATIVE DUTIES

    The origins of American tax policy

    Tax reform is at the forefront of contemporary policy debate. US citizens pay taxes at lower rates than their European counterparts, and a growing number of researchers agree that progressive taxes on wealth and income have the potential to rectify inequality. The historically less progressive nature of American tax policy is commonly explained as a product of the colonies’ early opposition to “taxation without representation,” as well as the large population of immigrants, the absence of traditional aristocracy, and the ubiquity of “country party republican” ideology which characterized the country’s formation.

    In an essay accompanying the publication of her 2006 book, historian ROBIN EINHORN introduces a new factor into the debate: the impact of domestic politics around slavery on early American state-building. From the piece:

    “Americans are right to think that our anti-tax and anti-government attitudes have deep historical roots. Our mistake is to dig for them in Boston. We should be digging in Virginia and South Carolina rather than in Massachusetts or Pennsylvania, because the origins of these attitudes have more to do with the history of American slavery than the history of American freedom. In 1776, Congress was talking about slavery because its members were framing a national government for the new nation—what would become the Articles of Confederation. Trying to figure out how to count the population to distribute tax burdens to the various states, the members inevitably faced the problem of whether to count the population of enslaved African Americans. Since slaves were 4% of the population in the North and 37% of the population in the South, this decision would have a huge impact on the tax burdens of the white taxpayers of the northern and southern states.

    Slaveholders developed three solutions to this general problem. First, they tried to guarantee that they dominated the legislative process by manipulating the representation rules. Second, they demanded weak governments that would make few of the decisions that provoked discussions of slavery. Third, they insisted on constraining the tax power through constitutional limitations on its use. Yet the real slaveholder victory lay in a fourth strategy—persuading the nonslaveholding majorities that the weak government and constitutionally restrained tax power actually were in the interests of the nonslaveholders themselves. Slaveholders persuaded many of their contemporaries that expansions of slavery are expansions of ‘liberty,’ constitutional limitations on democratic self-government are defenses of ‘equal rights,’ and the power of slaveholding elites is the power of the ‘common man.’ In the topsy-turvy political world we have inherited from the age of slavery, the power of the majority to decide how to tax became the power of an alien ‘government’ to oppress ‘the people.'”

    Link to the essay, and link to a 2000 academic article by Einhorn which presents the argument in greater historical detail.

    • “The growth in cash transactions was critical to the evolution of the modern income tax. Because the market’s cash nexus permitted more and more individuals to derive a greater portion of their income and wealth from the sale of their labor services, lawmakers were able to more easily measure and tap the growing tax base. Consequently, the national tax structure began to shift away from a reliance on indirect levies, namely import duties and excise taxes on alcohol and tobacco, toward more direct and graduated taxes on income and wealth transfers.” Ajay Mehrotra looks at the economic developments behind the passage of the 16th Amendment in 1913. Link.
    • In a new paper, Lucy Barnes links tax progressivity to the strength of capital-labor coalitions in European countries prior to World War I. Link.
    • A 2017 paper by Raymond Fisman, Keith Gladstone, Ilyana Kuziemko, and Suresh Naidu offers the first ever evidence on the taxation preferences of US citizens, finding that Americans are more likely to support taxes on wealth than on savings. Link. See also this 2016 paper by Naidu, Felipe González, and Guillermo Marshall on the role of slave property rights in promoting early American economic development. Link.
      ‡ history taxes politics

    New Researchers

    Selective admissions in the nursing home industry

    Assistant Professor of Strategy at UCLA Anderson ASHVIN GANDHI looks at the practice of private healthcare providers—in particular, nursing homes in California—selecting for the most profitable patients.

    From the abstract:

    “Do healthcare providers pick their patients? This paper uses patient-level administrative data on skilled nursing facilities in California to estimate a structural model of selective admission practices in the nursing home industry. I exploit within-facility covariation between occupancy and admitted patient characteristics to distinguish admission patterns attributable to selective admission practices from those attributable to heterogeneous patient preferences. In spite of anti-discrimination laws, I find strong evidence of selective admission practices that disproportionately harm Medicaid-eligible patients with lengthy anticipated stays. Counterfactual simulations show that enforcing a prohibition on selective admissions would increase access for these residents at the cost of crowding out short-stay non-Medicaid patients from their preferred facilities.”

    Link to the full paper, link to Gandhi’s website.

    ‡ healthcare economics new_researchers

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    +++

    • New on the Phenomenal World: Jerome Hodges and Maya Adereth interview the eminent John Roemer on his early political activity, the development of analytical Marxism, the function of modeling for theoretical advancements, his recent work on Kantian optimization, and the relationship between theory and political practice. Link.
    • “Disparities in who enrolls in college, and where they enroll, results in a higher education landscape that remains highly stratified by socioeconomic status (SES). About 41% of low-SES and 27% of middle-SES high school graduates did not enroll in any form of postsecondary education, whereas only 8% of high-SES recent graduates did not.” Sara Adan discusses how perceived affordability shapes college attendance in the US. Link. ht Laura
    • A new paper by C. Y. Kelvin Yuen and Ping Wang models the relationship between minimum wage hikes and employment levels. Link. (See also this widely read paper by Doruk Cengiz, Arindrajit Dube, Attila Lindner, Ben Zipperer on minimum wages and low-wage jobs.)
    • In the Future Perfect newsletter this week, Dylan Matthews selects his top 5 papers of the past decade, the most recent of which is an evaluation of evidence-based policy: “Using the Results from Rigorous Multisite Evaluations to Inform Local Policy Decisions.” Link. For an ungated draft version, click here.
    • Morris M. Kleiner and Evan J. Soltas analyze the welfare effects of occupational licensing, finding that it “raises wages and hours but reduces employment.” Link. ht Sidhya
    • At LPE Blog, Sanjukta Paul on economic coordination rights in constitutional law. Link.
    • Rutvica Andrijasevic, Devi Sacchetto, and Ngai Pun “investigate the transfer of work and employment practices from Foxconn’s manufacturing headquarters in mainland China to its subsidiaries in Czechia,” highlighting the importance of local bargaining institutions for understanding patterns of internationalization. Link.
    • “While early research found the low-wage occupation share to be rising beginning in at least the 1980s, our recent research has found it to be rising only from 2002–2012, too late to reflect the introduction of relevant technology.” Jennifer Hunt and Ryan Nunn examine the decline of middle-wage jobs and rising inequality. Link.
    • “We find that states with laws prohibiting collective bargaining for teachers and states with lower union dues per teacher made substantially larger cuts to overall educational expenditures after the Great Recession.” Walker Swain and Christopher Redding on union strength and budget cuts. Link.
    • A law journal article by Kate Engold looks at the “investment imperative” that shapes human capital development in the United States. Link.
    • Modeling the $15 minimum wage in DC, along with the the EITC: “The higher minimum wage will produce significant income gains for most of the city’s low-wage workers, with relatively few job losses.” By Fahad Fahimullah, Yi Geng, and Bradley Hardy. Link.
    • “By relying on primary sources across the Italian peninsula, France, Flanders and Britain and for the early modern period across German-speaking regions into Russia, this article shows that the plethora of late medieval revolts were rarely, if ever, confined to a neighborhood or bounded by local religious congregations or family ties. Instead, they were citywide and north of the Alps fused alliances with the peasantry and other cities. With popular protest pushing eastward in the early modern period, these long-distant dimensions became more extensive, crossing linguistic boundaries and thousands of kilometers. In addition, this article raises new questions, such as why peasants and urban rebels in Italy, in contrast to northern Europe, resisted cross-mural alliances, and to what extent late medieval popular insurrection differed from those of the early modern period.” Samuel Kline Cohn Jr. on medieval protests. Link.

  4. Sunset Red and Gold– The Gondolier

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    DESCRIBED FUTURES

    Automation fears and realities

    Of the many justifications for introducing a universal basic income, automation is among the most popular. Over the past years, a slew of reports and endless media coverage has raised the specter of mass “technological unemployment“—a possible future that has been taken up by basic income proponents across the political spectrum. It was even a point of argument in this week’s Democratic presidential debate.

    In the first of a two-part series, historian AARON BENANAV (whose work on the history of unemployment categories we shared in a previous letter) critiques and situates the automation debates within long-term global trends. Framed as a response to what Benanav terms the “automation theorists,” who maintain a sense of inevitability about the robot takeover, the paper pursues alternate explanations: declining labor demand, global deindustrialization, and manufacturing overcapacity.

    From the paper:

    “Automation turns out to be a constant feature of the history of capitalism. By contrast, the discourse around automation, which extrapolates from instances of technological change to a broader social theory, is not constant; it periodically recurs in modern history.

    The return of automation discourse is a symptom of our era, as it was in times past: it arises when the global economy’s failure to create enough jobs causes people to question its fundamental viability. The breakdown of this market mechanism today is more extreme than at any time in the past. This is because a greater share of the world’s population than ever before depends on selling its labour or the simple products of its labour to survive, in the context of weakening global economic growth.”

    Link to the paper, and link to an ungated version on the author’s website.

    • David Autor’s 2016 paper “Paradox of Abundance” examines the problem of its title: “technological changes threatens social welfare not because it intensifies scarcity but because it augments abundance.” Link.
    • A previous newsletter highlights a paper by legal scholar Brishen Rogers, which critiques automation fears in the US context by pointing to labor law and the “fissuring” of the workforce as more consequential for stagnating wages and declining job security. Link. Along the same lines, but in the European context, Zachary Parolin’s recent work for the OECD measures the effects of collective bargaining agreements on wages in automatable occupations. Link.
    • Three post-debate accounts of the issue: Paul Krugman in the Times; Matt Yglesias in Vox; and Jordan Weisman in Slate, featuring the following quote from David Autor: “If we talk about the economic trauma of the 2000s, that’s not primarily due to automation. Nobody can tell you what great invention happened in 1999 that wiped out 20 percent of manufacturing jobs.”
    • For another broad view of macro trends and low-demand problems, see JW Mason’s “Macroeconomic Lessons from the Past Decade.” Link.
    ‡ labor_market automation

    New Researchers

    Monopsony and the gender wage gap

    Postdoc at Microsoft Research SYDNEE CALDWELL and researcher at DeepMind EMILY OEHLSEN examine how labor market concentration affects the gender wage gap.

    From the paper:

    “The idea that this imperfect competition could lead to a gender wage gap dates back to Joan Robinson’s 1933 book, in which she coined the term monopsony. Women may earn less than men if they are, on average, less willing to leave their employer in response to changes in firm and market conditions. This can happen if women are more loyal to their employers (i.e. have higher average switching costs), have less information about their outside labor market opportunities, have different valuations for employer-provided amenities, or face smaller effective labor markets due to different commuting costs. However, without exogenous variation in the wages provided by a single firm it is difficult to produce credible measures of firm-specific elasticities, or to test whether these elasticities differ by gender.

    We find that women have Frisch elasticities double those of men on both the intensive and extensive margins. However, women seem no less willing than men to switch firms in response to changes in relative wages. These results fail to support the hypothesis that gender differences in labor supply response are important for pay gaps for low-skilled workers.”

    Link to the paper, link to Caldwell’s website.

    ‡ monopsony gender new_researchers

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    +++

    • The second of Lily Hu’s two-part post on causal counterfactual reasoning and race in algorithmic fairness: “The critique of the methods that I venture here concerns the particular forms of reasoning about discrimination and equality that causal counterfactual methods require, and asks whether engaging such reasoning is: 1) plausible as a way of understanding discrimination as a distinct kind of moral (and legal) wrong and 2) practical as a means toward building fair decision systems.” Link.
    • “We present what we believe are the first measures of intergenerational mobility in the United States based on credit scores.” A new report by Daniel Hartley, Bhash Mazumder, and Aastha Rajan at the Federal Reserve Bank of Chicago looks at the relationship between credit and inequality. Link.
    • New data from the SHIFT project offers insight into how erratic work schedules impact the lives of service workers. Link.
    • On Twitter this week Gabriel Zucman and Wojtek Kopczuk debated conceptualizations of corporate tax incidence, spurred by Zucman’s new book with Emmanuel Saez. Link to Arindrajit Dube’s helpful summary thread.
    • Amy Ellen Schwartz and Michah W. Rothbart look at the impact of universal free meals (UFM) on school performance in New York City public schools. Their findings: “Increases in school lunch participation improve academic performance for both poor and non‐poor students; an additional lunch every two weeks increases test scores by roughly 0.08 standard deviations in math and 0.07 standard deviations in ELA.” Link.
    • Maxim Pinkovskiy finds not only that inequality in life expectancy is increasing across the US, but that this increase is largely driven by growing income disparities. Link.
    • 250,000 miles of Roman Empire roads, in transit map form. Link. See also Stanford’s “Geospatial Network Model of the Roman World.” Link.
    • “Even as the Latin American regional economy slowed over the past five years, Bolivia had the highest growth of per capita GDP in South America. The country’s solid economic growth has contributed substantially to the reduction of poverty and extreme poverty. This economic transformation was possible due to policy decisions, including a new constitution with significant economic mandates; public ownership of natural resources and some strategic sectors of the economy; and redistributive public investment and wage policies.” A new CEPR report by Andrés Arauz, Mark Weisbrot, Andrew Bunker, and Jake Johnston. Link.
    • In an article from February, Beccy Wilebore et. al draw on satellite imagery to analyze the impact of unconditional cash transfers on land use changes in the Gola Rainforest National Park, in Sierra Leone: “We find support for the hypothesis that unconditional payments, in this setting, increase land clearance in the short run.” Link. ht Sidhya
    • Twenty three individuals and organizations, including the Center for Democracy and Technology and Data and Society, have declared opposition to the HUD’s proposed weakening of disparate impact liability: “The current ‘burden-shifting framework’ allows courts to examine the specific facts of the case and determine whether the facially neutral practice caused unjustified discrimination. Under the proposed modification, most algorithmic models that caused cognizable disparate impacts would never make it to this fact-specific inquiry.” Link.
    • “The Early Bronze Age (EBA) of the southern Levant was the first period in which many sites became fortified. This process reached its climax during the latter part of the period (namely Early Bronze III). Until recently, most scholars saw this phenomenon as an indication that the period was characterized by a high level of organized conflict. The following article analyses the fortifications of eight EBA sites, as well as other markers of warfare, and argues that the period’s fortifications were built mainly to demonstrate a town’s might and power while deterring potential attackers. Taking into account the rise of social complexity during the period, they were also used to consolidate the society through the construction process and possibly to control movement and serve as a boundary marker. Incipient leaders, who planned and coordinated the construction, used possible threats and the construction process to aggrandize themselves as being the ‘protectors’ of the settlement.” Link.

  5. Machine

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    WEAK OUTCOMES

    On the returns to for-profit colleges

    As student debt grows and the labor market stagnates, a growing body of research seeks to answer questions about the worthiness of college. What characterizes the schools and populations for whom college is worth it? What does worthiness mean—financial, intellectual, for individuals, for society as a whole? A key way to examine these questions is to find evidence on the financial returns to college. Douglas Webber examines the question along lines of ability, major, and debt, and explores the question for marginal students; JFI’s Sidhya Balakrishnan and Barry Cynamon looked at the way that returns vary based on the type of financing (loans, IDR, ISAs).

    A new paper from STEPHANIE CELLINI and NICHOLAS TURNER uses administrative data to examine the returns to public college vs. for-profit college certificate programs. The key finding is that “for-profit certificate students experience lower earnings and employment post-college than their public sector counterparts,” but the richness of the data allows for many more surprising conclusions as well: one is that for-profit college may actually have worse returns than no college whatsoever; another is that for-profits may have worse effects for women than for men. From the paper:

    “Across the board, our results show that despite the much higher costs of attending a for-profit institution, the average for-profit certificate student experiences lower earnings effects relative to public sector students. For-profit colleges outperform public institutions in only one of the top ten for-profit fields—cosmetology. Further, students in online and chain for-profit institutions appear to fare worse than students in more traditional campus-based and independent institutions. Our institution-level regressions reveal that the weak performance of the for-profit sector is not limited to a few poor performing institutions, rather the majority of schools appear to have negligible average earnings effects.”

    The full paper is available in the Journal of Human Resources here.

    • Scott Cunningham wrote a substantial tweet-thread summary, available here. “I’d include this paper when sorting through the human capital vs signaling debate. This is arguably pure credentialing… So why are the returns so bad if it’s also a credential? I’d be curious how proponents of the ‘education is only signaling’ hypothesis reacted to this study.” For more on that debate, see our previous JFI letter.
    • How can for-profit colleges be held accountable for poor returns to the educations that they provide? A 2016 report from Davids J Deming and Figlio explains the successes and failures of Obama’s Gainful Employment Act, and suggests the importance of financial “skin in the game” for all kinds of institutions. Link.
    • A new data explorer from the Urban Institute brings together an array of education data sets. Link.
    • Cellini and Turner’s piece examines certificate programs at for-profits. For more on certificate programs, see our March letter on the work of Di Xu and Madeline Trimble, and our May letter on the many non-Title-IV certificates, certifications, and credentials about which there is almost no data.
    ‡ higher_education returns_to_college

    New Researchers

    Informal domestic work in Argentina

    Brian Feld, PhD student in Economics at the University of Illinois, studies informal labor markets in low and middle income countries. His job market paper examines the impact of a 2013 policy aimed at formalizing the work of domestic laborers in Argentina.

    From the introduction:

    “I find that after the reform formality rates among domestic workers went from 16% to 22%, a 36% increase. Despite the increase in formality rates, I do not find changes in unemployment among domestic workers, although I do observe a reduction of 3.4% in hours of work per week from a baseline of almost 25 hours. Labor earnings per month do not decrease but rather increase approximately 4% after the reform, which implied that earnings per hour increased by almost 8%. The increase in earnings suggest that the formalization also led employers to comply with other labor regulations, such as minimum wages.

    I also study the impacts of the policy change on the educational outcomes of children of domestic workers. Among boys, I find an increase of 2.6% in school attendance (a 3.1% increase), a 4.2% increase in years of education (from a pre-reform average of 8 years), and a 7.3% increase in secondary school completion (which corresponds to a 20% increase from pre-reform values) among male children. On the other hand, I do not observe significant impacts of the reform on schooling outcomes among girls.”

    Link to the paper, and to Feld’s website.

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    +++

    • New on the Phenomenal World: part one of Digital Ethics fellow Lily Hu‘s enthusiastically received deep dive into the problems with causal counterfactual reasoning about racial discrimination. Link.
    • On 18 October at 3PM, Zachary Parolin will be visiting the JFI offices in New York to lead a research session covering his recent work on automation and unions. If you’re interested in joining, please sign up here.
    • “It has been difficult for environmentalists to engage with either carbon removal or solar geoengineering in a forward-thinking way. Part of this is due to a fixation on the immediate need to see emissions peak — but part of it also has to do with some serious limitations in how we think.” In a new post, Holly Jean Buck argues for active public participation in climate policy. Link.
    • “In this paper, we leverage the quasi-random movement of New York City police commanders across police precincts to estimate the net impact of stop and frisk policing on students’ long-run educational attainment. We find that increased exposure to police stops has negative effects on high school graduation, college enrollment, and college persistence. These effects are substantially larger for black students, the racial group overwhelmingly stopped by police.” By Andrew Bacher-Hicks and Elijah de la Campa. Link. ht Sidhya
    • David Walters and Michael Quinlan document “the struggle of coalminers for mine safety in Australia and New Zealand from 1871-1925.” Link.
    • “The U.S. economy has recently experienced two, seemingly unrelated, phenomena: a large increase in post-retirement life expectancy and a major expansion in securitization and shadow banking activities. We argue they are intimately related. When expecting to live longer, agents rely more heavily on intermediaries that use securitization, with riskier but higher returns.” New NBER publication by Guillermo Orgoñez and Facundo Piguillem. Link. (And link to an ungated version from 2017.)
    • On VoxTalks, Nathan Sussman discusses the early financial development of London, dispelling the common misconception that the city only emerged as a financial center in the late 17th century. Link.
    • A new report by Fatih Guvenen, Gueorgui Kambourov, Burhan Kuruscu, Sergio Ocampo, and Daphne Chen at the Center for Equitable Growth concludes that “wealth taxation has the potential to raise productivity while simultaneously reducing consumption inequality.” Link.
    • The first three volumes of the History of Cartography have been made free and available for download by the University of Chicago Press. Inside: Cartography in Pre-historic, Ancient, and Medieval Europe and the Mediterranean, and South East Asian, South Asian, African, American, Arctic, Australian, and Pacific societies. Link.
    • “One approach to justice in algorithmic prediction is to attempt to make it more like Laplace’s omniscient demon, and less like his rule of succession; from this perspective, better predictions – based on causal models – are fairer predictions.” Reuben Binns looks to Laplace’s 1814 “Sunrise Problem” to frame contemporary debates over algorithmic fairness. Link.
    • “It took the UK about a century and a half to increase its GDP per capita by half as much as China did in less than 40 years.” At VoxEU, Li Yang, Filip Novokmet, and Branko Milanovic examine the transformation of Chinese urban elite between 1988 and 2013. Link.
    • “This paper provides evidence of the long-run effects of a permanent increase in agricultural productivity on conflict. We construct a newly digitized and geo-referenced dataset of battles in
      Europe, the Near East and North Africa covering the period between 1400 and 1900 CE. For variation in permanent improvements in agricultural productivity, we exploit the introduction of potatoes from the Americas to the Old World after the Columbian Exchange.” Link to the paper by Murat Iyigun, Nathan Nunn, and Nancy Qian. For related work by Nunn and Qian, see the end of this previous letter.

  6. The Balloon

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    DIFFERENCE ENGINE

    Labor and mechanized calculation

    Breathless media coverage of machine learning tools and their applications often obscures the processes that allow them to function. Time and again, services billed or understood by users as automatic are revealed to rely on undervalued, deskilled human labor.

    There is rich historical precedent for the presence of these “ghosts in the machine.” In a 2017 lecture, Director Emirata of the Max Planck Institute for the History of Science LORRAINE DASTON examines the emergence of mechanical calculation, revealing a fascinating history of the interaction between new technologies and the methods of routinizing and dividing intellectual labor that emerges alongside them.

    From the introduction:

    “The intertwined histories of the division of labor and mechanical intelligence neither began nor ended with this famous three-act story from pins to computers via logarithms. Long before Prony thought of applying Adam Smith’s political economy to monumental calculation projects, astronomical observatories and nautical almanacs were confronted with mountains of computations that they accomplished by the ingenious organization of work and workers. What mechanization did change was the organization of Big Calculation: integrating humans and machines dictated different algorithms, different skills, different personnel, and above all different divisions of labor. These changes in turn shaped new forms of intelligence at the interface between humans and machines.”

    Link to the paper version of the lecture. (And stay tuned to the Phenomenal World for our upcoming interview with Daston.)

    • A 1994 paper by Daston entitled “Enlightenment Calculations” gives specific attention to the logarithmic tables of Gaspard de Prony, which sought to demonstrate the usefulness of the newly-invented metric system: “The tables marked an epoch in the history of calculation but also one in the history of intelligence and work.” Link.
    • Matthew L. Jones, an historian at Columbia University, studies the history of calculation and computing. His 2016 book Reckoning with Matter: Calculating Machines, Innovation, and Thinking about Thinking from Pascal to Babbage traces the history of attempts to routinize, mechanize and apply the power of calculation. Link to the book, link to Lorraine Daston’s review in Critical Inquiry.
    • Simon Schaffer’s 1996 paper on the relationship between Charles Babbage’s calculating engine and the contemporaneously emerging factory system. Link.
    • A syllabus prepared by Mary L. Gray and Siddharth Suri, authors of Ghost Work—a book about the “hidden” labor force behind many tech services—surveys the tech platform subcontracting labor market. Link.
    ‡ history_of_science digital_ethics history

    New Researchers

    Collective bargaining’s effects in Brazil

    In his job market paper, PhD candidate in economics at Columbia LORENZO LAGOS studies the impacts of collective bargaining in Brazil, with a focus on an understudied factor: amenities.

    From the abstract:

    “This paper studies how a collective bargaining institution affects workers’ wages and amenities. The particular institution of interest is automatic extensions, which dictate that negotiated benefits cannot be phased out except through new collective bargaining agreements (CBAs). The introduction of automatic extensions in Brazil shocked the collective bargaining process by 1) allowing unions to holdout during negotiations; 2) expanding the time horizons over what is negotiated; and 3) increasing the relative value of amenities to wages. I find that mean wages fall at establishments with extended CBAs… and that bargaining units with strong unions secure additional amenities valued above the decrease in wages.”

    Link to the abstract, and to Lagos’s website.

    ‡ labor new_researchers

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    +++

    • Souraya Sbeih and William Cook report on new data revealing how 400 Kenyans use mobile banking service M-Pesa. Preliminary findings: M-Pesa is quickly and frequently converted to cash. Link to an overview of the data (and link also to our previous newsletter on fin-tech and poverty alleviation).
    • CEPR’s interactive “Blue Collar Jobs Tracker” shows the geographic decline in industrial jobs by sector and month, since 2018. Link.
    • An engaging study of the iPhone from Tricontinental: “One estimate suggests that if the iPhone were made in the United States, it would cost at least $30,000 per phone.” Link. ht Francis
    • Marta Kołczyńska empirically tests the influence of inequality on protest participation. Her conclusions: “Most of the observed effect of economic inequality on participation is due to between‐country differences rather than within‐country changes in inequality. The results therefore do not support a causal relationship between protest participation and economic inequality.” Link.
    • “I am more impressed by people who make modest progress on questions of obvious importance than people who make decisive progress on questions that aren’t even worth asking.” Political scientist and anthropologist James Scott on the limits to scientific reasoning in the social sciences. Link.
    • Regardless of whether they’ve taken a statistics course, college graduates fail to draw on prior research when calculating the probability of a reported research outcome. By W Burt Thompson, Amanda Garry, John Taylor, and Milen L. Radell. Link.
    • From Columbia’s Center on Sustainable Investment, a new report outlines how value-chain shifts and climate risks are impacting the lives of coffee producers. Link.
    • Maria Claudia Soler analyzes the experience of ISA recipients across Latin America: “Students who took ISAs expect higher future income, but have a worse academic performance than non-takers, suggesting that adverse selection might be a challenge for the large-scale implementation of ISAs.” Link.
    • At StatsBlog, a critique of the existing definition of P-values offered by the National Academy of Sciences, which fails to “distinguish likelihood from probability.” Link. ht Sidhya
    • Dylan Matthews skillfully breaks down the ramifications of Henrik Kleven’s new paper on the labor supply effects of work requirements. Link to the article, and link again to the paper, which we covered in a previous newsletter.
    • “By focusing on the history of white ants in colonial South Asia, this article shows how insects were ubiquitous and fundamental to the shaping of British colonial power. British rule in India was vulnerable to white ants because these insects consumed paper and wood, the key material foundations of the colonial state. The white ant problem also made the colonial state more resilient and intrusive; government intervention was extended in order to control it. But despite state intervention, white ants did not vanish altogether, and colonized and post-colonial South Asians used white ants to articulate their own distinct political agendas. Over time, white ants featured variously as metaphors for Islamic decadence, British colonial exploitation, communism, democratic socialism, and, more recently, the Indian National Congress. Co-constitutive encounters between the worlds of insects and politics have therefore been an intrinsic feature of British colonialism and its legacies in South Asia.” White Ants, Empire, and Entomo-Politics in South Asia, by Rohan Deb Roy. Link.

  7. Little Mephisto

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    VARIED NET

    The politics of welfare in the 21st century

    In his 1990 book, The Three Worlds of Welfare Capitalism (TWWC), sociologist Gosta Esping-Andersen identified three categories of European welfare regimes: liberal, conservative, and social democratic. In Esping-Andersen’s account, these welfare regimes developed according to the sorts of coalitions formed by working people: social democratic regimes are based on associations between agricultural workers and industrial socialist organizations; conservative regimes emerged through an alliance between labor organizations and religious groups; liberal regimes are ones in which strong workers movements never managed to significantly structure bargaining institutions.

    The dynamic and historical account of welfare state development which TWWC proposes continues to influence our understanding of how distributional conflicts can shape political institutions. However, Esping-Andersen’s categories were based on full employment and high growth—a paradigm that no longer holds. In a lesser known but more recent book, the author attempts to adjust his model to postindustrial labor markets.

    From the introduction:

    “This book is an attempt to come to grips with the ‘new political economy’ that is emerging. One premise of my analyses is that ‘postindustrial’ transformation is institutionally path-dependent. This means that existing institutional arrangements heavily determine national trajectories. More concretely, the divergent kinds of welfare regimes that nations built over the post-war decades have a lasting and overpowering effect on which kind of adaptation strategies can and will be pursued. Hence, we see various kinds of postindustrial societies unfolding before our eyes.

    Contemporary debate has been far too focused on the state. The real crisis lies in the interaction between the composite parts that, in unison, form contemporary welfare ‘regimes’: labour markets, the family, and, as a third partner, the welfare state. What most commentators see as a welfare state crisis, may in reality be a crisis of the broader institutional framework that has come to regulate our political economies. Our common tendency to regard postindustrial society as a largely convergent global process impairs our analytical faculties and our ability to understand the radical shifts in government and power which have taken place in recent decades.”

    Link to the publisher’s page.

    • Esping-Anderson’s analysis rests heavily on the Polanyian notions of decommodification and double movement. In a recent book chapter, sociologist Michael Burawoy elaborates on the persisting relevance of these concepts for understanding social movements in market societies. Link.
    • Philip Manow uses the historical framework developed in TWWC to explain the success of communist parties in Southern Europe: “Conflicts between the nation-state and the Catholic church in the mono-denominational countries of Europe’s south rendered a coalition between pious farmers and the anticlerical worker’s movement unthinkable, leading to the further radicalization of the left.” Link.
    • “How can the social categories which are commonly called ‘middle’ class be situated within a conceptual framework built around a polarized concept of class? What does it mean to be in the ‘middle’ of a ‘relation’?” In his 2000 textbook, Class Counts, the late Erik Olin Wright develops a theoretically rich account of class relations and their relevance for understanding historical change. Link.
    ‡ welfare history political_economy

    New Researchers

    US deportations and human capital development in Central America

    In an AEA paper published in May of this year, Associate Professor of Economics at Princeton MARIA MICAELA SVIATSCHI examines the effects of US deportations to Central America. Looking at the uptick in deportations of people with criminal convictions following the draconian 1996 immigration laws, Sviatschi examined the effects of context on human capital development.

    From the abstract:

    “I ask whether peer effects generate changes in education investments in the areas where deported criminals are located in Central America using administrative data in El Salvador. I exploit the increase in criminal deportations from the United States in 1996 to analyze how individuals who grew up in municipalities affected by gangs in 1996 have fewer years of schooling when they are young adults. I find that individuals who were exposed during childhood to gang leaders have less schooling than those who were older than 16 in 1996 when the law was passed.”

    Link to the paper, link to Sviatschi’s website.

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    +++

    • At the Phenomenal World, Francis Tseng and Jack Gross interview Seda Gürses and Bekah Overdorf, two computer scientists whose work grapples with the externalities of optimization systems. “Where privacy gets you to focus on personal data and the profiling of individuals, optimization gets you thinking about how groups of people and entire geographies are optimized for profit.” Link.
    • Ellora Derenoncourt and Claire Montialoux examine the effect of minimum wages laws on racial inequality. “Using a cross-industry difference-in-differences design, we show that wages rose sharply for workers in the newly covered industries. The impact was nearly twice as large for black workers as for white.” Link.
    • A 2004 paper by philosopher Elizabeth Anderson, who was awarded a MacArthur Genius Grant this week, examines the and rejects the (sparse) justifications for work requirements in welfare regimes. Link. See also another excellent paper by Anderson: “Use of Value Judgements in Science.” Link.
    • “Banks are closing their branches across the US. Branch numbers declined in every single year since 2009, amounting to a total net loss of 11,244 by 2018, or 11.4%. If Europe is any guidance, more than 8 out of 10 branches will be closed in the near future.” By Jan Keil. Link.
    • Arvind Subramanian and Dani Rodrik examine the peristence of financial globalization. Link.
    • “The figure of the judge or adjudicator in international tribunals has been garnering growing attention. Yet we know relatively little about how adjudicators actually produce their rulings. Anecdotal evidence suggests that for all the attention panelists and Appellate Body (AB) members at the World Trade Organization (WTO) receive, the Secretariat plays an overlooked and increasingly important role. We examine this role and… the findings are unambiguous: the WTO Secretariat exerts significantly more influence over the writing of WTO panel reports than panelists themselves.” Link.
    • An IPA policy brief highlights the nine-year results of a start-up cash transfer grant in Uganda. Link.
    • Sunit Bagree on financial outflows from Southern Africa. Link.
    • A special issue of German History Journal on German labor history across time and context. Link.
    • Michael Lipsitz and Evan Starr examine the effect of the 2008 Oregon ban on non-compete agreements for low-wage workers, and find the wage-suppression and job immobility effects of NCAs to be significant. Link. Another paper co-authored by Lipsitz looks more closely at NCAs’ effect on worker mobility. Link.
    • Kevin Rinz examines life cycle differences in the effects of exposure to the Great Recession. Link.
    • “The fertilizer trade was instrumental in mobilizing new sources of nutrients and motivating innovative labor regimes. Chilean nitrate firms used a similarly coercive labor regime known as the enganche system. In the 1880s, recruiters for the Nitrate Producers Association began enlisting migrant workers in Chile, Bolivia, and Peru. Enganchadores, literally ‘ones who press or trick others into performing a service,’ hosted raucous, liquor-soaked carnivals where they enticed migrant laborers with tales of the boomtown fortunes to be made in the Norte Grande, the northernmost region of Chile. Once these men signed on, they found themselves at the mercy of company agents who routinely ignored contractual obligations. Debt for his passage to the mines became the interminable bond that kept each worker toiling endlessly for his contractor. As a result, the First Green Revolution—from the 1840s to the 1930s—not only represented an unprecedented human intervention in the global nitrogen cycle, it also relied upon a new configuration of transnational labor relations.” Link. ht Francis

  8. The One

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    FICTIONAL BARGAIN

    The meaning and impact of the Coase Theorem

    Recent years have seen a surge in scholarship that critically evaluates the origins and impact of the law and economics movement. Out of the many theoretical bedrocks of the movement, the Coase Theorem is one of the most significant. Stemming from Ronald Coase’s 1960 paper “The Problem of Social Cost,” the theorem itself was coined by George Stigler in his 1966 book The Theory of Price. (Click here for a very simple primer on the theorem as it is generally taught.)

    A 1999 paper by STEVEN MEDEMA—an economist and historian who has written extensively on Coase and his legacy—looks at the role that the Coase theorem has played in the law and economics movement:

    In spite of the often heavily ideological overtones of the Coase theorem debate, the theorem is simply a positive proposition, stating that under certain conditions a particular result will follow. Yet, the Coase theorem has been assailed from the left (as conservative dogma) and from the right (as liberal dogma); its moral, philosophical, and political underpinnings have been called into question; its logic, applicability, and empirical content have been both trashed and defended; it has been hailed as offering a new way to conceptualize law and legal culture and attacked as anathema to the traditional common law process. The present essay will attempt to explain how and why the Coase theorem quickly evolved from a debunking fiction to the basis of one of the most successful branches of applied economics in the last part of this century.

    Link to the paper.

    • Ronald Coase’s seminal paper “The Problem of Social Cost.” Link. And an interview with Coase from 1997, in which he says: “I think the success of the Coase Theorem—because it’s discussed all over the place—is an interesting illustration of what’s wrong with economics. If you read ‘The Problem of Social Cost,’ it occupies perhaps four pages. It’s useful because you can show the type of contracts that would have to be made in order to have an efficient economic system. But then you have to introduce the obstacles to doing it. Then you see how the system actually works.” Link.
    • A 1998 paper by Deirdre McCloskey examines the legacy of the theorem: “Something like a dozen people in the world understand that the ‘Coase’ theorem is not the Coase theorem. One of this select group is Ronald Coase himself, so I suspect we blessed few are right.” Link.
    • A post by Steven Medema on VoxEU treats Coase’s legacy and the distance between his own views and the school of thought which adopted the theorem bearing his name. Link. Another paper by Medema examines the Coase Theorem on its sixtieth anniversary. Link.
    • Robin Hahnel and Kristen Sheeran provide an “internal critique” of the theorem, arguing that even under optimal conditions—low transaction costs and well-defined property rights—it generates perverse incentives. Link.
    • A 2017 paper by Dina Waked—”Sense and Nonsense of the Economic Analysis of Tort Law”—situates the law and economics school (and its invocation of Coase) alongside earlier and more recent alternatives, including the early institutionalists. Link.
    ‡ law_and_economics history economics

    New Researchers: DOMINANT DIVIDEND

    How the interests of capital owners shape government response to crises

    PhD Candidate in Government at Cornell University JIMENA VALDEZ studies the different ways that states interact with large concentrations of capital, both foreign and domestic. In a pre-published paper which is currently under review, she compares responses to the Eurozone crisis in Portugal and Spain, two countries which, despite facing similar external pressures to decentralize wage bargaining following the crisis, ultimately exhibited divergent responses. According to Valdez’s research, the ability of governments to liberalize labor markets depended on the size and affiliations of their export competing sector.

    From the paper’s introduction:

    On September 7 of 2012, Pedro Passos Coelho, the Prime Minister of Portugal, broadcast a message from his official residence announcing the strategy to recover from the Eurozone crisis—a combination of austerity, public spending cuts, tax increases, and pro-market reforms. While the Portuguese people went into the streets to protest, the main business associations had an unexpectedly similar reaction—immediate and public rejection. The government withdrew the measure two weeks later. By contrast, when on July 11, 2012 the Spanish Prime Minister Mariano Rajoy went to the Parliament to announce the largest economic adjustment of the democratic era—a combination of cuts to public servants, unemployed and dependent people, as well as an increase in taxes—the business sector applauded it. Juan Rosell, the head of the Spanish Confederation of Business Organizations, said that the economy required “deep, painful and courageous” reforms and asked for further reductions in expenditures and less increase in taxes.

    Against the common assumption that the liberalization of labor markets is not only sought, but widely embraced by capital, I show that, beyond a general preference for lower labor costs, business interests are heterogeneous and influence policy in unexpected ways. I advance the theory that business positions on liberalization are shaped by international exposure and sectoral production strategies, as well as binding associational commitments. Corresponding to these variables, business will have different preferences for the different dimensions of labor liberalization—employment protection legislation (EPL) and collective bargaining (CB). In addition, policy-makers mostly take into account the interests of those business sectors that are relevant to the model of economic growth they prefer, and dismiss the rest.”

    A draft of the paper is available upon request, via Valdez’s website.

    ‡ labor_market austerity new_researchers

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    +++

    • Among the persisting arguments in favor of minimum income requirements for EITC recipients is their effect on labor supply. A newly published (and widely anticipated) paper by Henrik Kleven casts doubt on existing evidence which supports this claim: “I show that the employment effects align closely with exposure to welfare reform and the business cycle. Single mothers who were unaffected by welfare reform (but eligible for the EITC) did not respond. Overall and contrary to consensus, the case for sizable extensive margin effects of the EITC is fragile.” Link.
    • “Economics has contributed disturbingly little to discussions about climate change. This is a moment for our discipline to engage in a careful discussion of priorities and what it can contribute.” From VoxEu, a bibliometric analysis on economists’ barely existing contributions to discourse on climate change. Link.
    • An essay adapted from Katrina Forrester’s new book on post-war liberal philosophy. “Rawls’s ideas were developed during a very distinctive period of U.S. history, and his theory bears an intimate connection to postwar liberal democracy. Is liberal political philosophy complicit in its failures? Is political philosophy, like liberalism itself, in crisis, and in need of reinvention? And if so, what does its future look like?” Link.
    • “High student debt levels and systemic racism have created a vicious cycle for Black students.” In a new paper, Suzanne Kahn, Mark Huelsman, and Jen Mishory consider the compounding effects of student debt and the racial wealth gap. Link.
    • An arbitration next week may have large consequences for Uber, and determine the legality of its surge pricing feature. Link. Via Marshall Steinbaum, who wrote an article about this back in 2016. Link.
    • In the Annual Review of Environment and Resources, on “The State of the World’s Mangrove Forests,” by Daniel A. Friess et. al. Link.
    • Ioana Marinescu, Ivan Ouss, and Louis-Daniel Pape on labor market concentration, wages, and hires: more concentration, fewer hires, lower wages. Link.
    • A paper by Alice Evans looks at the dynamics of reform campaigns, with supply chain legislation as its case study: “Many activists are stuck in a despondency trap. Never seeing radical reform, they assume it is impossible, moderate their ambitions, and invest in more feasible but sub-optimal alternatives. This creates a negative feedback loop, in which the dearth of radical reform becomes self-fulfilling. But if reformists see advances at home and abroad, they may become more optimistic about collective mobilization and break out of their despondency trap. This is shown by tracing the drivers of ground-breaking legislation.” Link.
    • From the Cambridge Journal of Economics, a special issue on the nuances of financialized capitalism. Link.
    • Sean O-Brady examines “trends in wages, working hours, pensions and healthcare in food retail in Canada, Germany, Sweden and the USA between 1980 and 2016,” finding that “Precariousness increased in each country, but the form and degree of change differed markedly, reflecting the effects of product market competition, bargaining centralization and labour regulation.” Link.
    • In a new report for the Ash Center, Colleen Mathis, Daniel Moskowitz and Benjamin Schneer consider how independent redistricting commissions improved democratic representation in states like Arizona: “When states create independent redistricting commissions, they remove the authority for drawing electoral lines from politicians and hand it over to independent bodies consisting of multi-partisan citizen volunteers who do not hold public office.” Link.
    • “This article explores the challenges of redefining property rights for land, with application to monarchical Iraq from 1944 to 1958. We apply two processes in the analysis of economic institutions to study history: a puzzle-solving method at the micro level, with broader interest in the role of institutions in development and economic growth at the macro level. Thus, we explore the interaction between demanders and suppliers of land reform in the political market, focusing on the parliamentary influence of big landholders as an interest group. We conclude that despite increasing demand for land reform, politicians were able to supply quantitative change only, consisting of the allocation of newly arable land to landless cultivators, rather than the redistribution of existing assets or qualitative change.” The Political Economy of Property Rights in Monarchical Iraq, by Omar A. M. El-Joumayle and Bassam Yousif. Link.

  9. Live Airborne System

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    DIVIDED INTEGRATION

    Immanuel Wallerstein’s contributions to research in the social sciences

    Two weeks ago today marked the passing of the great Immanual Wallerstein. His work has had resounding influence across fields: from literature, to legal theory, education, development studies, and international relations. Among his foremost contributions is the four volume Modern World System series, which recount the transformation of feudalism into global capitalism through progressive incorporation of new regions into the European capitalist core. Complementing this history was world-systems theory, an analytical approach which challenged the tendency of social science research to identify simplified and direct causal relationships.

    Wallerstein argued that purely economic, historical, or political analyses of society exclude more factors than they incorporate, casting doubt on both their internal and external validity. From the introduction to World Systems Analysis:

    The phenomena dealt with in these separate boxes are so closely intermeshed that each presumes the other, each affects the other, each is incomprehensible without taking into account the other boxes. The separate boxes of analysis are an obstacle, not an aid, to understanding the world. Structurally, the social reality within which we live has not been the multiple national states of which we are citizens but something larger, which we call a world-system. This world-system has had many institutions—states and the interstate system, productive firms, households, classes, identity groups of all sorts—which form a matrix which permits the system to operate but at the same time stimulates both the conflicts and the contradictions which permeate it.

    The world-system is a social creation, with a history, whose origins need to be explained, whose ongoing mechanisms need to be delineated, and whose inevitable terminal crisis needs to be discerned. For this reason, it is important to look anew not only at how the world in which we live works but also at how we have come to think about this world.

    Link to the book’s first pages.

    • “My intellectual development led me to historicize social movements, not only to better understand how they came to do the things they did, but also in order to better formulate the political options that were truly available in the present.” On his website, Wallerstein reflects on the questions and contradictions that informed his life’s work. Link.
    • “The Modern World-System is a theoretically ambitious work that deserves to be critically analyzed as such.” Theda Skocpol’s sympathetic scrutiny of the weaknesses in Wallerstein’s major work, from the 1977 Review of American Sociology. Link.
    • Wallerstein’s account of feudal breakdown, which stressed external factors like increased trade, countered that of historians like Robert Brenner, who focused instead on internal factors like peasant revolts. Robert A. Denemark and Kenneth P. Thomas give an overview of the debate. Link.
    ‡ sociology history methodology

    New Researchers: LATENT DIMENSION

    The complexities of political alignment on Brazil’s supreme court

    In a 2017 paper, ALEXANDER HUDSON—currently a postdoc at the Max Planck Institute for the Study of Religious and Ethnic Difference—examines the ideological breakdown of Brazil’s Supremo Tribunal Federal (STF).

    From the paper:

    Beyond uncovering a more complete picture of the complexity of voting behavior of the justices of the STF, we hope to make a theoretical contribution in terms of the difference between the vast bulk of cases that the STF decides, and the few critical judgements it makes each year. Our theory holds that in cases that are in some way vital to the interests of the central government, justices are inclined to deviate from their broader voting record, and vote to uphold the government’s policy agenda. In the case of Brazil’s STF, this is particularly interesting, since the court decides such a high number of cases each year. There is evidence individual justices use their prerogatives in non-orthodox ways to ‘bury’ politically important decisions among the thousands of cases each year. Furthermore, we expect that in cases of high salience, the ideological structure of the court will show fewer dimensions—highlighting clearer divisions within the court.

    Link to the paper, link to Hudson’s website.

    ‡ law politics new_researchers

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    +++

    • New on the Phenomenal World: Owen Davis on the commodity, chartalist and credit theories of money. Link.
    • “The increased reliance on quantitative evidence does not relieve us from taking sides in distributional conflicts.” JFI fellow Max Kasy on the importance of value-judgements in policymaking, for Econfip. Link.
    • In the Boston Review, Marshall Steinbaum defends Binyamin Appelbaum’s new book, The Economists’ Hour, which “condemns the role the economics profession has played in breeding inequality, and holds economists to account for the resulting backlash.” Link.
    • Neave O’Clery, Eoin Flaherty and Stephen Kinsella use a “multi-scale community detection algorithm” to analyze the “network of inter-industry worker flows in the Irish economy.” Link.
    • To effectively combat climate change, we need to “shift the focus from the super-poor to the super-rich,” according to Ilona M. Otto, Kyoung Mi Kim, Nika Dubrovsky, and Wolfgang Lucht. Link.
    • “Policy requires arithmetic, but it is never reducible to arithmetic.” On their respective blogs, Matt Bruenig and Max Sawicky debate the financial feasibility of a UBI. Link to Sawicky’s original post, link to Bruenig’s response, and link to the former’s final reply.
    • On the VoxEU podcast, Mark Harrison, Alan Bollard, Walter Scheidel, and Cormac Ó Gráda discuss the economic history of World War II. Link.
    • Michael Weiss on the impact of informational campaigns and “last dollar” tuition assistance in 10 Ohio community colleges: “Many more students will take advantage of the summer session and earn credits toward a degree if thoughtfully encouraged to do so.” Link.
    • “When measuring the labor input on the basis of the rate of unemployment, we conclude that the US economy is currently performing very well. When the current situation is judged from the point of view of hours worked, instead, the extent of the current use of the labor input is considerably less impressive, and a sizeable gap appears with respect to other historical peaks of activity.” Claudia Fontanari, Antonella Palumbo, and Chiara Salvatori expound on the overlooked weaknesses of the US’s full employment economy. Link.
    • Growing evidence suggests that student faculty evaluations are heavily biased against women and people of color. Link to the ASA’s recent statement, which argues that “student feedback should not be used alone as a measure of teaching quality.”
    • From 2014: Laura Panza and Jeffrey G. Williamson assess the state-led industrialization strategy undertaken by Muhammad Ali, who ruled over Egypt under the Ottoman Empire from 1805-1849. Link.
    • On “The Early Origins of the UK’s Finance-led Growth Model,” by Tami Oren and Mark Blyth. Link.
    • “We analyze the centralization of political parties and elite networks that underlay the birth of the Renaissance state in Florence. Class revolt and fiscal crisis were the ultimate causes of elite consolidation, but Medicean political control was produced by means of network disjunctures within the elite, which the Medici alone spanned. Cosimo de’ Medici’s multivocal identity as sphinx harnessed the power available in these network holes and resolved the contradiction between judge and boss inherent in all organizations. Methodologically, we argue that to understand state formation one must penetrate beneath the veneer of formal institutions, groups, and goals down to the relational substrata of peoples’ actual lives. Ambiguity and heterogeneity, not planning and self-interest, are the raw materials of which powerful states and persons are constructed.” A classic 1993 paper by John F. Padgett and Christopher K. Ansell. Link.

  10. Original & Forgery

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    MULTIPLY EFFECT

    The difficulties of causal reasoning and race

    While the thorny ethical questions dogging the development and implementation of algorithmic decision systems touch on all manner of social phenomena, arguably the most widely discussed is that of racial discrimination. The watershed moment for the algorithmic ethics conversation was ProPublica’s 2016 article on the COMPAS risk-scoring algorithm, and a huge number of ensuing papers in computer science, law, and related disciplines attempt to grapple with the question of algorithmic fairness by thinking through the role of race and discrimination in decision systems.

    In a paper from earlier this year, ISSA KOHLER-HAUSMAN of Yale Law School examines the way that race and racial discrimination are conceived of in law and the social sciences. Challenging the premises of an array of research across disciplines, Kolher-Hausmann argues for both a reassessment of the basis of reasoning about discrimination, and a new approach grounded in a social constructivist view of race.

    From the paper:

    “This Article argues that animating the most common approaches to detecting discrimination in both law and social science is a model of discrimination that is, well, wrong. I term this model the ‘counterfactual causal model’ of race discrimination. Discrimination, on this account, is detected by measuring the ‘treatment effect of race,’ where treatment is conceptualized as manipulating the raced status of otherwise identical units (e.g., a person, a neighborhood, a school). Discrimination is present when an adverse outcome occurs in the world in which a unit is ‘treated’ by being raced—for example, black—and not in the world in which the otherwise identical unit is ‘treated’ by being, for example, raced white. The counterfactual model has the allure of precision and the security of seemingly obvious divisions or natural facts.

    Currently, many courts, experts, and commentators approach detecting discrimination as an exercise measuring the counterfactual causal effect of race-qua-treatment, looking for complex methods to strip away confounding variables to get at a solid state of race and race alone. But what we are arguing about when we argue about whether or not statistical evidence provides proof of discrimination is precisely what we mean by the concept DISCRIMINATION.”

    Link to the article. And stay tuned for a forthcoming post on the Phenomenal World by JFI fellow Lily Hu that grapples with these themes.

    • For an example of the logic Kohler-Hausmann is writing against, see Edmund S. Phelps’ 1972 paper “The Statistical Theory of Racism and Sexism.” Link.
    • A recent paper deals with the issue of causal reasoning in an epidemiological study: “If causation must be defined by intervention, and interventions on race and the whole of SeS are vague or impractical, how is one to frame discussions of causation as they relate to this and other vital issues?” Link.
    • From Kohler-Hausmann’s footnotes, two excellent works informing her approach: first, the canonical book Racecraft by Karen Fields and Barbara Fields; second, a 2000 article by Tukufu Zuberi, “Decracializing Social Statistics: Problems in the Quantification of Race.” Link to the first, link to the second.
    ‡ law race causation

    New Researchers: DOMICILE SPREAD

    The effects of housing subsidies

    In her dissertation work, PhD candidate in political science at UC Berkeley TANU KUMAR examines the effects of a Mumbai homeownership subsidy. Using a housing lottery as a natural experiment, Kumar interviewed over 800 lottery winners 3-5 years after implementation to determine its effects and, examines (in one paper) the effects of the program on children’s educational attainment, youth employment, and (in another paper) political participation. Crucially, the effects of this wealth shock are not driven by relocation.

    From the paper on political participation:

    “I find that on average, winners of housing lottery are roughly 29 percentage points more likely than non-winners to report attending ward level meetings where local communities improvements are discussed. They are also 14 percentage points more likely to report individually approaching bureaucrats and politicians to demand improvements to their communities, 11 percentage points more likely to report doing so in groups, and 11 points more likely to be able to correctly name a local elected official. Effects are occur in spite of increased satisfaction with local services among beneficiaries.”

    Link to the first paper, link to the second, and link to Kumar’s website.

    ‡ housing inequality new_researchers

    Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

    +++

    • From the latest issue of the European Journal of Industrial Relations: a roundup of articles on co-determination in Germany (link), Central Europe (link), Northern Europe (link), and Italy (link).
    • Ifeoma Ajunwa on the advent of “productivity monitoring applications” and the legal questions they raise regarding workers’ privacy rights. Link.
    • Great coverage of the Magnolia Mother’s Trust cash transfer program in Mississippi, by reporter Robert Samuels. Link.
    • From the World Resources Institute, the global forest watch tool. Link.
    • Marshall Steinbaum’s paper “Antitrust, the Gig Economy, and Labor Market Power.” Link. From the latest issue of Law and Contemporary Problems, “Work After the End of Employment,” with contributions from Cynthia Estlund, Catherine Fisk, Sanjukta Paul, and more. Link to the whole issue.
    • A new paper from Emmanuel Saez and Gabriel Zucman on progressive wealth taxation. Link.
    • Tess Penne, Tine Hufkens, Tim Goedemé et al examine the scale and nature of child support programs among the European welfare states. “The article shows that, even though with important cross-national variation, cash transfers generally amount to less than 60 percent of the cost of children. Although in five out of six countries support for families is higher at the lower end of the income distribution, for households living on a low gross wage, the income of a family with children is less adequate compared to a similar childless family and is in many cases insufficient to participate adequately in society.” Link. ht Sidhya
    • A new proposal for a universal housing guarantee in the United States. Link.
    • Sarah Trent and Khaliun Bayartsogt report on the resurgence of self-organized co-ops in rural Mongolia—a common practice during the Mongolian People’s Republic that had fallen to the side since 1992. Link.
    • Julian Gewirtz covers China’s technological advances in Foreign Affairs. Link.
    • Mark Anner on the role of pricing in brutal working conditions down the supply chain: “Purchasing practices of lead firms adversely affect working conditions and workers’ rights in supplier factories. These trends [are attributed] to a price squeeze and a sourcing squeeze in which lead firms pay increasing lower prices to suppliers while also imposing short lead times and high order volatility.” Link. ht Alice Evans
    • In the Financial Times, Adam Tooze on Hurricane Dorian’s impact on the Bahamas. Link.
    • “The controversial evolution of publicly traded equity in Amsterdam after 1602 is presented as capitalism’s fork in the road, opening a path to financialized capitalism with equity markets its driving force. This gives the process of financialization a 400-year history that accelerated in the late 20th century. With negative impacts on various enterprising economies since their inception, the forces that have driven the equity market’s ascendancy are examined and the logic underlying this arrangement is questioned. The changes to economic theory and policy that promoted this financialization shed new light on many enduring economic problems.” Catherine Macaulay on 400 years of equity market development. Link.
    • We were thrilled to see coverage of Kathryn Holston‘s successful push, with Anna Stansbury, to end hotel-bedroom job interviews at the American Economics Association’s annual meeting. Kathryn is an economics PhD student at Harvard and a JFI fellow in our guaranteed income initiative. Link to the WSJ. Link to an interview with Kathryn.