Category Archive: Sources

  1. Assemblies

    Comments Off on Assemblies

    FISSURED CHURN

    Reexamining claims about automation and labor displacement

    Current UBI discussions emerged out of concerns over the role of human beings in a machine-dominated labor market. In 2013, a paper by Oxford University professors Carl Benedikt Frey and Michael Osborne claimed that 47% of US jobs were at risk of long term automation. The statistic circulated widely, prompting fears of widespread unemployment. The debate over these predictions is complex: those who deny any threat from automation often point to near-full employment, and risk overlooking the proliferation of low-paying and precarious jobs; while those who forecast mass unemployment risk assuming that technological development necessarily leads to labor displacement.

    In a 2018 paper, legal scholar BRISHEN ROGERS argues that fears of a robot takeover misapprehend the real dynamics in the labor market:

    “In a period of technological upswing, with companies rapidly installing robotics and other automation devices, we would also see significant increases in labor productivity. In fact, productivity growth has recently been the slowest as at any time since World War II. What’s more, productivity change in the manufacturing sector—where automation is easiest—has been especially tepid lately, at 0.7 percent over the last decade. On a related note, levels of ‘occupational churn,’ or the net creation of jobs in growing occupations and loss of jobs in declining occupations, are also at historic lows.

    Even more striking, if firms expected artificial intelligence to be a major source of productivity in the near future, they would surely be investing in information technology and intellectual property. But they aren’t. Computers and software constituted 13.5 percent of the value of companies’ investments from 2000-2007, as the internet was coming into wide use. Over the last decade, that rate declined to 4.8 percent. These differences strongly suggest that there is nothing inevitable about precarious work or economic inequality. Hotel work, food services, janitorial work, and retail work have become precarious over the past twenty years because companies in those sectors forcibly de-unionized and/or ‘fissured’ away their workers to subcontractors or franchisors, thereby denying them effective access to many legal rights.”

    Link to the paper.

    • An MIT Technology Review from 2018 surveyed the predictions of every paper published on job losses due to automation. The results: “There is really only one meaningful conclusion: we have no idea how many jobs will actually be lost to the march of technological progress.” Link.
    • “…even those occupations which are contracting due to technological change will continue to provide plenty of job openings over the next two decades. The challenge lies in improving the quality of these jobs going forward.” Paul Osterman anticipates Rogers’ arguments in a column from 2017. Link.
    • Another recent paper by Brishen Rogers (to which we previously linked) continues the thread: “Based on a detailed review of the capacities of existing technologies, automation is not a major threat to workers today, and it will not likely be a major threat anytime soon.” Link.
    • Daron Acemoglu and Pascual Restrepo published two papers on automation and employment: the first uses industry level data to observe changes in the task content of production. The second argues that automation has been primarily concerned with reducing the need for labor, with insufficient attention being paid to socially productive investment. Link to the first, link to the second.
    • Frank Levy on the relationship between automation-induced job losses and the rebirth of populist politics. Link.
    • From EconFIP, a research brief on automation, AI, and the labor share. Link.
    ‡ labor_market automation future_of_work

    New Researchers: HEAT EFFECT

    Temperature changes and the labor market

    In her job market paper, economics PhD candidate VICTORIA WENXIN XIE studies the effects of temperature shocks on the labor market. While previous research in this area examines the productivity impacts of extreme heat, this paper provides detailed results on how climate change affects worker welfare—”crucial for calibrating country-specific calculations for the social cost of carbon.” Focussing on the manufacturing sector in Brazil, the paper also reveals transmission-mechanism insights that suggest at mitigation strategies. From the paper:

    “I provide worker-level evidence on different labor-market adjustment margins with respect to extreme heat shocks and the underlying transmission mechanism. First, using employer–employee-matched data, I find that heat shocks lead to a significant increase in the propensity of immediate manufacturing layoff. I further isolate the direct labor-productivity channel by focusing on heat shocks during the local non-growing seasons, exploiting rich municipality-level agricultural census and crop calendars. Second, I examine medium-run adjustment margins. Tracking workers across employment spells, I find limited intersectoral and interregional worker reallocation. A significant proportion of manufacturing workers fail to reallocate to another formal-sector job within 36 months. Third, heat shocks during the non-growing seasons have more pronounced impact on workers in more routine manual-task-intensive occupations.”

    Link to the paper, link to Victoria Wenxin Xie’s website.

    ‡ climate 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.

    +++

    • Max Kasy presented exciting new work at our Friday research session yesterday on designing a basic income pilot. Link to his presentation slides.
    • A new proposal to expand the Earned Income Tax Credit (EITC) and introduce a universal child allowance has gained near-total support from Senate Democrats. Link to Dylan Matthews’ analysis on Vox. The proposal was criticized by many for retaining a phase-in, notably Matt Bruenig who condemned “the dreaded trapezoid design.” Link to Bruenig’s analysis.
    • The political consequences of the decline of local news. By Meghan Rubado and Jay Jennings. Link.
    • At Pew Trusts Trend, Jay Famiglietti maps the future of fresh water access. Link.
    • A new paper by Arindrajit Dube, Doruk Cengiz, Attila Lindner, and Ben Zipperer estimates the effect of minimum wage laws on low-wage jobs across states from 1979-2016. Among the the findings: “The overall number of low-wage jobs remained essentially unchanged over the five years following the increase. At the same time, the direct effect of the minimum wage on average earnings was amplified by modest wage spillovers at the bottom of the wage distribution. Our estimates by detailed demographic groups show that the lack of job loss is not explained by labor-labor substitution at the bottom of the wage distribution. We also find no evidence of disemployment when we consider higher levels of minimum wages.” Link.
    • Noah Smith’s Bloomberg column from this Thursday: “Republicans Turn Away From Experts and Economics.” Link.
    • MIT Technology Review convened several area experts to develop practical suggestions for building an ethics board at Google. Link.
    • “The European Monetary Union rulebook thus locks the Italian economy into economic decline and impoverishment.” A new research paper by Servaas Storm examines the impact of deflationary policies on Italy’s crisis recovery. Link.
    • “Discrimination through optimization.” Researchers Muhammad Ali, Piotr Sapiezynski, Miranda Bogen, Aleksandra Korolova, Alan Mislove, Aaron Rieke examine Facebook’s ad targeting system. Link. See also coverage of Facebook’s ongoing legal battle with HUD over housing discrimination in its ad offerings. Link.
    • A report from The Institute on Assets and Social Policy at Brandeis discusses the institutional and policy mechanisms that foster an unequal and racialized distribution of workplace benefits. Link. ht Lauren
    • Aaron Benanav links the invention of the ‘informal’ sector to failed ILO efforts at categorizing societies “where work for wages did not constitute a widespread social norm.” Link.
    • Danielle Citron and Ryan Calo on “the automated administrative state.” Link. From a series of posts at the Shorenstein Center covering major issues surrounding automated decision systems. Link to the series.
    • “Discussing technological progress in The Wealth of Nations, Adam Smith ignores most of the famous inventions in textile spinning, iron making, and steam power, instead chooses as his paradigm of technical progress one good that is entirely absent from most current histories of the Industrial Revolution: watches. In fact, Smith makes the notable claim that, over the preceding century, the price of watches may have fallen by up to 95 per cent, which we attempt here to evaluate. To test whether watch prices had been falling steadily and steeply since the late seventeenth century we use the records of over 3,200 criminal trials at the Old Bailey court in London from 1685 to 1810. Owners of stolen goods gave the value of the items they had lost, and, because watches were frequently stolen, we can reliably track how their value changed through time. Our results highlight that the process of sustained technological progress which is nowadays seen to define the Industrial Revolution dates back in England to at least the late seventeenth century, rather than the accepted date of the mid eighteenth century.” Link.

  2. Exploding Bowl

    Comments Off on Exploding Bowl

    REMUNERATE EXPANSE

    Social reproduction and basic income proposals

    The most visible discourse on universal basic income focuses squarely on the labor market. Unconditional cash transfers are understood above all as a potential policy solution to wage stagnation, rising inequality, and labor displacement. This framework, which responds to rising income inequality in general, can be construed as a response to the decline of the family wage.

    In a 2017 paper published as part of a forum on UBI in Global Social Policy journal, PATRICIA SCHULZ discusses uncompensated care work and enumerates the ways a basic income could signal a departure from forms of social protection tied to the gendered wage and its analogs in safety net programs:

    “In industrialized countries, work organization, labor legislation, and social security systems developed progressively based on the model of the male breadwinner. Therefore, as most social security systems are based on contributions linked to remunerated work, the inferior income of women, their restriction to part-time jobs, as well as the interruptions in their careers due to care responsibilities will directly impact the level of social protection they can expect in case of old age, disability, illness, and so on, as well as expose them to dependency on a partner and/or the welfare state. It remains a huge political challenge to overcome the resistance against delinking social protection and remunerated work, even when the latter tends to become more and more uncertain.

    A UBI would be the continuation of previous efforts to ensure that every person has a right to basic economic security, everywhere on the planet, women as well as men.”

    Link to the report.

    • The 1960s-70s saw a major surge of advocacy and policy thought surrounding access to existing safety net programs, much of which was driven by the National Welfare Rights Organization. Linkto NWRO chairperson Johnnie Tillmon’s 1972 manifesto on welfare and women’s work, which includes a call for a “guaranteed adequate income,” and link to historian Felicia Kornbluh’s 2007 book on the movement. Economist Toru Yamamori’s research sheds light on feminist movements in the UK and Italy that posed basic income as a solution to discriminatory practices of welfare agencies. Link. (Link also to Frances Fox Piven and Richard Cloward’s 1966 article on the gaps in American safety net programs and the possibility of a guaranteed income.)
    • There is much ongoing debate within feminist literature about how a UBI might impact the gender division of labor. Some theorists, including Ingrid Robeyns, caution that compensating unpaid care work risks diminishing the political will of women to advocate for more fundamental changes to their social position. Link. Others maintain that a UBI will incentivize men to play a larger role in social reproduction, thereby leveling power dynamics within heterosexual households.Link, link.
    • For a more thorough argument in favor of basic income, the late feminist economist Ailsa McKay has written extensively on the potential impacts of the policy for gender equity and a reconfiguration of citizenship. Link to an article on basic income and social citizenship, and link to her 2005 book The Future of Social Security Policy: Women, Work, and a Citizen’s Basic Income.
    ‡ guaranteed_income inequality gender

    New Researchers: CONSUMPTION CHANNEL

    Agriculture and development in Indonesia

    In a working paper, postdoctoral researcher RYAN B. EDWARDS studies how the expansion in agricultural production of Indonesian palm oil shaped domestic consumption patterns and poverty levels. Contrary to the popularized ‘resource curse‘ theory, as well as theories which hold that trade in agricultural products generates inequality, Edwards finds that a 10% increase in the share of a district area devoted to palm cultivation corresponds to a 5.36% reduction in poverty and an 8% increase in the rate of consumption growth. The paper stresses how increased consumption indirectly alleviates poverty:

    “First, rising household expenditures are concentrated on health, education, and durable good expenditures, which in turn correspond to more household assets and floorspace. I interpret these changes as evidence of household-level capital accumulation, a classic theoretical channel linking agricultural productivity to economic development. A second indirect channel relates to local governments, with revenue and expenditure growing considerably faster in expanding regions. Districts that expanded their oil palm acreage have improved electrification, increased use of modern cooking fuels, better roads, and more marketplaces—all often publicly provided. Similar results when controlling for local government revenue and expenditure suggest that at least some of these changes are due to the new infrastructure needed to process, transport, and export palm oil in undeveloped rural areas without any prior industry.”

    Link to the paper, and link to Edwards’ website.

    ‡ economic_history development 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.

    +++

    • A recent comment piece in Nature by Valentin Amrhein, Sander Greenland, Blake McShane, and over 800 signatories calls for the retiring of statistical significance. Link. At his blog, Andrew Gelman rounds up the ensuing discussion and offers his commentary. Link.
    • SOAS economists Simon Dikau and Ulrich Volz “examine the extent to which climate-related risks and mitigation policies fit into the current set of central bank mandates and objectives.” Link.
    • An excellent first post in a series from Decompressing History on how economic statistics are generated for historical periods: “Making the GDP Sausage.” Link.
    • Daniel Kahneman in conversation with Tyler Cowen: “One thing is very certain—that bias has been overestimated at the expense of noise. Virtually all the literature and a lot of public conversation is about biases. But in fact, noise is, I think, extremely important, very prevalent.” Link.
    • A collection of posts from a 2018 workshop on the “fourth industrial revolution.” Link.
    • “The counterfactual causal model of discrimination is not wrong because we can’t work around the practical limits of manipulation. It is wrong because to fit the rigor of the counterfactual model of a clearly defined treatment on otherwise identical units, we must reduce race to only the signs of the category, meaning we must think race is skin color, or phenotype, or other ways we identify group status. And that is a concept mistake if one subscribes to a constructivist, as opposed to a biological or genetic, conception of race.” Issa Kohler-Hausmann argues for an adequate understanding of discrimination in research on algorithmic bias. Link.
    • A Twitter thread by Rob O’Dell about building an algorithm to detect “copy-paste” state legislation. Link.
    • Xue Yujie with a detailed report on a suite of pilot programs deploying facial recognition and other forms of pattern recognition monitoring systems in Chinese schools. Link.
    • Researchers Sórcha Foster and Lisa Wilson on the impact of automation for employment in Northern Ireland. Link.
    • “We introduce Protective Optimization Technologies: solutions that enable optimization subjects to defend from unwanted consequences.” Researchers Rebekah Overdorf, Bogdan Kulynych, Ero Balsa, Carmela Troncoso, and Seda Gürses examine the adverse impacts of optimization in consumer apps, and develop a strategy for consumers to protect themselves from unbalances in a credit scoring application. Link.
    • On credit and the labor share. By Asli Leblebicioglu and Ariel Weinberger. Link.
    • At Law and Political Economy Blog, a symposium of posts inspired by Elizabeth Anderson’s 2017 book on workplace governance. Link to the first post by Frank Pasquale, link to the rest of the symposium.
    • “The nullification of slave-based wealth after the US Civil War was one of the largest episodes of wealth compression in history. We document that white southern households with more slave assets lost substantially more wealth by 1870 relative to households with otherwise similar pre-War wealth levels. Yet, the sons of these slaveholders recovered in income and wealth proxies by 1880, in part by shifting into white collar positions and marrying into higher status families. Their pattern of recovery is most consistent with the importance of social networks in facilitating employment opportunities and access to credit.” By Philipp Ager, Leah Boustan, and Katherine Eriksson. Link. (And link to an ungated 2016 version, and link to Boustan’s thread on the research.)

  3. Place Distant Place

    Comments Off on Place Distant Place

    VERIFY ACCESS

    Recruitment strategies and representation at public research universities

    Public research universities have long been understood as engines of meritocratic social mobility. Relative to other higher ed institutions, public universities remain those with the highest mobility rates. But research over the past decade has shown that these institutions are failing to represent the diversity of their state populations, and adopting financial aid models that cater to the wealthy.

    A new report co-authored by CRYSTAL HAN, OZAN JAQUETTE, and KARINA SALAZAR looks at one mechanism behind this trend. Analyzing off-campus recruitment events, it finds that public research universities prioritize recruiting out-of-state students from wealthy, white, urban communities over all others:

    “In contrast to rhetoric from university leaders, our findings suggest strong socioeconomic and racial biases in the enrollment priorities of many public research universities. A small number of universities exhibit recruiting patterns broadly consistent with the historical mission of social mobility for meritorious state residents. However, most universities concentrated recruiting visits in wealthy, out-of-state communities while also privileging affluent schools in in-state visits. Although most universities did not exhibit racial bias in in state visits, out-of-state visits consistently exhibited racial bias. Since most universities made many more out-of-state visits than in-state visits, overall recruiting visit patterns for most universities contribute to a student composition where low-income students of color feel increasingly isolated amongst growing cohorts of affluent, predominantly White, out-of-state students. These recruiting patterns and enrollment priorities are a function of a broken system of state higher education finance, which incentivizes universities to prioritize rich out-of-state students with lack-luster academic achievement.”

    Link to the report.

    • The report includes contextual background on the “enrollment management” industry, which advises universities on strategic admissions and recruitment strategies to improve their financial and ranking standings: “While scholarship and policy debate about college access focuses on the final stages of the enrollment funnel—when applicants are admitted and financial aid ‘leveraging’ is used to convert admits to enrollees—the EM industry expends substantial resources on earlier stages of the funnel.” Link to Don Hossler and John Bean’s 1990 book on the subject.
    • Elizabeth Popp Berman discusses the results in a brief thread: “This is a function of the funding model we’ve created, in which public university behavior is driven by a toxic mixture of 1) the status economy and 2) state funding cuts… The good news is that there is variation in this behavior: not all schools are doing it to the same degree. There’s less in states with strong state support. And there’s a difference among schools with similar state support/demographics.” Link.
    • A 2006 report from Kati Haycock and Danette Gerald charts the trends in decreasing access for low income students. Link. Further work co-authored by Haycock in 2010 details the trend of public research universities offering financial aid to out of state students. Link.
    • In our newsletter last year, a spotlight on previous work by Ozan Jaquette and Bradley Curs finds that shrinking state funding leads public universities to increase their out-of-state enrollment. Link to that paper, link to the archived letter, which includes several other relevant papers.
    ‡ higher_education inequality educational_opportunity

    New Researchers: STATE OF WAR

    Assessing the role of conflict in state formation

    Prominent theories on the emergence of bureaucratic states hold that rulers develop and optimize centralized fiscal infrastructures in order to strengthen their capacity for war-making. (Classic works by Max Weber, Charles Tilly, and Mancur Olson advance this theory through a historical analysis of European nation-sates.) In her job market paper, Y. JOY CHEN uses original evidence on elite interests, patterns of war, and state-building efforts in pre-imperial China to argue that war in fact hindered state-building, as rulers relegated control of threatened territories to regional leaders. Chen’s alternative explanation centers around human capital formation: newly literate consumers were cheaper to appoint as administrators, and therefore began to supplant nobles within the bureaucracy.

    The paper includes a game theoretic model of the decision-making process of a ruler facing external threats:

    “The model makes the following predictions: (1) bureaucratic rule is less likely to transpire in places that face greater external threat and have lower strategic importance, because directly controlling these places brings less value to the ruler; (2) bureaucratic rule is less likely to transpire when administrators’ political connections are strong, because these individuals have higher bargaining power… Consistent with the model, I find that bureaucratic rule is more likely to transpire in border regions, and particularly in regions that face greater foreign military threat from large states and nomadic tribes. Secondly, I find that administrators of bureaucratic counties are more likely to have weak political connections. Thirdly, I find that the clan membership of administrators is uncorrelated with the exposure to trade of the region they manage.”

    Link to the paper, and link to Y. Joy Chen’s website.

    ‡ economic_history war 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 philosopher John Dewey called for a continued and lively conversation between social scientists and the general public, saying the shoe maker knows how to make a shoe, but it is the public who knows where the shoe pinches. Dewey did not mean that we should abandon expertise and embrace the public wisdom as a substitute. Instead, he meant that the two need to be in dialogue with each other.” Henry Farrell and Jack Knight on internal disciplinary feuds and the need for political science to engage the public. Link.
    • A new paper by Daron Acemoglu and Pascual Restrepo asks: “The Wrong Kind of AI?” Link.
    • “Notably, on both sides of the Iron Curtain, optimization was deployed in decisively non-market settings. Such was the first half-century of the subfield’s existence, in which optimization was identified with planning. The engineer would first decide what problem needed to be solved, and would then formulate an optimization program that modeled the problem exactly and solved it once and for all. In these contexts, optimization theory was among the least market-oriented of liberal sciences.” Jimmy Wu on the politics of optimization. Link.
    • “Retirement wealth is highly unequally distributed; the top lifetime earnings quintile holds half of all retirement wealth, the bottom quintile, only 1 percent.” By Teresa Ghilarducci, Siavash Radpour, and Anthony Webb of the Schwartz Center for Economic Policy Analysis. Link.
    • A new report by Ratna Sinroja, Sarah Thomason, and Ken Jacobs of the UC Berkeley Labor Center examines the consequences of misclassifying workers as independent contractors—a practice used to reduce labor costs by allowing employers to avoid payroll taxes and payments for unemployment and workers compensation. The report focuses primarily on the detriments of misclassification for workers, but also notes that “misclassification is a significant drain on government resources, with the state losing an estimated $3,000 in annual tax revenues for every worker that is misclassified.” Link.
    • David Berger, Kyle Herkenhoff, and Simon Mongey on the welfare implications of labor market power. Link.
    • In February, we linked to the launching of Economics for Inclusive Prosperity and their series of policy proposals. The project prompted a series of responses from academics across disciplines. Among them, Corey Robin, Alice Evans, and Ethan Bueno De Mesquita encourage the authors to push beyond economic metrics and recognize the political underpinnings of meaningful policy reform. See also EfIP’s initial and final contributions to the discussion.
    • Reboot Design, sponsored by the Hewlett Foundation, designed and facilitated a workshop on how to advance the participatory budgeting movement. Link to the subsequent report.
    • “Indonesia’s weak labor movement transformed local wage councils from institutions of wage restraint into institutions that delivered generous wage increases.” By Teri L. Caraway, Michele Ford, and Oanh K. Nguyen. Link.
    • Cass R. Sunstein reviews Pamela Herd and Donald Moynihan’s book in the NYRB: “Administrative burdens impose a high cost, and that cost often falls on those who are in the worst position to bear it.” Link.
    • “Exploitation of tenants tends to be highest in poor neighborhoods. Landlords in poor neighborhoods also extract higher profits from housing units. Property values and tax burdens are considerably lower in depressed residential areas, but rents are not.” New research by Matthew Desmond and Nathan Wilmers. Link.
    • From the USC Game Innovation Lab, and in honor of recent SCOTUS activity: “The ReDistricting Game.” Link. ht Jay
    • “In China, population growth and its uneven regional distribution not merely limited the surplus grain available for trade, but exerted severe pressure on an inherently unstable water control system pitting farming against flood prevention and the waterway transportation of goods, creating increasingly insurmountable challenges for water engineering. In combination with rigid fiscal rules, population growth constrained the ability of the Qing state to govern this vast empire effectively.… We describe an escalating ‘span of control’ problem, increasing the pressure on a small bureaucracy in the periphery as well as the core of the empire, caused by a rigid and underfunded state apparatus.” Link.

  4. Instruction

    Comments Off on Instruction

    LONE LADDER

    On the history of protectionist development and trade policy

    There is renewed debate around the merits of protectionism and free trade, spurred by political rhetoric from the left and right in the US, and in Europe and Latin America. Active disagreements over the consequences of free trade date back to policies promoted in the 50s and 60s, a period during which many newly-decolonized countries undertook an import-substitution-industrialization (ISI) model of development. Popularized by Argentine economist Raul Prebisch, ISI was a development strategy which advocated a prolonged period of state investment in manufacturing and infrastructure prior to trading in the global market. Subject to extensive criticism, it was thought to have been discredited in favor of the Washington Consenus throughout the late-70s and early 2000s.

    Beginning most notably with Hajoon Chang’s Kicking Away the Ladder, however, a growing number of economists have come to question the viability of the Washington Consensus as a development model, both historically and in the present. In a 2017 article, AREGBESHOLA R. ADEWALE lends further evidence to these critiques. Using the World Bank’s Development Indicators, he develops a model which tests the relationship between ISI policies and industrialization in the BRICS (Brazil, Russia, India, China, South Africa). His model finds a strong and consistent correlation between economic growth and ISI policy:

    “The analyses confirm the short and long run relationships between growth and ISI’s measurable indicators, in a chronological manner that supports import substitution in the short run and exports promotion in the long run… A conclusion can thus be drawn, both from literature and econometric estimations, that the ISI macroeconomic policy defies the self-defeating prophecy levied against it by the institutions of the Washington Consensus.”

    Link to the paper.

    • Dani Rodrik’s 2011 book, The Globalization Paradox, offers a detailed overview of the distributional consequences of free trade both domestically and globally. Chapter 8 of the book presents a compelling vindication of ISI policies: “Even where ISI underperformed, it often bequeathed industrial capacities that would later prove very helpful.” Link to the book, and link to an earlier blog post in which Rodrik takes Mexico as a case study for the potential benefits of ISI.
    • “This special issue is an attempt to advance a production-centred agenda focusing on the real dynamics of productive organisations and ecosystems, with the emphasis on their transformation and innovative renewal in mature economies.” Hajoon Chang introduces an issue of the Cambridge Journal of Economics. Link.
    • John Waterbury’s The Egypt of Nasser and Sadat provides a rigorous evaluation of the transition from state- to market-led development in Egypt from the 50s and into the 80s. Link.
    • “I find that regions in the French Empire which became better protected from trade with the British for exogenous reasons during the Napoleonic Wars (1803-15) increased capacity in mechanized cotton spinning to a larger extent than regions which remained more exposed to trade.” Réka Juhász tests the economic impacts of protectionism through a natural experiment. Link.
    • An excellent new paper by Nathaniel Lane surveys new empirical research examining industrial policy. Link.
    ‡ development trade

    New Researchers: LIQUIDITY EFFECTS

    Testing the impact of Income-Driven-Repayment schemes on student welfare

    In a recently revised paper, JFI Fellow and newly-appointed Assistant Professor at the University of Arizona DANIEL HERBST uses a novel data set to examine the impact of income-driven repayment (IDR) programs on the post-college income profiles of more than one million student borrowers. He finds that IDR policies overwhelmingly increase borrower welfare while producing no negative labor-market effects. From the abstract:

    “Within seven months of take up, IDR enrollees are 31 percentage points less likely to fall delinquent and pay down 162 dollars more student debt each month compared to those who remain on standard repayment plans. IDR enrollees have credit scores that are 8.6 points higher, hold 0.1 more credit cards, and carry 293 dollars higher credit card balances than non-enrollees one year after the servicing call, suggesting increased short-term consumption out of liquidity.”

    Link to the most up-to-date version of the paper, and to Herbst’s website. An earlier draft was referenced by Susan Dynarski in a New York Times piece on student loans last summer.

    ‡ college education_finance 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 posts at the Phenomenal World: Owen Davis on the emerging monopsony consensus, and Jack Marley-Payne on ideology in AP economics. Link and link.
    • At Slate, Arindrajit Dube on the late Alan Krueger. Link. See also Dylan Matthews’ overview of the immense contributions Krueger made to the field, and Susan Dynarski’s comments on his legacy.
    • Branko Milanovic: nation states are the common root of our failure to deal with inequality and climate change. Link.
    • Andrew Selbst and Solon Barocas on the problems that machine learning poses for the explainability discourse: “intuition serves as the unacknowledged bridge between a descriptive account and a normative evaluation. But because machine learning is often valued for its ability to uncover statistical relationships that defy intuition, relying on intuition is not a satisfying approach. This Article thus argues for other mechanisms for normative evaluation. To know why the rules are what they are, one must seek explanations of the process behind a model’s development, not just explanations of the model itself.” Link.
    • Who profits from patents? Researchers Patrick Kline, Neviana Petkova, Heidi Williams, and Owen Zidar examine the internal distribution of rents at innovative firms. Link.
    • Researcher Emily Moschini finds that universal subsidies yield greater welfare gains than targeted child care subsidies: “Universal subsidies more fully insure newborns against the risks they face than targeted subsidies, and do not disincentivize skill investment.” Link.
    • A paper by Tim Jackson surveys the literature on secular limits to growth. “It also points to the historical congruence (and potential causal links) between declining productivity growth and resource bottlenecks.” Link.
    • A report examining the possible effects of automation on labor displacement of older black women. Link.
    • From the Internet Society, a report on consolidation across the Internet, from internet applications, to access provision, to service infrastructure. Link to the executive summary, link to the report.
    • From Adam Tooze: What are central banks for? Link.
    • “The German banking crisis was crucial to boosting the Nazi movement’s electoral fortunes. It aggravated the German economy’s downturn, leading to more radical voting because of declining incomes. In addition, it also increased the Nazis’ popularity directly… After controlling for changes in economic fundamentals, higher exposure [to failing banks] by local firms directly increased Nazi voting above and beyond its direct effect through falling incomes. While the Nazis’ message was similar across Germany, it had greater success in cities affected by [major bank] failures.” Link.

  5. The Somnambulist

    Comments Off on The Somnambulist

    MAJORITY EARNINGS

    Studying the impact of certificate programs in the higher ed landscape

    ⤷ Income Share Agreements

    Research surrounding student debt and the labor market value of postsecondary degrees focuses primarily on students obtaining a 4-year degree, secondarily on students receiving a 2-year degree, and only rarely considers students in certificate programs—non-degree awards that are cheaper and shorter than traditional degree programs. The scarcity of discourse on certificate programs is remarkable; given the rising costs of education and declining college premiums, certificate programs have assumed an increasingly large role in the postsecondary landscape. Moreover, the mission of community colleges has gradually shifted away from academic preparation and towards vocational education and job training programs.

    There is very little in the way of a literature examining the role that certificate award programs play in the postsecondary landscape. In a rare example, a 2016 paper by DI XU and MADELINE JOY TRIMBLE estimates “the relationship between earning a certificate and student earnings and employment status after exiting college.” The authors use detailed student-level information from North Carolina and Virginia to understand the impact of certificates on individual employment and wage earnings:

    “The paper indicates that certificates have positive impacts on earnings in both states overall, and in cases where there is no impact on earnings, certificates may nonetheless lead to increased probability of employment or to other benefits. In some cases, certificates appear to promote entry into a student’s desired industry of employment, even if the industry switch is not associated with an increase in earning on average. The paper finds substantial variation in the returns across fields of study and, more importantly, across specific programs within a particular field. These results suggest that important evidence is lost when information about the benefits of certificate programs are simply averaged together. Therefore, it is important to evaluate the programs earnings relative to the institutional context and the local labor market.”

    Link to the paper.

    • In a corresponding blog post, Xu writes: “There needs to be multiple measures to evaluate the benefits of a certificate program, rather than merely evaluating its impact on overall earnings. Policies that tie funding or other benefits to the earnings of program graduates alone may unfairly penalize programs that provide implicit economic benefits to students or that improve students’ lives in other important ways.” Link.
    • Similar to these findings, a 2005 study provides evidence that certificate programs function as a retraining tool to help “high-tenure displaced workers” find work in a changing job market. The paper—authored by Louis Jacobson, Robert LaLonde, and Daniel Sullivan—finds that certificate programs in the technical fields and education increased the long-term earnings of displaced workers. Link.
    • In their 2014 paper, Stephanie Cellini and Claudia Goldin chart the relationship between federal student aid and for-profit colleges, showing that for-profits “produced 42 percent of vocational certificates, 18 percent of associate’s degrees, 5 percent of bachelor’s degrees, and 10 percent of master’s degrees.” Link.
    ‡ higher_education educational_opportunity

    New Researchers: INSTITUTIONAL CHANGE

    Examining whether competent politicians can compensate for poor insitutions.

    MARIA CARRERI applies an original measure of ‘competence’ to interviews with 306 Italian mayors in order to test whether political skill increases the linkelihood of passing effective legislation. Her analysis finds that in municipalities with flawed informal institutions, more competent mayors are able to use financial resources more productively, increase long-term investments, and provide better local services without raising taxes. From the paper:

    “Recent evidence suggests that local governments might be the very place where significant policy change can take place, given the lower relevance of partisan polarization in this context… Applying the methodology that I developed in this paper to the study of politicians managing U.S. municipal governments represents a promising area of future research.”

    Link to the paper, and link to Maria Carreri’s website.

    ‡ public_services democracy 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 Mayor of Newark announced the city’s Basic Income pilot project during his State of the City Address on Tuesday. JFI and ESP are launching the project’s taskforce in the coming weeks. Link to coverage of the announcement.
    • “Based on a detailed review of the capacities of existing technologies, [I argue] that automation is not a major threat to workers today, and that it will not likely be a major threat anytime soon.” By Brishen Rogers of Temple University. Link
    • A new paper by Julian Gewirtz examines how the work of American writer Alvin Toffler and other futurists influenced Chinese officials and policies during China’s “New Technological Modernization.” Link.
    • From the Pedestrian Observations blog: Why are the costs for constructing transit infrastructure so high in America? “[Americans] can solve the problem of high construction costs if they want, but they need to first recognize that it exists, and that internal politics and business culture are part of the problem rather than the solution.” Link. ht Steve Randy Waldman
    • “Because antitrust has effectively established a state monopoly on the allocation of coordination rights, we ought to view coordination rights as a public resource, to be allocated and regulated in the public interest rather than for the pursuit of only private ends.” By Sanjukta Paul. Link.
    • Barry Eichengreen reflects on the sustainability of US government debt. Link
    • Via Henry Farrell: a new paper by Uma Jayakumar and Scott E. Page provides insight into holistic college admissions processes and correlates social capital and ideas of exceptionalism. “Our model describes three distinct effects: an opportunity effect: students from high socioeconomic statuses have the opportunity to try more activities; a specialization effect: those opportunities are biased toward elite activities that colleges desire, and a support effect: these students receive better coaching and training, enjoy more familial support, and also benefit from healthier diets and lifestyles.” Link.
    • A major new PNAS study develops a “pollution inequity” metric, establishing evidence of “the difference between the environmental health damage caused by a racial–ethnic group and the damage that group experiences.” The study shows non-Hispanic white experience 17% less air pollution exposure than is caused by their consumption, while Black and Hispanic people bear exposure 56% and 63% in excess of their consumption. Link to the study, link to news coverage.
    • “Economics is a tricky business: Even smart, highly trained people often get it wrong the first time and on their own, so designing the professional environment to ensure that different perspectives are brought to bear can be seen as part of the ‘quality assurance’ process.” Amanda Bayer and David Wilcox on the unequal distribution of economic education. Link.
    • “With increased globalization and climate change, there is an intensifying focus by governments and nongovernmental organizations on preparing for invasive species before they arrive, especially in the places most vulnerable to injurious impacts.” Undark covers the coming wave of crop-destroying invasive species. Link.
    • “By ignoring the social interactions that characterize real-world community contexts, randomized studies underestimate the decline in labor market participation and its impact on employers. These findings depend to a great extent on the details of the policy design, and as such I conclude that the oft-proposed right-left ideological alliance on basic income is unlikely to survive the move from basic income as a broad policy umbrella to basic income as a concrete policy option.” An essay on guaranteed income and pilot design by David Calnitsky. Link.
    • Insufficient sleep reduces voting and other prosocial behavior. Link.
    • “A revolutionary vanguard wants to persuade citizens to mobilize. To do so, it must convince our citizen (and others like him or her) that the probability of success is sufficiently high. To do this, it must convince him or her that his or her fellow citizens are in fact quite antigovernment. The tool that the vanguard has at its disposal is insurgent violence, such as guerilla or terrorist attacks. These attacks may be persuasive to our citizen because she believes that the vanguard cannot produce a high level of violence without the support of the surrounding population. Thus, high levels of vanguard violence suggest, to our citizen, a high level of antigovernment sentiment in the population as a whole.” A 2010 paper by Ethan Bueno de Mesquita on regime change and revolutionary entrepreneurs. Link.

  6. Incomplete Squares

    Comments Off on Incomplete Squares

    CONTEXT ALLOCATION

    Expanding the frame for formalizing fairness

    ⤷ Digital Ethics

    In the digital ethics literature, there’s a consistent back-and-forth between attempts at designing algorithmic tools that promote fair outcomes in decision-making processes, and critiques that enumerate the limits of such attempts. A December paper by ANDREW SELBST, dana boyd, SORELLE FRIEDLER, SURESH VENKATASUBRAMANIAN, and JANET VERTESI—delivered at FAT* 2019—contributes to the latter genre. The authors build on insights from Science and Technology Studies and offer a list of five “traps”—Framing, Portability, Formalism, Ripple Effect, and Solutionism—that fair-ML work is susceptible to as it aims for context-aware systems design. From the paper:

    “We contend that by abstracting away the social context in which these systems will be deployed, fair-ML researchers miss the broader context, including information necessary to create fairer outcomes, or even to understand fairness as a concept. Ultimately, this is because while performance metrics are properties of systems in total, technical systems are subsystems. Fairness and justice are properties of social and legal systems like employment and criminal justice, not properties of the technical tools within. To treat fairness and justice as terms that have meaningful application to technology separate from a social context is therefore to make a category error, or as we posit here, an abstraction error.”

    In their critique of what is left out in the formalization process, the authors argue that, by “moving decisions made by humans and human institutions within the abstraction boundary, fairness of the system can again be analyzed as an end-to-end property of the sociotechnical frame.” Link to the paper.

    • A brand new paper by HODA HEIDARI, VEDANT NANDA, and KRISHNA GUMMADI attempts to produce fairness metrics that look beyond “allocative equality,” and directly grapples with the above mentioned “ripple effect trap.” The authors “propose an effort-based measure of fairness and present a data-driven framework for characterizing the long-term impact of algorithmic policies on reshaping the underlying population.” Link.
    • In the footnotes to the paper by Selbst et al, a 1997 chapter by early AI researcher turned sociologist Phil Agre. In the chapter: institutional and intellectual history of early AI; sociological study of the AI field at the time; Agre’s departure from the field; discussions of developing “critical technical practice.” Link.
    ‡ digital_ethics fairness

    New Researchers: SPATIAL NETWORKS

    Questioning incentives for early cross-border migration

    In his job market paper, DAVID ESCAMILLA-GUERRERO, PhD Candidate in Economic History at the London School of Economics, explores the earliest wave of migration from Mexico to the United States. Using records from 10,895 individual border crossings between 1906 and 1908, he analyzes the spatial distribution of the migration flow as well as the incentives driving it. The paper’s findings challenge the consensus that most immigrants came from the densely populated Bajio region, and dispute theories which identify the Mexico-US wage gap and the expansion of Mexico’s railway system as the primary incentives for migration. Instead, they indicate that most immigrants came from the border region, and that flows were consistently driven by social capital formation through immigrant networks:

    “… for more than one hundred years, Mexican immigrant networks have been a self-perpetuating social asset that provides information and assistance, which reduces the costs and risks of migrating… Hence, since its beginnings, the Mexico-US migration flow has been influenced by forces that are commonly not analyzed by policy makers. An integral migratory policy should consider the different incentives behind the migration decision as well as their evolution along time and across Mexican regions.”

    Link to the paper, link to David Escamilla-Guerrero’s website.

    ‡ human_capital networks 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 a new paper titled “Universal Basic Income in the Developing World,” Abhijit Banerjee, Paul Niehaus, and Tavneet Suri discuss the perceived limitations of implementing a basic income through piecemeal, targeted approaches. The paper examines “what scholars know (and what they do not) about three questions: what recipients would likely do with the incremental income, whether this would unlock further economic growth, and the potential consequences of giving the money to everyone (as opposed to targeting it).” Link.
    • Bryce Covert reports on the tragic impacts that work requirements have had on Medicaid recipients in Arkansas. Link. ht Steve
    • “This paper shows that where there was once a sharp border… where labor law ended and antitrust began, there is now a considerable legal gray area.” Marshall Steinbaum on the erosion of antitrust law and its consequences for the bargaining power of labor. Link.
    • Geoffrey Irving and Amanda Askell on the complexities of developing AI systems which reflect human values, and the need for greater cooperation between machine learning researchers and social scientists: “If we learn values by asking humans questions, we expect different ways of asking questions to interact with human biases in different ways… Although we have candidates for ML methods which try to learn from human reasoning, we do not know how they behave with real people in realistic situations.” Link.
    • An interview with sociologist Saskia Sassen on the “Age of Extraction”: “There is a multiplication of sharp breaking points that can be thought of as systemic edges. Once crossed you are in a different space; it is not simply a less agreeable or livable zone, as might be the spaces of social exclusion. It is far more radical: you are out.” Link.
    • A look at the twenty nine mega-regions driving the global economy, analyzed by Richard Florida. Link.
    • A recording of historian Lorraine Daston’s February SSRC Fellow Lecture: “Long before there were computers or even reliable calculating machines, there were algorithms, recipes, and other rigid rules. But for just as long, stretching back to ancient Greece and Rome and continuing through the Enlightenment of the eighteenth century, the rule-as-algorithm coexisted peacefully and fruitfully with another idea of a rule: the rule-as-pattern. For us, who live in the age of algorithms, this centuries-long cohabitation between the most rigid of rules—the algorithm to be followed to the letter—and the most supple of rules—the pattern or model to be imitated but not slavishly copied—seems paradoxical.” With responses from JFI Letter mainstays Helen Nissenbaum and Frank Pasquale. Link.
    • Zeynep Tufekci responds to Mark Zuckerberg’s blog post announcing a new, privacy-focused direction for Facebook: “The plan, in effect, is to entrench Facebook’s interests while sidestepping all the important issues.” Link.
    • A 2017 report by the Georgetown Center on Education and the Workforce states that selective colleges can afford to admit on average 20% more Pell Grant Recipients. The report finds “that about 86,000 Pell Grant recipients score at or above the median on standard tests for selective colleges, but do not attend them.” Link.
    • The Institute on Taxation and Economic Policy released data this week indicating that state and local taxes move national income from the poor to the rich. The report includes this striking figure: “45 states worsened inequality by taxing low-income households at a higher effective rate.” Link to the report, link to coverage in the Washington Post. ht Lauren
    • “Given that there are almost no tenure-track jobs, the majority of the next generation of intellectuals—like my own generation—will probably have to look outside the university for employment, and policy making is a sphere that could benefit from the academic’s commitment to empirics, empathy, and contingency.” University of Washington’s Daniel Bessner on the “public intellectual” in a time of degraded academia. Link.
    • In May of 2018, the Federal Reserve Bank of St. Louis held a conference on returns to a college education. The papers presented consider the value of college premiums, and outline how family income dynamics and wealth gaps shape these calculations. Link. Click here to see related research by JFI Director of Researcher Sidhya Balakrishnan and Senior Fellow Barry Cynamon.
    • Neil Cummins studies English inequality with 60 million death records: “This paper analyses a newly constructed individual level dataset of every English death and probate from 1892-2016. This analysis clearly shows that the 20th century’s ‘Great Equalization’ of wealth stalled in mid-century. Despite the large declines in the wealth share of the top 1%, from 73% to 20%, the median English person died with almost nothing throughout. All changes in inequality after 1950 involve a reshuffling of wealth within the top 30%.” Link.

  7. Weak Local Lineament

    Comments Off on Weak Local Lineament

    REACH ARREARS

    Charting the significance of credit and debt throughout society

    ⤷ Basic Income

    Household debt has proliferated in the past decade. In the final quarter of 2018, it reached $13.54 trillion—an $869 billion increase since the previous peak in 2008 and a 21.4% increase since the post-crisis trough. While it is now widely recognized that the financialization of household consumption set the groundwork for the Recession (see for example this chapter by Manuel Aalbers), credit markets seem immune to structural reform.

    On the one hand, access to credit enables purchases and investments crucial to long term financial mobility; on the other, it incorporates those who lack resources into a cycle of obligations to lenders. In her most recent publication in the Annual Review of Sociology, RACHEL E. DWYER questions how debt has shaped the American social landscape. She develops a two dimensional model of formal debt relationships which categorizes contracts according to the source of credit (state vs. market) and the nature of the obligation (prospective vs. retrospective). The model integrates the logic of debt and credit relationships with an analysis of distributional politics:

    “The top row of prospective credit offers are more likely made to affluent or middle-class and disproportionately white populations, and the bottom row of retrospective financial obligations are more likely to fall on lower-income or poor and disproportionately racial/ethnic minority populations. The experience of debt and financial fragility is thus different across these social groups defined by class, race/ethnicity, and other social status, though also tied together by similar logics of financialization and individualized accountability for life conditions.”

    Dwyer’s research shows how credit and debt relations vary geographically and temporally, encouraging a comparative analysis of debt relationships in countries with different political economies. Link to the article.

    • On the unique role that credit markets play in the American economy, see Monica Prasad on the credit-welfare state tradeoff, and Colin Crouch on privatized-mortgage Keynesianism. Link to the first; link to the second.
    • For a pre-crisis examination of credit and inequality, see Patrick Bolton and Howard Rosenthal’s Credit Markets for the Poor. Link.
    • Vicki Been, Ingrid Ellen, and Josiah Madar explore the relationship between urban segregation and subprime mortgage lending. Link.
      ‡ employment human_capital education

      New Researchers: VISIBILITY PREMIUM

    Political effects of celebrity exposure

    In a novel paper, HEYU XIONG—a Phd candidate at NORTHWESTERN and newly appointed professor at CASE WESTERN RESERVE UNIVERSITY—studied the political consequences of television celebrity. He used the career of Ronald Reagan as a case study and exploited quasi-experimental variation in television reception to estimate the effects of celebrity media exposure on political outcomes, finding that
    support for Reagan based on non-political factors extended nearly two decades after his television career—an effect more pronounced in areas in which Reagan was not a known political entity. The findings suggest that elections hinge considerably more on non-political media exposure and personal characteristics than previously assumed.

    From the abstract:

    “My results contribute to our knowledge of the vote decision process. Understanding what candidate information is pertinent and how that information is processed is key to understanding the selection of elected officials and, subsequently, the policies those elected officials enact. The economic theory of electoral competition is traditionally situated in the framework of the policy oriented voter. Even without the assertion of rationality, voters are, at the very least, presumed to be voting in order to advance a policy position or to express a political preference. While this preoccupation is not misplaced, the results suggest that candidates’ personal characteristics constitute a significant, if substandard, criterion for vote choice.”

    Link to the paper.

    ‡ elections trust 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.

    +++

    • A new post on our blog Phenomenal World: economist Max Kasy provides a high-level overview of his paper exploring guaranteed income and the limitations of the Earned Income Tax Credit. Link.
    • From California: In a push for open access to publicly funded research, the University of California—the largest public university system in America—terminated its subscription with the scientific publisher Elsevier over high costs. Link to coverage in Science Magazine, and link to the UC press release.
    • NYU’s Jacob Faber studies the connection between foreclosure and homelessness and finds that foreclosures within a given year correlate with homelessness in the following year. This paper carries “important implications for our understanding of the Great Recessions’s consequences and demonstrates the need for expanded data collection on homeless populations.” Link.
    • Michael Rosenbaum, in a post for Innovation for Poverty Action, discusses the behavioral improvements necessary for more effective student loan repayment. “The behavioral problems are ones that may be simple and cost-effective to address: a personalized letter costs 80 cents by my estimate. That letter won’t get rid of $1.4 trillion dollars of student loan debt, but it can improve stressed borrowers’ lives in a meaningful way.” Link. ht Sidhya
    • At Vox, Dylan Matthews with a comprehensive review of the 600-page congressionally-ordered report on strategies for alleviating child poverty in the United States. Link. And link to the report, from the National Academy of Sciences.
    • A new publication from the American Sociological Review provides evidence that growing precarity is impacting the health of workers: “These data reveal that exposure to routine instability in work schedules is associated with psychological distress, poor sleep quality, and unhappiness.” Link.
    • Alexandra Samuel on science fiction’s predictive powers and the future of technology. Link.
    • Earlier this month, a conference held at the Rhodes Center for Environment and Society discussed America’s climate change future and explored its relationship to housing markets, stranded assets, and entrenched interests. Link to a series of lecture videos from the conference.
    • Deepmind uses machine learning to improve the efficiency of energy grids. Link.
    • A paper by H. Luke Shaefer, Kathryn Edin, Vincent Fusaro, and Pinghui Wu “examines the relationship between the decline of traditional cash welfare during the 2001-2015 period and two direct measures of wellbeing among households with children: household food insecurity and public school child homelessness. Using models that control for state and year trends, along with other factors, we find that the decline of cash assistance is associated with increases in these two forms of hardship.” Link.
    • Margaret O’Mara writes a history of the “uses” of foreign students in the US. Link.
    • “The government of a country with a good financial reputation could borrow from the international capital market and use the proceeds to endow a sovereign wealth fund that mainly invests in the world stock market.” Giacomo Corneo with a paper for the social wealth fund files, covering “the conditions under which such a policy is welfare‐improving, discusses the optimal size of such a fund, and proposes an institutional framework for the management of public stock ownership.” Link.
    • “The analysis makes precise how path-specific effects contribute to net effects, and illustrates how structural equations enable one to address questions that eluded probabilistic accounts.” Naftali Weinberger on path-specific effects and probabilistic causality. Link.
    • When Kodak accidentally discovered the Manhattan Project: “The fogging of Kodak’s film and the Trinity test in New Mexico were eerily connected, revealing some chilling secrets about the nuclear age.” Link.

  8. Grievous Plans

    Comments Off on Grievous Plans

    NO SHORTAGE

    New evidence on the relationship between skills and labor supply

    ⤷ Income Share Agreements

    More than a decade after the financial crisis of 2008, median household incomes have stagnated at their pre-2008 levels, and global economic growth is expected to decline further from what is already a historic low. While the unemployment rate has rebounded, part time, service, and temporary work remain the principal drivers behind labor market growth. Weak recovery from the crisis has been widely attributed to the “skills gap”; commentators and policymakers alike hold that quality jobs are there, but Americans are simply not qualified to perform them.

    At the American Economic Association’s most recent conference, ALICIA SASSER MODESTINO, DANIEL SHOAG, and JOSHUA BALLANCE provide evidence against this view. Using a proprietary database of more than 36 million online job postings, they show that employers increased skill requirements in states and occupations which experienced larger increases in the unemployment rate. Their findings suggest that it wasn’t a shortage of skills which weakened labor markets, but rather the ubiquity of qualified applicants which drove employers to raise hiring standards. By testing employer responses to an influx of veterans from Iraq and Afghanistan, the authors are able to confirm this mechanism:

    “As a source of exogenous variation in the availability of skilled workers, we make use of a natural experiment resulting from the large increase in the post-9/11 veteran labor force following troop withdrawals from Iraq and Afghanistan… Panel A of Table 5 demonstrates that there is a strong, significant, and positive relationship between the sharp increase in the supply of returning veterans and the rise in employer skill requirements for both education and experience.”

    This is among the first pieces of empirical evidence which suggests that employer skill requirements are driven, in part, by labor supply. Link to the conference webpage, where a full version of the paper is available for download.

    • As early as 2011, Lawrence Mishel argued against analysts who asserted that the unemployment crisis was structural, proposing instead that the economy was experiencing a crisis of demand. Link.
    • In his most recent book, LSE anthropologist David Graeber examines the relationship between skill and value, questioning why jobs which produce the most social value tend to be categorized as unskilled, consequently earning lower wages. Link to Graeber’s widely acclaimed essay from 2013 that first outlined his argument, and link to the Google preview of his new book.
    • In a report for the Roosevelt Institute, Marshall Steinbaum and Julie Margetta Morgan argue that the ‘skills gap’ narrative is inconsistent with student debt crisis: “Although the country’s populace is becoming more educated, each educational group is becoming less well paid.” Link.
    • Paul Osterman wrote an accessible overview of the debate for The Atlantic in 2014: “The claim that a shortage of skilled workers has exacerbated inequality has gained traction but it is not supported by the data… For instance, while 38 percent of manufacturing firms require math beyond simple addition, subtraction, and multiplication, the type of math employees need to be able to handle are standard features of a good high school education and part of the curriculum for most community-college students…Nearly 65 percent of businesses report they have no vacancies whatsoever, and another 76.3 percent report they have no long-term vacancies…” Link.
    ‡ employment human_capital education

    New Researchers: TRUST EXCHANGE

    Studying the political determinants of economic exchange

    In his job market paper, ABHIT BHANDARI—a political science Ph.D. candidate at COLUMBIA UNIVERSITY—examines the relationship between political institutions and market exchange. To research the work, Bhandari incorporated a business in Senegal and hired employees to conduct door-to-door sales.

    From the abstract:

    “Economic growth requires confidence in the secure exchange of goods. But when states selectively enforce rule of law, political considerations can moderate the trust that buyers have in sellers. How do political connections moderate economic behavior in developing countries, and how do such connections operate alongside formal state institutions? I propose a theory of seller moral hazard in exchange, where buyers believe that politically connected sellers can break deals with relative impunity. In this context, state-backed formal contracts may only protect the claims of connected buyers who similarly receive preferential treatment from the state.

    These findings demonstrate the importance of unequal political connections in impeding trade, and the limits of piecemeal legal solutions. Exchange under such conditions can result in distinct trading networks that intensify inequalities.”

    Link to the paper, link to Bhandari’s website. Link also to a post at Ken Opalo’s blog, where we first saw this paper. Opalo situates Bhandari’s work alongside Yuen Yuen Ang’s excellent book on Chinese institutional history (which we’ve linked to in the past), noting that “A common mistake made by most would-be reformers is the total disregard for forms of organization that make business transactions credible in the ‘informal’ sector in the name of imposing a state-centric rule-based systems.”

    ‡ institutions trust 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

    +++

    • An important new initiative, Economists for Inclusive Prosperity, published its first report: a series of 10 policy proposals indicating how we can reform key economic institutions to foster a more equal society. “Our claim is that there are overarching themes and commonalities that taken together provide a coherent overall vision for economic policy that stands as a genuine alternative to the market fundamentalism that is too often (and in our view, wrongly) associated with mainstream economics. We strive for a whole that is greater than the sum of the parts.” Link.
    • A new paper from the Economic Policy Institute argues that labor’s share of income remains inadequate despite recent recent wage growth: “Another striking feature of our measure of the labor share is how depressed it remains even as we approach 10 years from the end of the Great Recession. This highlights that even wage growth significantly faster than we’ve seen in recent months can persist for a long time before it necessarily translates into inflation breaching the Fed’s 2 percent target.” Link.
    • An essay by Brett Scott argues for understanding the transition to cashless payments as a “process setting in motion a ‘cleansing’ of informality.” Link.
    • “Focusing on the adoption of electricity in the concrete industry during the 1930s for its unique source of variation and data availability, [I find] that firms adjusted to this labor-saving technology by decreasing employment rather than increasing output.” Miguel Morin from the Institute for New Economic Thinking questions the link between wages and productivity by considering the impact of electricity adoption on wages during the Great Depression. Link.
    • Sandeep Vaheesan of the Open Markets Institute explores the history and “hidden power” of the FTC for battling market concentration. Link.
    • New at NBER: Alberto Alesina, Elie Murard, and Hillel Rapoport examine how immigration patterns affect preferences for redistribution in Western Europe. Link.
    • “The MOOC pivot” by Justin Reich and José A. Ruipérez-Valiente. Link.
    • “Upon reading a selection of the grievance books (“cahiers de doléances”) proffered to King Louis XVI in 1789 by the various regions and estates of France, Alexis de Tocqueville reflected with horror that ‘what they were asking for was the simultaneous and systematic abolition of all the laws and customs in force throughout the country.’ Given that he couldn’t read all 60,000 books, however, to what extent is Tocqueville’s conclusion simply the result of a selection bias?” A paper by Jeff Jacobs subjects the grievance books to fully-automated content analysis. Link.

  9. Cup and Ring

    Comments Off on Cup and Ring

    GAP PROGRESSION

    New life in the debates over poverty measurement

    ⤷ Alternative Metrics

    In recent weeks, a familiar debate over how we understand the global poverty rate across time reappeared in mainstream op-ed pages. Sparked initially by Bill Gates tweeting out an infographic produced by Our World in Data—which visualizes massive decreases (94% to 10% of people) in global poverty over the past two-hundred years—the notable discussants have been LSE anthropologist JASON HICKEL and Our World in Data researchers JOE HASELL and MAX ROSER.

    Hickel published a polemical Guardian op-ed criticizing the publication of this chart, which, he argued, misrepresents the history it claims to communicate and relies on contestable and imprecise data sources to bolster its universal progress narrative, taking “the violence of colonisation and repackaging it as a happy story of progress.” The responses were numerous.

    Among them, a post by Hasell and Roser provided detailed descriptions of the methods and data behind their work to answer the following: “How do we do know that the vast majority of the world population lived in extreme poverty just two centuries ago as this chart indicates? And how do we know that this account of falling global extreme poverty is in fact true?”

    In addition to methodological arguments regarding data sources and the poverty line, Hickel’s argument emphasizes the gap between poverty and the capacity to eliminate it:

    “What matters, rather, is the extent of global poverty vis-à-vis our capacity to end it. As I have pointed out before, our capacity to end poverty (e.g., the cost of ending poverty as a proportion of the income of the non-poor) has increased many times faster than the proportional poverty rate has decreased. By this metric we are doing worse than ever before. Indeed, our civilization is regressing. On our existing trajectory, according to research published in the World Economic Review, it will take more than 100 years to end poverty at $1.90/day, and over 200 years to end it at $7.4/day. Let that sink in. And to get there with the existing system—in other words, without a fairer distribution of income—we will have to grow the global economy to 175 times its present size. Even if such an outlandish feat were possible, it would drive climate change and ecological breakdown to the point of undermining any gains against poverty.

    It doesn’t have to be this way, of course.”

    Link to that post, and link to a subsequent one, which responds directly to the methods and data-use questions addressed by Hasell and Roser.

    • For a measured account, see this excellent post from Branko Milanovic. On Twitter, he summarizes Hickel: “1. Maddison’s 19th century GDPs do not include the value of non-cash goods and services that was relatively high then [basically true]; 2. Bourguignon-Morrisson 19th century distributions are guesses [true]; 3. Poverty Line of $1.90 is unrealistically low (disputed); 4. How to account for the extreme costs of industrialization (coercion and the dead) [often ignored although life expectancy changes are used to adjust for it].” Link.
    • At Vox, Dylan Matthews provides a comprehensive summary of the recent debate’s various back-and-forths, glossing the major disputes over the poverty line, historical data accuracy, and narrative. Link.
    • A 2018 paper by eminent poverty scholar Martin Ravallion takes stock of poverty debates with a focus on income inequality: “Given the scope for sensible people to disagree on the desirable properties of an inequality measure—and there is no scientific justification for the near monopoly of relative measures in applied work by economists—more productive debates on globalization and development might be possible if both sides better understood what concepts of inequality they are using. To talk about ‘inequality’ without making explicit whether one means absolute or relative inequality is especially problematic.” Link.
    • These discussions over the nature of development, economic growth, and measures of economic progress derive from much earlier debates in international relations and development studies. In his canonical 1966 article, Andre Gunder Frank distinguishes between “undevelopment” and “underdevelopment,” arguing that “underdevelopment is not due to the survival of archaic institutions and the existence of capital shortage in regions that have remained isolated from the stream of world history. On the contrary, underdevelopment was and still is generated by the very same historical process which also generated economic development.” Link to the original text.
      ‡ income_inequality metrics

    New Researchers: NO SUBSTITUTE

    A paper finds no labor market losses resulting from minimum wage increases

    In CARL NADLER’S job market paper—co-authored with SYLVIA ALLEGRETTO, ANNA GODOEY, and MICHAEL REICH—the authors build on literature that finds no job market losses resulting from minimum wage increases. The paper tests for labor-labor substitutions, a widely proposed hypothesis which suggests that employers’ preferences shift in favor of skilled workers as the price of labor increases, thereby masking underlying job losses for low wage workers. It takes a concentrated look at the earnings and employment effects of increased minimum wage policies in Chicago, Washington DC, Oakland, San Francisco, San Jose, and Seattle. It also tests for labor-labor substitutions in California’s food industry.

    The findings:

    “In the six cities, we find positive earnings responses in the food services industry that are remarkably close to those estimated in recent studies of state and federal minimum wage increases. … Like these studies, we also do not detect any employment losses. … Our analysis of California food services finds no evidence of either labor-labor substitution or hours effects. As a result, the most likely explanation for our findings is that total labor demand elasticity for employment and hours combined is inelastic, and the policies have raised the earnings of low-wage workers in the six cities. .”

    Link to the paper, and link to Carl Nadler’s website.

    ‡ labor_market minimum_wage 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 University of Anterwerp’s Herman Deleck Center for Social Policy published a working paper exploring how institutional and cultural factors influence support for a UBI. They find that “countries with the greatest demand for a universal basic income are the countries with the least institutional capacity to implement a generous, unconditional, and universal cash assistance program.” Link.
    • Caroline Lester reports on the largest ever study of moral preferences for autonomous vehicles in The New Yorker: “Most players sacrificed individuals to save larger groups. Most players spared women over men. Dog-lovers will be happy to learn that dogs were more likely to be spared than cats. Human-lovers will be disturbed to learn that dogs were more likely to be spared than criminals.” Link.
    • From the Undark Magazine podcast, an interview with researchers who use audio data to “monitor rapidly-melting polar ice caps.” Link.
    • On the cartography of meta-data: at Failed Architecture, Matthew Stewart reveals how real estate developers use algorithmic representations of urban neighborhoods to plan future investments. “We could place these developments firmly within a momentum that persists between urbanization and financialization; one mitigated by real estate markets and effectively unaltered post-2008 and the subprime mortgage crisis.” Link.
    • Preliminary results from Finland’s UBI experiment. Link. ht Lauren
    • “It’s the poorest part of California…There’s almost no middle class.” Michael Greenberg recounts the extreme conditions experienced by farm laborers in the San Joaqium Valley. Link.
    • German Gutierrez argues that the shift towards monopolization in US industries and the growth of the real estate sector are responsible for labor’s declining profit share in the United States: “…a detailed analysis of US industry-level trends suggests that rising mark-ups and increasing concentration are critical to jointly explaining declining (gross and net) labor shares and rising profit shares.” Link to the full paper.
    • Governor Gavin Newsome has proposed a “digital dividend” for Californians, drawn from the profits “created from their data.” Link. Any details are yet to come, but the idea of a digital dividend has appeared in our newsletter before, in a paper co-authored by Glen Weyl last year. Link to that paper.
    • An insight into Brazil’s Belo Horizante: a city which began providing access to food as a right of citizenship in 1993. Link.
    • “When the early proponents of the scale-free paradigm started seeing power laws in real-world networks in the late 1990s, they viewed them as evidence of a universal organizing principle underlying the formation of these diverse networks… Now, the new paper reports that few real-world networks show convincing evidence of scale-freeness.” From last year, an article in Quanta covers ongoing debates in social network analysis research. Link. ht Steven Nuñez
    • “The Great Dying of the Indigenous Peoples of the Americas resulted in a human-driven global impact on the Earth System in the two centuries prior to the Industrial Revolution.” A new paper by Alexander Kocha, Chris Brierley, Mark Maslina, and Simon Lewis tests the pre-industrial revolution Anthropocene thesis. Link.
    • “Shoplifting occurred nationwide, but it was disproportionately a problem in the capital. A study of a sample of the many thousand prosecutions at the Old Bailey reveals that linen drapers, shoemakers, hosiers and haberdashers were the retailers most at risk. Over 70% of goods stolen, particularly by women, were fabrics, clothing and trimmings.” From a study of petty theft in 18th century England, highlighted at the always-excellent EHS Long Run Blog. Link.

  10. Overboard

    Comments Off on Overboard

    HETEROGENOUS GAP

    In search of a more just model for higher education financing

    ⤷ Income Share Agreements

    This week, we delve into the persisting inequalities of our higher education system. Since Winston, Hill, and Boyd found that only 10% of students at elite universities came from families who fell within the bottom 40% of the income distribution in 2005, universities across the board have revived efforts to diversify their student bodies.

    The idea that there’s a need for greater socioeconomic diversity in higher education is largely uncontroversial, particularly amid growing evidence of the higher earnings potential for college graduates. However, the policies best suited to addressing this gap see far less consensus. ROSINGER, BELASCO, and HEARN in the Journal for Higher Education examine the impact of both means tested and universal policies that replace student loans with grants in financial aid packages. The impact of these policies on socioeconomic diversity is somewhat counterintuitive:

    “We found that colleges offering universal discounts experienced increased enrollment among middle-class students. Our study indicates universal no-loan policies represent one strategy to increase access and affordability for the middle-class in the elite reaches of higher education. The study also, however, raises questions about the policies’ effectiveness in addressing access for low-income students and efficiency in targeting aid.”

    Link to the full paper.

    • For more on the potential for universities to facilitate both the entrenchment and supersession of generational inequalities, see the groundbreaking 2017 paper by Chetty et. al. The authors used fourteen years of federal income tax data to construct mobility report cards of nearly 2000 colleges, provoking a range of new literature in the field. Their findings: “The colleges that have the highest bottom-to-top-quintile mobility rates – i.e., those that offer both high success rates and low-income access – are typically mid-tier public institutions. For instance, many campuses of the City University of New York (CUNY), certain California State colleges, and several campuses in the University of Texas system have mobility rates above 6%… Elite private (Ivy-Plus) colleges have an average mobility rate of 2.2%.” Link to the paper, as well as the digitization of its results, courtesy of the New York Times.
    • Drawing on “Mobility Report Cards,” a recent paper by Bloome, Dyer, and Zhou finds that parental income has become less predictive of adult income, offsetting inter-generational income persistence resulting from education. Link.
    • Anna Manzoni and Jessi Streib find that wage gaps between first- and continuing-generation college students are not caused by the institutions they attend, the grades they earn, or the subjects they study: “Our decomposition analysis shows that the uneven distribution of students into labor market sectors, occupations, hours worked, and urban locations is more responsible for the wage gap than the distribution of students into and within educational institutions.” Link.
    • A book on the trials and tribulations of building and maintaining the “Harvard of the proletariat”: Anthony Picciano and Chet Jordan on the history of the CUNY system. Link.
      ‡ ISAs inequality higher_ed

    New Researchers: HIDDEN COSTS

    A look at the economic impact of armed conflict in non-conflict areas

    In his job market paper, Northwestern PhD candidate ALEXEY MAKARIN examines the multifaceted effects of armed conflict on the economy, particularly in non-conflict areas. Marakin uses the ongoing Russian military intervention in Ukraine as a case study and finds that Ukranian counties with pre-existing ties to Russia experience a smaller drop in trade than counties with more prominent anti-Russian sentiments. The paper contributes to a growing literature on the indirect impacts of conflict on economic activity, and is the first to document a negative impact of these conflicts on business operations in firms outside the conflict area.

    From the paper:

    “Ukrainian firms from counties with fewer ethnic Russians experienced a deeper decline in trade with Russia. We argue that this result stems from increased ethnic tensions and a differential rise in negative attitudes and beliefs about Russia. Possible mechanisms include consumer boycotts of Russian products, reputational concerns of Ukrainian firms, and a breakdown of trust in contract enforcement. In contrast, we find no evidence for individual-level animosity between firms’ key decision makers or discrimination at the border. We also rule out that the differential decline in trade arises only from economic spillovers, such as refugee flows and destruction of supply chains with conflict areas.”

    Link to the full paper here.

    ‡ conflict trade new_researchers

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

    +++

    • We contributed to a report commissioned by the Mayor’s Office of Chicago for Chicago Resilient Families Task Force looking at how EITC expansions or guaranteed income could tackle inequality in that city. We are excited to see it published this week. Link.
    • At our blog Phenomenal World, we’ve added several papers to our UBI / guaranteed income literature review, authored by Gary Tan, Maya Adereth, and Sidhya Balakrishnan. Link to the expanded version.
    • A comprehensive new study by James Bessen, Maarten Goos, Anna Salomons, and Wiljan Van den Berge provides “the first estimate of the impacts of automation on individual workers.” Link.
    • From the UK research group Autonomy, a report advocating for the four-day work week. “There is no positive correlation between productivity and the amount of hours worked per day.” Link.
    • By Eric Bettinger et al: tracking the long run effects of California’s state-based financial aid program, Cal Grant. Link.
    • An excellent post at CDG from back in December by Pamela Jakiela draws some insights out of the World Bank’s Worldwide Bureaucracy Indicators database, on the geographical distribution of public employees, the gender composition of bureaucrats, and the relationship between public sector wages and corruption. Link to the post, link to the database.
    • Following the net rise in the structural power of large European banks. By Pepper Culpepper and Tobias Tesche. Link.
    • I argue that Copts’ conversion to Islam between 641 and 186 was characterized by selection on socioeconomic status due to the tax system. Upon the Conquest, Arabs imposed an annual poll tax on every adult free Coptic male, which was enforced until 1856. As conversion freed Copts from the poll tax liability, and since the conversion incentive was decreasing in income owing to the lump-sum feature of the tax, I hypothesize that the tax caused the conversion of poorer Copts, leading Copts to shrink into a better-off minority.” A 2017 paper on the economics of conversion by economic historian Mohamed Saleh. Link.