Fifteen Worthy Reads from October 25, 2018
Worthy Reads at Equitable Growth
- Alix Gould-Werth: What upticks in U.S. economic inequality and incarceration mean for marriage - Equitable Growth: "...
...The work of these three researchers indicates that increasing inequality in the United States has consequences beyond the material circumstances of those at the bottom of the income distribution. Lower bank account balances, for example, affect people’s romantic lives and family composition. What does this mean for policy? Because other research shows that married people have higher rates of economic security, some experts call for the promotion of marriage. Schneider and his co-authors’ work suggests that these policy proposals may be putting the cart before the horse. If policymakers instead start by improving economic circumstances, rates of marriage are likely to increase. This could lead to a virtuous circle, in which people have the resources they need to form the families they desire, which, in many cases, may further bolster their economic circumstances or insulate them from economic hardship. Schneider and his co-authors also show that incarceration has effects that ripple beyond the immediate impact on the confinement of and concomitant declines in well-being among incarcerated people. Incarceration affects not only the family relationships of African American and low-educated men who are most likely to be incarcerated but also the family formation of low-educated women. While much literature investigates whether marriage is a protective factor against justice involvement, policymakers may again wish to move the proverbial cart and focus on the long-reaching benefits that reducing incarceration may have for families....
Elisabeth Jacobs: Paid Family and Medical Leave in the United States - Equitable Growth: "... >...Caregiving needs span the life cycle, and changes in women’s labor force participation in the United States mean that the majority of families no longer have a stay-at-home spouse to provide unpaid care. Yet too many workers who need time off to care for a new baby, a sick loved one, an aging family member, or their own health may do so only at the expense of their own financial well-being—and the cumulative cost of this failure takes a broader toll on the health of the U.S. economy. A growing number of states are experimenting with policies designed to provide widespread access to paid family and medical leave, which creates a window of opportunity for expanding the knowledge base about the demand for paid caregiving leave across the life cycle, as well as the costs and benefits of paid leave policies for individuals, families, businesses, and the economy as a whole. This paper explores the evidence from the United States on the need for and impact of paid family and medical leave, considering parental, caregiving, and medical leave separately, and surveys a wide range of literature that spans labor market outcomes, health outcomes, and broader macroeconomic outcomes, including policy spillovers. In doing so, it lays out a research agenda designed to accelerate the evidence base for future state and federal policymakers....
Greg Lieserson: Slide presentation: How should Treasury and the IRS conduct cost-benefit analysis of tax regulations? - Equitable Growth: "... >...Equitable Growth’s Director of Tax Policy and Senior Economist Greg Leiserson participated today in the Tax Policy Center’s event “Costs and Benefits of Tax Regulations: Exploring Treasury’s and OMB’s New Responsibilities.” In his presentation, Leiserson argues that the traditional tools of tax analysis are the appropriate tools for the cost-benefit analysis of tax regulations, and that cost-benefit analysis should report estimates of the revenue, distribution, and compliance-cost impacts of a proposed regulation. Social benefits and social costs are not quantified in this approach—and should not be quantified—because doing so would require assumptions about the value of revenues and the appropriate distribution of the tax burden. Treasury and the IRS should not claim to have definitive answers to these questions in a regulatory impact analysis...
Delaney Crampton: Gerrymandered school districts perpetuate segregation by keeping low-income students out, which is bad for economic growth - Equitable Growth: "In 1954, Brown v. Board of Education was the unanimous U.S. Supreme Court ruling that led to the beginning of the end of blatant racial segregation of children in public schools. Actual desegregation took decades to enforce and is still incomplete in many local school districts across the United States. But what’s equally troubling is a new type of segregation in some school districts—gerrymandered school borders that fence out students from economically stressed families, which often means new segregation along racial and ethnic lines. With economic inequality on the rise sharply over the past four decades, families are increasingly segregated into communities based on income status, resulting in public schools becoming increasingly segregated by income. Research from 2014 Equitable Growth grant recipient Sean Reardon of Stanford University, Christopher Jencks of Harvard University, and Ann Owens of the University of Southern California found that between 1990 and 2010, the segregation of public-school families by income between school districts had increased by more than 15 percent....
Elisabeth Jacobs and Liz Hipple: Are today’s inequalities limiting tomorrow’s opportunities? - Equitable Growth: "Comparing the relationship between inequality and intergenerational mobility across developed economies, City University of New York economist Miles Corak found that in countries where inequality is high such as the United Kingdom and United States, there is a strong relationship between a parent and a child’s economic outcomes. Conversely, in countries where inequality is lower such as Norway and Denmark, the relationship between a parent and child’s economic outcomes was not as strong.1 Comparing the relationship between inequality and intergenerational mobility across different parts of the United States, Harvard University economist Raj Chetty found that mobility varied dramatically across the United States and that high inequality was one of the factors correlated with low mobility. Some cities such as Salt Lake City have rates of mobility similar to countries with high rates of mobility such as Denmark. Other cities such as Atlanta and Milwaukee have rates of mobility lower than other developed countries.2 Metrics matter for making sense of the relationship between inequality and mobility. Relative (or rank) mobility compares a child’s rank in the economic distribution to the child’s parents’ place in the distribution at a similar point in the life cycle. Imagine a child born into a family with a total household income in the bottom 20th percentile of the distribution of all household incomes. As a young adult, that now-adult-child’s household income at a comparable point in life is in the 75th percentile of the distribution of all household incomes. This is relative upward mobility. Relative mobility is, by definition, a zero-sum proposition: If a particular child moves up in rank from childhood to adulthood, then someone else, by definition, must move down.
Worthy Reads Elsewhere
The Federal Reserve's public view of the likely path of the economy now lacks coherence. This is a bad thing. It may mean that the Federal Reserve's private view of the likely path of the economy now lacks coherence, in which case policy will lack coherence. It certainly means that market participants can no longer plan on the Federal Reserve having a known coherent view of the economy: Joe Gagnon: Tension Remains at the Heart of the Fed’s Forecast: "The Federal Open Market Committee (FOMC, or Fed) surprised no one at its September meeting by raising the target for the federal funds rate a quarter of a percentage point to a range of 2.00 to 2.25 percent. The FOMC has been tightening monetary conditions very slowly since late 2015...
Eric Levitz: Tribalism Isn’t Our Democracy’s Problem. The GOP Is: "Ordinary Republican and Democratic voters don’t disagree about public policy much more than they used to, but they still fear and loathe each other more than at any point in our nation’s modern history.... electoral politics has always been 'identity' politics. What is new is how cleanly the two-party system currently divides Americans along lines of racial, religious, and regional identity.... Few rural white Evangelical Christians can vote for a Democrat in 2018 without betraying all of their definitions of who 'their people' are...
Sarita Gupta, Stephen Lerner, and Joseph A. McCartin: It’s Not the 'Future of Work,' It’s the Future of Workers That’s in Doubt: "Nearly every discussion of labor’s future in mainstream media quickly becomes mired in a group of elite-defined concerns called 'The Future of Work'.... Rarely has a phrase been so ubiquitous in discussions of the economy or social policy.... [But] it is the concentration of wealth and power in this new economy, not computerization or artificial intelligence, that represents the gravest threat to our future...
THE MUST-READ OF MUST-READS on the links between behavioral finance and macro: John Maynard Keynes (1936): The State of Long-Term Expectation: The General Theory of Employment, Interest and Money: Chapter 12: "If I may be allowed to appropriate the term _speculation for the activity of forecasting the psychology of the market, and the term enterprise for the activity of forecasting the prospective yield of assets over their whole life, it is by no means always the case that speculation predominates over enterprise. As the organisation of investment markets improves, the risk of the predominance of speculation does, however, increase...
Antonio Fatás: Europe's fiscal policy doom loop: "The damage done by procyclical fiscal policy in the euro area between 2010 and 2014 is likely to be even larger.... Fiscal policymakers... created a 'doom loop', with unfounded pessimism feeding into policy... the consequences of those policies increasing pessimism... hysteresis, permanently reducing GDP...
Stewart Brand: The Whole Earth Catalog’s Long Legacy over 50 years: "Stewart lays out out how the Whole Earth Catalog 'conferred agency' and spawned many subsequent efforts.... The special role of San Francisco and California to the rest of America-and especially to the East Coast.... Stewart ponders whether the Whole Earth Catalog marked the beginning of a shift to a new kind of 21st-century civilization.... Stewart on why he is optimistic about the next 50 years...
Jiahua Che and Yingyi Qian: Insecure Property Rights and Government Ownership of Firms>: "The ownership of firms in an environment without secure property rights against state encroachment. 'Private ownership' leads to excessive revenue hiding, and 'state ownership' (i.e., national government ownership) fails to provide incentives for managers and local governments in a credible way.... 'Local government ownership'... may better serve the interests of the national government...
A very interesting study of what appears to be highly successful job search assistance in Nevada: Day Manoli, Marios Michaelides, and Ankur Patel: Long-Term Effects of Job-Search Assistance: Experimental Evidence Using Administrative Tax Data: "Administrative tax data... examine the long-term effects of an experimental job-search assistance program operating in Nevada in 2009...
Seth Godin: Throat : "Begin in the middle. The first paragraph, where you lay out what's about to happen. The half-apology you use to preface your comments at the meeting. The email that takes a paragraph or two to get to the point…. You can skip those. Throat clearing is a good way to make sure that people are looking at you. And an even better way to give yourself time to collect your thoughts, to indulge your fears or to get yourself warmed up. But we're already looking at you. We've clicked through to your link, given you the microphone, read your note…
Cosma Shalizi: Alien Failure Modes of Machine Learning: "They have such alien failure-modes, and... don't have the sort of flexibility we're used to from humans or other animals. They generalize to more data from their training environment, but not to new environments.... If you take a person who's learned to play chess and give them a 9-by-9 board with an extra rook on each side, they'll struggle but they won't go back to square one; AlphaZero will need to relearn the game from scratch...
