Were material incentives always a weak and blunt tool in the face of a society in which people's lives were deeply interwoven in social networks? Or is America today different from at least what America was in the past, in which moving to opportunity was a real thing? The brilliant Duflo and Banerjee have thoughts: Esther Duflo & Abhijit Banerjee: Economic Incentives Don’t Always Do What We Want Them To https://www.nytimes.com/2019/10/26/opinion/sunday/duflo-banerjee-economic-incentives.html?action=click&module=Opinion&pgtype=Homepage: 'Tax incentives do very little. For example, in famously “money-minded” Switzerland, when people got a two-year tax holiday because the tax code changed, there was absolutely no change in the labor supply. In the United States, economists have studied many temporary changes in the tax rate or in retirement incentives, and for the most part the impact of labor hours was minimal. Nor do people slack off if they are guaranteed an income: The Alaska Permanent Fund, which, since 1982, has handed out a yearly dividend of about $5,000 per household, has had no adverse impact on employment.... Evidence suggests that it has not decreased participation in the labor market. Employment has tracked that of similar states since the dividend began.... On the flip side, when jobs vanish and the local economy collapses, we cannot count on people’s desire to seek out a better life to smooth things out. The United States population is surprisingly immobile now. Seven percent of the population used to move to another county every year in the 1950s. Fewer than 4 percent did so in 2018.... The [manufacturing] decline started in 1990 and accelerated in the mid-2000s, precisely at the time when the industries in some regions were hit by competition from Chinese imports. When jobs disappeared in the counties that were producing toys, clothing or furniture, few people looked for jobs elsewhere. Nor did they demand help to move or to retrain — they stayed put and hoped things would improve. As a result, one million jobs were lost and wages and purchasing power fell in those communities, setting off a downward spiral of blight and hopelessness. Marriage rates and fertility fell, and more children were born into poverty. Despite this, the faith in incentives is widely shared. We encountered this mismatch firsthand, when, in the fall of 2018, we (along with the economist Stefanie Stantcheva) conducted a survey of 10,000 Americans. We asked half of them what they thought someone should do if he or she were unemployed and a job was available 200 miles away. Sixty-two percent said the person should move. Fifty percent also said that they expected at least some people to stop working if taxes went up, and 60 percent thought that Medicaid beneficiaries are discouraged from working by the lack of a work requirement. Forty-nine percent answered yes when asked whether “many people” would stop working if there were a universal basic income of $13,000 a year with no strings attached....


#noted #2020-03-05

Comments