U.S. estimates of the natural rate of interest – the real short-term interest rate that would prevail absent transitory disturbances – have declined dramatically since the start of the global financial crisis. For example, estimates using the Laubach–Williams (2003) model indicate the natural rate in the United States fell to close to zero during the crisis and has remained there into 2016. Explanations for this decline include shifts in demographics, a slowdown in trend productivity growth, and global factors affecting real interest rates. This paper applies the Laubach–Williams methodology to the United States and three other advanced economies – Canada, the Euro Area, and the United Kingdom. We find that large declines in trend GDP growth and natural rates of interest have occurred over the past 25 years in all four economies. These country-by-country estimates are found to display a substantial amount of comovement over time, suggesting an important role for global factors in shaping trend growth and natural rates of interest.
Awarded the Bhagwati Prize for 2017-2018, given every two years for the best article published in the Journal of International Economics during the previous two years.
We estimated rates of “absolute income mobility”—the fraction of children who earn more than their parents—by combining data from U.S. Census and Current Population Survey cross sections with panel data from de-identified tax records. We found that rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s. Increasing Gross Domestic Product (GDP) growth rates alone cannot restore absolute mobility to the rates experienced by children born in the 1940s. However, distributing current GDP growth more equally across income groups as in the 1940 birth cohort would reverse more than 70% of the decline in mobility. These results imply that reviving the “American dream” of high rates of absolute mobility would require economic growth that is shared more broadly across the income distribution.
This article considers the effects on the wage structure of the U.S. economy’s growing reliance on demand from high-income consumers. Relative to the mass consumers that defined the post–World War II U.S. economy, high-income consumers are willing to pay for high-quality and high-status products. These spending patterns split producers into up-market and down-market segments and stoke winner-take-all dynamics among up-market producers. Economic dependence on high-income consumers could thus lead to a new form of industrial segmentation, based on vertical differentiation by product quality or status. To test these predictions, data from consumer expenditure and wage surveys are linked using input-output tables and used to fit variance function regressions. Results show that industries more dependent on high-income consumers have greater wage inequality. This analysis identifies a new structural source of wage inequality not considered in previous research: the increasingly unequal composition of consumer demand reproduces wage inequality.
In police reform circles, many scholars and policymakers diagnose the frayed relationship between police forces and the communities they serve as a problem of illegitimacy, or the idea that people lack confidence in the police and thus are unlikely to comply or cooperate with them. The core proposal emanating from this illegitimacy diagnosis is procedural justice, a concept that emphasizes police officers’ obligation to treat people with dignity and respect, behave in a neutral, nonbiased way, exhibit an intention to help, and give them voice to express themselves and their needs, largely in the context of police stops. This Essay argues that legitimacy theory offers an incomplete diagnosis of the policing crisis, and thus de-emphasizes deeper structural, group-centered approaches to the problem of policing. The existing police regulatory regime encourages large swaths of American society to see themselves as existing within the law’s aegis but outside its protection. This Essay critiques the reliance of police decision makers on a simplified version of legitimacy and procedural justice theory. It aims to expand the predominant understanding of police mistrust among African Americans and the poor, proposing that legal estrangement offers a better lens through which scholars and policymakers can understand and respond to the current problems of policing. Legal estrangement is a theory of detachment and eventual alienation from the law’s enforcers, and it reflects the intuition among many people in poor communities of color that the law operates to exclude them from society. Building on the concepts of legal cynicism and anomie in sociology, the concept of legal estrangement provides a way of understanding the deep concerns that motivate today’s police reform movement and points toward structural approaches to reforming policing.
Research on wealth inequality and accumulation and the data upon which it relies have expanded substantially in the twenty-first century. Although the field has experienced rapid growth, conceptual and methodological challenges remain. We begin by discussing two major unresolved methodological concerns facing wealth research: how to address challenges to causal inference posed by wealth’s cumulative nature and how to operationalize net worth, given its highly skewed distribution. Next, we provide an overview of data sources available for wealth research. To underscore the need for continued empirical attention to net worth, we review trends in wealth levels and inequality and evaluate wealth’s distinctiveness as an indicator of social stratification. We then review recent empirical evidence on the effects of wealth on other social outcomes, as well as research on the determinants of wealth. We close with a list of promising avenues for future research on wealth, its causes, and its consequences.
Under what conditions do autocracies peacefully settle disputes? Existing studies tend to focus on the domestic factors that shape conflict initiation. In this article, I show how domestic institutions interact with international institutions to produce more cooperative outcomes. Particularly, this study argues that as autocracies become more central in the network of liberal institutions such as preferential trade agreements (PTAs), they are less likely to initiate a militarized interstate dispute (MID). As a state becomes more democratic, the effect of centrality within the PTA network on the peaceful dispute settlement dissipates. This is because greater embeddedness in the PTA regime is associated with enhanced transparency for autocracies, which allows autocracies to mitigate ex ante informational problems in dispute resolution. Using a dataset of MID initiation from 1965 to 1999, this study finds robust empirical support for the aforementioned hypothesis. Moreover, the results are substantively significant. Further analysis into the causal mechanisms at work provides evidence in favor of the information mechanism. Autocrats who are more embedded in the PTA network tend to have higher levels of economic transparency and economic transparency itself is associated with lower rates of conflict initiation. The results suggest that an autocrat’s structural position within the international system can help to peacefully settle its disputes.
This article challenges the implicit assumption of many cross-national studies that gender-role attitudes fall along a single continuum between traditional and egalitarian. The authors argue that this approach obscures theoretically important distinctions in attitudes and renders analyses of change over time incomplete. Using latent class analysis, they investigate the multidimensional nature of gender-role attitudes in 17 postindustrial European countries. They identify three distinct varieties of egalitarianism that they designate as liberal egalitarianism, egalitarian familism, and flexible egalitarianism. They show that while traditional gender-role attitudes have precipitously and uniformly declined in accordance with the “rising tide” narrative toward greater egalitarianism, the relative prevalence of different egalitarianisms varies markedly across countries. Furthermore, they find that European nations are not converging toward one dominant egalitarian model but rather, remain differentiated by varieties of egalitarianism.
New social transformations within and beyond the cities of classic urban studies challenge prevailing accounts of spatial inequality. This paper pivots from the Rust Belt to the Sunbelt accordingly, disentangling persistence and change in neighborhood median income and concentrated income extremes in Los Angeles County. We first examine patterns of change over two decades starting in 1990 for all Los Angeles neighborhoods. We then analyze an original longitudinal study of approximately six hundred Angelenos from 2000 to 2013, assessing the degree to which contextual changes in neighborhood income arise from neighborhood-level mobility or individual residential mobility. Overall we find deep and persistent inequality among both neighborhoods and individuals. Contrary to prior research, we also find that residential mobility does not materially alter neighborhood economic conditions for most race, ethnic, and income groups. Our analyses lay the groundwork for a multilevel theoretical framework capable of explaining spatial inequality across cities and historical eras.
Amid the long decline of US unions, research on union wage effects has struggled with selection problems and inadequate theory. I draw on the sociology of labor to argue that unions use non-market sources of power to pressure companies into raising wages. This theory of union power implies a new test of union wage effects: does union activism have an effect on wages that is not reducible to workers’ market position? Two institutional determinants of union activity are used to empirically isolate the wage effect of union activism from labor market conditions: increased union revenue from investment shocks and increased union activity leading up to union officer elections. Instrumental variable analysis of panel data from the Department of Labor shows that a 1 percent increase in union spending increases a proxy for union members’ wages between 0.15 percent and 0.30 percent. These wage effects are larger in years of active collective bargaining, and when unions increase spending in ways that could pressure companies. The results indicate that non-market sources of union power can affect workers’ wages and that even in a period of labor weakness unions still play a role in setting wages for their members.
The Every Student Succeeds Act (ESSA) requires states to identify and turn around struggling schools, with federal school improvement money required to fund evidence-based policies. Most research on turnarounds has focused on individual schools, whereas studies of district-wide turnarounds have come from relatively exceptional settings and interventions. We study a district-wide turnaround of a type that may become more common under ESSA, an accountability-driven state takeover of Massachusetts’s Lawrence Public Schools (LPS). A differences-in-differences framework comparing LPS to demographically similar districts not subject to state takeover shows that the turnaround’s first 2 years produced sizable achievement gains in math and modest gains in reading. We also find no evidence that the turnaround resulted in slippage on nontest score outcomes and suggestive evidence of positive effects on grade progression among high school students. Intensive small-group instruction over vacation breaks may have led to particularly large achievement gains for participating students.
One contentious question in contemporary election administration is the impact of voter identification requirements. We study a Virginia law which allows us to isolate the impact of requiring voters to show photo identification. Using novel, precinct-level data, we find that the percentage of registered voters without a driver's license and over age 85 are both positively associated with the number of provisional ballots cast due to lacking a photo ID. To examine the law's impact on turnout, we associate precinct-level demographics with the change in turnout between the 2013 gubernatorial and 2014 midterm elections. All else equal, turnout was higher in places where more active registered voters lacked a driver's license. This unexpected relationship might be explained by a targeted Department of Elections mailing, suggesting that the initial impact of voter ID laws may hinge on efforts to notify voters likely to be affected.
Subtle policy adjustments can induce relatively large “ripple effects.” We evaluate a College Board initiative that increased the number of free SAT score reports available to low-income students and changed the time horizon for using these score reports. Using a difference-in-differences analytic strategy, we estimate that targeted students were roughly 10 percentage points more likely to send eight or more reports. The policy improved on-time college attendance and 6-year bachelor’s completion by about 2 percentage points. Impacts were realized primarily by students who were competitive candidates for 4-year college admission. The bachelor’s completion impacts are larger than would be expected based on the number of students driven by the policy change to enroll in college and to shift into more selective colleges. The unexplained portion of the completion effects may result from improvements in nonacademic fit between students and the postsecondary institutions in which they enroll.
Individual cities are active interest groups in lobbying the federal government, and yet the dynamics of this intergovernmental lobbying are poorly understood. We argue that preference incongruence between city and its parent state government leads to under-provision of public goods, and cities need to appeal to the federal government for additional resources. We provide evidence for this theory using a dataset of over 13,800 lobbying disclosures filed by cities with populations over 25,000 between 1999 and 2012. Income inequality and ethnic fragmentation are also highly related to federal lobbying activities. Using an instrumental variables analysis of earmark and Recovery Act grant data, we show that each dollar a city spends on lobbying generates substantial returns.
Prior research suggests that summer learning loss among low-income children contributes to income-based gaps in achievement and educational attainment. We present results from a randomized experiment of a summer mathematics program conducted in a large, high-poverty urban public school district. Children in the third to ninth grade (N = 263) were randomly assigned to an offer of an online summer mathematics program, the same program plus a free laptop computer, or the control group. Being randomly assigned to the program plus laptop condition caused children to experience significantly higher reported levels of summer home mathematics engagement relative to their peers in the control group. Treatment and control children performed similarly on distal measures of academic achievement. We discuss implications for future research.
Recent research suggests that foreclosures have negative effects on homeowners and neighborhoods. We examine the association between concentrated foreclosure activity and the risk of a property with a foreclosure filing being scheduled for foreclosure auction in New York City. Controlling for individual property and sociodemographic characteristics of the neighborhood, being located in a tract with a high number of auctions following the subject property’s own foreclosure filing is associated with a significantly higher probability of scheduled foreclosure auction for the subject property. Concentration of foreclosure filings prior to the subject property’s own foreclosure filing is associated with a lower probability of scheduled foreclosure auction. Concentrated foreclosure auctions in the tract prior to a subject property’s own filing is not significantly associated with the probability of scheduled foreclosure auction. The implications for geographic targeting of foreclosure policy interventions are discussed.
Estimating the lifetime wealth consequences of homeownership is complicated by ongoing events, such as divorce or inheritance, that may shape both homeownership decisions and later-life wealth. We argue that prior research that has not accounted for these dynamic selection processes has overstated the causal effect of homeownership on wealth. Using NLSY79 data and marginal structural models, we find that each additional year of homeownership increases midlife wealth in 2008 by about $6,800, more than 25 percent less than estimates from models that do not account for dynamic selection. Hispanic and African American wealth benefits from each homeownership year are 62 percent and 48 percent as large as those of whites, respectively. Homeownership remains wealth-enhancing in 2012, but shows smaller returns. Our results confirm homeownership’s role in wealth accumulation and that variation in both homeownership rates and the wealth benefits of homeownership contribute to racial and ethnic disparities in midlife wealth holdings.
In 2010, Harriet Cleveland was imprisoned in Montgomery, Alabama for failing to pay thousands of dollars in fines and fees stemming from routine traffic violations. More than thirty years after a series of Supreme Court rulings outlawed debtor's prisons, Ms. Cleveland's case brought national attention to both the sheer amount of lega lfinancial obligations (LFOs) that could be accrued, even in cases without a criminal conviction, and the potential consequences of non-payment. But it has been nearly impossible to know how common Ms. Cleveland's experience is because of a general lack of individual-level data on the incidence and payback of LFOs, particularly for non-felonies.
In this vein, we gather about two hundred thousand court records from Alabama over the last two decades to perform the most comprehensive exploration of the assessments and payback of LFOs to date across an entire state. Consistent with conventional wisdom, we demonstrate that the median LFOs attached to a case with a felony conviction nearly doubled between 1995 and 2005, after which it has remained roughly steady. But a felony-centric view of criminal justice underestimates the extent of increasing LFOs in the United States. Our systematic comparison of LFOs in felony, misdemeanor, and traffic cases across Alabama demonstrates how the signficant debt Ms. Cleveland accumulated for a series of minor traffic offenses is not such an aberration. We show that only a minority of LFOs are assessed in cases where someone was convicted of a felony and incarcerated. Rather, most LFOs are assessed in cases without an imposed sentence, in cases with a misdemeanor or traffic violation, or even in cases that did not result in a conviction at all. These case records also reveal substantial heterogeneity in the assessment of LFOs-both within and across local judicial districts-even in cases in which defendants were convicted on exactly the same charge.
The current focus on assessing “college and career readiness” raises an empirical question: How do high school tests compare with college admissions tests in predicting performance in college? We explored this using data from the City University of New York and public colleges in Kentucky. These two systems differ in the choice of college admissions test, the stakes for students on the high school test, and demographics. We predicted freshman grade point average (FGPA) from high school GPA and both college admissions and high school tests in mathematics and English. In both systems, the choice of tests had only trivial effects on the aggregate prediction of FGPA. Adding either test to an equation that included the other had only trivial effects on prediction. Although the findings suggest that the choice of test might advantage or disadvantage different students, it had no substantial effect on the over- and underprediction of FGPA for students classified by race-ethnicity or poverty.
In this paper we analyze the relationship between turnover-driven growth and subjective wellbeing. Our model of innovation-led growth and unemployment predicts that: (i) the effect of creative destruction on expected individual welfare should be unambiguously positive if we control for unemployment, less so if we do not; (ii) job creation has a positive and job destruction has a negative impact on wellbeing; (iii) job destruction has a less negative impact in US Metropolitan Statistical Areas (MSA) within states with more generous unemployment insurance policies; (iv) job creation has a more positive effect on individuals that are more forward-looking. The empirical analysis using cross-sectional MSA-level and individual-level data provide empirical support to these predictions.
This paper examines the racial ecology of lead exposure as a form of environmental inequity, one with both historical and contemporary significance. Drawing on comprehensive data from over one million blood tests administered to Chicago children from 1995-2013 and matched to over 2300 geographic block groups, we address two major questions: (1) What is the nature of the relationship between neighborhood-level racial composition and variability in children’s elevated lead prevalence levels? And (2) what is the nature of the relationship between neighborhood-level racial composition and rates of change in children’s prevalence levels over time within neighborhoods? We further assess an array of structural explanations for observed racial disparities, including socioeconomic status, type and age of housing, proximity to freeways and smelting plants, and systematic observations of housing decay and neighborhood disorder. Overall, our theoretical framework posits lead toxicity as a major environmental pathway through which racial segregation has contributed to the legacy of Black disadvantage in the United States. Our findings support this hypothesis and show alarming racial disparities in toxic exposure, even after accounting for possible structural explanations. At the same time, however, our longitudinal results show the power of public health policies to reduce racial inequities.