The Unassuming Economist

Source: VoxEU CEPR

Despite the commitments of the 2021 UN Climate Change Conference, countries’ climate mitigation policies are not enough to meet their ambitious emissions reduction targets. This column puts forward a framework for designing comprehensive decarbonisation strategies that promote growth and social inclusion. A policy mix based on three components is needed: (1) emission pricing, (2) standards and regulations, and (3) complementary policies that offset distributional effects. A robust and independent institutional framework and credible communications campaigns are key to managing policy constraints and enhancing public acceptance of mitigation policies.

Source: NBER Working Paper (2022)

Researchers Sergey Chernenko and David S. Scharfstein write about the significant racial disparities in borrowing through the Paycheck Protection Program (PPP) using data gathered from a large sample of restaurants in Florida and then investigate the causes of these disparities. They find that- “Black-owned restaurants are 25% less likely to receive PPP loans. Restaurant location explains 5 percentage points of this differential. Restaurant characteristics explain an additional 10 percentage points of the gap in PPP borrowing. On average, prior borrowing relationships do not explain disparities. The remaining 10% disparity is driven by a 17% disparity in PPP borrowing from banks, which is partially offset by greater borrowing from nonbanks, largely fintechs. Disparities in PPP borrowing cannot be attributed to lower awareness of PPP loans or lower demand for PPP loans by minority-owned restaurants. Black-owned restaurants are significantly less likely to receive bank PPP loans in counties with more racial bias. In these counties, Black-owned restaurants are more likely to substitute to nonbank PPP loans. This substitution, however, is not strong enough to eliminate racial disparities in PPP borrowing”.

Source: IMF Working Paper

Abstract:

“This paper provides an overview of the relation between tax policy and gender equality, covering labor, capital and wealth, as well as consumption taxes. It considers implicit and explicit gender biases and corrective taxation. On labor taxes, we (the authors) discuss the well-established findings on female labor supply and present new empirical work on the impact of household taxation. We also analyze the impact of progressivity on pay gaps and labor supply. On capital and wealth taxation, we discuss the implications of lower effective capital income taxation on the personal income tax burden gap across genders. We show that countries with relatively low female shares of capital income and wealth also tend to tax property and inheritances particularly lightly. On consumption taxes, we cover taxes on female hygiene products and excise taxes, which we assess in relation to externalities and differences in consumption patterns across genders.”

One of the most significant stylized facts in the U.S. economy since the 1970s has been the decline in the share of national income accruing to labor. Many recent studies have sought to explain this trend, with most explanations focusing on structural changes such as deindustrialization, globalization, financialization, rising market concentration, and technological change.

In this paper, the authors argue that these forces primarily operate through a bargaining power channel measured by the cost of job loss and that the reduction in labor’s share of income has been driven by lower bargaining power for workers. They examine various parameters for the US between 1960 and 2016 to test this hypothesis and conclude that structural changes such as globalization (Furceri and Loungani, 2018) and weak economic performance in the US have increased inequality over time.

Click here to read the full paper.

From a new paper by Ning Jia, Raven Molloy, Christopher Smith, and Abigail Wozniak:

“Internal migration patterns in the US have drawn growing attention among researchers, policy analysts, and others. This interest has been driven by two trends. First, internal migration in the US has fallen for more than three decades (Molloy et al. 2011; Frey 2009; Cooke 2011, 2013). This decline raises questions about whether it stems from desirable factors, like improved location or job matching, or undesirable factors, like employer monopsony power or other barriers to job mobility (Kaplan and Schulhofer-Wohl 2017; Molloy et al. 2016). Relatedly, highly educated Americans have become increasingly concentrated in larger cities (Diamond 2016). Thus, both the level of migration in the US and the types of destinations chosen by different types of people have changed in important ways over the last several decades.

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Dao et al. (2017) revisit the key ideas from BK and show more directly that the nature of local labor market adjustment to demand shocks has changed in the last few decades—and that the diminished responsiveness of net migration is a key reason for the change in how local labor markets adjust. The authors take a similar approach to BK by estimating adjustment margins at the state level’s response to demand shocks. However, they extend the BK sample with an additional 20 years of data and make other methodological innovations, including using administrative data on migration flows instead of inferring population adjustment from CPS-based measures. Among the many useful contributions of this analysis is a demonstration that after 1990, the net migration response to a state-level demand shock has been smaller on average than in earlier periods, and the response of the unemployment and labor force participation rates is larger. Hence, one way to reconcile the BK findings with the more recent conflicting evidence on local labor market adjustment and regional divergence is that migration was more important as an equilibrating mechanism from the 1970s through the early 1990s (the period in the BK sample) and has recently become less important.”