Consumption

  • Luigi Pistaferri

Leader: Luigi Pistaferri

The study of poverty and inequality has long privileged measures of income over those of consumption. Does this lead us awry? The purpose of the Consumption RG, which the CPI has founded only recently, is to monitor trends in consumption-based poverty and inequality and to understand the sources of those trends. The analyses within this RG will focus on the individual components of consumption because they are not always moving in lockstep. For example, inequality in the ownership of major durables has been declining, whereas inequality in nondurables, services, and food consumption has been increasing. The trends in food consumption are further complicated, however, because coloric intake is not growing more unequal, partly as a result of assistance provided by SNAP. The main rationale for setting up this RG is that patterns of consumption, especially among the poor, appear to be changing in complicated ways that require careful study and documenting. Although in principle the well-being of households may be better assessed with consumption than income, a consumption-based approach is thus complicated by the very different trends across the components of consumption and by difficulties in knowing the value assigned to the quality of goods that are consumed.

  • Elizabeth Peters
  • Sara McLanahan

Leaders: Elizabeth Peters, Sara McLanahan

The continuing decline in prime-age employment interacts with ongoing changes in the structure and composition of low-income families. The relevant trends here include (a) declining marriage rates and increasing cohabitation, (b) increases in nonmarital births and multi-partner fertility, and (c) rising noncustodial parenthood (especially for fathers). These developments all work to weaken the “family safety net” for poor children. In a precarious labor market, a second parent provides backup in difficult times (e.g., extra income, childcare), thus reducing the risks of poverty. The family safety net is in this sense weakening just as the labor market is becoming more precarious. Moreover, because some programs (e.g., EITC) provide higher benefits for custodial parents, the rise of noncustodial parenting undermines the capacity of the formal safety net to step in as the family safety net weakens. These and related changes in family structure have prompted a spate of policy proposals, some involving safety net reforms that accommodate the new family forms (e.g., incentivizing noncustodial parents to comply with child-support orders), and others addressing the underlying institutional changes themselves (e.g., increasing the availability of long-acting reversible contraceptives). The charge of the Family RG is to evaluate these proposals and to better understand how the safety net is adapting to changes in family structure. The following projects are a sampling of the research underway within this RG.

A new round of Fragile Families data collection: Under the leadership of Sara McLanahan, a new initiative to update the Fragile Families Study is underway, with a focus on adding administrative records, metabolic and immune markers, and measures of methylation.

Income and the developing brain: Does income support for families affect the brain function and development of infants? A new experiment will reveal all.

Measuring family complexity in the AOS: Will the American Opportunity Study (AOS) capture the rise of ever more complicated family forms? By linking tax, census, and birth records, the AOS should be up to the task.

  • Sanjay Basu
  • Mark Cullen
  • Jeremy Freese
  • David Rehkopf

Leaders: Sanjay Basu, Mark Cullen, Jeremy Freese, David Rehkopf 

The affiliates within the Health Disparities RG are using new computer modeling and statistical techniques to examine how poverty affects the health of children and adults and how some anti-poverty programs are reducing those effects. Here’s a sampling of our projects. 

Income, geography, and life expectancy: Using deidentified tax data and Social Security Administration death records, Raj Chetty and his coauthors have shown that the richest 1 percent live 14.6 years longer, on average, than the poorest 1 percent. Although poor people typically have much shorter lives, Chetty also shows that the extent of this disadvantage depends on the place of residence, thus suggesting that there may be opportunities for policy to reduce the gap in life expectancy.

Infant health and poverty: Which poor neighborhoods are associated with very low birth weights? By identifying neighborhoods that are yielding very low birth weights, we can start to target home visiting and related programs.

Biological mechanisms of disadvantage: We all know that poverty “gets under the skin” and creates lasting disadvantage. Is this because children exposed to poverty-induced stress experience epigenetic changes? We’re going to know very soon.

Income and the developing brain: The prevailing view is that poverty is especially likely to shape children’s early development because of the high plasticity and rapid growth of the brain during the first three years of life. It’s high time for a rigorous study of how income affects the brain function and development of infants and toddlers. 

  • Matthew Desmond
  • Rebecca Diamond

Leaders: Matthew Desmond, Rebecca Diamond

The Housing RG is tasked with exploring the the inner workings of disadvantaged neighborhoods and the low-cost housing market, with a focus on (a) the relationship between housing, employment, and poverty, (b) the causes, dynamics, and consequences of eviction, and (c) the effectiveness of housing vouchers and other housing programs. A sampling of our ongoing projects follows.

Evictions and poverty: Are evictions an important cause of deep and extreme poverty? In collaboration with Raj Chetty, Matt Desmond is starting a project on the long-term consequences of eviction that will reveal the extent to which deep and extreme poverty can be reduced with a “housing first” policy that ramps up federal housing programs.

Housing voucher policy: The U.S. currently spends approximately $20 billion per year on subsidized housing vouchers, but 80 percent of these vouchers are used in moderate- or high-poverty neighborhoods, where opportunities for upward mobility are typically limited. Can voucher policies be recast to increase the number of families moving to “high opportunity” neighborhoods?

  • David Harding
  • Stephen Raphael
  • Joan Petersilia

Leaders: David Harding, Stephen Raphael, Joan Petersilia

Since the mid-1970s, the United States has experienced a precipitous rise in incarceration, with about 2.3 million U.S. adults now incarcerated in state and federal prisons. In recent years, there has been increasing pressure to wind down this commitment to mass imprisonment, and it’s accordingly important to study ways to reintegrate successfully. The Incarceration RG is tasked with monitoring and evaluating the relationship between poverty and sentencing, parole reform, probation, reintegration, and recidivism.

Poverty and the decline in prison population: Will the ongoing decline in California’s prison population bring about an increase in homelessness, mental health service use, and other poverty-relevant outcomes? This line of research will reveal whether ongoing declines in incarceration should be coordinated with increased funding for programs that may substitute for incarceration.

Arrests, race, and poverty: Is reducing arrests the only way to reduce criminal bookings (and the employment-reducing effects of such bookings)? There may be another way.

  • Greg Duncan
  • Arnold Milstein
  • Sean Reardon
  • Gregory Walton

Leaders: Greg Duncan, Arnold Milstein, Sean Reardon, Gregory Walton

The Life Course RG is dedicated to advancing research on life course theory and assessing how it can contribute to reducing poverty. The research within this RG focuses on issues of toxic stress, neurodevelopment, and epigenetics. The following are a few relevant projects within this RG.

Optimal timing of interventions: It has long been argued that interventions in the earliest years of childhood have larger long-term returns that interventions in later years. Is a comprehensive test of this hypothesis now possible?

Biological mechanisms of disadvantage: We’ve all heard that poverty “gets under the skin.” There is growing debate, however, on whether this biologic embedding of poverty takes an epigenetic form. A study underway at the CPI will be an especially important entry into this debate. 

Infant health and poverty: It is well known that early disadvantages at the “starting gate” parlay into later developmental disadvantages and increased risks of poverty. Are these starting-gate disparities growing larger? Using the census of U.S. birth records between 1970 and 2014, we will soon know whether they are.

Differential EITC effects: Is there a critical moment in the child’s cognitive development in which an EITC supplement is especially consequential? This question, which has long been difficult to answer, can now be taken on by linking vital statistics to administrative data for school children.

  • Kathryn Edin
  • Linda Burton
  • David Grusky

Leaders: Linda Burton, Kathryn Edin, David Grusky

The Supplemental Poverty Measure (SPM) reveals substantial post-1970 reductions in poverty under a constant (i.e., “anchored”) threshold, but this trend masks worrisome developments at the very bottom of the distribution. Although the overall SPM has trended downward since 1970, the SPM for households with less than half of the anchored threshold level (i.e., “deep poverty”) has remained stable since 1968. Even more worrying, the most extreme forms of poverty, such as living on less than $2 per day (per person), have in fact increased over the last two decades. The main tasks of our Poverty and Deep Poverty RG are to describe trends in poverty and deep poverty, to assess the effectiveness of current anti-poverty programs, and to examine the likely payoff to introducing new anti-poverty programs. We present a sampling of relevant projects below.

Frequent Reporting Project: Why are unemployment statistics reported monthly whereas poverty statistics are reported only once a year (and with such a long lag)? The CPI is hard at work solving this problem.

California Poverty Project: The CPI, in collaboration with the Public Policy Institute of California, issues the California Poverty Measure (CPM) annually. There are plans afoot to make it an even more powerful policy instrument. 

Ending Poverty in California: Is it possible to substantially reduce poverty in California by relying entirely on evidence-based programs? It indeed is.

The National Poverty StudyThe country’s one-size-fits-all poverty policy ignores the seemingly profound differences between suburban poverty, immigrant poverty, reservation poverty, rural white poverty, deindustrializing poverty, and the many other ways in which massive deprivation plays out in the U.S. The National Poverty Study, which will be the country’s first qualitative census of poverty, takes on the problem.

Income supports and deep poverty: The U.S. does not rely heavily on unconditional cash transfers in its poverty programming. Is this a mistake? The CPI is assisting Y Combinator in providing the first U.S. evidence on unconditional income support since the negative income tax experiments of the 1970s.

Disability and deep poverty: The country’s disability programs are an important anti-poverty weapon. In evaluating their effectiveness, it is important to determine whether the low employment rates among program recipients reflects an underlying (low) capacity for employment, as opposed to the labor-supply effects of the programs themselves. Although it’s long been difficult to assess such labor-supply effects, now there’s a way forward.

Evictions and deep and extreme poverty: Are evictions an important cause of deep and extreme poverty? This line of research examines the extent to which deep and extreme poverty can be reduced with a “housing first” policy that ramps up federal housing programs.

Deep poverty and TANF add-ons: The country is implicitly running hundreds of experiments on how best to structure TANF programs, but it hasn’t had the capacity to evaluate them. Are administrative data the answer?

  • Gary Solon
  • Raj Chetty
  • Florencia Torche

Leaders: Raj Chetty, Gary Solon, Florencia Torche

The purpose of the Social Mobility RG is to develop and exploit new administrative sources for measuring mobility and the effects of policy on mobility out of poverty. This research group is doing so by (a) providing comprehensive analyses of intergenerational mobility based on linked administrative data from U.S. tax returns, W-2s, and other sources, and (b) developing a new infrastructure for monitoring social mobility, dubbed the American Opportunity Study, that is based on linking census and other administrative data. Here’s a sampling of projects:

Small place estimates: The Equal Opportunity Project, led by Raj Chetty, uses tax return data to monitor opportunities for mobility out of poverty. In one of the new lines of analysis coming out of this project, the first round of results at the level of “commuting zones” are being redone at a more detailed level (e.g., census block level), thus allowing for even better inferences about the effects of place.

The American Opportunity Study: This research group is also collaborating with the Census Bureau to develop a new infrastructure for monitoring mobility that treats linked decennial census data as the spine on which other administrative data are hung.

Colleges and rising income inequality: Where do poor children go to attend college? The “Mobility Report Card” will convey the joint distribution of parent and student incomes for every Title IV institution in the United States.

The “absolute mobility” of the poor: What fraction of poor children grow up to earn more than their parents? Have rates of absolute upward mobility changed over time? This project develops a new method of estimating rates of absolute mobility for the 1940-1984 birth cohorts.

Intergenerational elasticities in the U.S.: There remains some debate about the size of intergenerational elasticities in the U.S. A rarely-used sample of 1987 tax data provides new evidence on U.S. elasticities.

  • Nicholas Bloom
  • Raj Chetty
  • Emmanuel Saez

Leaders: Nicholas Bloom, Raj Chetty, Emmanuel Saez

The CPI is home to some of the country’s most influential analyses of the income and wealth distribution. The purpose of the Income and Wealth RG is to monitor the ongoing takeoff in income inequality, to better understand its sources, and to analyze its implications for labor market performance, educational attainment, mobility, and more. The following is a sampling of the CPI’s research projects within this area.

Trends in income and wealth inequality: What are the key trends in U.S. income and wealth inequality? The U.S. increasingly looks to Emmanuel Saez and his research team for the latest data on U.S. economic inequality.

Distributional National Accounts: In an ambitious infrastructural project, Emmanuel Saez and his team are building a “Distributional National Accounts” based on tax returns, a data set that will eliminate the current gap between (a) national accounts data based on economic aggregates and (b) inequality analysis that uses micro-level tax data to examine the distribution of income but is not consistent with national aggregates. This new data set will in turn make it possible to evaluate the extent to which economic growth, which has long been represented as a preferred poverty-reduction approach, is indeed delivering on that objective.

The rise of between-firm inequality: How much of the rise in earnings inequality can be attributed to increasing between-firm dispersion in the average wages they pay? This question can be addressed by constructing a matched employer-employee data set for the United States using administrative records.

Rent and inequality: It is increasingly fashionable to argue that “rent” accounts for much of the takeoff in income inequality. The Current Population Survey can be used to assess whether this claim is on the mark. 

  • Robert Mare
  • Daniel Lichter

Leader: Daniel Lichter, Robert Mare

The Residential Segregation RG is dedicated to updating the country’s system for measuring residential segregation. This research group has three main research commitments: (a) monitoring segregation at the extremes; (b) charting the spatial distribution of the elderly poor; and (c) developing a new GPS-based infrastructure for measuring segregation. 

Segregation at the extremes: The first line of research addresses the need to better monitor segregation at the extremes, including (a) the possible rise of enclave-style segregation at the very top (the “one percent”) and (b) the yet more troubling possibility of a resurgence of extreme segregation among the very poor. In a related recession brief, Robert Sampson has shown that poor neighborhoods have become yet poorer in the downturn, raising the possibility that hyper-segregation is indeed emerging. 

Segregation of the elderly poor: In the second line of research, research group members are charting the spatial distribution of the elderly poor, given emerging concerns about their ghettoization. This line of research, which is being carried out in collaboration with the Stanford Center on Longevity, begins with a simple descriptive mapping of elderly poor that reveals the extent to which they are indeed isolated and segregated. 

Real-time measures of segregation: The third main initiative is to develop a new infrastructure for monitoring segregation. The conventional approach of carrying out separate and static measurements of residential, school, work, friendship, and marriage segregation can be replaced with a direct behavioral framework that tracks the continuous-time patterning of inter-person contact. By exploiting GPS measurements (increasingly available, even for the poor, via mobile phones), it becomes possible to track poor, middle-class, and rich people as they move through their day and attend school, go to work, carry out their shopping, and visit friends and family. This methodology will produce a real-time measure of how much segregation there is and, in particular, the extent to which the poor are growing increasingly isolated in school, home, work, and leisure. 

  • Michael Hout
  • Gregory Acs
  • David Card
  • Jesse Rothstein

Leaders: Gregory Acs, David Card, Michael Hout, Jesse Rothstein

The labor market was of course hit very heavily by the Great Recession, as evidenced by (a) the slow recovery of the unemployment rate, (b) and the even slower recovery of the long-term unemployment rate and the prime-age employment ratio (defined as the ratio of employed 25-54 year-olds to the population of that same age). This “jobs problem,” which is especially prominent among low-skill workers, has led to a sharp rise in the number of poor households without any working adults. It also underlies, in part, the sharp increase in the number of disability insurance claims and awards, which in turn has further reduced the supply of labor among low-skilled individuals.

If the first type of “jobs problem” is that there still are not enough of them, the second is that the jobs that are available do not always provide the requisite hours, wages, or security that are needed for a sure pathway out of poverty. As a result, low-skill individuals are not just working less but, even when they are working, there is no guarantee that their jobs will lift them and their families out of poverty. The Labor Markets RG is tasked with conducting research on these and related problems and exploiting administrative and other data to assess possible policy responses to them. We list below a few examples of the work being carried out in this group.

Long-run effects of work incentives: As nonworking poverty increases, the U.S. might well want to turn to new types of work incentive programs. Have these programs worked elsewhere?

Minimum wages and poverty: Throughout the west coast, there are a host of minimum wage “experiments” underway, experiments that have the potential to reset the low-wage labor market in quite fundamental ways. How are these experiments playing out?

  • Karen Jusko
  • Mark Duggan
  • Hilary Hoynes

Leaders: Mark Duggan, Hilary Hoynes, Karen Jusko

The Safety Net RG is devoted to monitoring changes in government transfers and anti-poverty programs and assessing whether they are meeting the needs of the poor. The U.S. safety net is undergoing such changes as (a) an ongoing decline in TANF cash benefits, (b) rapid increases in spending on EITC, Medicaid, Disability Insurance, Unemployment Insurance, and SNAP, and (c) a dramatic shift toward spending that favors the “working poor” over the more destitute. The CPI affiliates working within this research group are monitoring these changes, examining their implications for poverty, assessing the effectiveness of key government and nongovernment programs in reducing poverty, and modeling the costs and benefits of possible changes in policy and programs. We’ve provided a sampling here of some of this ongoing research.

Poverty Relief Project: With Kate Weisshaar, Karen Jusko uses the poverty relief ratio to evaluate the effectiveness of anti-poverty programs over time, across states, and across countries. Which state is the least effective in fighting poverty? Has the U.S. become more or less effective over time? These and other questions are answered in our latest State of the Union reports.

Long-run effects of SNAP: Have we underestimated the returns to SNAP by ignoring the long-run effects on children exposed to it in their early childhood? It’s now possible to find out.

California Welfare LaboratoryThe poverty rate in California, when measured with the Supplemental Poverty Measure, is the highest in the country. What can be done to bring that rate down? The mission of the California Welfare Laboratory is to make research on California’s welfare programs accessible to all and thus facilitate an informed discussion of what is working and what needs to be improved.

Differential EITC effects: It is often argued that early interventions have especially high payoffs.  Are the returns to the EITC indeed larger when it goes to parents with young children?

Disability and poverty: Does the federal government’s disability program reduce labor supply? Although it’s long been difficult to identify a causal effect, Mark Duggan has now found a way.

The effects of TANF: The TANF program is very decentralized and thus takes on dramatically different forms. How can we exploit that variability to find out what’s working?

  • Doug Massey
  • David Grusky
  • Tomás Jiménez
  • Beth Mattingly

Leaders: David Grusky, Tomás Jiménez, Doug Massey, Beth Mattingly

This RG was created after the CPI received a sub-award to study Hispanic poverty, inequality, and mobility. The objective is to document key poverty and inequality trends, to begin the task of explaining what underlies them, and to then populate a new website, with the results coming out of this research.

We are taking on five lines of research under the leadership of both young and more distinguished scholars. The “basic trends” group is documenting key developments in Hispanic population distribution, income, education, poverty, employment, and “safety net” use; the “new generations” group is examining whether second and third generation immigrants are successfully incorporating into the labor market; the “social mobility” group is assessing whether Hispanics continue to have ample opportunities to improve their economic situation during their lifetime; the “social policy” group is examining how recent legal and policy changes have affected Hispanic natives and immigrants; and the “health” group is exploring the sources of deteriorating health among Hispanic immigrants and natives. The work of this RG was featured in a Pathways Magazine special report on poverty, inequality, and mobility among Hispanics.

 

  • Sean Reardon

Leader: Sean Reardon

The purpose of the Education RG is to examine trends in the extent to which educational access and achievement are related to poverty and family background. The scholars working within this RG are examining state-level differences in the effects of social origins, uncovering the causes of the recent rise in the socioeconomic achievement gap, uncovering the causes of the yet more recent turnaround in this rise (among kindergarten children), and examining the ways in which high-achieving children from poor backgrounds can be induced to go to college. The following is a sampling of relevant CPI projects.

Reducing the race gap in test scores: How can the black-white gap in achievement test scores be eliminated? The new Stanford Education Data Archive (SEDA) will provide the most systematic evidence to date on the capacity of school-district policies to reduce the gap.

Colleges and rising income inequality: Are colleges delivering upward mobility for those raised in poverty? The new “Mobility Report Card” will provide unusually detailed data on this fundamental question.

Poverty and schooling on reservations: The noted ethnographer Martin Sánchez-Jankowski is examining how education on reservations can be reformed to reduce dropout, poverty, and suicide. 

  • C. Matthew Snipp
  • Tomas Jimenez
  • Linda Burton
  • Hazel Markus
  • Douglas Massey
  • Marybeth Mattingly

Leaders: Linda Burton, Tomás Jiménez, Hazel Markus, Douglas Massey, Marybeth Mattingly, C. Matthew Snipp

The CPI has an extensive research program on race, ethnicity, immigration, and poverty. The National Poverty Study, for example, is designed to rigorously compare differences across rural black, deindustrialized, reservation, and other “racialized” poverty forms. The CPI also runs a comprehensive program on Hispanic poverty that explores such topics as the “chilling effect” of anti-immigrant laws on program use, the reasons why, contrary to much speculation, the Hispanic poverty rate has not taken off, and the causes of the so-called Hispanic Health Paradox (see, for example, our Pathways Magazine special report on poverty, inequality, and mobility among Hispanics). And one of the CPI’s most distinguished affiliates, Jennifer Eberhardt (who is on the CPI directorate), is carrying out a groundbreaking big-data analysis of policing and race. We list below a sampling of other CPI projects on race, ethnicity, immigration, and poverty.

Poverty among refugees: The U.S. refugee population faces very high rates of poverty, yet we know very little about the effects of different resettlement programs and approaches. There are efforts afoot to exploit available administrative data and begin to find out what works and what doesn’t.

Arrests, race, and poverty: Why are some arrests resolved informally while others are converted into a criminal record that then has a life-long scarring effect? The process of converting an arrest into a criminal booking may play an important role in generating downstream racial disparities.

Reducing the race gap in test scores: The new Stanford Education Data Archive (SEDA) is a rich resource that is providing the most systematic evidence to date on the capacity of school-district policies to reduce the racial gap in test scores.

Poverty and schooling on reservations: Why are test scores and educational outcomes on Native reservations so low (relative to the national average)? In a new project by the noted ethnographer Martin Sánchez-Jankowski, we’ll be learning more about how traditional and formal education are viewed and the ways in which they might be better integrated. 

  • Shelley Correll
  • Cecilia Ridgeway
  • David Pedulla

Leaders: Shelley Correll, David Pedulla, Cecilia Ridgeway 

The Poverty and Discrimination RG is charged with developing a regularized protocol for measuring the amount and extent of discrimination in labor and housing markets. It is increasingly clear that labor market discrimination, far from withering away, remains very prominent for many statuses and in many types of markets. However, because this research tradition is based on “one-off” audit studies and laboratory experiments, it is not possible to compare across studies and assess which types of discrimination are the most important or the most resistant to change. There is accordingly a need to build a standardized protocol for monitoring trends in discrimination across the various types of discrimination in play (e.g., poverty status, employment status, homelessness, economic background, race, ethnicity, sexual orientation, incarceration status, citizenship, religion, disability). The twofold objective of this protocol is to make it possible to assess which types of discrimination are especially prominent and which types are growing weaker or stronger over time.

 

All - CPI Research

Title Author Media
Forever Homes and Temporary Stops: Housing Search Logics and Residential Selection Hope Harvey, Kelley Fong, Kathryn Edin, Stefanie DeLuca

Forever Homes and Temporary Stops: Housing Search Logics and Residential Selection

Author: Hope Harvey, Kelley Fong, Kathryn Edin, Stefanie DeLuca
Publisher: Social Forces
Date: 06/2020

Residential selection is central in determining children’s housing, neighborhood, and school contexts, and an extensive literature considers the social processes that shape residential searches and attainment. While this literature typically frames the residential search as a uniform process oriented around finding residential options with desired characteristics, we examine whether individuals may differentially conceive of these searches in ways that sustain inequality in residential attainment. Drawing on repeated, in-depth interviews with a stratified random sample of 156 households with young children in two metropolitan counties, we find that parents exhibit distinct residential search logics, informed by the constraints they face. Higher-income families usually engage in purposive searches oriented around their residential preferences. They search for “forever homes” that will meet their families’ needs for years to come. In contrast, low-income parents typically draw on a logic of deferral. While they hope to eventually search for a home with the unit, neighborhood, and school characteristics they desire, aspirations for homeownership lead them to conceive of their moves (which are often between rental units) as “temporary stops,” which justifies accepting homes that are inconsistent with their long-term preferences. In addition, because they are often “pushed” to move by negative circumstances, they focus on their immediate housing needs and, in the most extreme cases, adopt an “anywhere but here” approach. These logics constitute an unexamined mechanism through which economic resources shape residential searches and ultimate attainment.

COVID-19 Is Also a Reallocation Shock Jose Maria Barrero, Nicholas Bloom, Steven J. Davis

COVID-19 Is Also a Reallocation Shock

Author: Jose Maria Barrero, Nicholas Bloom, Steven J. Davis
Publisher: National Bureau of Economic Research
Date: 05/2020

Drawing on firm-level expectations at a one-year forecast horizon in the Survey of Business Uncertainty (SBU), we construct novel, forward-looking reallocation measures for jobs and sales. These measures rise sharply after February 2020, reaching rates in April that are 2.4 (3.9) times the pre-COVID average for jobs (sales). We also draw on special questions in the April SBU to quantify the near-term impact of the COVID-19 shock on business staffing. We find 3 new hires for every 10 layoffs caused by the shock and estimate that 42 percent of recent layoffs will result in permanent job loss. Our survey evidence aligns well with anecdotal evidence of large pandemic-induced demand increases at some firms, with contemporaneous evidence on gross business formation, and with a sharp pandemic-induced rise in equity return dispersion across firms. After developing the evidence, we consider implications of our evidence for the economic outlook and for policy responses to the pandemic. Unemployment benefit levels that exceed worker earnings, policies that subsidize employee retention, occupational licensing restrictions, and regulatory barriers to business formation will impede reallocation responses to the COVID-19 shock.

Using Disasters to Estimate the Impact of Uncertainty Scott R. Baker, Nicholas Bloom, Stephen J. Terry

Using Disasters to Estimate the Impact of Uncertainty

Author: Scott R. Baker, Nicholas Bloom, Stephen J. Terry
Publisher: National Bureau of Economic Research
Date: 05/2020

Uncertainty rises in recessions and falls in booms. But what is the causal relationship? We construct cross-country panel data on stock market levels and volatility and use natural disasters, terrorist attacks, and political shocks as instruments in regressions and VAR estimations. We find that increased volatility robustly lowers growth. We also structurally estimate a heterogeneous firms business cycle model with uncertainty and disasters and use this to analyze our empirical results. Finally, using our VAR results we estimate COVID-19 will reduce US GDP by 9% in 2020 based on the initial stock market returns and volatility response.

Expanding and Diversifying the Pool of Undergraduates who Study Economics: Insights from a New Introductory Course at Harvard Amanda Bayer, Gregory Bruich, Raj Chetty, Andrew Housiaux

Expanding and Diversifying the Pool of Undergraduates who Study Economics: Insights from a New Introductory Course at Harvard

Author: Amanda Bayer, Gregory Bruich, Raj Chetty, Andrew Housiaux
Publisher: National Bureau of Economic Research
Date: 04/2020

There is widespread concern that economics does not attract as broad or diverse a pool of talent as it could. For example, less than one-third of undergraduates who receive degrees in economics are women, significantly lower than in math or statistics. This article presents a case study of a new introductory undergraduate course at Harvard, “Using Big Data to Solve Economic and Social Problems,” that enrolled 400 students, achieved nearly a 50-50 gender balance, and was among the highest-rated courses in the college. We first summarize the course’s content and pedagogical approach. We then illustrate how this approach differs from that taken in traditional courses by showing how canonical topics – income inequality, tax incidence, and adverse selection – are taught differently. Then, drawing upon students’ comments and prior research on effective teaching practices, we identify elements of the course’s approach that appear to underlie its success: connecting the material to students’ own experiences; teaching skills that have social and career value; and engaging students in scientific investigation of real-world problems. We conclude by discussing how these ideas for improving instruction in economics could be applied in other courses and tested empirically in future research.

COVID-Induced Economic Uncertainty Scott R. Baker, Nicholas Bloom, Steven J. Davis, Stephen J. Terry

COVID-Induced Economic Uncertainty

Author: Scott R. Baker, Nicholas Bloom, Steven J. Davis, Stephen J. Terry
Publisher: National Bureau of Economic Research
Date: 04/2020

Assessing the economic impact of the COVID-19 pandemic is essential for policymakers, but challenging because the crisis has unfolded with extreme speed. We identify three indicators – stock market volatility, newspaper-based economic uncertainty, and subjective uncertainty in business expectation surveys – that provide real-time forward-looking uncertainty measures. We use these indicators to document and quantify the enormous increase in economic uncertainty in the past several weeks. We also illustrate how these forward-looking measures can be used to assess the macroeconomic impact of the COVID-19 crisis. Specifically, we feed COVID-induced first-moment and uncertainty shocks into an estimated model of disaster effects developed by Baker, Bloom and Terry (2020). Our illustrative exercise implies a year-on-year contraction in U.S. real GDP of nearly 11 percent as of 2020 Q4, with a 90 percent confidence interval extending to a nearly 20 percent contraction. The exercise says that about half of the forecasted output contraction reflects a negative effect of COVID-induced uncertainty.

all - CPI Affiliates

Shelley Correll's picture Shelley Correll Discrimination Research Group Leader, Barbara D. Finberg Director of Michelle R. Clayman Institute for Research on Gender, Professor of Sociology
Stanford University
Greg J. Duncan's picture Greg J. Duncan Life Course Research Group Leader, Distinguished Professor of Education
University of California, Irvine
Daniel Lichter's picture Daniel Lichter Segregation Research Group Leader; Professor of Sociology; Director of Cornell Population Center; Ferris Family Professor of Policy Analysis and Management; Robert S. Harrison Director of the Institute for Social Sciences
Cornell University
Greg J. Duncan's picture Greg J. Duncan Life Course Research Group Leader, Distinguished Professor of Education
University of California, Irvine
Hazel Markus's picture Hazel Markus Race, Ethnicity, and Immigration Research Group Leader; Davis-Brack Professor in the Behavioral Sciences; Director of Research Institute of Comparative Studies in Race and Ethnicity; Professor of Psychology
Stanford University

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All - Other Research

Title Author Media
The Opioid Epidemic Was Not Caused by Economic Distress But by Factors that Could be More Rapidly Addressed Janet Currie, Hannes Schwandt

The Opioid Epidemic Was Not Caused by Economic Distress But by Factors that Could be More Rapidly Addressed

Author: Janet Currie, Hannes Schwandt
Publisher: National Bureau of Economic Research
Date: 08/2020

Without the opioid epidemic, American life expectancy would not have declined prior to 2020. In turn, the epidemic was sparked by the development and marketing of a new generation of prescription opioids and provider behavior is still helping to drive it. There is little relationship between the opioid crisis and contemporaneous measures of labor market opportunity. Cohorts and areas that experienced poor labor market conditions do show lagged increases in opioid mortality, but the effect is modest relative to the scale of the epidemic. Instead, we argue that there are specific policies and features of the U.S. health care market that led to the current crisis. It will not be possible to quickly reverse depressed economic conditions, but it is possible to implement policies that would reduce the number of new opioid addicts and save the lives of many of those who are already addicted.

Teacher-to-Classroom Assignment and Student Achievement Bryan S. Graham, Geert Ridder, Petra M. Thiemann, Gema Zamarro

Teacher-to-Classroom Assignment and Student Achievement

Author: Bryan S. Graham, Geert Ridder, Petra M. Thiemann, Gema Zamarro
Publisher: National Bureau of Economic Research
Date: 07/2020

We study the effects of counterfactual teacher-to-classroom assignments on average student achievement in elementary and middle schools in the US. We use the Measures of Effective Teaching (MET) experiment to semiparametrically identify the average reallocation effects (AREs) of such assignments. Our findings suggest that changes in within-district teacher assignments could have appreciable effects on student achievement. Unlike policies which require hiring additional teachers (e.g., class-size reduction measures), or those aimed at changing the stock of teachers (e.g., VAM-guided teacher tenure policies), alternative teacher-to-classroom assignments are resource neutral; they raise student achievement through a more efficient deployment of existing teachers.

Family Spillovers in Field of Study Gordon B. Dahl, Dan-Olof Rooth, Anders Stenberg

Family Spillovers in Field of Study

Author: Gordon B. Dahl, Dan-Olof Rooth, Anders Stenberg
Publisher: National Bureau of Economic Research
Date: 07/2020

This paper estimates peer effects both from older to younger siblings and from parents to children in academic fields of study. Our setting is secondary school in Sweden, where admissions to oversubscribed fields is determined based on a student's GPA. Using an RD design, we find strong spillovers in field choices that depend on the gender mix of siblings and whether the field is gender conforming. There are also large intergenerational effects from fathers and mothers to sons, except in female-dominated fields, but little effect for daughters. These spillovers have long-term consequences for occupational segregation and wage gaps by gender.

Do Unemployment Insurance Benefits Improve Match Quality? Evidence from Recent U.S. Recessions Ammar Farooq, Adriana D. Kugler, Umberto Muratori

Do Unemployment Insurance Benefits Improve Match Quality? Evidence from Recent U.S. Recessions

Author: Ammar Farooq, Adriana D. Kugler, Umberto Muratori
Publisher: National Bureau of Economic Research
Date: 07/2020

We present new evidence on the impact of more generous unemployment insurance (UI) on workers’ ability to find jobs better suited to their skills. Using Longitudinal Employer-Household Dynamics data, we find the UI extensions introduced in the U.S. improved the quality of worker-job matches. Using Current Population Survey data, we also find that longer UI benefit durations decrease the mismatch between workers’ educational attainments and the educational requirements of jobs. We find bigger effects of UI on match quality for those more likely to be liquidity constrained—women, non-whites and less-educated workers—,suggesting UI extensions improve the functioning of the labor market.

Unpacking the Drivers of Racial Disparities in School Suspension and Expulsion Jayanti Owens, Sara S McLanahan

Unpacking the Drivers of Racial Disparities in School Suspension and Expulsion

Author: Jayanti Owens, Sara S McLanahan
Publisher: Social Forces
Date: 06/2020

School suspension and expulsion are important forms of punishment that disproportionately affect Black students, with long-term consequences for educational attainment and other indicators of wellbeing. Prior research identifies three mechanisms that help account for racial disparities in suspension and expulsion: between-school sorting, differences in student behaviors, and differences in the treatment and support of students with similar behaviors. We extend this literature by (1) comparing the contributions of these three mechanisms in a single study, (2) assessing behavior and school composition when children enter kindergarten and before most are exposed to school discipline, and (3) using both teacher and parent reports of student behaviors. Decomposition analyses reveal that differential treatment and support account for 46 percent of the Black/White gap in suspension/expulsion, while between-school sorting and differences in behavior account for 21 percent and 9 percent of the gap respectively. Results are similar for boys and girls and robust to the use of school fixed effects and measures of school composition and student behavior at ages 5 and 9. Theoretically, our findings highlight differential treatment/support after children enter school as an important but understudied mechanism in the early criminalization of Black students.