Economist Mark Perry has an interesting blog post summing up the Bureau of Labor Statistics report “Characteristics of Minimum Wage Workers, 2014.” The following provides the percentages of different groups earning the minimum wage or less:
Age: 16-19 (15.3%), 25+ (2.5%).
Education: Less than high school (7.3%), High school graduates (3.5%), Associate’s degree (2.2%), Bachelor’s degree (less than 2%).
Marital Status: Never married (6.7%), Married (1.9%).
Hours Worked: Part-time (9.5%), Full-time (1.8%).
Perry summarizes,
Four important factors that will help workers earn a wage above the federal minimum wage are: 1) age (experience), 2) education, 3) marital status and 4) hours worked. Only 1-in-40 workers age 25 and above make the minimum wage, only 1-in-45 workers with an associate’s degree or higher makes the minimum wage, only 1-in-53 married workers earns the minimum wage, and only 1-in-56 workers working full-time earns the minimum wage. The evidence seems clear that the minimum wage applies only to a very small group of young, inexperienced, single, part-time workers, with a lack of education.
Check out the full report. In debates over the minimum wage, we should consider these demographics and take into consideration how much life experience–including work, education, marriage–plays into economic mobility.
Credit where credit is due: I heard an NPR report recently about opposition to President Obama fast-tracking a trading deal with countries in the Pacific (called the TPP for Trans-Pacific Partnership) and–though I didn’t yet know the details–I was surprised and impressed that he was willing to take a stand against his own party for a common sense but unpopular policy. The NYT has been reporting on the story as well, with an April 16th story emphasizing the internecine struggle to come (“In what is sure to be one of the toughest fights of Mr. Obama’s last 19 months in office, the “fast track” bill allowing the White House to pursue its planned Pacific trade deal also heralds a divisive fight within the Democratic Party, one that could spill into the 2016 presidential campaign.”) and an April 21st story describing GOP efforts to broker a compromise between Obama and the left-wing of his own party (“Republican lawmakers and the White House have agreed to subject any trade deal negotiated by President Obama to a monthslong review by Congress and the public, a concession aimed at winning the support of Democrats who view trade agreements as a threat to American workers.)
This is all a bit sad because, as Greg Mankiw wrote for the NYT on April 24th, that this fight was a prime example of what Alan Blinder called Murphy’s Law of economic policy: “Economists have the least influence on policy where they know the most and are most agreed; they have the most influence on policy where they know the least and disagree most vehemently.” As Mankiw puts it:
Among economists, the issue is a no-brainer. Last month, I signed an open letter to John Boehner, Mitch McConnell, Nancy Pelosi and Harry Reid. I was joined by 13 other economists who have led the President’s Council of Economic Advisers, a post I held from 2003 to 2005. The group spanned every administration from Gerald Ford’s to Barack Obama’s.
If the issue is so clear-cut, why is it so divisive? Mankiw discusses that as well, citing Caplan’s book The Myth of the Rational Voter: Why Democracies Choose Bad Policies. According to Caplan’s research, the public isn’t just ignorant about economic policy. Ignorance would not be so bad, because mistakes would at least be random and therefore might cancel each other out. Nope, the public is systematically biased in particularly unhelpful ways, all of which are at play in this debate:
The first is an anti-foreign bias. People tend to view their own country in competition with other nations and underestimate the benefits of dealing with foreigners. Yet economics teaches that international trade is not like war but can be win-win.
The second is an anti-market bias. People tend to underestimate the benefits of the market mechanism as a guide to allocating resources. Yet history has taught repeatedly that the alternative — a planned economy — works poorly.
The third is a make-work bias. People tend to underestimate the benefit from conserving on labor and thus worry that imports will destroy jobs in import-competing industries. Yet long-run economic progress comes from finding ways to reduce labor input and redeploying workers to new, growing industries.
I hope President Obama will do the right thing and continue to fight for the TPP, a deal that will be better for the lives of everyone involved. But the longer the fight goes the more likely it is to become an issue in the 2016 election. In that case, voters will have more say and, depressingly, the likelihood of sensible economic policies will diminish accordingly.
Not long ago I added a little motto to the front page of this website: We tackle controversy with civility. Here’s my attempt at applying that approach to the controversial topic of the the gender pay gap.
Let’s start with some myth-busting. Not long ago, Buzzfeed produced a video that is a perfect example of what the wage gap isn’t.
The whole point of this video is that you’ve got two workers whose only apparent difference is their gender. Same approximate age, same race, same education (we’re guessing here) and, as the woman says, the very same job. And yet she gets paid 78% of what he makes. This is a myth, and it’s irresponsible even by the standards of Buzzfeed given that (as PolitiFact noted) “BuzzFeed actually looked at some sources that got it right, but then produced a misleading video.”
This sensationalist approach is sadly common. Comedian Sarah Silverman grabbed headlines herself recently for her own contribution to the myth. She relayed a story of when she and a male comedian were paid $10 and $60, respectively, for the same work in a PSA about the wage gap. Except that she left out the part where her gig had been unbook and his gig had been booked in advance. When the man she had called out as sexist (by name) spoke out publicly about that, she released an exclusive statement to Salon, saying that “My regret is that I mentioned Al by name- it should have been a nameless, faceless anecdote” and conceding that “This is also HARDLY an example of the wage gap.”
Even worse: it’s not just Buzzfeed videos and stand up comics who perpetuate the mythical 22% wage gap for men and women doing the same work. When I researched this piece I was stunned to learn that the website of the United States Department of Labor does the same:
MYTH: Saying women only earn 77 cents on the dollar is a huge exaggeration – the “real” pay gap is much smaller than that (if it even exists).
REALITY: The size of the pay gap depends on how you measure it. The most common estimate is based on differences in annual earnings (currently about 23 cents difference per dollar). Another approach uses weekly earnings data (closer to an 18- or 19-cent difference). Analyzing the weekly figures can be more precise in certain ways, like accounting for work hours that vary over the course of the year, and less accurate in others, like certain forms of compensation that don’t get paid as weekly wages. No matter which number you start with, the differences in pay for women and men really add up. According to one analysis by the Department of Labor’s Chief Economist, a typical 25-year-old woman working full time would have already earned $5,000 less over the course of her working career than a typical 25-year old man.
Once again: this is giving a misleading impression that if you have men and women with the same backgrounds doing the same work, the man will get paid more. That’s simply untrue. When you control for these factors the wage gap shrinks dramatically or even disappears. According to the HuffPo of all places (based on a study prepared by the American Association of University Women): “Women are close to achieving the goal of equal pay for equal work. They may be there already.”
This is where most conservative responses to the wage gap question stop, but I want to keep going because there is more to talk about. In particular, two issues remain.
The first issue has to do with why it is that more men apparently have the education, training, and background necessary to compete for higher-paying jobs. The reason is complex, and it probably involves personal choice correlated with gender (e.g. more women may prefer jobs that trade compensation for flexibility) and also with making the kinds of training necessary for some high-paying jobs uncomfortable environments for women (anyone who is familiar with the computer science field will know that is a factor). To the extent that personal choice is the deciding factor, there is no inequality. To the extent that it’s hostile environments, then clearly we’re just relocating sexism from hiring managers to colleagues and students in male-dominated fields. Let’s set this issue aside for a bit, we’ll come back to it later.
The second has to do with studies that appear to show sexism directly in hiring decisions. One of these studies was conducted by Corinne Moss-Racusin, a social psychologist at Skidmore College. The study was very simple: create a resume and send it off (in this case to scientists) where one version has the name “John” and the other has the name “Jennifer.” See if the responses differ. As this Stanford article summarizes, they do.
Superficially, this looks like clear evidence of sexism, but that might be too hasty. First, it’s odd that the biased reactions come from female scientists as well as from male scientists. Of course it’s not impossible to hypothesize that women in male-dominated fields view themselves as exceptional and still have a generally sexist view of women in general, but this explanation is at least a little odd. Is there an alternative explanation? There is.
You can explain this finding without recourse to sexism simply by assuming (1) that hiring managers only care about bang for the buck and (2) that men tend to work more hours. Well, as it turns out, #2 isn’t an assumption. It’s a fact, as sources like this one indicate. Well, if the folks doing the hiring want the most bang for the buck and if men tend to work more hours and if the position is salaried, then clearly they will have a preference for men, even if they think women are just as competent hour-for-hour.
If true, this means that the gender discrimination is not operating at the level of individual prejudice. It is not the case that people making hiring decisions dislike women or devalue their contributions. But it also doesn’t mean that our work here is done. What remains is still the question: why do men work more hours?
And this brings us back to the point I said we’re return to: the question of personal preference vs. environmental factors. Or, to use the more conventional terms, nature vs. nurture. I can’t emphasize enough: this is the reason the wage gap is so controversial. Because at its heart, buried beneath all the layers of analysis we’ve done so far to get here, we stumble on one of the most controversial questions of our age: are gender differences tied to innate human nature or are they merely social constructs? Your view on that question will, for the most part, cement whether you see the gender gap as essentially a minor issue where we just need to eradicate remaining vestiges of chauvinism and/or clean out a few specific problem industries or whether you see the wage gap as a society-wide, catastrophic consequence of a thriving patriarchy. Because if you think women tend to work fewer hours because they elect to value other things (such as child-rearing) more relative to men, than the wage gap is mostly a reflection of individual preference. But if you think women tend to work fewer hours because they are being socialized not to fully develop their talents and view their contributions to society as equal to those of men, then the wage gap (all 22% of it, not just the small amount that remains when you control for job type, etc.) is a form of widespread oppression. Women contribute fewer hours, in that view, because they are unfairly burdened with more of the work outside of their day job and because they are subtly manipulated by society from an early age to see themselves as objects to be desired for superficial characteristics rather than as subjects to be actively engaged in shaping their own destinies and developing and expressing their innate capabilities.
As long as this conflict remains, the issue is not going to go away. Even if the 22% number is a myth, it’s a myth that expresses a critique of modern society that has far more validity than Silverman’s mangled story or the Department of Labor’s mangled statistics.
Now, as I get ready to wrap this post up, here are my own thoughts about this conflict. For the most part with the view of the gender essentialists, especially after reading Steven Pinker’s influential book The Blank Slate: The Modern Denial of Human Nature. Pinker argues very persuasively and with reams of evidence that human nature is real and that it includes meaningful sex differences. What this means is that, if women tend towards actually liking being primary caregivers more than men, working towards equal pay across society (not equal pay for equal work, but equal pay AND equal work) is not actually going to make women happier. It’s going to make them less happy, as a group.
Imagine a scenario where Bob really likes to hike and so he takes a full-time job with lots of flexibility and expectations of a 40-hour work-week. His wages are lower in return for having a lot more time out of the office. Jim likes to buy stuff, however, and so he takes a full-time job where the expectation is 80-hours a week. He gives up hiking time to earn even more money. There’s an obvious wage gap here. But if you come in and solve it by insisting that Bob and Jim both spend equal hours in the office and equal hours hiking, you’re making them both less happy. You took away Bob’s hiking time, which he values more, and gave him a higher salary, which he was already willing to give up for the hiking time. You took away Jim’s money, which he values more, and gave him hiking time which he had already chosen to give up for the money. If women willingly choose careers that allow more flexibility in exchange for lower pay, then trying to coral them into higher-pay, lower-flexibility jobs is a terrible solution. If women want to be part-time nurse practitioners and you try to engineer them in to being full-time software engineers, no one is happy.
This isn’t purely hypothetical, by the way. As women have moved towards parity in the workplace over the last few decades, their level of happiness has not increased. It has decreased:
By many objective measures the lives of women in the United States have improved over the past 35 years, yet we show that measures of subjective well‐being indicate that women’s happiness has declined both absolutely and relative to men.
Since I largely believe innate human differences account for the systematic decisions of large numbers of women to spend less of their time in formal work, I don’t accept the view that what we’re witnessing is widespread patriarchy. I think what we’re witnessing, by and large, is people doing what they want to do.But there are some really important corollaries and caveats.
First, although I think it’s too obvious to require saying I’m going to say it anyway: the fact that lots of women decide of their own volition to emphasize something other than professional achievement (relative to men) does not in any way indicate that all women should do the same. The classical liberal in me is deeply committed to individualism, and that means that I have a lot of sensitivity for the outliers. There should be absolutely no coercion–formal or informal–designed to force men or women to pick certain careers based on their gender.
As a follow-up to that, if we’re going to have a situation where the women who choose to (for example) go into computer science are always going to be in a minority then we ought to have institutions and systems in place that ensure they get equal access to training and other opportunities. Not to be too personal, but my wife is getting a PhD in computer science. You can’t ask for a more male-dominant sector than that. She regularly attends women-centric conferences and groups and I am very glad that they exist to provide her and other women with something closer to equal opportunity in an environment that can be really hostile. There is a lot of room for conservatives and liberals to agree on common sense, incremental improvements for women.
I also think that our work culture is intrinsically anti-family, and that this is a problem for men as well as for women. As a recent article at Harvard Business Review pointed out:
We often think of problems with [work] expectations as women’s problems. But men too may struggle with them: my research at a top strategy consulting firm, first published in Organization Science, revealed that many men experienced these expectations as difficult to fulfill or even distasteful. To be sure, some men seemed to happily comply with the firm’s expectations, working long hours and traveling constantly, but a majority were dissatisfied. They complained to me of children crying when they missed their soccer games, of poor health and substance addictions caused by how they worked, and of a general sense of feeling “overworked and underfamilied.”
I would dearly love to see some sanity, some balance, and some honesty start to replace a culture of dishonesty where, as the headline of that article points out, “Some Men Pretend to Work 80-Hour Weeks.” Sure, some really do work that much. (I have a few times.) But it’s the perception that more hours = better employee that leads some men and women to fake it while other men and women really do work that many hours and in both cases productivity and health suffer.
On the wider picture, however, I fear the conflict is irresoluble. If gender is innate, then it is quite probable that a number of systematic gender differences will be a permanent feature of human society. If gender is primarily a social invention, then the agenda is clear: equality means women and men earning the same in the workforce because they are largely doing the same things and they are equally happy about it. You have to erase any correlation between gender and work-preferences. On any significant metric, therefore, androgyny is the goal by definition. Any gender differences that remain will be inconsequential and superficial.
At that point you’re trying to socially engineer people’s conception of gender and definition of happiness in order to fit your pre-conceived notions of equality. And I have to ask: why? Something seems backwards when you first tell people how to live and then have to re-engineer them to like it that way.
The Harvard Business Review has an article that is at once shocking and utterly obvious. The premise of the article is that in a lot of demanding (and also very lucrative) professional service careers there is a culture that demands ridiculous hours as a signal that an employee is fully committed to the team. “We often think of problems with these expectations as women’s problems,” says Erin Reid, “But men too may struggle with them.”
Reid found that there were a couple of important differences, however. The biggest is that men have two choices when they refuse to sell their souls to the job: they can either publicly ask for more accommodation or they can “pass” which is to say: lie about how much they work. If they take the path of formally asking for less-demanding positions (e.g. asking for a domestic rather than an international assignment, asking for time off after a child is born), then they face the same stiff penalties as women who ask for official accommodation: lost promotions and marginalization. But if they can successfully hide their true hours and get away with working less than people assume they do, then they can simultaneously work fewer hours and preserve their sterling reputations.
I haven’t ever worked in a management consulting firm or similar high-pressure environment. My corporate experience has been like a watered-down version of these trends, but it’s the same basic concept.Conspicuous overwork is like conspicuous consumption: a way to signal that you’re part of the in-group. I’ve always been disgusted by the dishonesty that goes along with it, however. No one ever (in my experience) lied outright about their hours, but based on observations and conversations I’m sure that a lot of white-collar professionals vastly overstate their hours to their bosses and often to themselves. Not when they actually have to record their hours, but when they are paid salary and the hours are implied.
Another thing to note: the bias was specifically anti-family.
Intriguingly, the pushback men received for asking for time away from work seemed limited to time for family: one man who had since left the firm told me that, when his daughter was born he had been harassed for taking two weeks of paternity leave, despite spending some of that leave working. But when, later that year, he and his family took a three-week vacation to an exotic locale, the vacation was permitted, and his team encouraged him to “unplug” and take a real vacation. This disparity in treatment seems, at one level, ridiculous, but at another level, entirely consistent with the firm’s expectation that men be ideal workers: taking on mundane responsibilities in one’s family life can threaten one’s devotion to work, while affording an expensive vacation may be instead contingent upon devotion to and success at work.
I believe the problem starts with outmoded vestiges of Industrial Revolution assumptions. During that time–when professional work in large corporations first became widespread–a lot of the work was mechanized. In that scenario your productivity as a worker is basically equivalent to the time you spend pulling the lever (or whatever it is you’re supposed to do.) Partially this outdated assumption is sticking with us based on sheer inertia, but I think the bigger explanation has to do with the big differences between client-facing roles and knowledge roles. There are lots of coders, data analysts, and other knowledge workers who would get much more done with 12 hours of hard work per week (and some overhead for meetings and maintenance) than 50 hours spent primarily browsing Facebook and pretending to work. But if you give them genuine freedom to work as effectively as possible, you will likely enrage the client reps who really do need to be at their desk (or otherwise available) throughout the entire work day no matter what.
It gets trickier when you consider that the knowledge workers are generally highly-skilled and probably better paid, while client-facing folks (like call center employees, to use an extreme example) are much closer to entry level. I’m not sure that I want a super-efficient system if it means creating such a major divide between self-directed knowledge workers with tremendous freedom and lower-level employees who are locked in to 9-5 drudgery.
In the long run, you hope that all the boring jobs eventually get taken over by computers and we all become highly-skilled, self-directed workers, but transitioning to that point without great injustice (not to mention civil unrest) is a tricky, tricky problem. In the meantime, however, it would great for companies to drop the unrealistic expectations of hyper-schedules and realize that, in the long run, fathers and mothers are both better workers when are treated more like humans and less like resources. The potential to have more fairness for male and female workers and a healthier society in general (as family takes greater priority) is a win-win.
New research reveals that high taxes may (unsurprisingly) deter inventors from remaining in a country. The authors summarize their findings:
There has is a strong and significant correlation between top tax rates and those inventors who remain in their home countries. The relation is strongest for superstar inventors…The elasticities imply that for a ten percentage point reduction of top tax rates from 50% to 40%, a country would be able to retain on average 3.3% more of its top 1% superstar inventors. This relation weakens as one moves down the quality distribution of inventors – the top 25-50% or the bottom 50% of inventors are no longer sensitive to top tax rates.
…The recent evidence suggests that labour, like capital, might be internationally mobile and respond to tax incentives. The loss of highly skilled agents such as inventors might entail significant economic costs, not just in terms of tax revenues lost but also in terms of reduced positive spillovers from inventors and, ultimately, less innovation in a country.
Harvard economist Roland Fryer was awarded the 2015 John Bates Clark Medal by the American Economic Association. Many top economists have been the recipients, from Milton Friedman to Paul Krugman. But as The Economist points out,
Mr Fryer’s prize…stands out. Top academic economists tend to be white. They often hail from privileged backgrounds and build their reputation on inscrutable econometrics. Mr Fryer does not fit that mould. He is the first African-American to win the medal (after having in 2007 become the youngest African-American to receive tenure at Harvard, at age 30). Mr Fryer’s childhood was not an easy one. He grew up poor, and was abandoned by his mother and beaten by his father as a child. As a teenager he survived by selling counterfeit handbags and dealing marijuana. Perhaps not coincidentally, his research agenda is heavily focused on investigations of real world policy questions. Mr Fryer has used economic tools to study America’s racial divide and to explore how it might be narrowed—economic questions that historically have been understudied. Economics, as a field, seems slow to appreciate the possibility that the introduction of new perspectives can mean that more interesting questions get asked, leading to better answers.
His innovative and creative research contributions have deepened our understanding of the sources, magnitude, and persistence of U.S. racial inequality. He has made substantial progress in evaluating the policies that work and do not work to improve the educational outcomes and economic opportunities of children from disadvantaged backgrounds. His theoretical and empirical work on the “acting white” hypothesis of peer effects provides new insights into the difficulties of increasing the educational investments of minorities and the socially excluded. Fryer is the leading economist working on the economics of race and education, and he has produced the most important work in recent years on combating the racial divide, one of America’s most profound and long-lasting social problems.
I first came across Fryer as an undergrad. My wife at the time was taking a sociology course in preparation for dental hygiene school. His work came in handy when she had assignments regarding racial inequality in America. I’ve tried to keep up with his work over the years. I was very excited to see him awarded.
Be sure to check out the AEA link above or this link to Bloomberg for a more in-depth overview of his research.
Over at The Atlantic, Walter Frick offers economic literature roundup that suggests the latter. A strong safety net encourages startups by making the effort seem less risky, he argues. For instance, a 2014 paper found the expansion of food stamps “in some states in the early 2000s increased the chance that newly eligible households would own an incorporated business by 16 percent.” Another paper by the same author found that “the rate of incorporated business ownership for those eligible households just below the cutoff was 31 percent greater than for similarly situated families that could not rely on CHIP to care for their children if they needed it.”
However, he notes,
Now it is one thing to argue that a more robust safety net would be good for US entrepreneurship broadly understood — I think that would be the case in some areas, though I would be careful about eliminating welfare work requirements — and quite another to make the same claim about mimicking the Scandinavian social democracies. In “Can’t We All Be More Like Nordics?”, Daron Acemoglu, James Robinson, and Thierry Verdier argue that “technological progress requires incentives for workers and entrepreneurs [and] results in greater inequality and greater poverty (and a weaker safety net) for a society encouraging more intense innovation.” If cut-throat, inegalitarian US capitalism became more like cuddly Scandinavian capitalism, the US might no longer be as capable of pushing the technological frontier…Indeed, the researchers have found a large per-capita gap between Scandinavia and the US when it comes to highly cited patents. The US also has a high-impact entrepreneurship rate three times as high as Sweden. (Of course, open economies benefit from innovation first produced elsewhere.) In short, the US has a pretty special thing going, and we should be careful not screw that up.
“One possible force for greater upward mobility is the welfare reforms of the 1990s,” writes Manhattan Institute scholar Scott Winship in Forbes. “Hear me out, because I think the case is stronger than is generally admitted. We probably won’t know the answer for a few more years, because the oldest children born in the 1990s are only 25 years old today, and the youngest are barely 15 years old.” Nonetheless, what’s his case?
To begin with, liberals tend to believe that parental income per se is important for upward mobility. If true, welfare reform was far more effective than the War on Poverty at expanding opportunity. Child poverty, according to a carefully constructed measure developed by a Columbia University research team, was 26 percent in the peak year of 1969 and 27 percent in 1990 (also a peak). It continued rising until 1993, the year after a presidential campaign in which the winner routinely pledged to “end welfare as we know it” and the year that the Earned Income Tax Credit was substantially expanded by the new president. Child poverty then fell from 28 percent to 17 percent by 2006. It rose during the Great Recession, but not by much; 19 percent of children were poor in 2012.
Economic growth deserves some of the credit for the decline in child poverty; even without taking federal taxes and transfers into account, poverty would have fallen between 1993 and 2000. However, economic growth might not have actually lowered child poverty much if not for the work incentives built into welfare reform. The 1990s expansion was the first one since 1960 in which poverty among single-mother families responded as much to falling unemployment as it did among married-parent families, and poverty fell by more among single-mother families than their married-parent counterparts from 1996 to 2000. The strong economy of the late 1990s was fortuitous, but child poverty declined slightly even after 2000, rising only very modestly, if at all, during the two recessions since then.
…Through 1990, taxes and transfers had essentially no impact on the poverty rate they estimated. To be sure, the safety net moved some families up from deep poverty to less-intense hardship. But the Columbia poverty levels are pretty much the same from 1967 to 1990 whether or not the safety net is taken into account. Beginning in the early 1990s, however, taxes and transfers began to reduce child poverty rates below the levels they would otherwise have attained. The safety net was only effective at reducing poverty once the national mood was strongly in favor of fundamental reform and once those reforms began.
But was there an even bigger reason for the decrease in poverty? According to Winship, the answer (suggested by the evidence) has to do with intact families and a decrease in out-of-wedlock births. Check it out.
At least that’s what Reason‘s science writer Ronald Bailey has concluded based on various studies. “For example,” Bailey writes,
according to a study comparing outcomes in all U.S. states in the January 2014 issue of Contemporary Economic Policy by Illinois State University economist Oguzhan Dincer and his colleagues finds that reducing economic freedom actually tends to increase inequality. “On average, as the size and scope of government increases, so does income inequality,” Dincer tells Reason.
The authors go on to establish “Granger causality.” Simplistically stated, this means they show a causal feedback loop, in which economic intervention produces economic inequality, which in turn leads to more economic intervention. Politicians often react to rising inequality with policies that, on average, end up making inequality worse—say, by increasing the minimum wage. (That is not to say that some policies, such as raising the top marginal tax rate, could decrease inequality. But taken as a whole, the effect moves in the other direction.)
…A 2013 study in The Journal of Regional Analysis and Policy by economists at Ohio University and Florida State University bolsters Dincer’s findings. That study, also using Fraser state economic freedom index data, identified a Kuznets curve relationship between increasing economic freedom and trends in income inequality.Their analysis “suggests that beginning from a low level of economic freedom, increases initially generate more inequality as the upper part of the income distribution benefits relatively more than the lower part; however, as enhancements of economic freedom continue, this reverses and the lower part of the distribution experiences larger relative income gains.”
In their study, Dincer and his colleagues report that their results “support previous studies which find a positive relationship between economic freedom and per capita income.” Last November, a National Bureau of Economic Research study by the Mississippi State University economist Travis Wiseman found, all things being equal, that a one-point increase on the Fraser Economic Freedom of North America index is associated with about an $8,156 increase in real average market incomes.
Check out the whole article and the studies in full.
Drawing on a large sample from Sweden, a new working paper suggests that wealth may not have much impact on child outcomes. From the abstract:
In adults, we find no evidence that wealth impacts mortality or health care utilization, with the possible exception of a small reduction in the consumption of mental health drugs…In our intergenerational analyses, we find that wealth increases children’s health care utilization in the years following the lottery and may also reduce obesity risk. The effects on most other child outcomes, which include drug consumption, scholastic performance, and skills, can usually be bounded to a tight interval around zero. Overall, our findings suggest that correlations observed in affluent, developed countries between (i) wealth and health or (ii) parental income and children’s outcomes do not reflect a causal effect of wealth.
These findings should give us pause. Perhaps we as citizens and policy makers should be looking at other factors that truly impact the long-term well-being of children.
Economist Mark Perry has an interesting blog post summing up the Bureau of Labor Statistics report “Characteristics of Minimum Wage Workers, 2014.” The following provides the percentages of different groups earning the minimum wage or less:
This is all a bit sad because, as Greg Mankiw wrote for the NYT on April 24th, that this fight was a prime example of what Alan Blinder called Murphy’s Law of economic policy: “Economists have the least influence on policy where they know the most and are most agreed; they have the most influence on policy where they know the least and disagree most vehemently.” As Mankiw puts it:
. Pinker argues very persuasively and with reams of evidence that human nature is real and that it includes meaningful sex differences. What this means is that, if women tend towards actually liking being primary caregivers more than men, working towards equal pay across society (not equal pay for equal work, but equal pay AND equal work) is not actually going to make women happier. It’s going to make them less happy, as a group.
Harvard economist 
Over at 
To begin with, liberals tend to believe that parental income per se is important for upward mobility. If true, welfare reform was far more effective than the War on Poverty at expanding opportunity. Child poverty, according to a carefully constructed measure developed by a 
…A 2013 study in The Journal of Regional Analysis and Policy by economists at Ohio University and Florida State University 
Drawing on a large sample from Sweden, a new