Sluggish wage growth stands out as the Achilles’ heel of the otherwise sturdy U.S. job market. With the economy almost at full employment, and more than eight years since the recession ended, a sustained pickup in paychecks remains elusive.
Source: Ahiteme N. Houndonougbo, Matthew N. Murray, Public Finance Review, Online First, Published September 27, 2017
From the abstract:
We provide empirical evidence on the consequences of relatively higher tax burdens on the rich for aggregate employment growth using a newly constructed time series for 1947 through 2011 derived from the US Statistics of Income. In response to shifts in the relative federal tax burden toward the rich, we find statistically significant positive effects on employment growth in the short run and some evidence of negative effects on employment growth in the long run. Among our robustness checks, we use the Romer and Romer narrative record analysis to restrict our sample to a period of exclusively exogenous tax changes. The results hold in the restricted sample and are also consistent across alternative specifications and estimation methods, including unrestricted and Bayesian vector autoregressive.
Source: Harvey Cutler, Martin Shields and Stephen Davies, Growth and Change, Early View, September 10, 2017
From the abstract:
Previous research shows that when changes in national commodity and income tax rates affect labor supply decisions differently, relative rates can be altered to increase welfare. In the U.S., 40 states impose both a sales and income tax; however, the reliance varies widely. This paper uses a computable general equilibrium model to examine tax policy changes in Colorado. The findings suggest that the revenue neutral changes to income and sales tax rates can affect both the level of economic activity and the distribution of income. When labor force participation is highly sensitive to income tax rate changes—which this paper suggests is the case—progressive changes to Colorado’s tax policy changes can both reduce inequality and increase output and employment.
Source: Andrew Ojede, Bebonchu Atems, Steven Yamarik, Growth and Change, Early View, September 25, 2017
From the abstract:
Using data on 48 contiguous U.S. states and a spatial econometric approach, this paper examines short- and long-run effects of productive higher education and highway infrastructure spending financed by different revenue sources on state economic growth. Following the Lagrange Multiplier, Wald, and Likelihood Ratio tests, the data are found to be characterized by both spatial lag and spatial error processes, leading to the estimation of a dynamic spatial Durbin model. By decomposing results of the dynamic spatial Durbin model into short- and long-run direct as well as indirect (spillover) effects, we show that accounting for spillover effects provides a more comprehensive approach to uncovering the effects of productive government spending on growth. We find that, regardless of the financing source, productive higher education and highway spending have statistically significant short- and long-run direct as well as spillover effects on state income growth.
It’s rosy at best to presume that the next 20 years will be as kind to Amazon as the last 20. Local taxpayers shouldn’t bear the risk of the corporation’s financial future.
New data from the U.S. Census Bureau show that in 2016, the median U.S. household earned $59,039, a 3.2 percent increase from the previous year. Seven years after the end of the Great Recession, the median household’s income has approximately recovered to its pre-recession level, when adjusted for inflation, but has effectively remained stagnant since the late 1990s.
Middle-class households are not seeing the high levels of income growth that are being enjoyed by America’s highest-income earners. Furthermore, the share of income that is earned by the middle 60 percent of households, by income, has fallen to record lows. A revitalized union movement could help reverse the decades-long trend of growing inequality and a shrinking middle class. But anti-union attacks at the state and national levels threaten to further tilt our nation’s economy against workers…..
…The commonplace argument that increases in the volume of immigration, by themselves, lower wages and take jobs from Americans – an argument which Attorney General Jeff Sessions used to defend ending DACA – has neither empirical nor theoretical support in economics. It is just a myth.
Instead, both theory and empirical research show that immigration, including low-skill and low-English immigration, grows the pie and strengthens the American workforce…..
With the new school year starting, there is good news for incoming students of economics—and anybody else who wants to learn about issues like inequality, globalization, and the most efficient ways to tackle climate change. A group of economists from both sides of the Atlantic, part of a project called CORE Econ, has put together a new introductory economics curriculum, one that is modern, comprehensive, and freely available online.
In this country, many colleges encourage Econ 101 students to buy (or rent) expensive textbooks, which can cost up to three hundred dollars, or even more for some hardcover editions. The CORE curriculum includes a lengthy e-book titled “The Economy,” lecture slides, and quizzes to test understanding. Some of the material has already been used successfully at colleges like University College London and Sciences Po, in Paris…..
…..The CORE approach isn’t particularly radical. (Students looking for expositions of Marxian economics or Modern Monetary Theory will have to look elsewhere.) But it treats perfectly competitive markets as special cases rather than the norm, trying to incorporate from the very beginning the progress economists have made during the past forty years or so in analyzing more complex situations: when firms have some monopoly power; people aren’t fully rational; a lot of key information is privately held; and the gains generated by trade, innovation, and finance are distributed very unevenly. The CORE curriculum also takes economic history seriously…..
CORE is an open-access, interactive ebook-based course for anyone interested in learning about the economy and economics.
CORE is a question-motivated way to learn the tools of economics.
CORE is based on recent developments in economics and other social sciences.
CORE is a community of learners and teachers collaborating to make economics accessible and relevant to today’s problems.
…. This paper focuses on one particular political consequence of a shrinking middle class. It contends that this was a key factor in Donald Trump becoming President of the United States. Then it argues that the policies promulgated by Trump will not help the US middle class but will exacerbate recent inequality trends. The paper concludes with some suggestions for reviving the middle class. ….
Trumponomics: causes and consequences – Part I
Source: Real-World Economics Review, Issue no. 78, March 22, 2017
Trump through a Polanyi lens: considering community well-being
Trump is Obama’s legacy. Will this break up the Democratic Party?
Causes and consequences of President Donald Trump
Explaining the rise of Donald Trump
Class and Trumponomics
David F. Ruccio
Trump`s bait and switch: job creation in the midst of welfare state sabotage
Pavlina R. Tcherneva
Trumponomics: causes and consequences – Part II
Source: Real-World Economics Review, Issue no. 79, March 30, 2017
Economic policy in the Trump Era
Major miscalculations: globalization, economic pain, social dislocation and the rise of Trump
Is Trump wrong on trade? A partial defense based on production and employment
Robert H. Wade
President Trump and free-trade
U.S. private capital accumulation and Trump`s economic program
Trump` s contradictions and the future of the Left
Trumponomics, firm governance and US prosperity
Robert R Locke
Recovery from the Great Recession is essentially complete, but there are difficult unemployment and wage issues
From the blog post:
A new IZA World of Labor report looking at the US labor market (2000-2016) finds a remarkable drop in the labor force participation rate; the nearly full recovery of unemployment from the depths of the Great Recession; and the continuing growth in post-inflation average earnings while earnings inequality continues to rise.
The report by IZA Network Coordinator Dan Hamermesh (Royal Holloway, University of London) looks at the development of the American labor market since before the 2001 recession. In the aggregate the US labor market is doing quite well today. Unemployment is currently below 5%, and real weekly earnings of full-time workers increased from the 2000 cyclical peak to the current period of near full employment.