Category Archives: Economy

The New Map of Economic Growth and Recovery

Source: Economic Innovation Group, 2016

From the summary:
The New Map of Economic Growth and Recovery surveys the economic landscape emerging from the Great Recession and compares it to previous recovery periods. This report identifies the geography and strength of job creation and new business formation, as well the overall collapse in the number of new firms in the economy.

This analysis points to very different futures for American communities, suggesting that the gains from growth have and will continue to consolidate in the largest and most dynamic counties and leave other areas searching for their place in the new economy. While many will benefit, the new map also calls for a new toolkit for ensuring broad access to opportunity and helping both people and places realize their economic potential.

Enduring Employment Losses from the Great Recession? Longitudinal Worker-Level Evidence

Source: Danny Yagan, UC Berkeley and NBER, June 2016

The severity of the Great Recession varied across U.S. local areas. Comparing two million workers within firms across space, I find that starting the recession in a below-median 2007-2009-employment-shock area caused workers to be 1.0 percentage points less likely to be employed in 2014, relative to starting elsewhere. These enduring employment losses hold even when controlling for current local unemployment rates, which have converged across space. The results demonstrate limits to U.S. local labor market integration and suggest hysteresis effects culminating in labor force exit.
Related:
They’re some of the unluckiest places in America — and may confirm what’s wrong with the economy
Source: Ana Swanson, Washington Post, Wonkblog, June 23, 2016

Sorting Through the Determinants of Local Government Competition

Source: Michael Overton, The American Review of Public Administration,Published online before print June 22, 2016
(subscription required)

From the abstract:
Competition among local governments for business investment and residents is a key feature of metropolitan governance scholarship. Despite the excellent work exploring interjurisdictional competition, the conceptualization and operationalization of competition still lack the necessary complexity to fully capture the determinants of competition. In reality, the degree of competition between local governments is a multidimensional concept. How do the different dimensions of competition impact a city’s own-source revenue yield? Using a Spatial Durbin Model (SDM) to analyze a sample of 2,299 U.S. cities, this study finds that household income differentiation and manufacturing differentiation are important in a city’s revenue yield, and both types of differentiation limit head-to-head competition among local governments. In addition, the results indicate that entry barriers and collaboration affect a city’s revenue yields, while the number of cities in a metropolitan statistical area (MSA) does not influence those collections.

The Macroeconomic Consequences of Mr. Trump’s Economic Policies

Source: Mark Zandi, Chris Lafakis, Dan White, Adam Ozimek, Moody’s Analytics, June 2016

This paper assesses the macroeconomic consequences of presidential candidate Donald Trump’s proposed economic policies. These include his policies on taxes and government spending, immigration, and international trade. A similar analysis of candidate Hillary Clinton’s proposed economic policies will be forthcoming.
Related:
Moody’s Analytics analysis: Trump presidency would ‘significantly’ hurt economy
Source Nolan D. McCaskill, Politico, June 20, 2016

Donald Trump’s presidency would “significantly” weaken the country, driving the U.S. into a “lengthy recession” with nearly 3.5 million job losses and a 7 percent unemployment rate, according to a Moody’s Analytics analysis released Monday. The analysis examined the presumptive Republican presidential nominee’s economic plans at face value, based on interviews, speeches and his campaign website. The authors of the report, however, warned that quantifying the real estate mogul’s economic polices “is complicated by their lack of specificity.” …. The report also determined that Trump’s plans would hit the middle class the hardest while high-income earners would benefit the most from his tax breaks. ….

Declining Dynamism in the U.S. Labor Market

Source: David W. Perkins, CRS Insight, IN10506, June 15, 2016

Many observers have noted that certain measures of the U.S. labor market “dynamism” or “fluidity” including job reallocation, worker churn, and geographic labor mobility—have been declining for the past 20 years or more. The ability of U.S. workers to flow between jobs has been a defining feature of the economy since the end of World War II, and a reduction in labor market fluidity could have negative implications for unemployment, wage growth, and productivity. Economists have proposed several possible explanations for the decline in labor market dynamism, but the effect of these potential factors is unclear….

The Price We Pay: Economic Costs of Barriers to Employment for Former Prisoners and People Convicted of Felonies

Source: Cherrie Bucknor and Alan Barber, Center for Economic and Policy Research (CEPR), June 2016

From the abstract:
Despite modest declines in recent years, the large and decades-long blossoming of the prison population ensure that it will take many years before the United States sees a corresponding decrease in the number of former prisoners. Using data from the Bureau of Justice Statistics (BJS), this report estimates that there were between 14 and 15.8 million working-age people with felony convictions in 2014, of whom between 6.1 and 6.9 million were former prisoners.

Prior research has shown the adverse impact that time in prison or a felony conviction can have on a person’s employment prospects. In addition to the stigma attached to a criminal record, these impacts can include the erosion of basic job skills, disruption of formal education, and the loss of social networks that can improve job-finding prospects. Those with felony convictions also face legal restrictions that lock them out of many government jobs and licensed professions.

Assuming a mid-range 12 percentage-point employment penalty for this population, this report finds that there was a 0.9 to 1.0 percentage-point reduction in the overall employment rate in 2014, equivalent to the loss of 1.7 to 1.9 million workers. In terms of the cost to the economy as a whole, this suggests a loss of about $78 to $87 billion in annual GDP. Some highlights of this study include:
• Between 6.0 and 6.7 percent of the male working-age population were former prisoners, while between 13.6 and 15.3 percent were people with felony convictions.
• Employment effects were larger for men than women, with a 1.6 to 1.8 percentage-point decline in the employment rate of men and a 0.12 to 0.14 decline for women.
• Among men, those with less than a high school degree experienced much larger employment rate declines than their college-educated peers, with a drop of 7.3 to 8.2 percentage points in the employment rates of those without a high school degree and a decline of 0.4 to 0.5 percentage points for those with college experience.
• Black men suffered a 4.7 to 5.4 percentage-point reduction in their employment rate, while the equivalent for Latino men was between 1.4 and 1.6 percentage points, and for white men it was 1.1 to 1.3 percentage points. This paper updates earlier CEPR research that also examined the impact of former prisoners and those with felony convictions on the economy.
Related:
Press release

Fiscal Health of Large U.S. Cities Varied Long After Great Recession’s End

Source: The Pew Charitable Trusts, American Cities Project, Issue Brief, April 2016

From the overview:
Though the U.S. economy improved for a fourth straight year in fiscal year 2013, many big cities faced constrained budgets because of weak property tax revenue growth and cuts in federal and state aid.

This brief focuses on the cities that anchor the nation’s largest metropolitan areas. The fiscal health of the cities varied considerably in fiscal 2013, depending on their circumstances. Still, a number of trends emerge concerning the cities’ revenue, spending, and reserves.

The analysis, based on audited city financial statements, continues work undertaken by The Pew Charitable Trusts’ American cities project following the Great Recession, which ran from late 2007 through mid-2009. For this multiyear series, Pew has examined data in the financial statements of the central city in each of the nation’s 30 largest metro areas (as defined by the 2010 census). Though included in previous analyses, Cincinnati was excluded from the most recent look at revenue, spending, and reserves because city officials changed its fiscal year in 2013. That resulted in financial documents that covered only six months and made it impossible to compare financial information to previous years or to other cities included in the analysis.

A separate brief, “Issuance of New Money Bonds Remains Low in Large U.S. Cities,” looks at trends in city bond issuances through 2014….