Source: Dylan Matthews, Vox, May 22, 2019
Raj Chetty has an idea for introducing students to econ that could transform the field — and society…..
….Chetty has made his name as an empirical economist, working with a small army of colleagues and research assistants to try to get real-world findings with relevance to major political questions. And he’s focused on the roots and consequences of economic and racial inequality. He used huge amounts of IRS tax data to map inequality of opportunity in the US down to the neighborhood, and to show that black boys in particular enjoy less upward mobility than white boys.
Ec 1152 is an introduction to that kind of economics. There’s little discussion of supply and demand curves, of producer or consumer surplus, or other elementary concepts introduced in classes like Ec 10. There is no textbook, only a set of empirical papers. The material is relatively cutting-edge. Of the 12 papers students are required to read, 11 were released in 2010 or after. Half of the assigned papers were released in 2017 or 2018. Chetty co-authored a third of them.
And while most economics courses at Harvard require Ec 10 as a prerequisite, Ec 1152 does not. Freshmen can take it as their first economics course…..
….If this were just a pedagogical shift at Harvard, that would be one thing. But Chetty is aiming to make the course a model for other schools. After the financial crisis, many economists have concluded that Econ 101 is broken across the university system and is not preparing students for a world where markets frequently fail. Chetty’s class offers a new way to teach an introductory course, yet at the same time is more closely aligned with what contemporary economic research looks like. The course’s lecture videos are already available online, for students at other institutions to use…..
Source: Jane G. Gravelle, Donald J. Marples, Congressional Research Service, CRS Report, R45736, May 22, 2019
The 2017 tax revision, P.L. 115-97, often referred to as the Tax Cuts and Jobs Act, and referred to subsequently as the Act, was estimated to reduce taxes by $1.5 trillion over 10 years. The Act permanently reduced the corporate tax rate to 21%, made a number of revisions in business tax deductions (including limits on interest deductions), and provided a major revision in the international tax rules. It also substantially revised individual income taxes, including an increase in the standard deduction and child credit largely offset by eliminating personal exemptions, along with rate cuts, limits on itemized deductions (primarily a dollar cap on the state and local tax deduction), and a 20% deduction for pass-through businesses (businesses taxed under the individual rather than the corporate tax, such as partnerships). These individual provisions are temporary and are scheduled to expire after 2025. The Act also adopted temporary provisions allowing the immediate deduction for equipment investment and an increase in the exemption for estate and gift taxes…..
….This analysis examines the preliminary effects of the Act during the first year, 2018. In some cases it is difficult to determine the effects of the tax cuts (e.g., on economic growth) given the other factors that affect outcomes. In other cases, such as the level of repatriation and use of repatriated funds, the evidence is more compelling. This report discusses these potential consequences in light of the data available after the first year…..
Source: Diane Oakley, Ilana Boivie, National Institute on Retirement Security, Issue Brief, January 2019
From the abstract:
This study analyzes data on specific private sector pension plans (referred to as “multiemployer plans”) to assess the overall national economic impact of benefits paid by these plans to retirees.
We estimate the employment, output, value added, and tax impacts of pension benefit expenditures from multiemployer plans at the national level, and find that the economic gains attributable to private sector multiemployer DB pension expenditures are considerable.
In 2016, $41.8 billion in pension benefits were paid to 3.5 million retired Americans covered by multiemployer plans. The average benefit paid to retirees covered by these plans was $11,935 per year. Expenditures made out of those pension payments collectively supported:
– Nearly 543,000 American jobs that paid nearly $28 billion in labor income
– $89 billion in total economic output nationwide;
– $50 billion in value added (GDP); and
– $14.7 billion in federal, state, and local tax revenue.
The largest employment impacts occurred in the real estate, food services, health care, and retail trade sectors.
Source: Emily Raimes, Timothy Blake, Daniel Ortega, Nicholas Samuels, Moody’s, Sector In-Depth, State government – US, May 20, 2019
Economic conditions in the US are strong, and the probability of a recession beginning within the next year appears to be low. States are aware that a downturn will come eventually, however, and are building reserves to prepare. According to our scenario analysis, most states will be able to weather a moderate recession without significant adverse credit impact, in large part because of healthy reserves and inherently strong fiscal flexibility. Recession preparedness is stronger for 22 states, moderate for 26 and weaker for two…..
Source: Mark Paul, Dollars & Sense, no. 341, web-only, May/June 2019
We’ve heard it countless times in recent media accounts: The economy is at “full employment.” The most recent jobs numbers, out the first week in May, show the official unemployment rate, and applications for unemployment benefits are at a 50-year low. The last time a recovery was able to push the unemployment rate to these levels was in 1969, when my mom was just entering elementary school and the United States was in the heyday of the “Golden Age” of capitalism.
But economists are puzzled. Despite low unemployment (the current rate is just 3.6%), significant wage increases remain elusive. In other words, workers aren’t benefiting much. This is deeply troubling in an era of unprecedented inequality, driven in large part by decades of a falling wage share. The size of our economic pie may be getting bigger, but the wage share, or the share of the economic pie going to workers, has been contracting. Furthermore, a lack of wage growth isn’t allowing for the true recovery that Main Street so desperately needs…..
Source: David Swenson, The Conversation, May 7, 2019
….The U.S. has been consistently urbanizing, especially for the past 100 years. Technology advances in manufacturing, agriculture, mining, fishing and forestry accelerated migration from rural to urban areas.
Over time, incremental innovations in those original core industries required fewer workers, further boosting migration away from rural areas. Much of the blue-collar and middle-income shares of more rural economies dwindled as a result….
Source: Congressional Research Service, CRS Insight, IN11098, April 11, 2019
Economists and financial markets closely monitor interest rates in hopes of gleaning information about the path of the economy. One measure of particular interest is the “yield curve.” Recently, the yield curve associated with U.S. Treasuries inverted. This Insight discusses possible explanations for the inversion, including whether the inversion is signaling that the economy will enter a recession.
Source: Jeremy Brecher, In These Times, May 2019
A true just transition means robust training, guaranteed jobs and pensions for fossil fuel industry workers.
Source: Conor McKay, Ethan Pollack & Alastair Fitzpayne, Aspen Institute, Future of Work Initiative, April 2019
Automation is an important ingredient driving economic growth and progress. Automation has enabled us to feed a growing population while allowing workers to transition from subsistence farming to new forms of work. Automation helped moved us from a craft system to mass production, from blue-collar to white-collar to “new collar” work—with better work, higher wages, more jobs, and better living standards.
But without adequate policies and institutions, automation can also have negative effects on individuals and communities. Emerging technologies—including artificial intelligence, machine learning, and advanced robotics—have the potential to automate many tasks currently performed by workers, leading to renewed questions over what the future holds for the American workforce. We must ensure the proper support structures are in place to promote opportunity and prosperity for all.
Automation and a Changing Economy is divided into two sections.
Part I, Automation and a Changing Economy: The Case for Action, explores how automation impacts the economic security and opportunity of the American worker…..
Part II of this report, Automation and a Changing Economy: Policies for Shared Prosperity, outlines a program to address automation’s challenges and opportunities……
Source: Bernard Yaros, Sarah Crane, Regional Financial Review, Vol. 29 no. 6, February 2019
The purpose of this article is to serve as a primer on U.S. fiscal multipliers in times of recession. We discuss the economic policies that Congress typically authorizes during a downturn and size them up against one another based on their multipliers. We analyze the impact on the economy of more government aid to states and localities, unemployment insurance benefits, food stamps, infrastructure, and various tax cuts.