Labor

As the old lines continue to shift, what does inequality mean in the modern global economy? And, how does the economy need to evolve to address these changes?

Joseph Stiglitz, Michael Spence and a global team of leading thinkers are calling for new thinking & new rules for the world economy

Growing income inequality is threatening the American middle class, and the middle class is vanishing before our eyes. We are still one country, but the stretch of incomes is fraying the unity of our nation.

The Precariat under Rentier Capitalism Guy Standing We are in the midst of a Global Transformation, analogous to Karl Polanyi’s Great Transformation described in his seminal 1944 book. Whereas Polanyi’s Transformation was about constructing national market systems, today’s is about the painful construction of a global market system. To use Polanyi’s term, the ‘dis-embedded’ phase has been dominated by an ideology of market liberalisation, commodification and privatisation, orchestrated by financial interests, as in his model. The similarities also extend to today’s fundamental challenge, how to construct a ‘re-embedded’ phase, with new systems of regulation, distribution and social protection.

“Dual Economy” models were developed to explain growth in the developing world. Now they appear necessary to comprehend the high income trap that afflicts the world’s most developed economies.

Xavier Gabaix argues that public policies should prioritize alleviating deprivation at the bottom over narrowing the rich-poor gap 

Why we should worry about job quality, not quantity—or robot overlords

Economists’ infamous failure at predicting the recent financial crisis has brought new impetus to studies on diversity in the economics profession. Such studies have underlined how diversity plays a prominent role in enriching economic analyses.

Professor Ghilarducci describes the roadblocks to securing retirement and retirement plans beyond the 401k.

Greater efficiency, lower costs, and universal coverage make it the sustainable option, say some top economists

Demand, Secular Stagnation and the Vanishing Middle-Class

Professor Dutt discusses how group identity is key to addressing inequality and how inequality can disrupt group identity.

A new book by economist Peter Temin finds that the U.S. is no longer one country, but dividing into two separate economic and political worlds

Despite dismissive comments by the U.S. Treasury Secretary, facing the challenge posed by robotics replacing human labor raises key public policy questions 

The “War on Poverty,” and the impact of public policy

Long term labor shortages do not happen naturally in market economies.

Long term labor shortages do not happen naturally in market economies. That is not to say that they don’t exist. They are created when employers or government agencies tamper with the natural functioning of the wage mechanism.

The health crisis afflicting working-class Americans recalls similar symptoms in Russia following the collapse of communism

Taxing the use of robotics may or may not be the answer, but the question remains how to compensate for the growing inequality created by our changing economies

Pursuing equality while growing the economy requires reframing social spending as a form of investment.

To mark International Women’s Day, Neva Goodwin argues that the crisis of income insecurity and longstanding gender inequality require a form of universal basic income that recognizes and rewards the value of household labor

New findings show that hourly wage-rates in China are higher than in middle-income countries and are approaching the levels of Greece and Portugal

Following a thought-provoking panel discussion at the AEA, James Heckman and Rob Johnson discuss peer-reviewed journals and a professional incentive structure that constricts the idea space and reinforces tired orthodoxies in economics.

Stanford economic historian Professor Gavin Wright, addressing the Institute’s conference on the economics of race, argues that the conditions facing the children of the great migration from the South are very different to the conditions for the children of those who stayed behind. 

Research by INET-affiliated scholars shows the US lags far behind its peers on inclusive growth, suggesting inequality is not an inevitable consequence of globalization and technology

Smick argues that distortions of capitalism have fed populist rebellion, and that reviving a capitalism that offers opportunity for average people to increase their earnings is an urgent priority if America’s political economy is to be stabilized.

Professor Temin sees the US economy as bifurcated along lines analogous to the situation described in developing world economies by W. Arthur Lewis.

Beatrice Cherrier remembers Tony Atkinson’s influential intellectual, educational and institutional contribution to the field of public economics

Viewed in historical context, the weak recovery from the 2008 crisis has been slow and painful, but a sub-5% unemployment rate and healthy job and wage growth will be among the most important legacies Obama leaves to the next president

Evidence thus far questions the assumption that robotics are eliminating jobs. INET Senior Vice President for Programs Rick McGahey says the UBI debate should focus on the long-term weakening of labor’s bargaining power

Notes from the Institute’s Director of Research on some significant papers and contributions produced in 2016 under the INET rubric 

Campaign promises aside, the policies favored by President-elect Donal Trump are likely to bring more pain than gain to  working-class Americans 

Research funded by the Institute for New Economic Thinking has revealed that the SEC reports executive compensation using a formula that routinely undercounts it

Institute for New Economic Thinking-backed research into inequality explores how taxes and government policy have contributed to deepening economic inequality   

New research by Nobel Laureate and Institute for New Economic Thinking Advisory Board member James Heckman finds strong economic gains from birth-to-five education programs 

The Institute for New Economic Thinking’s recent Detroit event on race and economics noted both the structural impediments faced by African-Americans, and the impressive gains made in some communities despite those headwinds

Slight increases in national-average earnings for older workers mask long-run stagnation and decline in Michigan, Ohio, Pennsylvania and Wisconsin – states that unexpectedly voted for Donal Trump

On June 2, 1965, under a mandate established by Title VII of the Civil Rights Act of 1964, the U.S. Congress created the Equal Employment Opportunity Commission (EEOC) to enforce federal anti-discrimination laws related to employment. The expectation was that African Americans would be prime beneficiaries of the EEOC.

Nobel laureate argues that the party’s adherence to neoliberal orthodoxy has hurt its prospects

President Franklin D. Roosevelt’s policies allowed the United States to avoid the perils of right-wing populism that plunged Europe into war in the 1930s — Europe should learn from his example

Columbia professor Dan O’Flaherty explains how an awareness of racial trauma developed from growing up in Newark inspired him to write and teach on the economics of race.

How orthodox economics paved the way for the political shocks of 2016

By suppressing important questions in favor of being cheerleaders for globalization, economists failed to influence the public conversation

How economics underperforms in diversity, and some potential remedies

Mission-oriented public investment is vital to spur a revival of private-sector investment

Alicia Garza, co-founder of the Black Lives Matter Network, shares a vision of how to bring economic opportunity to women of color

Prof. Marlene Kim says her research has revealed that African-American women face triple penalties from race and gender bias, and the combination of those two

Getting rid of barriers to economic security is possible with the right policies at the right time. 

In an Al Jazeera documentary “In Search of the Great American Job”, Institute scholar William Lazonick offers some arch insights into the relationship between financialization — particularly the “shareholder value” ideology in corporations, which drives the transfer of profits to shareholders through stock buybacks — and job creation and inequality.

Scholar sees Institute for New Economic Thinking conference as an important opportunity to discuss issues of race and economics, and of Detroit’s past and future 

Social safety nets don’t always need to come with a dark side

A conversation with Robert Johnson, President of the Institute for New Economic Thinking, former Managing Director for Soros Fund Management and former Chief Economist of the US Senate Banking Committee.

Research by INET grantees Atkinson, Casarico and Voitchovsky shows that women are starkly underrepresented in top earning brackets across a range of different countries

Vice President warns that corporate stock buybacks restrict America’s long-term prosperity, citing the research of Institute grantee William Lazonick who has long argued the same

If additional education is not the solution to racial inequality, what is?

An exclusive conversation with Richard Batley, Head of Macroeconomics at Lombard Street Research.

An Institute for New Economic Thinking Working Paper by William Lazonick and Matt Hopkins reveals that much reporting on executive pay relies on systems of measurement that underreport real compensation

Painting economics as blind to inequality may be overstating matters, but for too long efforts to explain it have been self limiting. Now, new economic thinkers are willing to pose uncomfortable questions.

In June of this year, Swiss voters saw an initiative on their ballots calling for an “unconditional basic income” that would “allow the whole population to lead a decent life and participate in public life.” Put on the ballot by a petition drive after it was rejected in parliament, the initiative was rejected by 77 percent of Swiss voters, with 23 percent approving.

With the power of modern computing being harnessed into increasingly small and portable devices, what do digital platforms mean for the entrenched global economy?

Technology will ruin America if we don’t compensate for its impact, warns Andy Stern.

A response to Arjun Jayadev’s argument about the impact of automation on our work and life

Anxiety over human labor being replaced by cyborgs may be in vogue, but it’s overblown — machines may help us achieve healthier and more meaningful lives

Mass protests challenging the government to focus on job-creation rather than on market liberalization and trade deals may carry a cautionary message to Western policy makers, too.

What we’re reading: A weekly scan of published items relevant to the Institute’s work

The corrosive social and economic effects of what have now become ‘normal’ unemployment levels require new solutions, and tradewithout full employment exacerbates the problem

As empirical evidence continues to roll in, can the theoretical orthodoxy continue to hold their ground?

Does the technology revolution require a new social policy?

European Union countries are facing an epic challenge of integrating more than 1 million refugees from conflict zones in the Middle East and beyond.

The Romer/Romer letter to Professor Gerald Friedman marks a turning point. It concedes that there are indeed important issues at stake when evaluating the proposed economic policies of Presidential Candidate Bernie Sanders. These issues go beyond the political debate and should be discussed seriously between and among professional economists.

Nancy Folbre is an American feminist economist who focuses on economics and the family, non-market work and the economics of care. She is Professor Emirita of economics at the University of Massachusetts Amherst, who has written extensively about the economics of care and reciprocity.

The United States economy has come apart, with the rich getting richer and workers’ incomes not advancing at all.

Exploring inequality, gender, and the North-South divide.

This is almost certainly the highest level of relative, and certainly absolute, global inequality at any point in human history. Is there anything we can do to reverse or mitigate this trend?

A panel featuring Thomas Piketty, Kevin Murphy, and Steven Durlauf

The Institute recently sponsored several panels at the Kiel Global Economic Symposium. In particular, the panel on Income Distribution and Mobility struck us as likely to be of especially wide interest. We are grateful for the participation of all the scholars on them and are pleased to present summaries of their presentations here.

America’s economic system has failed by not raising living standards for most.

There is a renewed interest in the size of labour supply elasticities and the discrepancy between micro and macro estimates. Recent contributions have stressed the distinction between changes in labour supply at the extensive and the intensive margin. In this paper, we stress the importance of individual heterogeneity and aggregation problems.

Whilst progress has been made, the “glass ceiling” dividing men and women has yet to be broken definitively. Monika Queisser discusses the challenges still facing women in the workplace and beyond.

This paper proposes a different interpretation of the Eurozone crisis, seeing as its “final” cause European policies which have forced private savings down too low.

Hubris might well head the list

This panel covers the teaching of economics at the university level.

This memo outlines key concepts and the methodological approach involved in a recently funded Institute for New Economic Thinking project. Our aim is to pinpoint the relationship between the reception of academic ideas, traced by citation networks with qualitative coding, and positions of institutional and political power.

Considerable academic and public attention has been drawn to the pulling away of the very rich—the so-called “one percent” whose gains have far outpaced those of everyone else (Piketty 2014). But the debate has reached well beyond the very top, especially in the United States.Indeed, the hollowing out of the middle class, continuing stagnation of wages, and new evidence on the lack of upward mobility across generations all strike at the very heart of the American ideal.

Italy was one of the worst hit during the 2007–2009 global financial crisis (GFC) among the major advanced economies. By year-end 2009, Italy’s economy had contracted by 6.6 percent; significantly larger than the recessions in the euro zone and the United States, for example, which saw their GDPs shrink by 4.4 and 3.1 percent, respectively.