Spring 2022 Journal of Economic Perspectives Available Online

I have been the Managing Editor of the Journal of Economic Perspectives since the first issue in Summer 1987. The JEP is published by the American Economic Association, which decided about a decade ago–to my delight–that the journal would be freely available on-line, from the current issue all the way back to the first issue. You can download individual articles or entire issues, and it is available in various e-reader formats, too. Here, I’ll start with the Table of Contents for the just-released Spring 2022 issue, which in the Taylor household is known as issue #140. Below that are abstracts and direct links for all of the papers. I will probably blog more specifically about some of the papers in the few weeks, as well.

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Symposium on Macro Policy in the Pandemic

A Social Insurance Perspective on Pandemic Fiscal Policy: Implications for Unemployment Insurance and Hazard Pay,” by Christina D. Romer and David H. Romer

This paper considers fiscal policy during the pandemic through the lens of optimal social insurance. We develop a simple framework to analyze how government taxes and transfers could mimic the insurance that people would like to have had against pandemic income losses. Permutations of the framework provide insight into how unemployment insurance should be structured, when and how much hazard pay is called for, and whether fiscal policy should aim just to redistribute income or also to stimulate aggregate demand during a pandemic. When we use the insights from the model to evaluate unemployment insurance measures taken during the pandemic, we find that some, but far from all, of the implications of the social insurance framework were followed. In the case of hazard pay, we find that the proposal for a national program (the never-implemented HEROES Act) was both broader and more generous than a social insurance perspective would call for. We suggest that the social insurance perspective on fiscal policy is likely to become increasingly relevant as pandemics and climate-related natural disasters become more common causes of unemployment and recessions.

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“Should We Insure Workers or Jobs during Recessions?” by Giulia Giupponi, Camille Landais and Alice Lapeyre

What is the most efficient way to respond to recessions in the labor market? To this question, policymakers on the two sides of the pond gave diametrically opposed answers during the COVID-19 crisis. In the United States, the focus was on insuring workers by increasing the generosity of unemployment insurance. In Europe, instead, policies were concentrated on saving jobs, with the expansion of short-time work programs to subsidize labor hoarding. Who got it right? In this article, we show that far from being substitutes, unemployment insurance and short-time work exhibit strong complementarities. They provide insurance to different types of workers and against different types of shocks. Short-time work can be effective at reducing socially costly layoffs against large temporary shocks, but it is less effective against more persistent shocks that require reallocation across firms and sectors. We conclude that short-time work is an important addition to the labor market policy-toolkit during recessions, to be used alongside unemployment insurance.

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“The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did It Go There?” by David Autor, David Cho, Leland D. Crane, Mita Goldar, Byron Lutz, Joshua Montes, William B. Peterman, David Ratner, Daniel Villar and Ahu Yildirmaz

The Paycheck Protection Program (PPP) provided small businesses with roughly $800 billion dollars in uncollateralized, low-interest loans during the pandemic, almost all of which will be forgiven. With 94 percent of small businesses ultimately receiving one or more loans, the PPP nearly saturated its market in just two months. We estimate that the program cumulatively preserved between 2 and 3 million job-years of employment over 14 months at a cost of $169K to $258K per job-year retained. These numbers imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms. Program incidence was ultimately highly regressive, with about three-quarters of PPP funds accruing to the top quintile of households. PPP’s breakneck scale-up, its high cost per job saved, and its regressive incidence have a common origin: PPP was essentially untargeted because the United States lacked the administrative infrastructure to do otherwise. Harnessing modern administrative systems, other high-income countries were able to better target pandemic business aid to firms in financial distress. Building similar capacity in the U.S. would enable improved targeting when the next pandemic or other large-scale economic emergency inevitably arises.

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Symposium on Economics of Slavery

American Enslavement and the Recovery of Black Economic History,” by Trevon D. Logan

This paper reconsiders the evidence needed to answer pressing questions of economic history and racial inequality, the Third Phase of research on American Enslavement and its Aftermath. First, I briefly summarize how economists have sought to understand slavery as an institution. Second, using my family’s narrative as a lens, I show how answers to questions from economic history and economic theory can be answered by expanding our evidentiary base and methodological approaches. In the process, I highlight some areas of what these “traditional” economic perspectives miss. Finally, I briefly provide some examples from other fields—such as recent work by historians—that have sought to provide texture on some of the key dimensions of slavery and racial inequality that have been under-studied by economists.

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“The Cumulative Costs of Racism and the Bill for Black Reparations,” by William Darity Jr., A. Kirsten Mullen and Marvin Slaughter

Two major procedures for establishing the monetary value of a plan for reparations for Black American descendants of US slavery are considered in this paper: 1) Enumeration of atrocities and assignment of a dollar value to each as a prelude to adding up the total, and 2) Identification of a summary measure that captures the dollar amount of the cumulative, intergenerational effects of anti-Black atrocities. Under the first approach, the itemization strategy, we assess wage costs to the enslaved of bondage; financial gains to the perpetrators of slavery; damages to Black victims of post-Civil War white massacres and lynchings; losses from discrimination in the provision of the home buying supports from the Federal Housing Administration and the G.I. Bill; and income penalties due to racial discrimination in employment. Under the second approach, the global indicator strategy, we calculate the present value of providing 40 acres of land to freed slaves in 1865 and the current wealth gap between Black and White Americans. We conclude that the latter standard, the racial wealth gap, provides the best gauge for the size of the bill for Black reparations.

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“Slavery and the Rise of the Nineteenth-Century American Economy,” by Gavin Wright

The essay considers the claim that slavery played a leading role in the acceleration of US economic growth in the nineteenth century. Although popular among pro-slavery apologists, the proposition fails under rigorous historical scrutiny. The slave South discouraged immigration, underinvested in transportation infrastructure, and failed to educate the majority of its population. It is not even clear that the region produced more cotton than it would have under a counterfactual alternative settlement by free family farmers, on the free-state pattern. The grain of truth in recently popular narratives is that many northerners and business interests were complicit in the crime of slavery: routinely engaging in transactions with slaveholders, even promoting activities that facilitated slavery and the domestic slave trade. Complicity complicates simple historical moralism, but it is quite different from the notion that the prosperity of the nation as a whole derived from slavery in any fundamental way.

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Symposium on Childhood Interventions

“Children and the US Social Safety Net: Balancing Disincentives for Adults and Benefits for Children,” Anna Aizer, Hilary Hoynes and Adriana Lleras-Muney

Economic research on the safety net has evolved over time, moving away from a focus on the negative incentive effects of means-tested assistance on employment, earnings, marriage, and fertility to include the potential positive benefits of such programs to children. Initially, this research on benefits to children focused on short-run impacts, but as we accumulated knowledge about skill production and better data became available, the research evolved further to include important long-run economic outcomes such as employment, earnings, and mortality. Once the positive long-run benefits to children are considered, many safety net programs are cost-effective. However, the current government practice of limiting the time horizon for cost-benefit calculations of policy initiatives often fails to take this into account. Finally, we discuss why child poverty in the United States is still higher than most OECD countries and how research on children and the safety net can better inform policy-making.

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“Universal Early-Life Health Policies in the Nordic Countries,” by Miriam Wüst

Given mounting evidence on the negative impact of early-life shocks for the wellbeing of people over the life course, a growing economics literature studies whether early-life policies have symmetric positive effects. This paper zooms in on research on this topic from the Nordic countries, where all families have access to a comprehensive set of early-life health programs, including prenatal, maternity, and well-infant care. I describe this Nordic model of universal early-life health policies and discuss the existing evidence on its causal effects from two categories of studies. First, studying the introduction of universal policies, research has documented important short- and long-run benefits for the health, education, and labor market trajectories of treated cohorts. Second, exploiting modern-day changes to policy design, research for now documents short- and medium-run impacts of universal care on primarily maternal and child health as well as parental investment behaviors. I conclude with directions for future research.

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“Inequality in Early Care Experienced by US Children,” by Sarah Flood, Joel McMurry, Aaron Sojourner and Matthew Wiswall

Using multiple datasets on parental and non-parental care provided to children up to age six, we quantify differences in American children’s care experiences by socioeconomic status (SES), proxied primarily with maternal education. Increasingly, higher SES children spend less time with their parents and more time in the care of others. Non-parental care for high-SES children is more likely to be in childcare centers, where average quality is higher, and less likely to be provided by relatives, where average quality is lower. Even within types of childcare, higher-SES children tend to receive care of higher measured quality and higher cost. Inequality is evident at home as well: measures of parental enrichment at home, from both self-reports and outside observers, are on average higher for higher-SES children. Parental and non-parental quality are positively correlated, leading to substantial inequality in the total quality of care received from all sources in early childhood.

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“Economics of Foster Care,” by Anthony Bald, Joseph J. Doyle Jr., Max Gross and Brian A. Jacob

Foster care provides substitute living arrangements to protect maltreated children. The practice is remarkably common: it is estimated that 5 percent of children in the United States are placed in foster care at some point during childhood. This paper describes the main tradeoffs in child welfare policy and provides background on policy and practice most in need of rigorous evidence. Trends include efforts to prevent foster care on the demand side and to improve foster home recruitment on the supply side. With increasing data availability and a growing interest in evidence-based practices, there are opportunities for economic research to inform policies that protect vulnerable children.

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Features

Retrospectives: “Joan Robinson on Karl Marx: `His Sense of Reality Is Far Stronger,’” by Carolina Alves

This paper revisits why Joan Robinson turned to Karl Marx in 1942 and which insights from Marxian economics she sought to incorporate into her later works, while commenting on how her encounter with Marx was received by some her of contemporaries. By the end of the 1930s, Robinson wanted to bring academic and Marxian economics together in a search for a more realist theory of the rate of profit and income distribution, along with clarifications on Keynes’s concept of full employment and the nature of technical progress and a long-period theory within the Keynesian framework. The result, An Essay on Marxian Economics (1942), was her most important work in terms of laying the foundations of her enduring challenge to the orthodox economics. Here she relied on Marxian insights to escape Marshallian orthodoxy. It is the story of how the originator of imperfect competition pushed further into a theory of exploitation.

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“Recommendations for Further Reading,” by Timothy Taylor

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