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June 17, 2014

Latest Posts from Economist's View

Latest Posts from Economist's View

The Effectiveness of Tax Rebates as Countercyclical Fiscal Policy

Posted: 17 Jun 2014 12:15 AM PDT

Tax rebates increase demand:

Governments around the world are searching for macro-stimulation instruments. This column discusses evidence showing that rebate-type payments policies generate substantial increases in demand for goods and services. In particular, a large portion of tax rebates are spent rapidly on arrival.

Full post here: The effectiveness of tax rebates as countercyclical fiscal policy, by Jonathan A. Parker, Vox EU.

Links for 6-17-14

Posted: 17 Jun 2014 12:06 AM PDT

Income Inequality: Politics or Economics?

Posted: 16 Jun 2014 07:42 AM PDT

I haven't seen Dave Jacobs in many years. Nice to see that he's still doing good work:

Could politics trump economics as reason for growing income inequality?, EurekAlert: Most research examining growing income inequality in the United States has focused on economic causes, for seemingly obvious reasons.
But a new study suggests that a different cause – the politically induced decline in the strength of worker unions – may play a much more pivotal role than previously understood.
In fact, the role that union decline has played in growing income inequality may actually be larger than many of the favorite explanations offered by economists, such as the education gap in the United States.
Among their contributions to income equality: unions reduce pay differences within companies and use their influence to lobby on behalf of the working and middle classes, the researchers say. "The effect that unions used to have on protecting the incomes of middle class and working Americans has been underestimated," said David Jacobs, co-author of the study and professor of sociology at The Ohio State University.
Jacobs conducted the study with Lindsey Myers, a doctoral student in sociology at Ohio State. Their results appear online in the journal American Sociological Review and are scheduled to appear in the August print edition. ...
Although the decline in union memberships began in the early 1950s, this decline accelerated after the election of President Ronald Reagan, whose policies and appointments to the National Labor Relations Board severely weakened unions, Jacobs said. Since then, Republican presidents and one Democratic president (Bill Clinton) have followed policies that continued to weaken unions. ...
Of course, a lot happened during this period that may conceivably affect income inequality. But Jacobs and Myers controlled for more than 20 other factors... "We controlled for all of the major factors generally cited by researchers as contributing to inequality. Still, union decline and the presence of Republican presidents remained the most important explanations for income inequality," Jacobs said. "Even education wasn't nearly as important as union decline." ...
"After the Reagan turning point, unions no longer had the influence to help contain the acceleration in inequality," Jacobs said. ...

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