The Institute for Research on Labor and Employment’s (IRLE) mission is to conduct and support research on labor and employment at UC Berkeley. Our goal is to bridge the gap between academic research and the policy world. To achieve this goal, IRLE supports policy-relevant and policy engaged research; disseminates the latest research from our centers, affiliated faculty, and scholars to a wide audience of policymakers, academics and the public; and educates California’s labor, business, and community leaders. IRLE is a research unit at the University of California, Berkeley. We stand apart from individual academic departments under the Vice Chancellor for Research and support research on the entire range of labor and employment issues across campus.
Sandra Susan Smith
Institute for Research on Labor and Employment
University of California, Berkeley
2521 Channing Way
Berkeley, CA 94720-5555
Towards Universal Health Coverage: California Policy Options for Improving Individual Market Affordability and Enrollment
California’s effective implementation of the Affordable Care Act (ACA) has led to the largest drop of the uninsured of all 50 states, with 93 percent of state residents now covered by health insurance. In spite of these coverage gains and improved affordability for many, individuals eligible for Covered California make up the state’s second largest group of uninsured after undocumented residents. Many Californians enrolled in individual market coverage also struggle to afford premiums and out-of-pocket costs.
In 2014, the California Department of Corrections and Rehabilitation began a demonstration of theEnhanced Drug and Contraband Interdiction Program at 11 prisons in California. Using data provided bythe Department, this study finds that the intensive version of the program yielded a 23% decline in failurerates of random drug tests over the period studied, and a reduction in the number of cellphone violations,but that these same institutions experienced increased levels of drug-related rules violations. Themoderate program had no discernable impact on drug abuse in the prisons in which it was tested.
The top one percent of arrestees in San Francisco (“high users”) account for approximately seven percent of all arrests. Property crimes, both felony and misdemeanor, are the most frequent charge in both high user arrests and cases filed by the District Attorney. High users are predominantly male and fall between 30 and 50 years old. African Americans, though 6% of San Francisco’s population, constitute almost 50% of the high user cohort. San Francisco’s high user cohort also faces significant economic insecurity: more than half accessed safety-net benefits from the Human Services Agency during the study period.
In the admissions cycle that began in November 2016, UC Berkeley carried out the second year of a pilot experiment with letters of recommendation. Unlike other highly selective universities, Berkeley has never previously asked applicants to submit letters from teachers and guidance counselors. This may limit the information available for use in holistic review, and some at Berkeley think that as the university gets more selective it is getting harder to make informed decisions with the evidence available. Others, however, are concerned that students from disadvantaged backgrounds may not have access to adults who can write strong letters, and that the use of letters will further disadvantage these students.
In the pilot experiment, a subset of applicants was invited to submit letters of recommendation if they wished. Any submitted letters were incorporated into the “second read” evaluations of their applications. I evaluate the impact of this on the outcomes of applicants from four groups underrepresented among successful applicants to Berkeley: students from families with low incomes, students whose parents did not attend college, students from low-scoring high schools, and students from underrepresented racial and ethnic groups. I use a variety of methods, including a within-subject design that compares application scores when readers had access to letters with scores from a parallel process that suppressed the letters and a regression discontinuity design that exploits sharp distinctions between otherwise similar students in the selection of students to be invited to submit letters.
Inequality of Educational Opportunity? Schools as Mediators of the Intergenerational Transmission of Income
Chetty et al. (2014) show that children from low-income families achieve much better adult outcomes, relative to those from higher-income families, in some places than in others. I use data from several national surveys to investigate whether children’s educational outcomes (educational attainment, test scores, and non-cognitive skills) mediate the relationship between parental and child income. Commuting zones (CZs) with stronger intergenerational income transmission tend to have stronger transmission of parental income to children’s educational attainment, as well as higher returns to education. By contrast, the CZ-level association between parental income and children’s test scores is only weakly related to CZ income transmission, and is stable across grades. There is thus little evidence that differences in the quality of K-12 schooling are a key mechanism driving variation in intergenerational mobility. Access to college plays a somewhat larger role, but most of the variation in CZ income mobility reflects (a) differences in marriage patterns, which affect income transmission when spousal earnings are counted in children’s income; (b) differences in labor market returns to education; and (c) differences in children’s earnings residuals, after controlling for observed skills and the CZ-level return to skill. This points to job networks or the structure of the local labor and marriage markets, rather than the education system, as likely factors influencing intergenerational economic mobility.
Immigration is a hotly contested policy issue in the United States. Diametrically opposed advocacy groups exchange counterclaims on immigration’s blessings or banes, sometimes with little pretext of objectivity. However, recent decades have also seen a growing body of nonpartisan scholarly analysis of immigration’s fiscal and economic impact in the US. An exploration of such study finds that the preponderance of evidence points to positive net fiscal and economic impacts—albeit modest ones—and negligible effects on native wages and employment rates. Immigration may have other economic impacts—positive and/or negative—not yet captured or measured. More research is needed to further our understanding of immigration’s fiscal and economic effects.
In this paper, I ask how immigrant/native-born wage gaps differ in two institutionally distinct receiving societies in Western Europe: Sweden, with a comparatively equal wage structure, and the United Kingdom, with a comparatively unequal wage structure. Using large, nationally representative data sets and focusing on 30 immigrant groups that reside in both countries, I document two distinct kinds of inequality between immigrant and native-born workers. In terms of wage percentiles, immigrants fare unambiguously better in the UK, net of human capital, demographic characteristics, and sending country. That is, immigrants achieve higher relative positions in the British labor market than in the Swedish labor market. But immigrant/nativeborn gaps in terms of real wages are at least as large in the UK as in Sweden, and for some groups larger, because overall earnings inequality is so high in the UK. These findings suggest that policies to improve immigrant pay must consider immigrant-specific barriers in the labor market and the detrimental effects of earnings inequality for immigrant workers.
The Great Recession has ruined the finances of millions of families and has had long-lasting impacts on employment. But less is known about its social consequences, about how it affected the intimate lives of the most disadvantaged – and in particular how it affected their fertility. Prior research has found that fertility decisions are often disconnected from economic concerns. In a new paper, I find the opposite: fertility falls in response to severe economic shocks among unmarried and teen women.1 I show that during the Great Recession, unmarried women increased their use of contraceptives and made use of more effective contraceptive methods. My results suggest that the Great Recession decreased fertility with consequences for the society as a whole.
The Great Recession caused significant hardship for many U.S. families. Safety net programs—some of which were expanded during the recession and its recovery—mitigated some of the worst effects, but were not available to all households and were insufficient to compensate for the depth of the downturn. What can policymakers learn from the adequacy of the response?
Policy-makers often aim to increase labor force participation by increasing the returns to work – either by cutting tax rates or reducing the rate at which benefits are phased out. A recent paper by Alexander Gelber, Damon Jones, and Daniel Sacks uses the Social Security Earnings Test to show that it takes significant time for people to adjust their work in response to changes in work incentives – typically two to three years. If the authors’ results on Social Security benefits are also true for other fiscal policies, this implies that such policy changes may do less in the short run to affect work, and that the full effects may materialize with a significant lag. This is relevant as policy-makers seek to project the effects of such policy changes on work over time.
A recent literature has constructed top income shares time series over the long run for more than 20 countries using income tax statistics. Top incomes represent a small share of the population but a very significant share of total income and total taxes paid. Hence, aggregate economic growth per capita and Gini inequality indexes are sensitive to excluding or including top incomes. We discuss the estimation methods and issues that arise when constructing top income share series, including income definition and comparability over time and across countries, tax avoidance and tax evasion. We provide a summary of the key empirical findings. Most countries experience a dramatic drop in top income shares in the first part of the 20th century in general due to shocks to top capital incomes during the wars and depression shocks. Top income shares do not recover in the immediate post war decades. However, over the last 30 years, top income shares have increased substantially in English speaking countries and in India and China but not in continental European countries or Japan. This increase is due in part to an unprecedented surge in top wage incomes. As a result, wage income comprises a larger fraction of top incomes than in the past. Finally, we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open.
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