We at Planet Money are constantly reading the work of economists and other social scientists to glean ideas, evidence and insights about the economy, and, more generally, the confusing world around us. Often this work provides the seeds for episodes or newsletters. But sometimes they're just interesting things we learned privately, and we don't do much with them.
Well, today, we're gonna try and change that. Welcome to the inaugural installment of the Planet Money Econ Roundup! Here are five recent papers that lit up our brains and are maybe worth taking a look at.
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"Minimum Wages and Workplace Injuries"
by Michael Davies, R. Jisung Park, and Anna Stansbury
These economists analyze data from California worker compensation claims between 2000 and 2019, and they look to see if there is any effect of increasing the minimum wage on workplace injuries. They find one. And a rather large one. "We find that a 10% increase in the minimum wage increases the injury rate by 11% in an occupation-metro area labor market which is fully exposed to the minimum wage increase." That's right, when the minimum wage goes up, so do workplace injuries. Yikes. But why? Davies, Park, and Stansbury find that these workplace injuries reflect "cumulative physical strain, suggesting that employers respond to minimum wage increases by intensifying the pace of work, which in turn increases injury risk." This paper's findings are pretty shocking, and we will be looking down the road to see if other economists can replicate them. Link to paper
"Technological Disruption in the Labor Market"
by David J. Deming, Christopher Ong, and Lawrence H. Summers
Obviously, there is a big fear right now that artificial intelligence will kill a bunch of jobs. We don't know what's going to happen. But we can maybe learn from the past.
The three economists, one of whom is a former US Treasury Secretary (Larry Summers), go through history — all the way back to 1880 — and estimate how new technologies changed what people do for work. So, for example, how the invention of the automobile may have killed horse-and-buggy jobs and created jobs in factories manufacturing cars.
The economists find that one of the most disruptive periods for occupational change was between 1940 and 1970, "when agricultural employment was still disappearing, manual labor was shifting into production and away from railroads, and clerical and administrative work were growing rapidly."
One of their most interesting findings is that the least disruptive period was rather recently. "The years spanning 1990 to 2017 were the most stable period in the history of the US labor market, going back nearly 150 years." That's maybe surprising because that was an era when we saw the spread of the personal computer, the rise of the Internet, and the advent of the smartphone. The study suggests that, relative to earlier technological waves, these technologies didn't do as much to change what Americans do for a living.
However, since 2017, the economists find, we've started seeing an uptick in occupational change.
First, they find that high-paid employment has grown while low- and middle-paid employment has declined as a percentage of total workforce. Maybe good news?
Second, and related to the previous finding, the economists find that "employment growth has stalled in low-paid service jobs."
Third, they find a huge increase in people working in science, technology, engineering, and math-related jobs. "The share of employment in STEM jobs has increased by more than 50 percent since 2010, fueled by growth in software and computer-related occupations," they write.
Finally, they find that "retail sales employment has declined by 25 percent in the last decade, likely because of technological improvements in online retail." They hypothesize that maybe this has to do with the advent of artificial intelligence. "While large language models (LLMs) like ChatGPT are too new for us yet to see any direct impact on the labor market, companies have been using predictive AI to optimize business operations since at least the mid-2010s. Online retailers like Amazon use AI to personalize prices and product recommendations and to manage inventory more efficiently, outcompeting big-box retail." Of course, the pandemic had an effect here too.
Looking forward, the economists suggest that occupational change will likely continue at a relatively fast pace (compared to the 1990-2017 period) as Generative AI and other new technologies change the labor market. Link to paper
"Babies and the Macroeconomy"
by Claudia Goldin
Countries around the world have seen a jaw-dropping decline in fertility rates. In this paper, Claudia Goldin, the 2023 winner of the Nobel Prize in economic sciences, offers a new theory to help explain why (listen to The Indicator's conversation with her back in 2021). Goldin starts by providing a good summary of the economics literature on this subject, which points to reasons like the advent of birth control pills and contraceptives. Goldin adds another factor into the mix to explain why some countries have seen a more precipitous decline in birth rates and others have only seen slower declines: the speed of economic growth.
Goldin hypothesizes that countries that experienced rapid economic growth in the 1960s and 1970s — like Greece, Italy, Japan, Korea, Portugal, and Spain — saw bigger and faster declines in fertility because of the way rapid economic growth catapulted them into modernity and upset traditional gender roles. Basically, women go into the workforce, and that changes their desires to have lots of kids because now they're more focused on their careers. And that change especially creates conflict between the genders in societies that just previously were more agricultural and had old-fashioned gender roles.
"Rapid economic growth has given women greater freedoms," Goldin writes. "But rapid economic change may lead to conflicts of various types when men are more swayed by traditions. What women require of men's time to raise a family and be members of a modern labor market may exceed the time their more tradition-bound spouses, or future spouses, are willing to offer. Household and caring tasks in such societies are largely women's responsibilities."
In societies that experience more slow and steady economic growth, Goldin suggests, this change is less sudden and men and women can more slowly work out a deal where they share more of the child-rearing responsibilities. That may help keep the fertility rate from falling as much. Link to paper
"Gun Policy and the Steel Paradox: Evidence from Oregonians"
by Katie Bollman, Benjamin Hansen, Edward A. Rubin & Garrett O. Stanford
This group of economists look at how a ballot initiative in Oregon for more gun control affected demand for guns in the state. They find that the ballot initiative, Measure 114, led many Oregonians to buy guns and ammo like crazy. "Background checks, a proxy for demand, rose 13.9% in anticipation of the referendum and surged 157% immediately following the election," the economists write. "After judicial intervention halted the law's enactment, demand returned near pre-election levels." The economists conclude that their study "underscores the paradoxical effect of gun-control policies, offering a cautionary lesson to policymakers." Link to paper
"The Gilded Age and Beyond: The Persistence of Elite Wealth in American History"
by Priti Kalsi and Zachary Ward
These economists look at wealth dynamics of the richest of the rich Americans during the late 19th and early 20th centuries. They find that the richest of the rich tend to drop in wealth rankings, so they don't stay at the top. However, they do find a relationship between their wealth and the likelihood that their grandkids are in the top 1%. Having a "rich grandparent exponentially increases the likelihood of reaching the top 1%. Still, over 90% of the grandchildren of top 1% wealth grandfathers did not achieve that level." In other words, having super rich grandparents boosts the likelihood that you're super rich, but it's no guarantee. Link to paper
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