Robert N Pollin

Global Apparel Production and Sweatshop Labor: Can Raising Retail Prices Finance Living Wages?

Robert Pollin et al. — Wed, 15 Dec 2010 08:50:56 PST

This paper provides some empirical evidence on issues raised by the global antisweatshop movement. We first consider the relationship between wage and employment growth, finding no consistent trade-off between them. We then measure the share of labor costs in the production of garments in the United States and Mexico. We find that the retail price increases necessary to absorb the costs of substantially raising wages are small, well within the range of price increases that polls suggest U.S. consumers are willing to pay. We close by considering some implications of these results.

Globalization and the Transition to Egalitarian Development

Robert Pollin — Wed, 15 Dec 2010 08:50:54 PST

The U.S. Employment Effects of Military and Domestic Spending Priorities

Robert Pollin et al. — Wed, 15 Dec 2010 08:50:52 PST

Measuring the Impact of Living Wage Laws: A Critical Appraisal of David Neumark's How Living Wage Laws Affect Low-Wage Workers and Low-Income Families

Mark D. Brenner et al. — Wed, 15 Dec 2010 08:50:50 PST

Drawing on data from the Current Population Survey (CPS), David Neumark (2002) finds that living wage laws have brought substantial wage increases for a high proportion of workers in cities that have passed these laws. He also finds that living wage laws significantly reduce employment opportunities for low-wage workers. We argue, first, that by truncating his sample to concentrate his analysis on low-wage workers, Neumark’s analysis is vulnerable to sample selection bias, and that his results are not robust to alternative specifications that utilize quantile regression to avoid such selection bias. In addition, we argue that Neumark has erroneously utilized the CPS data set to derive these results. We show that, with respect to both wage and employment effects, Neumark’s results are not robust to more accurate alternative classifications as to which workers are covered by living wage laws. We also show that the wage effects that Neumark observes for all U.S. cities with living wage laws can be more accurately explained as resulting from effects on sub-minimum wage workers in Los Angeles alone of a falling unemployment rate and rising minimum wage in that city.

Review (for Challenge Magazine) of The Roaring Nineties: A New History of the World’s Most Prosperous Decade by Joseph E. Stiglitz

Robert Pollin — Wed, 15 Dec 2010 08:50:48 PST

Informalization, Economic Growth and the Challenge of Creating Viable Labor Standards in Developing Countries

James Heintz et al. — Wed, 15 Dec 2010 08:50:46 PST

Over recent decades, there has been the substantial rise in the proportion of people engaged in what is termed informal employment, generating a broad trend toward “informalization” of labor market conditions in developing countries, even when economic growth is proceeding. We consider the relationship between the rise of informalization and the corresponding ascendancy of neoliberal policies in developing countries, focusing in particular on how the decline in average per capita GDP growth associated with neoliberalism has fostered informalization. We then explore policy measures for raising the proportion of decent jobs with core social protections in developing countries—which means, as we argue, reversing the process of informalization. We examine policy measures in two areas: raising the rate of economic growth and improving the regulation of labor markets.

Evaluating Living Wage Laws in the United States: Good Intentions and Economic Reality in Conflict?

Robert Pollin — Wed, 15 Dec 2010 08:50:44 PST

This paper first examines the question “what is a living wage” and provides a range of specific dollar amounts derived a conceptual assessment of the term. I then provide a series of cost estimates of living wage laws in various cities. Based on these cost estimates, I examine a set of alternative adjustments that covered firms could make to absorb these costs, including raising prices and productivity, redistributing the firm’s income more equally, laying off employees and relocating out of the area covered by the law. I draw upon both prospective and retrospective evidence to reach an overall assessment of the benefits of living wage laws relative to their costs.

Globalization, Inequality and Financial Instability: Confronting the Marx, Keynes and Polanyi Problems in Advanced Capitalist Economies

Robert Pollin — Wed, 15 Dec 2010 08:50:43 PST

Public Investment, Industrial Policy and U.S. Economic Renewal

Robert Pollin et al. — Wed, 15 Dec 2010 08:50:41 PST

The U.S. economy faces enormous questions and challenges as it attempts to recover from the col-lapse of 2008-09. Some of the most pressing questions are a series of longer-term, structural chal-lenges: Can we establish a growth engine driven by something other than financial bubbles? Can we renew the automobile industry and, more generally, reestablish a healthy manufacturing sector? Can we accomplish these various tasks while also rebuilding the economy on a new foundation of clean energy as opposed to fossil fuel energy sources? Addressing these longer-term challenges is the over-arching theme of this paper. Following an introductory discussion, in Section 2 we consider the overall evidence on the need for public investment in the traditional areas of transportation, energy, and water management. We then address the issue of financial crowding out. To do this, we examine evidence on how much of the U.S. economy’s financial resources have been flowing into productive private investments over time, as opposed to financial speculation. In Section 3, we then examine the U.S. ad hoc industrial policy, as it has been practiced both at the level of general manufacturing policies, such as with the auto bailouts, and in terms of technology incubation through the Pentagon. We consider ways of channel-ing these policy tools into supporting a strong technological base on a sustained basis. In Section 4, we bring together our discussions on public investment and industrial policies to sketch a policy ap-proach for supporting the revival of the U.S manufacturing sector, including the U.S. auto industry. In particular, we focus on the prospects for investments in public transportation: —to create an ex-panding market for U.S. automakers who are willing to convert part of their production lines to manufacturing buses and trains; to lower the costs of transportation for lower-income households; and to help advance the construction of a clean-energy economy in the United States.

Deepening Divides in the U.S. Economy, 2004: Jobless Recovery and the Return of Fiscal Deficits

Robert Pollin — Wed, 15 Dec 2010 08:50:39 PST

Response to “Seven Myths about Green Jobs” and “Green Jobs Myths”

Robert Pollin — Wed, 15 Dec 2010 08:50:38 PST

Considerations on Interest Rate Exogeneity

Robert Pollin — Wed, 15 Dec 2010 08:50:36 PST

The idea of an exogenous money supply—controlled entirely through central bank interventions—was a fundamental tenet of monetarism and New Classical economics. Post Keynesians have developed an extensive literature arguing that the money supply is in fact endogenous—that market forces combine with central banks in establishing the money supply. But Post Keynesians disagree on a related question: to what extent are interest rates set exogenously by central banks? To address this issue, this paper presents evidence regarding the movement of market interest rates in U.S. financial markets relative to the Federal Reservecontrolled Federal Funds rate. Concluding that market interest rates are primarily set through market forces—i.e. are largely endogenous—the paper then discusses the primary source of interest rate endogeneity. This is the instability of deregulated financial markets, which leads market participants to make wide swings in their risk assessments over time. It follows that effective regulatory policies to stabilize markets and control interest rates directly will increase the degree of interest rate exogeneity. The paper concludes with proposals for establishing greater control over market interest rates.

Inflation and Economic Growth: A Cross-Country Non-linear Analysis

Robert Pollin et al. — Wed, 15 Dec 2010 08:50:34 PST

This paper presents new non-linear regression estimates of the relationship between inflation and economic growth for 80 countries over the period 1961 – 2000. We perform tests using the full sample of countries as well as sub-samples consisting of OECD countries, middle-income countries, and low-income countries. We also consider the full sample of countries within the four separate decades between 1961 – 2000. Considering our full data set we consistently find that higher inflation is associated with moderate gains in GDP growth up to a roughly 15 – 18 percent inflation threshold. However, the findings diverge when we divide our full data set according to income levels. With the OECD countries, no clear pattern emerges at all with either the inflation coefficient or our estimated turning point. With the middle income countries, we return to a consistently positive pattern of inflation coefficients, though none are statistically significant. The turning points range within a narrow band in this sample, between 14 – 16 percent. With the low income countries, we obtain positive and higher coefficient values on the inflation coefficient than with the middle-income countries. With the groupings by decade, the results indicate that inflation and growth will be more highly correlated to the degree that macroeconomic policy is focused on demand management as a stimulus to growth. We consider the implications of these findings for the conduct of monetary policy. One is that there is no justification for inflation-targeting policies as they are currently being practiced throughout the middle- and low-income countries, that is, to maintain inflation with a 3 – 5 percent band.

Financial Structures and Egalitarian Economic Policy

Robert Pollin — Wed, 15 Dec 2010 08:50:32 PST

The Employment Effects of Downsizing the U.S. Military

Robert Pollin et al. — Wed, 15 Dec 2010 08:50:30 PST

This study focuses on the employment effects of military spending versus channeling some significant part of the military budget into alternative purposes. We begin by introducing the basic input-output modeling technique for considering issues such as these in a systematic way. We then present some simple alternative spending scenarios, namely devoting $1 billion to the military versus the same amount of money spent for five alternatives: tax cuts which produce increased levels of personal consumption; health care; education; mass transit; and construction targeted at home weatherization and infrastructure repair. Our first conclusion in assessing such relative employment impacts is straightforward: $1 billion spent on personal consumption, health care, education, mass transit, and construction for home weatherization and infrastructure will all create more jobs within the U.S. economy than would the same $1 billion spent on the military. We then examine the pay level of jobs created through these alternative spending priorities and assess the overall welfare impacts of the alternative employment outcomes. We then consider what would be the impact on employment of transferring all $138 billion in funding that went to the Iraq war in 2007 into alternative peaceful purposes. As we show, a transfer of funds of this magnitude would enable the U.S. government to provide, for example, health insurance for the 45 million U.S. residents who are now uninsured, and still provide funds for significant investments in education and energy conservation. A transfer of the Iraq budget into these alternative purposes would also expand employment in the U.S. by between 600,000 – 1 million jobs, depending on how exactly the $138 billion were allocated.

The Potential Revenue from Financial Transactions Taxes

Dean Baker et al. — Wed, 15 Dec 2010 08:50:29 PST

Comments on Aaron Yelowitz, "Santa Fe's Living Wage Ordinance and the Labor Market"

Robert Pollin et al. — Wed, 15 Dec 2010 08:50:26 PST

In a new study by Yelowitz “Santa Fe’s Wage Ordinance and the Labor Market,” dated September 23, 2005 (published by the Employment Policies Institute) Yelowitz claims to have demonstrated that the Santa Fe living wage ordinance is responsible for significant, negative consequences for Santa Fe’s least educated residents, including a 9.0 percentage point increase in the city’s unemployment rate among such workers. However, he derives these findings through a presentation of evidence that is misleading and incomplete, misusing the available data. We replicate and extend Yelowitz’s model to look at job growth specifically, and, using the same data as Yelowitz, we find that the Santa Fe ordinance did not produce any decline at all in the availability of jobs. Moreover, our estimates suggest that the living wage ordinance did increase earned income for the average worker affected by the ordinance, even if we accept Yelowitz’s estimates on reduced hours of work. In short, even while relying on Yelowitz’s own model and estimates, we find that, to date, the Santa Fe ordinance has succeeded in achieving its main aims: to improve the quality of jobs for low-wage workers in Santa Fe without reducing their employment opportunities.

Securities Transaction Taxes for U.S. Financial Markets

Robert Pollin et al. — Wed, 15 Dec 2010 08:50:24 PST

This paper examines the viability of security transaction excise taxes (STETs) as one policy tool for promoting a more stable financial environment, specifically with respect to the U.S. economy. Contrary to a large recent critical literature, we show that a STET can be designed without creating large distortions between segments of the financial market. We also show that a modest STET for the U.S.—beginning with a 0.5 percent tax on equity trades and scaled appropriately for other financial instruments—would generate substantial new government revenues, on the order of $100 billion per year.

The Relevance of Hyman Minsky

Robert Pollin — Wed, 15 Dec 2010 08:50:22 PST

Edited Transcript of Living Wage Conference Call, February 11, 2004

Timothy J. Bartik et al. — Wed, 15 Dec 2010 08:50:21 PST