THE WAGE EFFECT
Higher minimum wages and the EITC may reduce recidivism
“Using administrative prison release records from nearly six million offenders released between 2000 and 2014, we use a difference-in-differences strategy to identify the effect of over two hundred state and federal minimum wage increases, as well as 21 state EITC programs, on recidivism. We find that the average minimum wage increase of 8% reduces the probability that men and women return to prison within 1 year by 2%. This implies that on average the wage effect, drawing at least some ex-offenders into the legal labor market, dominates any reduced employment in this population due to the minimum wage.”
Full paper by AMANDA Y. AGAN and MICHAEL D. MAKOWSKY here.
- Jennifer Doleac responds, “The results in this new paper…definitely surprised me—my prior was that raising the min wage would increase recidivism.” She explains: “Those coming out of prison are very likely to be on the margin of employment (last hired, first fired). Given some disemployment effects, marginal workers are the ones who are going to be hurt. Amanda and Mike find that the positive effects of pulling some (higher-skilled?) offenders into the legal labor market outweigh those negative effects.” Link to Doleac’s Twitter thread.
- One of the co-authors, Makowsky, adds, “The EITC, dollar for household dollar, generates larger effects [than minimum wage increases], but is hampered by its contingency on dependent children. This is one more reason to remove the contingency, extending it to everyone.” Link to Makowsky’s Twitter thread.
- Another piece sourced from Makowsky’s thread: “The Impact of Living-Wage Ordinances on Urban Crime.” “Using data on annual crime rates for large cities in the United States, we find that living-wage ordinances are associated with notable reductions in property-related crime and no discernable impact on nonproperty crimes.” Link.
- Noah Smith rounds up recent studies on increasing the minimum wage, many of which come to contradictory conclusions. "At this point, anyone following the research debate will be tempted to throw up their hands. What can we learn from a bunch of contradictory studies, each with its own potential weaknesses and flaws?" Link.
Implications of the shift to contractors
“In Washington, especially on Capitol Hill, there’s not much talk about this shift in the labor market, much less movement toward solutions. Lawmakers attend conference after conference on the ‘Future of Work’ at which Republicans praise new companies like Uber and TaskRabbit for giving workers more flexibility in their jobs, and Democrats argue that those companies are simply finding new ways to skirt federal labor law. They all warn about automation and worry that robots could replace humans in the workplace. But there’s actually not much evidence that the future of work is going to be jobless. Instead, it’s likely to look like a new labor market in which millions of Americans have lost their job security and most of the benefits that accompanied work in the 20th century, with nothing to replace them.
“The scale of the change, for many economists, clearly suggests that it’s time for Congress to rethink the social contract around work, updating it for the new relationship between employers and workers in the 21st century. Letting it slide further risks hamstringing the country with an outdated system that hurts both middle-class workers and, experts fear, the economy that depends on them. The shift is already well underway. What’s far less clear is whether Washington is paying any attention.”
Full piece by DANNY VINIK here.
- Politico’s “Work” issue also contains “The Future of Work, a History,” about automation concerns over the past century. Link.
Ideas for regulating Facebook, from an early investor
ROGER MCNAMEE’S longread describes his concern about election interference and filter bubbles, and his work with Tristan Harris in Washington. One insight is on the relative price of ads:
“Meanwhile, the Remain campaign was making an appeal to reason. Leave’s crude, emotional message would have been turbocharged by sharing far more than Remain’s. I did not see it at the time, but the users most likely to respond to Leave’s messages were probably less wealthy and therefore cheaper for the advertiser to target: the price of Facebook (and Google) ads is determined by auction, and the cost of targeting more upscale consumers gets bid up higher by actual businesses trying to sell them things. As a consequence, Facebook was a much cheaper and more effective platform for Leave in terms of cost per user reached. And filter bubbles would ensure that people on the Leave side would rarely have their questionable beliefs challenged. Facebook’s model may have had the power to reshape an entire continent.”
Full post in Washington Monthly here.
- This week, the internet filled with responses to Mark Zuckerberg’s personal challenge. Zuckerberg writes: “The world feels anxious and divided, and Facebook has a lot of work to do—whether it’s protecting our community from abuse and hate, defending against interference by nation states, or making sure that time spent on Facebook is time well spent.” Nitasha Tiku posted a skeptical reading at Wired: “Real progress on abuse and propaganda will depend on whether Facebook empowers qualified third-party experts, faces real competition to do better, listens to its most vulnerable users, or has to face some form of regulatory oversight. But reclassifying ‘fixing Facebook’ as a personal challenge doesn't indicate a willingness to cede control.” Link.
- One trend in responses is a critique of the ad-based business model, and several commentators have suggested moving on to a subscription model. On Medium, John Battelle writes, “You cannot fix Facebook without completely gutting its advertising-driven business model.” Link. In the Week, Jeff Spross cites a 2015 Zeynep Tufekci editorial, and writes, “Even the dangers of fake news, and bots spreading misinformation, is a natural outgrowth of the very way social media companies make money.” Link.
- Mark Zuckerberg's Thursday announcement: "We're making a major change to how we build Facebook. I'm changing the goal I give our product teams from focusing on helping you find relevant content to helping you have more meaningful social interactions." Link to his statement. NYTimes coverage of the change. The editor in chief of the San Francisco Chronicle responds: "The San Francisco Chronicle won’t go out of business because of this decision. But smaller publications very likely could, and virtually all news organizations will lose money that pays for reportage." Link.
- Marshall Steinbaum in the Boston Review: “This human capital–oriented approach to the labor market gradually morphed into a normative claim: to increase wages and economic growth, we should increase human capital by expanding higher education. The federal student loan program, in conjunction with increased enrollment, became the policy mechanism for accomplishing this. The normative implication was even extended to individual workers: if you want higher wages, increase your educational attainment and take on debt to do so. The debt would 'pay for itself' with the increased earnings available to those with more education. But this theory was premised on the idea that the value of higher education credentials remains constant or increases, even as more people obtain them, because wages are set by worker productivity and productivity is increased by more education. That assumption proved false.” Link.
- Maciej Cegłowski has been teaching political campaigns the basics of tech security: “‘What’s the equivalent of wash your hands and boil water, like we do for public health?’ Cegłowski said. ‘What is that in terms of computer security? Things that people can act on that don’t require expert understanding.’” Link.
- Lawfare analyzes the Secure Elections Act: “The bill itself hits three central themes: Promote better information sharing about cybersecurity threats; Fund improvements to state election systems and processes through federal grants; Establish a bug bounty program to uncover new vulnerabilities in election systems.” Link.
- Two more attempts to automate the detection of illegitimate news. Looking for real eyewitnesses on Twitter: "We look for inferences that the tweeter was at the event they are posting about, and then test that by seeking evidence they were not actually there at all." Link. Seeking the informativeness of news stories: "So, the first task was to take a whole bunch of NYT articles—just over 50,000—and compare their lead paragraphs to the aforementioned short summaries. The difference between these two things can be viewed as an indicator of information richness." Link. (h/t: Margarita link: https://www.jainfamilyinstitute.org/fellows/2017/11/14/margarita-boyarskaya)
- A special congratulations to Candy Marshall and TheDream.US. Today, Jeff and MacKenzie Bezos announced a $33 million donation to fund 1,000 full college scholarships for DREAMer students. Link the the announcement.
- On single-blind vs. double-blind peer review. Link. (h/t: Margarita link: https://www.jainfamilyinstitute.org/fellows/2017/11/14/margarita-boyarskaya)
- “An explorable explanation of relativistic spacetime, inspired by Albert Einstein's thought experiments.” Link. Philip Cheang's comment on Twitter is a typical response: "Super cool stuff! E-Textbooks should really adopt this format for abstract/theoretical stuff."
- A moment of levity remembering astronaut John Young: “Certain members of Congress, though, were incensed at the thought that Young had ignored all of his very expensive space food in favor of deli take-out, and ended up setting an appropriations committee meeting to question NASA administrator George Mueller about the event. Thus, the immortal congressional line: ‘We have taken steps…to prevent recurrence of corned beef sandwiches in future flights.’” Link.