Theater of Masks

PROPONENT EXCHANGE

Policy feedback loops and US old-age policy

Researchers of policy history have long deliberated over explanatory frameworks: institutionalist accounts tend to focus on inherited conditions and path dependency in political development, while others stress the importance of social movements in shaping policy. Among the more dynamic analytical frameworks for the study of welfare politics is that of “policy feedbacks,” which looks at the evolution of policy as an iterative process in which new policies change the conditions for further political engagement.

In a 2019 article, EDWIN AMENTA and THOMAS ALAN ELLIOTT look at the utility of these frameworks for explaining the character of old-age pensions in the US from the mid-1930s to 1950s.

From the article:

“In 1935, Congress created Old Age Assistance (OAA), a federal-state matching program which immediately provided benefits to the elderly. All states adopted old-age assistance legislation by 1937, and many states passed generous pensions. These reforms occurred in the context of extensive activity by the old-age pension movement, which called for $200 monthly pensions to almost all nonemployed citizens over 60 years. This proposal was rejected, and the Social Security Act was enacted in August 1935. For the formative years of U.S. social policy, the elderly had to rely almost entirely on old age assistance programs, and these varied dramatically in generosity from state to state. We seek to explain why some states became generous and why some of them remained so during the formative years of U.S. old-age policy.

The results provide some support for each of the models. Initial generosity was prompted in some states by way of insider institutional political processes. In others, the politically mediated influence of a social movement, including mediation through favorable public opinion, brought about generous pensions. In the second period, initial generosity was a key determinant of later generosity, but it also required group mobilization, as expected by the positive policy feedback model. Yet there was still a route for states that were not generous to become so, one that worked through the politically mediated effects of a social movement. This is good news for U.S. proponents of policy reform. Political institutional obstacles to democracy, including an underdemocratized polity and patronage-based parties, stood as major hindrances to progressive old-age policy in its formative years. These obstacles were reduced by the Voting Rights Act of 1965 and various reforms of political parties and nomination systems that work mainly through primaries.”

Link to the paper.

• “Drawing on the example of conservative cross-state advocacy against public sector unions, I describe the strategy of policy feedback as political weapon. I document that the passage of conservative network-backed legislation led to large and enduring declines in public sector union density and revenue. I further show that by curbing the power of public unions, the passage of conservative network-backed bills dampened the political participation of public sector employees.” Alexander Hertel-Fernandez on “Policy Feedback as Political Weapon.” Link. (See also our recommended readings post from Hertel-Fernandez, and a related newsletter on RTW and policy feedbacks from back in 2018.)
• A 2003 book by Andrea Louise Campbell considers how the passage of Social Security galvanized political participation among low-income seniors. Link. And, from 2014, Amy Lerman and Vesla Weaver examine how the criminal justice system does just the opposite for the formerly incarcerated. Link.
• “I suggest that laws and administrative rules operate on voluntary organizations to structure the resources, capacities, strategies, and ideals of individuals.” Kristin Goss develops a multi-level theory of feedback loops. Link.

New Researchers

Unemployment & the gig economy

In her job market paper, Stanford PhD candidate EMILIE JACKSON examines the relationship between unemployment and gig labor platforms like Uber and TaskRabbit, looking at take-up rates after unemployment spells and the longer run effects of that take-up.

From the paper:

“I utilize penetration of gig platforms across counties over time, along with variation in individual-level predicted propensities for gig work based on pre-unemployment characteristics. In the short run, I show an increase in gig work following an unemployment spell and that individuals are correspondingly better able to smooth the resulting drop in income. However, individuals stay in these positions and are less likely to return to traditional wage jobs. Thus, several years later, prime-age (25-54) workers’ income lags significantly behind comparable individuals who did not have gig work available. Among older workers (55+), I find an increase in gig work corresponds to a postponement of Social Security retirement benefits and a reduction in receipt of Social Security Disability Insurance (SSDI).”

Link to the full paper, link to Jackson’s website.

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• At the Phenomenal World, a new entry in our recommended readings series, featuring Alice Evans: “If government is unresponsive or belligerent, people may lower their expectations, and reluctantly accept the status quo. This ‘despondency trap’ perpetuates a negative feedback loop.” Link.
• Fascinating paper and blog post on new work by Inga Heiland et al., using satellite imagery to track container shipping routes worldwide: “We use the Panama Canal expansion in 2016 as a natural experiment. This allows us to identify the impact of the improvement of one link of the shipping network on worldwide trade. Exploiting route information inferred from the satellite data, we estimate the impact of the Panama Canal expansion on global trade, and quantify the trade and welfare effects of the shock through the lens of a quantitative trade model.” Link to the blog post, link to the paper.
• At the FT: Steve Johnson on debt and austerity in emerging markets. Link.
• On contracting with loan sharks: “We study roughly 11,000 loans from unlicensed moneylenders to over 1,000 borrowers in Singapore and provide basic information about this understudied market. We develop a very simple model of the relational contract between loan sharks and borrowers and use it to predict the effect of a crackdown on illegal moneylending.” By Kevin Lang et al. Link.
• From the San Francisco Fed, by Peter J. Klenow, Huiyu Li, and Theodore Naff: “Is Rising Concentration Hampering Productivity Growth?” Link.
• In the Boston Review, Annette Zimmerman, Elena Di Rosa, and Hochan Kim provide a robust introduction to the literature and debates surrounding algorithmic fairness. Link.
• “Dynamic Efficiency in a Planned Economy: Innovation and Entrepreneurship Without Markets.” By Maxi Nieto and Juan Pablo Mateo. Link.
• A 2013 paper by Luís Bettencourt on cities: “I show how all cities may evolve according to a small set of basic principles that operate locally. A theoretical framework was developed to predict the average social, spatial, and infrastructural properties of cities as a set of scaling relations that apply to all urban systems. Confirmation of these predictions was observed for thousands of cities worldwide, from many urban systems at different levels of development.” Link.
• At VoxDev, Shelby Grossman blogs on new research into institutional structures in informal markets, with evidence from traders in Lagos. Link to the post, link to the paper.
• New research by Simone Rambotti looks at welfare policy and suicide across the 50 US states, finding a relationship between SNAP participation and lower suicide rates. Link.
• A recent working paper by Michael Gilraine suggested a relationship between air filtration in classrooms and student achievement, which was reported on at Vox by Matthew Yglesias. Link to the report. On his blog, Andrew Gelman raises some questions: “If there’s a problem, it’s with the general attitude in much of economics, in which it is assumed that identification strategy + statistical significance = discovery. That’s a mistake, and it’s something we have to keep talking about.” Link to the post.
• Dani Rodrik at Project Syndicate on the changing face of economics. Link.
• A post on technology adoption, from VoxEU: “Using new firm-level data from Hungary for the period 1992-2003, this column finds that firms are more likely to import a particular piece of sector-specific machinery when other local firms previously imported the same machine. Benefits are concentrated in large and foreign-owned companies, while small and domestically owned firms may actually be adversely affected.” Link.
• “Plagues and other lethal epidemics played a key role in shaping economic, social, institutional, and cultural change in the past. They also provide useful insights for understanding better current developments. Take, for example, the institutions put in place internationally to organize the fight against health threats. A clearly-recognizable ligne rouge connects the permanent health boards introduced by many cities in the late Middle Ages, to the monitoring systems of regional states in the early modern period, to the nineteenth century’s national health authorities introduced in response to the arrival of cholera, to the global system of international cooperation epitomized in the creation of the WHO in 1948.” Guido Alfani and Tommy Murphy with a rich overview of the literatures on plagues and lethal epidemics from late Antiquity to 1800. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org