Heller-Hurwicz Office Hours

UMN Economics Professor Jo Mullins says that cash assistance programs play a crucial role for poor households with children. "We know that from a pure accounting sense, if we look at what households in the United States get from Temporary Assistance to Needy Families, i.e. cash welfare, what they get from food stamps, what they get from the Earned Income Tax Credit, and more recently, the Child Tax Credit. You know, if you add all those things up, we know that they play a significant role in poverty reduction and the rates of exposure of children to what official statistics would call the poverty rate."

In late 2023, the Federal Trade Commission and Department of Justice revised their Merger Guidelines, and lowered the threshold for labor market concentration, making clear that the labor market concentration is going to be an important factor in antitrust policy going forward. Hear University of Minnesota economist Kyle Herkenhoff discuss the history of M&A policy and the new 2023 Merger Guidelines. 

According to Herkenhoff and his co-author's research, roughly 10% of markets in the U.S. are “single-firm markets,” meaning one company controls the jobs in that region. Additionally, in those single-firm markets, they find that workers are paid roughly 30% less than competitive wages and that monopsony power is pervasive across American industries and cities.

"We made a lot of progress in, you know, gender wage gaps and earnings gap, and so on, throughout the 70’s, the 80’s and early 90’s," says Federal Reserve Bank Researcher Anusha Nath. "And after all the policy changes that were made … we still see a huge wage gap, whether it's by gender, or whether it's by race. So even today, some of the latest numbers suggest that women earn 82 cents to $1 that men earn, if you look at the Black-white gap, it's 87 cents to $1, for Blacks versus whites."

Hear UMN Economics Professor Hannes Malmberg share why education/skills are widely acknowledged as central for economic development, yet their precise role remains uncertain. 

"What we're trying to look at is the interconnection between how much does the lack of big firms connect to the lack of education in a skilled workforce," says Malmberg. "We often assume that economic growth is a well defined concept, you know? Some countries are rich, some countries are poor. I think it's an assumption you should question. And you should look at the data."

Join us for the first episode of our new season of Office Hours. Hear HHEI Director Kjetil Storesletten discuss why inequality has increased since the 1970s.

"We worry that some people are getting a rotten deal," says UMN Economics Professor Kjetil Storesletten. "And there is perhaps a trade off between what is fair and what is efficient … we've seen the biggest increase in inequality in the century over the last [few] decades, and that's concerning to many."

Scientists agree: global warming is the result of CO2 produced by human activity, and urgent action is needed to reduce carbon dioxide emissions. What isn't clear is how this should be done in a global market economy. Fortunately, economic analysis can be used to figure out what policies have the best chance of success given economic and political realities. Tune in to hear Per Krusell, Professor at the Institute for Economic Studies at Stockholm University, discuss the economic approach to reducing carbon emissions. Originally recorded on September 22, 2022.

The economic transformation of China from a poor and centrally planned country in the 1970s to a middle-income market economy today is an amazing story. Kjetil Storesletten lays out the remarkable scale of change. Among the topics he addresses: What was the secret sauce that the Chinese leadership used to deliver rapid growth? Why was the growth broad based and not concentrated in the richer coastal areas? What is the way forward for China now?

The last few years have seen a renewed interest in wealth taxation. What is a wealth tax, and how does a wealth tax differ from taxes on capital income? Fatih Guvenen discusses research that highlights when a wealth tax, designed to encourage entrepreneurship and risk taking, is preferable to the better-known capital income tax.

In this episode, Mariacristina De Nardi discusses how longer lives and unpredictable health make our elder years an economic puzzle. Among the puzzles economists are trying to work out: why do many couples keep putting money away long into retirement? Do we enjoy our money less as we age? She also looks at what public policies might be particularly effective at lowering the degree of financial uncertainty in retirement.

Throughout his career, Art Rolnick has been a researcher and an advocate for government to make large investments in early childhood education for children living in families with low and unstable incomes. The research shows that by investing in quality early childhood education for at-risk children, individuals and society can reap extraordinarily high economic returns, benefits that are low-risk and long-lived.

In this episode, Joseph Mullins talks about his research from the paper, “Firms’ Choices of Wage-Setting Protocols.” The research project examines what drives differences in firms' willingness to bargain and renegotiate wages. Among the results: bargaining does contribute to the overall gender gap in wages. But a policy that prohibits bargaining to close wage gaps would lower wages for all workers, leading to overall welfare losses.

The global population is aging. Rising longevity is a powerful demographic force shaping the global economy in many different ways. In this conversation, economist Hannes Malmberg takes a deep dive into how global aging could impact the long-term direction of interest rates. 

Raise the debt ceiling or pay the bills? Economists Chris Phelan, Marco Bassetto and Cristina Arellano discuss the looming debt limit deadline, and what the risk of default may mean for the US economy. Recording sourced from our webinar held on May 24, 2023.

Gary Stern, former chief executive of the Minneapolis Federal Reserve Bank and co-author of Too Big To Fail, joins the podcast to talk the Silicon Valley Bank crisis, and why restoring market discipline on banks is the first step to making banks and regulators accountable to bank failures. With discussion of the global credit crunch and great recession contextualized in the present day, this episode stresses that there has to be a better way to regulate the banking industry, and avoid these periodic stressful episodes of bank failures, government rescues and economic turmoil.

Sovereign debt defaults have long threatened the stability and growth of economies. Remember the Latin American debt crisis of the early 1980s? How about Europe in the 2010s? Manuel Amador and Christopher Phelan discuss their research into sovereign debt defaults, including the role of reputation.

The trend toward rising income inequality in the U.S. has been studied and disputed among economists. Fatih Guvenen advances the scholarly discussion by exploring the concept of measuring inflation-adjusted lifetime inequality over six decades. One stark takeaway: the widespread stagnation of living standards of many American men. We also look at some preliminary data on the experience of younger groups who entered the labor market after 1983.

Have you heard of the term “monopsony”? Kyle Herkenhoff explains what monopsony is and how it is measured. His research measures local labor market concentration and its downward trend in the U.S. over the last 40 years – and its link to monopsony. We'll also discuss the Department of Justice push to apply merger guidelines to monopsony, and not just monopoly.

In this episode, Tim Kehoe discusses the impact of liberalizing international trade and foreign investment on the economy. He lays out why he believes globalization has been a source of productivity increases and the spread of economic progress throughout the world. He also calls for greater action by economists to pay more attention to the negative consequences of globalization and on policies to offset the adverse consequences.

In this episode Anusha Nath reviews the initial results from the Federal Reserve Bank of Minneapolis’ long-term minimum wage study. The economic impact of raising the minimum wage is controversial. This project is designed to assess over time the labor market effects of Minneapolis’ and St. Paul's minimum wage increases announced in 2017 and 2018, respectively.

How can economic research inform better policies? How should we define good public policy? What trade-offs are inevitable in any policy decision?  V.V. Chari, founding director of the Heller-Hurwicz Economics Institute, discusses his goal for upcoming podcast episodes to address questions like these. He also addresses what makes for good economic research.

Defund the banks? The recent failures of Silicon Valley Bank, Sovereign Bank, and internationally, Credit Suisse, have brought new focus on banks, their ability to pay depositors, and the role of central banks in regulating and ensuring the stability of our financial system. In this conversation, economists V.V. Chari, Terry Fitzgerald, and Christopher Phelan discuss the current banking crisis and what policies need to change going forward. Recorded at event on March 29, 2023.