Did the Value of a College Degree Decline during the Great Recession?

Rajashri Chakrabarti, Michelle Jiang, and William Nober



In an earlier post, we studied how educational attainment affects labor market outcomes and earnings inequality. In this post, we investigate whether these labor market effects were preserved across the last business cycle: Did students with certain types of educational attainment weather the recession better?

Just Released: Are Employer-to-Employer Transitions Yielding Wage Growth? It Depends on the Worker’s Level of Education

Gizem Kosar and Kyle Smith



The rate of employer-to-employer transitions and the average wage of full-time offers rose compared with a year ago, according to the Federal Reserve Bank of New York’s July 2018 SCE Labor Market Survey. Workers’ satisfaction with their promotion opportunities improved since July 2017, while their satisfaction with wage compensation retreated slightly. Regarding expectations, the average expected wage offer (conditional on receiving one) and the reservation wage—the lowest wage at which respondents would be willing to accept a new job—both increased. The expected likelihood of moving into unemployment over the next four months showed a small uptick, which was most pronounced for female respondents.

Education’s Role in Earnings, Employment, and Economic Mobility

Rajashri Chakrabarti and Michelle Jiang



Amid dialogue about the soaring student loan burden, questions arise about how educational characteristics (school type, selectivity, and major) affect disparities in post-college labor market outcomes. In this post, we specifically explore the impact of such school and major choices on employment, earnings, and upward economic mobility. Insight into determinants of economic disparity is key for understanding long-term consumption and inequality patterns. In addition, this gives us a window into factors that could be used to ameliorate income inequality and promote economic mobility.

Why New York City Subway Delays Don’t Affect All Riders Equally

Nicole Gorton and Maxim L. Pinkovskiy



The state of the New York City subway system has worsened considerably over the past few years. As a consequence of rising ridership and decaying infrastructure, the network is plagued by delays and frequently fails to deliver New Yorkers to their destinations on time. While these delays are a headache for anyone who depends on the subway to get around, they do not affect all riders in the same way. In this post, we explain why subway delays disproportionately affect low-income New Yorkers. We show that wealthier commuters who rely on the subway are less likely to experience extensive issues on their commutes.

The Evolution of Home Equity Ownership

Andreas Fuster, Eilidh Geddes, and Andrew F. Haughwout



In yesterday’s post, we discussed the extreme swings that household leverage has taken since 2005, using combined loan-to-value (CLTV) ratios for housing as our metric. We also explored the risks that current household leverage presents in the event of a significant downturn in prices. Today we reverse the perspective, and consider housing equity—the value of housing net of all debt for which it serves as collateral. For the majority of households, housing equity is the principal form of wealth, other than human capital, and it thus represents an important form of potential collateral for borrowing. In that sense, housing equity is an opportunity in the same way that housing leverage is a risk. It turns out that aggregate housing equity at the end of 2015 was very close, in nominal terms, to its pre-crisis (2005) level. But housing wealth has moved to a different group of people—made up of people who are older and have higher credit scores than a decade ago. In today’s post, we look at the evolution of housing equity and its owners.

How Did Quantitative Easing Interact with Regional Inequality?

Andreas Fuster



Income, or wealth, inequality is not something that central bankers generally worry about when setting monetary policy, the goals of which are to maintain price stability and promote full employment. Nevertheless, it is important to understand whether and how monetary policy affects inequality, and this topic has recently generated quite a bit of discussion and academic research, with some arguing that the Federal Reserve’s expansionary policy of recent years has exacerbated inequality (see, for instance, here or here), while others reach the opposite conclusion (see here or here). This disagreement can be attributed in part to the different channels through which expansionary monetary policy can affect inequality: its effect on asset prices would tend to increase inequality, while its effect on labor incomes and employment would likely decrease inequality. In this post, I study one particular channel through which Fed policies may have disparate effects—namely, mortgage refinancing—and I focus on dispersion across locations in the United States.

A Discussion of Thomas Piketty’s Capital in the Twenty-First Century: Does More Capital Increase Inequality?

Maxim L. Pinkovskiy

Second in a two-part series

My aim in the second post of this series on Thomas Piketty’s Capital in the Twenty-First Century is to talk about the economist’s research accomplishment in reconstructing capital-output ratios for developed countries from the Industrial Revolution to the present and using them to explain why wealth inequality will rise in developed countries. I will then provide a critical discussion of his interpretation of the history of capital in the developed world. Finally, I’ll end by discussing Piketty’s main policy proposal: the global tax on capital.

A Discussion of Thomas Piketty’s Capital in the Twenty-First Century: By How Much Is r Greater than g?

Maxim L. Pinkovskiy

First in a two-part series

Thomas Piketty’s 2014 book Capital in the Twenty-First Century may have been a greater sensation upon publication than Karl Marx’s nineteenth-century Das Kapital. It made the New York Times bestseller list, generated myriad reviews and responses from economists at top institutions, and was the subject of a standing-room-only session at the recent American Economic Association annual meeting. In Capital, Piketty argues that wealth inequality is set to rise from its relatively low levels in the 1950s through the 1970s to the very high levels it once occupied at the dawn of the Industrial Revolution—the time of the heroes of Jane Austen and Honoré de Balzac. He supports this argument with voluminous evidence on the history of the capital stock and of inequality in developed countries, which he argues have been moving in ways consistent with his theory. Piketty proposes that governments worldwide intervene to prevent this rise in inequality, most importantly by levying a global tax on capital.

The Capitol Since the Nineteenth Century: Political Polarization and Income Inequality in the United States

Rajashri Chakrabarti and Matthew Mazewski

Even the most casual observer of American politics knows that today’s Republican and Democratic parties seem to disagree with one another on just about every issue under the sun. Some assume that this divide is merely an inevitable feature of a two-party system, while others reminisce about a golden era of bipartisan cooperation and hold out hope that a spirit of compromise might one day return to Washington. In this post, we present evidence that political polarization—or the trend toward more ideologically distinct and internally homogeneous parties—is not a recent development in the United States, although it has reached unprecedented levels in the last several years. We also show that polarization is strongly correlated with the extent of income inequality, but only weakly associated with the rate of economic growth. We offer several tentative explanations for these relationships, and discuss whether all forms of polarization are created equal.

Just Released: Regional Economic Press Briefing on Job Polarization and Rising Inequality

Jaison R. Abel and Richard Deitz

Over the past three decades, the United States has seen substantial growth in both high- skill and low-skill jobs, while growth of those in the middle has stagnated. At the same time, a growing gap in wages between jobs that pay the most and those that pay the least has emerged. As we discussed in a previous blog post, this combination of trends is often referred to as job polarization, and it is happening in much of the developed world. In this post, we examine the extent to which job polarization has occurred in upstate New York, downstate New York, and Northern New Jersey. We find that job polarization has been significant in all of these places, contributing to a sharper than average rise in inequality in downstate New York and Northern New Jersey.