Tuesday, January 24, 2012 9:13am

Inequality and Skills

One of the leading reasons for rising U.S. income inequality over the past three decades is that technological change has affected workers with some skill sets differently than others.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 9
But, importantly, it is not the only factor. The other three are: slower growth in the supply of skills; institutional changes; and trade.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Strongly Agree 9
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Agree 9
There is a lot of evidence that technical change has favored more skilled workers over the past 3 decades
-see background information here
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 6
Bio/Vote History
         
Autor David Autor MIT Strongly Agree 10
It's not the only factor. Two others: slowing supply of skilled workers, and (probably) distorted pay-setting at the very top.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Agree 4
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Strongly Agree 8
Bio/Vote History
         
Chetty Raj Chetty Harvard Agree 7
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 10
There are certainly many other factors, such as the tax code, etc.
Bio/Vote History
         
Currie Janet Currie Princeton Strongly Agree 2
Increasing demand for skill is an underlying factor driving increased inequality though institutional changes are also important.
Bio/Vote History
         
Cutler David Cutler Harvard Agree 7
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Agree 10
I think there is excellent evidence on this, though it is also clear that much else is going on. Nor does the tech story imply benignity.
Bio/Vote History
         
Duffie Darrell Duffie Stanford Strongly Agree 7
This partial explanation does not lessen the policy importance of addressing the downside effects, including loss of social cohesion.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 6
Bio/Vote History
         
Fair Ray Fair Yale Agree 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 8
Bio/Vote History
         
Goldin Claudia Goldin Harvard Strongly Agree 9
But that is only the demand side. The slowdown in the supply of these skill sets is just as important (or more). You need the SS side too.
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 10
The data are pretty obvious that this is a key factor. Not the only one, but a very significant one.
Bio/Vote History
         
Greenstone Michael Greenstone MIT Agree 5
Seems self-evident but technological change cannot be measured directly; is this a falsifiable hypothesis? what would Karl Popper say?
Bio/Vote History
         
Hall Robert Hall Stanford Uncertain 4
Managers and financial salesmen account for most of the earnings growth at the top end. Not clear that tech change is responsible.
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 7
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Agree 8
It's likely that technological progress has favored high aptitude people. The evidence is only indirect,however: it's a residual explanation
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 7
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 7
Hard to quantify the exact contribution, but it is undoubtedly big. Also tricky in that it partially interacts with education and trade.
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Agree 10 Bio/Vote History
         
Lazear Edward Lazear Stanford Agree 7
The distribution has spread out at all relevant deciles. The question that remains is why the skill gap is not closing.
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 5
Although this is a common view, the causal factors are too complex to untangle unambiguously.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Agree 9
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Agree 10
Although there is some evidence to the contrary, the nature of occupational change and returns to schooling suggest it's important.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 8
Big debate on institutions vs. technology in labor economics. Technology is too narrow an explanation as it interacts with institutions.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Agree 6
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 4
Bio/Vote History
         
Shin Hyun Song Shin Princeton Uncertain 8
Bio/Vote History
         
Stock James Stock Harvard Disagree 5 Bio/Vote History
         
Stokey Nancy Stokey Chicago Strongly Agree 9
Investment-specific technical change together with capital-skill complementarity explains much of the increase in the skill premium.
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 3
Compared to what? More than 1% have good tech skills. Education disparities and tax policies surely more important.
Bio/Vote History
         
Udry Christopher Udry Yale Agree 3
This is hard to quantify, but the limited evidence is supportive.
Bio/Vote History
         
Zingales Luigi Zingales Chicago Agree 7
The statement is likely to be true but it does not address why the technology moved that way.
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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