Wednesday, December 6th, 2017 12:52 pm

Employment and the US Economy

Question A: The concept of “maximum sustainable employment” is well defined enough to be used beneficially in economic policymaking.

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

Question B: Right now the US economy is operating below maximum sustainable employment.

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

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Disagree 4
I don't think it's well defined. Lots of policies and institutions affect employment. Which one is "sustainable"? Does it mean efficient?
Bio/Vote History
         
Alesina Alberto Alesina Harvard Disagree 8
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 5
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 3
Bio/Vote History
         
Autor David Autor MIT Agree 6
Emphasis on "well defined enough" -- meaning that it's not precisely defined, but still approximately useful.
Bio/Vote History
         
Baicker Katherine Baicker Chicago Uncertain 2
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT No Opinion
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Disagree 6
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Uncertain 8
Bio/Vote History
         
Chetty Raj Chetty Stanford Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 7
Bio/Vote History
         
Cutler David Cutler Harvard Uncertain 5
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 6
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 4
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 6
Bio/Vote History
         
Einav Liran Einav Stanford No Opinion
Bio/Vote History
         
Fair Ray Fair Yale Disagree 5
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Uncertain 3
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Did Not Answer
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 1
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 5
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 9
Certainly not if it is interpreted as a fixed u*. We now know that unemployment dynamics following a major shock are complicated.
Bio/Vote History
         
Hart Oliver Hart Harvard Uncertain 5
Bio/Vote History
         
Holmström Bengt Holmström MIT Disagree 4
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Disagree 5
As a labor and microeconomist, I find "maximum sustainable employment" to be only loosely grounded in economic reasoning.
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Agree 8
Bio/Vote History
         
Judd Kenneth Judd Stanford Uncertain 7
The traditional measurement is unemployment rate. The ratio of employment to population depends on demographics as much as economic health.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Uncertain 7
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 7
in times like january 2009 it is obviously not true so having that in the Fed mandate helps, complicates times like now.
Bio/Vote History
         
Klenow Pete Klenow Stanford Uncertain 5 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 Strongly Agree 9
How else can the Fed understand the dual mandate?
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 7
Bio/Vote History
         
Samuelson Larry Samuelson Yale Agree 8
Coming to a precise numbers is always difficult, but the concept is quite useful in thinking about our economy.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Agree 5
enough is the operative word
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 3
Not sure it is very useful at all times, though.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Did Not Answer
Bio/Vote History
         
Shimer Robert Shimer Chicago Agree 7
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
The concept is clear enough but who knows how to measure it?
Bio/Vote History
         
Udry Christopher Udry Yale No Opinion
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Uncertain 5
The concept doesn't make sense. But of course we have policy options to increase efficiency in the labor market and employment. Lots of them
Bio/Vote History
         
Alesina Alberto Alesina Harvard Uncertain 8
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 5
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Disagree 3
Bio/Vote History
         
Autor David Autor MIT Strongly Agree 8
Unemployment is down, which is great, but labor force participation still has a lot of headroom to rise.
Bio/Vote History
         
Baicker Katherine Baicker Chicago Uncertain 1
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT No Opinion
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago No Opinion
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Uncertain 8
Bio/Vote History
         
Chetty Raj Chetty Stanford Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Uncertain 5
Bio/Vote History
         
Cutler David Cutler Harvard Agree 4
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Agree 8
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 4
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Uncertain 6
Debate continues about whether currently discouraged workers are permanently discouraged, but I think views are converging.
Bio/Vote History
         
Einav Liran Einav Stanford No Opinion
Bio/Vote History
         
Fair Ray Fair Yale No Opinion
Given that I disagree regarding the first question, the second question is not meaningful.
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Uncertain 1
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Did Not Answer
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 1
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 3
Bio/Vote History
         
Hall Robert Hall Stanford Uncertain 9
Until the next shock occurs, unemployment will continue to drift downward. The u rate in 1999 in MSP was 0.9 percent without dysfunction.
Bio/Vote History
         
Hart Oliver Hart Harvard Uncertain 5
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 4
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford No Opinion
Having said that "maximum sustainable employment" is only loosely grounded in economics, I obviously cannot say whether we are at it or not.
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Agree 6
Bio/Vote History
         
Judd Kenneth Judd Stanford Disagree 7
The last time we had sustained unemployment rate below 4% was 66-69, the peak of the Viet Nam war.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 8
Labor force participation, particularly for men, could be higher.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Uncertain 7
maybe, but if i had to bet we are about there.
Bio/Vote History
         
Klenow Pete Klenow Stanford Uncertain 5 Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 6
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 9
Probably above, perhaps at, but clearly not below by Fed’s own estimates.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Disagree 6
Bio/Vote History
         
Samuelson Larry Samuelson Yale Disagree 6
We might aspire to a higher labor force participation rate, but there is little evidence we can push the unemployment rates markedly lower.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton No Opinion
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Uncertain 5
Different indicators seem to be sending mixed signals.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Did Not Answer
Bio/Vote History
         
Shimer Robert Shimer Chicago Uncertain 1
Bio/Vote History
         
Thaler Richard Thaler Chicago Agree 1
labor force participation rate down and little wage pressure suggests room to grow the labor force.
Bio/Vote History
         
Udry Christopher Udry Yale No Opinion
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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