Social Democratic America (30 page)

16
. Hays 2003; DeParle 2004, ch. 14; Morgen, Acker, and Weigt 2010.

17
. Edin and Lein 1997; Newman 1999, 2006; DeParle 2004; Edin and Kefalas 2005; England and Edin 2009; Nelson and Edin 2013.

18
. Ben-Galim and Dal 2009.

19
. Gottschalk 1998.

20
. DeParle 2012; Shaefer and Ybarra 2012.

21
. Diamond and Orszag 2004; Ruffing 2011; Aaron 2013.

22
. Graetz and Mashaw 1999; Munnel 2012; US Senate Committee on Health, Education, Labor, and Pensions 2012.

23
. Currie 2006; OECD 2008, ch. 9; Esping-Andersen and Myles 2009; Garfinkel, Rainwater, and Smeeding 2010; Kenworthy 2011c, ch. 7.

24
. OECD 2008, ch. 7.

25
. Heckman 2008; Ermisch, Jäntti, and Smeeding 2012, p. 465; Duncan and Murnane 2011, p. 9.

26
. Downey, von Hippel, and Broh 2004; Alexander, Entwisle, and Olson 2007.

27
. See Bowen, Chingos, and McPherson 2009; Hout 2009; Jencks 2009; Arum and Roksa 2011; Dynarski and Scott-Clayton 2013; National Commission on Higher Education Attainment 2013.

28
. Jencks 2009, p. A7.

29
. OECD 2010, table B5.1; OECD 2012.

30
. Murray 2009; Vedder et al. 2010.

31
. This excludes those who get a certificate of high school equivalency by passing the General Educational Development tests (GED). Heckman and LaFontaine 2007.

32
. Kozol 1991.

33
. Hoxby 2003.

34
. Gleason et al. 2010; Center for Research on Education Outcomes 2013.

35
. DeLuca and Rosenblatt 2010.

36
. Hanushek 2010; Chetty, Friedman, and Rockoff 2011.

37
. Gordon, Kane, and Staiger 2008; Auguste, Kihn, and Miller 2010; Kristof 2012; Wilson and Laurent 2012.

38
. Esping-Andersen 2004, 2011; Smeeding, Erickson, and Jäntti 2011; Ermisch, Jäntti, and Smeeding 2011; Esping-Andersen and Wagner 2012.

39
. Heckman 2008; Ruhm and Waldfogel 2011.

40
. Gornick and Meyers 2003; OECD 2006; Esping-Andersen 2009.

41
. Vandell and Wolfe 2000; Waldfogel 2006. Among three- and four-year-olds, approximately 28 percent are enrolled in public prekindergarten and 52 percent in any type of prekindergarten school. See Barnett et al. 2011, table 4; National Center for Education Statistics 2012, table A-1-1.

42
. Heckman 2008; Barnett 2013.

43
. Kenworthy 2012b.

44
. Duncan, Ziol-Guest, and Kalil 2010.

45
. Waldfogel 2009, p. 52.

46
. Western 2006.

47
. Western 2012.

48
. Bowen and Bok 1998; Reskin 1998.

49
. Kahlenberg 1995; Murray 2012b.

50
. For more detail, see Kenworthy 2011c.

51
. For a more detailed discussion, see Kenworthy 2011i.

52
. Mishel and Shierholz 2013.

53
. Bernstein and Baker 2003.

54
. Kenworthy 2008a, 2013a.

55
. Kenworthy 2008a.

56
. For more discussion, see Kenworthy 2011g.

57
. Rising employment is particularly important for those at the low end of the labor market. Here, too, the 2000s upturn was a disappointment. In working-age households in the bottom quarter of income, average employment hours failed to rise at all. See Kenworthy 2011c, ch. 3.

58
. Gordon 2010.

59
. Blinder 2009a; Pierce and Schott 2012.

60
. Brynjolfsson and McAfee 2011; Jaimovich and Siu 2012.

61
. With the ebbing of the outsourcing and offshoring craze, some manufacturing and service jobs have begun to move back to the United States. But the number is, and will be, relatively small. See Fishman 2012;
Economist
2013b.

62
. Ben-Galim and Dal 2009.

63
. Katz 1998; Gottschalk 1998. A good candidate here is green jobs; see Apollo Alliance 2008; Block 2011.

64
. The Bureau of Labor Statistics projects that in 2020 approximately one third of US jobs will be in occupations with a median wage of $25,000 or less. See Bureau of Labor Statistics 2012a.

65
. For similar sentiment, see Gans 2011.

66
. Baumol 2012; Carlin 2012.

67
. My suggestion is similar in spirit to the idea of “inequality insurance” proposed by Robert Shiller; see Shiller 2003, ch. 11. See also Reich 2010.

68
. Average compensation tends to rise in sync with GDP per capita. See Pessoa and Van Reenen 2012.

69
. Note that to be effective, a rising earnings subsidy will need to be coupled with a rising minimum wage. Otherwise, the subsidy may lead to reductions in low-end wage levels, which will offset the improvement in income achieved by the subsidy. This can happen in two ways. First, if the subsidy succeeds in pulling more people into work, the increase in competition for jobs will put downward pressure on wages. Second, regardless of labor supply, employers will be tempted to incorporate the value of the subsidy into the wages they offer. For more discussion see Kenworthy 2011c, ch. 5.

1
. Kenworthy 2008a, ch. 8; 2011, ch. 8.

2
. Kenworthy 2009a.

3
. OECD 2008, ch. 4; Kenworthy 2011c, ch. 8.

4
. Mahler and Jesuit 2006; Kenworthy 2011c, ch. 8; Wang and Caminada 2011.

5
. This means households with incomes below approximately $250,000.

6
. Kenworthy 2011a.

7
. Our GDP in 2007 was $14 trillion. Ten percent of that is $1.4 trillion. That year the top 5 percent of Americans, 5.9 million households, had an average pretax income of $611,200, according to the Congressional Budget Office (CBO), making their total pretax income $3.6 trillion (Congressional Budget Office 2010). The $1.4 trillion needed to boost tax revenues by 10 percent of GDP amounts to 38.8 percent of that $3.6 trillion. Thus, the effective tax rate on the incomes of the top 5 percent of households would need to be increased by 38.8 percentage points.

8
. Kenworthy 2008a, figure 8.12.

9
. This estimate is based on information in Krueger 2009; Toder and Rosenberg 2010; Barro 2011; Campbell 2011.

10
. In fact, a consumption tax can be made progressive. See Frank 2008.

11
. Bartlett 2012b.

12
. Kenworthy 2011c, ch. 8.

13
. Kenworthy 2011h.

14
. Surowiecki 2010.

15
. Carasso, Reynolds, and Steurle 2008; Toder et al. 2010.

16
. Irons 2010.

17
. The total payroll (Social Security and Medicare) tax rate is about 15 percent, and since the mid-1980s it has consistently collected 6.6 percent to 7.0 percent of GDP.

18
. I use the shares of pretax income going to each quintile as of 2007. See Congressional Budget Office 2010.

19
. Huang 2012; Bartlett 2012a; Saez, Slemrod, and Giertz 2012.

20
. The list of relevant citations is lengthy. A good start is Polanyi 1944; Stiglitz 1989; Gough 1996; Lindert 2004; Madrick 2009.

21
. Jones 1995.

22
. This line of reasoning follows Stokey and Rebelo 1995; Myles 2000.

23
. Tanzi 2011.

24
. For more discussion, see Kenworthy 2008a, ch. 4.

25
. Slemrod and Bakija 2008; Myles 2009; Bakija 2012. As with almost any phenomenon, it's possible, with enough tweaking, to find an association that conforms to one's prior beliefs. For instance, some studies find a negative association between taxation and economic growth by adding a group of moderate-tax high-growth countries or a particular set of control variables. See Fölster and Henrekson 2001; Bergh and Karlsson 2010; Bergh and Henrekson 2011.

When comparing across countries, our best bet, from an analytical perspective, is to compare changes over time rather than levels. (This is a strategy known as “differences in differences”; see Kenworthy 2011d.) This means looking at the cross-country association between changes in the size of government and changes in economic growth. But this requires a good bit of variation among the countries in the degree of change in the hypothesized cause, and we don't have that here, unfortunately. During this period, government revenues rose by a few percentage points of GDP in nearly all countries. See Kenworthy 2011d, figure 2.

26
. Hall and Soskice 2001.

27
. Coherence applies both within and across economic spheres. A country's institutional mix is deemed more coherent to the extent that its institutions within each sphere are closer to one or the other of the two poles (liberal market or coordinated market) rather than in between and its institutions are consistent across spheres. Incoherence can be a product of being in the middle within each sphere or having liberal market institutions in some spheres and coordinated market institutions in others.

28
. There have been other attempts to measure institutional coherence: Amable 2003; Hall and Gingerich 2004; Kenworthy 2006; Schneider and Paunescu 2012.

29
. Hall and Gingerich have several control variables in their regressions, including inflation, change in the country's terms of trade (export prices
divided by import prices) weighted by its degree of trade openness, and the share of the population younger than age 15 or older than age 64. However, none of these is related to economic growth in their analyses. A fourth is the average growth rate among the group of countries as a whole weighted by the degree of trade openness in each nation. In an analysis with yearly data, this is useful to control for business cycle effects, but it is unnecessary in an analysis that covers one or more complete business cycles. I estimated a series of regressions with various combinations of three other controls: education (average years of schooling completed), real interest rates, tax revenues (as a share of GDP). This did not yield a positive association between institutional coherence and economic growth.

30
. See also Campbell and Pedersen 2007; Kristensen and Lilja 2011.

31
. Acemoglu, Robinson, and Verdier 2012.

32
. Heller 2001.

33
. Atkinson, Piketty, and Saez 2011, figure 10.

34
. Schultze 1977; Anderson 1978; Simon 1978; Wanniski 1978; Friedman and Friedman 1979; Weidenbaum et al. 1980; Gilder 1981; Murray 1984.

35
. Magaziner and Reich 1982; Reich 1983; Zysman 1983; Piore and Sabel 1984; Thurow 1984; Osborne 1987; Dertouzos et al. 1989; Kuttner 1989; Florida and Kenney 1990; Womack, Jones, and Roos 1990; Harrison and Kelley 1991; Tyson 1992.

36
. Reich 1991, 1999; Clinton 1995; Sperling 2005.

37
. Boix 2000.

38
. Giddens 1998, 2000.

39
. Both years were business-cycle peaks.

40
. These historical GDP per capita data are from Angus Maddison,
www.ggdc.net/maddison/historical_statistics/vertical-file_02-2010.xls
.

41
. Kenworthy 2010a.

42
. Kenworthy 2012c.

43
. Baumol 1967.

44
. Mandel 2000, 2012; Baumol 2012.

45
. Cowen 2011; Gordon 2012. Part of Gordon and Cowen's pessimism owes to the fact that the benefits of innovation no longer reach all households in the form of income growth. This is an important problem, as I emphasized in chapter 2. But it's a problem of distribution, not production. See Kenworthy 2011f.

46
. St. Louis FRED, employment-population ratio (LNU02300000), using Bureau of Labor Statistics data.

47
. North 1990.

48
. These employment rates are for persons age 16–64.

49
. Prescott 2004; Ohanian, Raffo, and Rogerson 2007.

50
. Blanchard 2004; Alesina, Glaeser, and Sacerdote 2005; Immervoll and Barber 2006; Ray and Schmitt 2007; Boeri and Cahuc 2008; Causa 2008; Kenworthy 2008a.

51
. Burgoon and Baxandall 2004.

52
. Scharpf 2000; Kemmerling 2009; OECD 2007; Kenworthy 2008a, 2011.

53
. Gornick and Meyers 2003; Huo, Nelson, and Stephens 2008; Kenworthy 2010b.

54
. Some include Ireland and the UK in the “weak labor” group and Spain and Portugal in the “traditional family roles” group, but doing so doesn't alter the conclusion.

55
. Nor are tax levels associated with
change
in employment hours from the 1980s to the 2000s. See Kenworthy 2011e.

56
. A good discussion is Tanzi 2011, ch. 1.

57
. Baker 2011, ch. 10.

58
. Weeden 2002; Carpenter et al. 2012.

59
. Avent 2011; Glaeser 2011; Yglesias 2012.

60
. Baker and Moss 2009; Stiglitz 2009; Baker 2011, ch. 9; Zingales 2012.

61
. Zingales 2012, p. 6. See Friedman 1962; Friedman and Friedman 1979.

62
. Alesina and Angeletos 2005, p. 1241.

63
. Rothstein 2011.

64
. Using other measures of the quality of government, such as Transparency International's corruption perceptions index, does not change the story.

65
. Teles 2012.

66
. IRS Taxpayer Advocate Service,
2010 Annual Report to Congress
, vol. 1, cited in Teles 2012.

67
. “Full Transcript of the Romney Secret Video,”
Mother Jones
, September 2012.

68
. Eberstadt 2012. See also Murray 1984, 2012a.

69
. Though they represented just one in three employees, gains from collective bargaining spilled over to other firms whose management was keen to preempt unionization efforts.

70
. Some worry about these developments because they believe stable couple families engender better behavior, thereby improving communities and individual happiness. See, for instance, Murray 2012a. For my purposes, family decline is a source of concern insofar as it has contributed to rising economic insecurity, to inadequate opportunity, and to the slow growth of living standards for America's lower half.