Stratification Economics, Social Policy, and Low-Wage Workers
Paper Session
Sunday, Jan. 3, 2021 12:15 PM - 2:15 PM (EST)
- Chair: Dania V. Francis, University of Massachusetts Amherst
The Adverse Implications of Couples’ Social Security Coordinated Claiming Strategies
Abstract
The progressivity and gender neutrality aim of Social Security in the United States are reduced by the rules that currently determine spousal and survivor benefits. Using administrative data from the Social Security Administration and the Health and Retirement Study, this study shows how the interaction between differential mortality rates, actuarial adjustments, and couples’ coordinated claiming decisions can lead to distributional outcomes that are far from being progressive and gender-neutral. Through a standard positive correlation test for asymmetric information, this research tests whether married couples strategically claim Social Security benefits based on private information. There are four important implications of this coordinated strategy, which this study explores: First, how the couple's relative PIA influences claiming behavior of the lower-earning spouse and the higher-earning spouse strategically, maximizing the couple's benefits and creating an undetermined impact on the system's progressivity. Second, in the presence of correlation between claim age and subsequent mortality, and claim age and socioeconomic status among individuals, the correlation between couples' mortality rates by socioeconomic status and their claim ages, can offset the extent to which adverse selection operates under spousal and survivor benefits. Third, couples' strategic behavior transfers benefits from lower-income single households to higher income married households generating a negative impact on the system's gender neutrality; and fourth, the existence of adverse selection and coordinated claiming between couples can elevate costs for the Social Security Trust Fund.ACA Medicaid Expansion and the Racial Wealth Gap
Abstract
This paper estimates the effect of the ACA Medicaid expansion on household wealth. Mainstream economic theory predicts that an expansion of public health insurance will lower private savings. This is based on an understanding of wealth as precautionary savings and deferred consumption. On the other hand, stratification economics models the functional role of wealth in maintaining privilege. In addition, qualitative research on health insurance for low-income populations indicates that increased access to healthcare, including screenings (e.g. breast cancer) and dental care, may affect one’s labor market participation or other lifestyle choices, leading to an increased ability to save and pay off debt.Using the SIPP, preliminary results indicate that Medicaid raises assets, but also raises debt, leading to no significant change in net worth. The asset increase is higher for black people, but the effect is not large enough to appreciably close wealth gaps. To estimate, I follow Curie and Gruber (1996) and construct an instrumental variable. I draw a nationally representative random sample of 300 individuals and calculate the proportion of these people that would be eligible for Medicaid in each state-year pair. This instrument is orthogonal to other individual characteristics, but correlated with the conditional probability of Medicaid eligibility.
The primary contribution of this work is to further draw the connection between health insurance, household wealth, and racial inequality. Research into the wealth of low-income households still receives comparatively little attention. This work uses quantitative methods to test qualitative evidence conducted around the ACA Medicaid expansion.
An Intersectional Approach to Occupational Crowding Analysis in NOLA
Abstract
This work examines occupational crowding patterns in the labor market in New Orleans, Louisiana. Informed by the methods of stratification economics, this analysis takes an intersectional approach to focus on the impacts of occupational crowding on women, people of color, and young and older workers in New Orleans. Using an intersectional occupational crowding analysis, this work will identify the occupations and industries that groups are crowded into and out of, with a particular focus on the hospitality, retail, care, and other service sectors. This research will then be matched with qualitative focus group interviews with workers to identify how occupational crowding creates a specific barrier to economic stability, and to identify which groups of workers are being impacted by the current economic and public health crisis. This analysis will then be used to inform proposals for state and local policy interventions that build economic security, centering the needs of marginalized workers in the economic recovery.Stratification Economics, Policy Analysis, and Race-Neutrality
Abstract
Stratification economics is an emergent subfield of economics that examines the structural and intentional processes that generate hierarchy and economic inequality among groups defined by race, ethnicity, or caste. The focus is on the analysis of the nature and reproduction of stratification not only within but also across different societies. It often offers policy prescriptions that differ from conventional policy recommendations rooted in rational choice theories. Modern policy analysis, by way of contrast, relies heavily on assumptions about rational choice behavior and decision-making. And, until recently, race, ethnicity, and caste have been viewed as exogenous factors whose relevance to policymaking is incidental to making sound policy recommendations.This paper illustrates how stratification economics can help improve policy analysis. The paper examines the problem of the efficiency of race-neutral or color-blind public policies. The specific example explored is one of public procurement and contracting and Disadvantaged Business Enterprise (DBE) programs and their implementation during the COVID-19 pandemic. Conventional models of the efficiency of DBE programs ask whether bidding behavior in the face of race-conscious interventions results in contract award outcomes that are inferior to those outcomes observed under race-neutral interventions. The COVID-19 pandemic offers a natural experiment for testing for differences in outcomes using race-neutral vs. race-conscious interventions because many jurisdictions relaxed the DBE requirements for bidding on contracts. Whereas the conventional microeconomic policy analysis approach is to compare pre and post COVID-19 outcomes, the stratification economics approach mandates that the analysis take into account structural and intentional practices, such as historic patterns of discrimination in public procurement and contracting and access to credit. We demonstrate that estimates of the effectiveness of the small-business loans as a race-neutral policy are overestimated in models that fail to take account of current or on-going discriminatory lending patterns.
JEL Classifications
- O1 - Economic Development
- Z1 - Cultural Economics; Economic Sociology; Economic Anthropology