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Inequality

Paper Session

Friday, Jan. 6, 2023 10:15 AM - 12:15 PM (CST)

Hilton Riverside, Eglington Winton
Hosted By: Econometric Society
  • Chair: Zachary Bethune, Rice University

Monetary Policy with Racial Inequality

Makoto Nakajima
,
Federal Reserve Bank of Philadelphia

Abstract

This paper presents a heterogeneous-agent New-Keynesian model featuring racial inequality in terms of income, wealth, and labor market risks, and studies how monetary policy affects different racial groups differently. The calibrated model can replicate the fact that an accommodative monetary policy shock narrows the Black-White unemployment rate gap, as the higher job separation rate among Black workers make the value of their job more sensitive to a monetary policy shock. The model indicates that Black and Hispanic workers benefit more from accommodative monetary policy than White workers, since they are more likely to be liquidity constrained and thus hand-to-mouth, and they face higher labor market risks, which are mitigated by accommodative monetary policy. For example, average welfare gain of Black workers from an accommodative monetary policy shock is more than 20 times larger than that of (middle-class) White workers.

Dynamic Oligopsony and Inequality

Kyle F. Herkenhoff
,
University of Minnesota

Abstract

How does local labor market competition affect the wage distribution and job flows? Using administrative Norwegian data on job flows, employment, wages and vacancies, we document that in less competitive markets, firms pay lower wages, post fewer vacancies and have lower job flows. Motivated by this evidence, we develop a dynamic general equilibrium search-theoretic model of the labor market that includes a finite number of firms, strategic wage and vacancy posting, and on-the-job search. We show that our framework is capable of replicating the observed relationships between market concentration and both job flows and wages. We use the model to measure the effects of labor market competition on the wage distribution and welfare, finding that making labor markets more competitive would lower within market wage inequality and the unemployment rate, and improve labor productivity.

The Impact of Racial Segregation on College Attainment in Spatial Equilibrium

Victoria Gregory
,
Federal Reserve Bank of St. Louis
Julian Kozlowski
,
Federal Reserve Bank of St. Louis
Hannah Rubinton
,
Federal Reserve Bank of St. Louis

Abstract

TBD

Unemployment and the Distribution of Liquidity

Zachary Bethune
,
Rice University
Guillaume Rocheteau
,
University of California-Irvine

Abstract

TBD
JEL Classifications
  • D14 - Household Saving; Personal Finance
  • J42 - Monopsony; Segmented Labor Markets