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Economics for Inclusive Prosperity (EfIP): Labor, Technology, and Social Policy

Paper Session

Friday, Jan. 3, 2020 10:15 AM - 12:15 PM (PDT)

Marriott Marquis, Marina Ballroom G
Hosted By: American Economic Association
  • Chair: Suresh Naidu, Columbia University

An Expanded View of Government’s Role in Providing Social Insurance and Investing in Children

Sandra E. Black
Columbia University
Jesse Rothstein
University of California-Berkeley


While private provision of goods often yields the efficient outcome, there are a number of goods that are not efficiently provided in the private market. Here, we outline two such situations: investments in child care and education, and insurance against risks created by business cycles, poor health, and old age. Because private markets work poorly for these goods, and the costs of market failure are large, standard economic reasoning implies a significant role for government provision. The reduction in economic insecurity that this would bring could help to improve political stability as well, by reducing the stakes that people perceive in discussions of trade, immigration, technological change, and countercyclical policy. Many observers have pointed to economic anxiety as a potential contributor to populist reactions in the U.S. and many European countries; a public sector that acts to reduce the risk that households face could ameliorate this, generating political spillovers and improving the state of the country more broadly.

Using Wage Boards to Raise Pay

Arindrajit Dube
University of Massachusetts-Amherst


The weight of evidence suggests that we have moved from a labor market in the U.S. that was based on labor market negotiations via collective bargaining to one where employers increasingly have power to set wages subject to limited labor market discipline. This paper proposes, as an alternative to a single, high minimum wage, instituting a wage board that sets multiple minimum pay standards by sector and occupation. The standards would be potentially chosen using consultation with stakeholders, such as business and worker representatives and elected representatives. This would allow raising wages not just for those at the very bottom, but also for those at the middle. This is effectively done in countries where there are extensions of collective bargaining contracts, but can also be done by setting multiple minimum pay levels statutorily.

Labor in the Age of Automation and Artificial Intelligence

Anton Korinek
University of Virginia


As technology advanced in recent decades, it increasingly left workers behind and led to sharp increases in inequality. The current wave of progress in artificial intelligence is likely to accelerate these trends. This note lays out three complementary approaches to countering these developments. Firstly, since technological progress generates net gains for society as a whole, the winners could in principle compensate the losers and still be better off. Secondly, progress should be steered to minimize the losses of workers. Thirdly, there is an important role for government intervention in information technology to thwart the rise of monopolies that extract rents from society. The note concludes with some speculations on the impact of artificial intelligence increasingly rivaling human labor.

Worker Collective Action in the 21th Century Labor Market

Suresh Naidu
Columbia University


Private sector union density in the United States has fallen below 7%, but new historical evidence shows high union density played an important role in compressing the US income distribution at mid-century and lowering intergenerational income persistence. Other recent evidence on pervasive labor market power suggests that unions may be able raise wages without severe dis-employment effects, and may alleviate inefficient contracting problems. Despite substantial survey evidence indicating latent demand for unions, employers have successfully fought unionization efforts in rising service sectors, and a combination of legal restrictions and economic transformations have impaired the ability of US unions to solve collective action problems at the appropriate scale – an issue that economics may be able to help ameliorate.
David Autor
Massachusetts Institute of Technology
David Deming
Harvard University
JEL Classifications
  • J0 - General
  • I0 - General