HLEG thematic workshop on Economic Insecurity, 4 March 2016, New York, United States. More information at: http://oecd/hleg-workshop-on-economic-insecurity-2016
HLEG thematic workshop on Economic Insecurity, Nathan Hendren, discussant
1. Discussion of “Redistribution in the Knowledge
Economy”
Nathaniel Hendren
Harvard and NBER
March, 2016
Nathaniel Hendren (Harvard and NBER) Discussion March, 2016 1 / 7
2. Summary
Many nice ideas in this brief
Caveat: I’m new to much of the terminologies used...
Political preference for redistribution depends on
[Redistribution] Altruism for poor
[Insurance] Belief you may be poor in the future
Changing economy generates more insecurity
Union jobs -> Temp workers
But, increasing segmentation has prevented support for redistribution
Two forces counter-act to prevent redistribution (A+B=0)
Nice empirical evidence...but omitted variable bias?
Second line of argument: gov’t institutions / coalitions determine
support for redistribution
Endogenous cycles? Less investment in public education -> lower
outcomes for vulnerable groups -> greater segmentation? -> less
support for redistribution?
Nathaniel Hendren (Harvard and NBER) Discussion March, 2016 2 / 7
3. Some Thoughts
Some thoughts with the U.S. experience in mind
Question the background: If inequality increased, why not more
support for redistribution?
Two types of increasing inequality
Top 1%
90/10
Is segmentation about 90/10 inequality? Political influence of top
prevents redistribution at the top?
Nathaniel Hendren (Harvard and NBER) Discussion March, 2016 3 / 7
4. Role of Intergenerational mobility
Alternative story in my mind: What if redistributive preferences are
more governed by intergenerational concerns?
Redistribution as intergenerational insurance...
Maybe value of this insurance hasn’t changed?
Low mobility in US (Chetty et al. 2014a), but stable over time
(Chetty et al. 2014b)
Nathaniel Hendren (Harvard and NBER) Discussion March, 2016 4 / 7
5. 00.20.40.60.8
Rank-RankSlope
1971 1974 1977 1980 1983 1986 1989 1992
Child's Birth Cohort
Intergenerational Mobility Estimates for the 1971-1993 Birth Cohorts
Forecast Based on Age 26
Income and College Attendance
Income Rank-Rank
(Child Age 30; SOI Sample)
College-Income Gradient
(Child Age 19; Pop. Sample)
Income Rank-Rank
(Child Age 26; Pop. Sample)
6. 0%10%20%30%40%
1971 1974 1977 1980 1983 1986
Child's Birth Cohort
Parent Quintile
Probability of Reaching Top Quintile by Birth Cohort
Q1 Q3 Q5
ProbabilityChildinTopFifthofIncomeDistribution
7. Final thoughts...
Copula is stable over time
Expectation and variance of child’s income rank is same now as 30
years ago
If families care about child’s location in income distribution, can this
explain why no massive change in support for redistribution?
In short, great set of ideas and interesting evidence of increasing
segmentation and its important political implications; am curious on
thoughts from an intergenerational perspective.
Nathaniel Hendren (Harvard and NBER) Discussion March, 2016 7 / 7