Opioids Actually Boost Women’s Employment: Eco Research Wrap

(Bloomberg) -- Opioids have earned a terrible reputation as mass pill addiction morphed into a heroin crisis that’s claiming lives across America. Economists and politicians have painted the epidemic as an outgrowth of job market despair, at least in part. 

The narrative may be too simplistic, new research from Princeton University economists finds. It’s the lead item in this week’s economic roundup, which also sums up a landmark study on race and mobility, a report on the outlook for long-run monetary policy, and a look at government debt and growth. Check this column each week for the latest economic research.  

Opioids: not a simple villain 

U.S. Employment and Opioids: Is There a Connection?
Published March 2018
Available on the NBER website 

Whether America’s opioid epidemic is impacting its labor market is a hard-to-quantify question, and Princeton University economists Janet Currie, Jonas Jin and Molly Schnell are taking a crack at it – with surprising results. As a reminder, Alan Krueger found a few years ago that of prime-age white men out of the labor force,  nearly 50 percent report chronic pain and daily use of opioid pain medications. Many – including former Federal Reserve Chair Janet Yellen – interpreted those and related findings to mean the opioid problem might be economically important. 

By digging into county-level employment and prescription data, the authors of this new study find that prescription opioids are actually having a small benefit for women’s labor market attachment: a 100 percent increase in prescribing would lead to a 5.2 percent increase in employment among women in counties with education below the median, they find. For those with above-median education, it would be a 3.8 percent boost. Opioid use has no clear relationship with men’s employment-to-population ratio.

The trio also take a look at how employment-to-population ratios effect opioid use, since it’s a popular train of thought that falling labor market attachment may be a factor fueling abuse. They find only ambiguous results. “The relationship between opioid prescribing and employment is considerably murkier than simple narratives would suggest,” they conclude. “While improving economic conditions in depressed areas is desirable for many reasons, it is unlikely to curb the opioid epidemic.” 

Weekly demo(graphic): Racial disadvantage 

Race and Economic Opportunity in the United States: An Intergenerational Perspective
Published March 2018
Available on the NBER website

Being born a black male in the United States means that you’re at a disadvantage when it comes to economic mobility – even when compared to white children born into very similar circumstances, according to a new working paper by Stanford University’s Raj Chetty and his co-authors. Looking at black and white boys born into the same neighborhoods and controlling for parental income, the researchers find that black boys end up earning less as adults in 99 percent of Census tracts. “The few areas in which black-white gaps are relatively small tend to be low-poverty neighborhoods with low levels of racial bias among whites and high rates of father presence among blacks,” the study found. Fewer than 5 percent of black children grow up in such environments. 

 

 

The graphic above shows how black and American Indian children fail to earn much relative to their peers in absolute terms. For more complex data visualizations related to mobility, check out the study starting from page 77. 

Fed policy in the long run

Thoughts on a Long-Run Monetary Policy Framework: Framing the Question
Published March 26, 2018 
Available on the Atlanta Fed website 

When the consensus that 2 percent was a reasonable inflation level solidified in global monetary policy circles in the latter half of the 1990s, the neutral rate of interest – the one that keeps the economy on an even keel – was in the range of 4 percent to 5 percent, a good 2 percentage points higher than current estimates. That’s relevant, because back then, policy makers didn’t need a buffer when they went to cut rates, since they had plenty of ammunition. These days, they have a lot less room to maneuver, as Atlanta Fed president Raphael Bostic points out in a new research note. It’s the first of a series, and he says in future posts, he’ll dig into a key question: whether raising the inflation target is the best path forward for monetary policy. 

Debt headache

Rising Public Debt to GDP Can Harm Economic Growth
Published March 2018
Available on the Dallas Fed website

Debt trajectories can have more important consequences for a nation’s economic growth than the level of debt to gross domestic product. Looking at data from a panel of countries, Dallas Fed economists find that there’s no universally applicable threshold at which debt piles begin to weigh on economic growth. Still, “the findings show that countries with rising debt-to-GDP ratios exceeding 60 percent tend to have lower real output growth rates.” But evidence of the debt-trajectory effects weakens when you separate advanced and developing nations, and the analysis shows association, not causality.

©2018 Bloomberg L.P.

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