Sunday, November 04, 2012

Casey Mulligan Answers Some Tough Questions

This interview offers an overview of his new book's main themes.  For those who do not have the strength to turn the book over, here are the book's back cover quotes.   I'm disappointed that nobody asked me to supply one.  I haven't heard of the three economists quoted below.

“Much of the policy reaction to the Great Recession emphasized Keynesian effects on aggregate demand and downplayed individual incentives to work, produce, and invest.  In contrast, Casey Mulligan’s research focuses on how an expanded array of U.S. safety-net programs—food stamps, unemployment insurance, Medicaid, and housing/mortgage assistance programs—raised effective marginal income-tax rates especially for poor families.  These diminished incentives to work help to explain the weakness of the U.S. economic recovery since the end of the recession in 2009 and also explain why Barack Obama is justifiably called the "Food-Stamp President."  Hopefully, future government policymakers will deliver better results by learning from this important book.”
-Robert J. Barro, Paul M. Warburg Professor of Economics, Harvard University

“Professor Mulligan analyzes the question of why has labor supply remained low and unemployment remained high during the current recession. He finds that the expansion of government safety net programs, along with their associated high marginal tax rates, decreases the economic incentives for labor supply. The question at issue is how much of the decrease in labor supply arises from these effects and their associated redistribution of income compared to the decreases in demand in sectors such as construction and manufacturing? He concludes that it is possible that nearly all or at least much of the decline in labor usage can be attributed to expansion of the social safety net. I highly recommend this sure to be controversial analysis of the effects of the Great Recession. Professor Mulligan has provided an innovative analysis of our current economic woes which should cause most economists to rethink their views of what has gone wrong.”   
-Jerry Hausman, McDonald Professor of Economics, MIT

“Casey Mulligan’s The Redistribution Recession presents a heterodox perspective on the Great Recession. The book argues that redistributive and other policies enacted to help cushion the blow of the financial and housing market collapses have reduced incentives to work, and thus had the unintended consequence of significantly lengthening and deepening the recession. The rich set of empirical analyses that Mulligan presents in support of this argument challenges the view that the problem of recovering from the Great Recession remains solely one of insufficient aggregate demand. Moreover, the analysis will likely provide a foundation for future research on the Great Recession and how policymakers responded to it.”
-David Neumark, Chancellor’s Professor of Economics and Director, Center for Economics & Public Policy, University of California-Irvine

UPDATE:  Today, the Wall Street Journal favorably reviews Casey's book.   The WSJ review page is quirky with respect to the books they choose to review.  They did not review Glaeser's book or Moretti's book or my Climatopolis book.  I'm tracking Casey's Amazon ranking ---and his book is now ranked #1,500 so a very high quality book and a positive WSJ review is  enough to offset the high price that Oxford Press is charging for his book!