The Inequality Economist
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Bibliographic details
- Authors: BOB SIMISON
- Published: December 1, 2023
Overview
- Profile of Harvard labor economist Lawrence F. Katz and his influence on economists’ understanding of economic disparity.
- Authored by BOB SIMISON; published December 2023 in F&D Magazine.
- Katz’s work spans almost 40 years and covers labor markets, education, inequality, field experiments, and editorial leadership at the Quarterly Journal of Economics (QJE).
AI and inequality
- Katz identifies two potential AI scenarios:
- AI could help people already in advanced, high-paying professions, “thereby potentially exacerbating labor market inequality.”
- AI could “help level the playing field for workers on the lower end of the scale,” by “increasingly substitut[ing] for elite expertise, making it less scarce and making the insights from elite expert knowledge more accessible to a broader range of workers.”
- Katz’s role: likely to help lead academic assessments of AI using big data and sophisticated analysis, leveraging methods he pioneered.
Research contributions and methods
- Two intellectual revolutions attributed to Katz (per a 2023 sketch by David Autor and David Deming):
- Applying supply-and-demand frameworks to explain fluctuations in wage inequality over time.
- Leading large-scale field experiments involving real people to answer big social-science questions (notably the Moving to Opportunity program).
- Early data-driven work:
- Senior thesis (1979) surveying land-use officials from the 93 San Francisco Bay Area jurisdictions on effects of Proposition 13.
- PhD (MIT, 1985) work challenging theories of cyclical joblessness and advancing job-search behavior analysis using longitudinal survey data.
- Research methods emphasized:
- Large-scale data analysis well before modern computing ubiquity; reliance on public-use datasets and painstaking manual tabulation.
Influential empirical findings
- 1992 papers:
- With Olivier Blanchard: Studied 40 years of state-by-state US data after Massachusetts unemployment surged between 1987 and 1991; concluded:
- It takes five to seven years for a state to rebound from an unemployment spike.
- The decline in the jobless rate largely reflects workers leaving the state rather than employers creating new jobs.
- It takes more than a decade for wages to return to normal.
- With Kevin Murphy: Analyzed changes in US wages from 1963 to 1987 using Census Bureau data; found:
- Income gap narrowed from 1970 to 1979 and widened dramatically after 1979.
- Widening reflected both rising demand for more-educated workers and a sharp decline in growth of the supply of such workers relative to demand.
- Education and inequality (with Claudia Goldin; The Race between Education and Technology):
- US advantage from early 20th-century “high school movement”; by the 1930s, “America was virtually alone in providing universally free and accessible secondary schools.”
- Katz’s assessment: Fifty to 60 percent of the rise in US wage inequality since 1980 grew out of the slowdown in educational advances relative to continuing growth in demand for college-educated workers.
- Other contributors cited: decline of unions, erosion of the federal minimum wage, surge in executive and top-end compensation, fissuring of supply chains, increased domestic outsourcing, greater use of the gig economy, and international offshoring.
- Policy stance: advocate investing more in state universities, strong vocational education, and sectoral employment training programs for high school graduates; critique of for-profit colleges’ low employer valuation (papers in the 2010s).
- Moving to Opportunity (MTO) experiment:
- Launched 1994 in Boston, Baltimore, Chicago, New York City, and Los Angeles with 4,604 families in public housing.
- Early findings: no immediate economic benefits for adults, but participants reported improved physical and mental health.
- Long-run findings: children who were younger than 13 when families moved to lower-poverty neighborhoods had 30 percent higher earnings as young adults, were more likely to attend college, got into better colleges, and lived in lower-poverty neighborhoods as adults.
- Katz involvement: chief economist of the Department of Labor in 1993 and continued study of MTO over more than 25 years.
- Policy implication: housing mobility affects health and long-term outcomes; existing resources could be better used though broader funding efforts faced political obstacles.
Editorial leadership and mentorship
- Editor of the Quarterly Journal of Economics since 1991 (past 32 years); QJE receives about 2,000 submissions a year and publishes 48 papers annually.
- Katz’s editorial impact described as shaping the economics profession’s agenda and encouraging risky, data-driven research.
- Mentorship record:
- Trained 239 PhD economists (maintains a nine-page list on his Harvard website).
- Protégés include more than 200 former doctoral students, two John Bates Clark Medal winners, three MacArthur Foundation grantees, and dozens of tenured scholars.
- Praised by colleagues for availability, encyclopedic knowledge of the literature, and influence on public policy through protégés.
Notable personal and career details (as reported)
- Katz’s age in the profile: 64.
- Family and background:
- Mother born Vera Reichenfeld in 1938 in Belgrade; emigrated to Ann Arbor for college; at age 85 works part-time as an actress in Spanish- and English-speaking roles.
- Katz’s early exposure to poverty and education inequities shaped research focus on inequality, segregation, and race.
- Personal anecdotes:
- Wife and frequent collaborator: Claudia Goldin, 2023 Nobel laureate.
- Katz walks his 13-year-old golden retriever Pika several times a day.
- Public service and mediation:
- Served as chief economist of the Department of Labor in 1993.
- Mediated labor disputes and contributed to Harvard outsourcing wage-and-benefits parity policy via the 2001 “Katz Committee.”
Source: F&D Magazine — “Lawrence F. Katz: The Inequality Economist,” BOB SIMISON, December 2023.
Content in this bundle
- F&D People in Economics: The Inequality Economist