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  • Issue Brief posted July 27, 2015 by Rachel Greszler, Salim Furth, Ph.D. An Economic Crisis Is the Heart of Puerto Rico’s Financial Crisis

    Puerto Rico faces a severe fiscal crisis, but this is merely a symptom of Puerto Rico’s primary disease: a lack of economic growth. Over the past decade, as Puerto Rico’s debt has expanded rapidly, the economy has contracted more than 10 percent. If the economy were growing, Puerto Rico would be much better positioned to address its fiscal crisis and might have averted it…

  • Issue Brief posted July 1, 2015 by Salim Furth, Ph.D., James M. Roberts, Mike Gonzalez, Norbert J. Michel, Ph.D. Puerto Rico Needs Economic Freedom, Not Bailouts

    Puerto Rico is in a debt crisis, and Governor Alejandro García Padilla (D) has announced that “the debt is not payable” given the commonwealth’s large deficits and collapsing economy.[1] Presenting a government-commissioned report, economist Anne Krueger explained that the origin of Puerto Rico’s debt is decades of stimulus spending and economic stagnation: Since 1996,…

  • Commentary posted June 8, 2015 by Salim Furth, Ph.D. 4 Ways Bad Economics Journalism Happens

    Science journalism recently took two huge hits, resulting in two major retractions. One article, which made national headlines upon initial publication, was revealed as an apparent fraud perpetrated by graduate student Mike LaCour. The other, a hoax and media experiment cooked up by John Bohannon, confirmed that even a sketchy result by a fictional professor in a…

  • Commentary posted May 27, 2015 by Salim Furth, Ph.D. The elusive magic of neighborhoods

    What determines where you live? Housing costs, family income, the quality of schools, length of commute all matter in our housing decisions. But there are overarching factors that are even more important: the people who compose your family and where you work. Have your first child? Get a divorce? Find a new job? You’re a strong candidate for a move. Families that move…

  • Commentary posted May 26, 2015 by Salim Furth, Ph.D. How L.A.’s Wage Hike Doesn’t Help the Poor

    The Los Angeles City Council has voted to raise the city’s minimum wage to $15 an hour by 2020, a move that will help some workers at the expense of others and lead to higher prices for consumers as businesses pass along the new expense. Occupational Employment Statistics estimates that there are 837,000 people in Los Angeles County working in professions where at least…

  • Commentary posted May 12, 2015 by Salim Furth, Ph.D. When Moving to a Better Neighborhood Is Harmful

    Would moving from a rough public-housing project in Baltimore to a middle-class neighborhood in the suburbs help teenagers? One would think so. After all, the projects are rife with unemployment, violence and drug abuse, and are poorly served by city schools and police. And research generally confirms that growing up in an average neighborhood is much better for poor…

  • Issue Brief posted May 7, 2015 by Salim Furth, Ph.D. Can Changing Your Address Change Your Fortune?

    Two economic research papers published this month show that where children live can have an impact on their prospects for success later in life. Parents already know that—and it is why houses in good neighborhoods often cost three or four times as much as houses in bad neighborhoods. The new studies have garnered outsized attention,[1] but the results are neither as…

  • Backgrounder posted March 11, 2015 by Salim Furth, Ph.D. Stagnant Wages: Fact or Fiction?

    Recent data show that wages have been growing recently at rates comparable to their long-term trends. Measuring average wages accurately is more difficult than it sounds, so this paper looks at six metrics of wage and compensation to present a complete picture. Since the beginning of 2013, wages have grown about 0.9 percent per year. Since 2006 (and thus including the…

  • Issue Brief posted February 24, 2015 by Salim Furth, Ph.D. Who Is Working Less?

    Labor force participation in the past few years has been lower than at any time since the 1970s. Heritage Foundation research using Current Population Survey (CPS) data finds that labor force participation decreased more among low-income households than among high-income households. Our finding contradicts results found by Stanford University economist Robert Hall using a…

  • Commentary posted February 3, 2015 by Salim Furth, Ph.D. Cutting Unemployment Insurance Probably Does Create Jobs, But We Don’t Know How Many Yet

    A new paper from the National Bureau of Economic Research has made waves by claiming that 1.8 million jobs were created by the expiration of unemployment benefits at the end of 2013. What went into that estimate? Will it stand up to criticism? First, some perspective: 2014 really was a good year for the labor market. The U.S. economy created 3 million jobs in 2014, up…

  • Commentary posted January 14, 2015 by Salim Furth, Ph.D. Budget accuracy has a conservative bias

    There is hubris in every government project. The unspoken idea behind bills as comprehensive as the Affordable Care Act and Dodd-Frank is that legislators can understand how a system works, tinker with it and improve it. Psychologically, it is unreasonable to expect that anyone is unbiased about her own grand idea, so legislating has a built-in bias toward government…

  • Backgrounder posted December 30, 2014 by Salim Furth, Ph.D. Accurate Budget Scores Require Dynamic Analysis

    A‌s the new Congress considers changes to the Joint Committee ‌on Taxation (JCT) and Congressional Budget Office (CBO), it should promote improvement in the methods used for evaluating macroeconomic policy. Currently, the JCT and the CBO often use “static” scoring methods, which make very strong assumptions about equilibrium responses to policy changes, often assuming no…

  • Commentary posted September 17, 2014 by Salim Furth, Ph.D., Curtis S. Dubay Six Demonstrably False Claims In Thomas Piketty’s Theory Of Wealth

    Thomas Piketty’s “Capital in the Twenty-First Century” became the most talked-about and most critiqued economics book of 2014 before academic readers had a chance to finish the book. When they did, many responded with rebuttals that cut directly to the core of Piketty’s argument. In “Capital,” Piketty makes six main claims. Here, we compare the evidence Piketty offers in…

  • Backgrounder posted September 12, 2014 by Curtis S. Dubay, Salim Furth, Ph.D. Understanding Thomas Piketty and His Critics

    Thomas Piketty’s Capital in the Twenty-First Century[1] is a treatise on how wealth inequality evolves in capitalistic economies. It is the most talked-about and most critiqued economics book of 2014 because Piketty’s timing was perfect: He released the English edition when income inequality was being actively debated in the United States. President Barack Obama brought…

  • Backgrounder posted August 7, 2014 by Salim Furth, Ph.D. The Export-Import Bank: What the Scholarship Says

    Much of the published support for the Export-Import Bank of the United States (Ex-Im Bank) is based on inaccurate views of the function of the bank or on mischaracterizations of the economics of providing export subsidies, which is the bank’s actual function. Export subsidies were extensively studied in a lengthy scholarly literature on “strategic trade policy,”[1] which…