Monthly Archive for March, 2011

Trust in Public Institutions over the Business Cycle

Published on 22 Mar 2011 in academic, news and research. 0 Comments Tags: , , .

by Betsey Stevenson, Justin Wolfers  -  #16891 (EFG LS PE POL)

We document that trust in public institutions–and particularly trust in banks, business and government–has declined over recent years. U.S. time series evidence suggests that this partly reflects the pro-cyclical nature of trust in institutions.  Cross-country comparisons reveal a clear legacy of the Great Recession, and those countries whose unemployment grew the most suffered the biggest loss in confidence in institutions, particularly in trust in government and the financial sector.  Finally, analysis of several repeated cross-sections of confidence within U.S. states yields similar qualitative patterns, but much smaller magnitudes in response to state-specific shocks.

http://papers.nber.org/papers/W16891

Policies to Encourage Job Creation: Hiring Credits vs. Worker Subsidies

Published on 15 Mar 2011 in academic, news and research. 0 Comments Tags: , , , .

by David Neumark – #16866 (LS)

The Great Recession has spurred interest in policy efforts to spur job creation. This article surveys existing research on two “direct” job creation policies: subsidies to employers to hire workers (“hiring credits”); and subsidies to individuals to enter the labor market (“worker subsidies”). The research suggests that in the short-term, when recovery from the recession is a priority, hiring credits are likely a more effective policy response. First, hiring credits are likely more cost effective, as long as they focus on the recently unemployed and create incentives for new job creation. Second, in general, worker subsidies better target benefits to low-income families and especially single mothers. At this juncture, however, because the recession fell so heavily on men, a hiring credit focused on the unemployed may target low-income families well, and the usual distributional concern with low-income female-headed households may be less paramount. And third, employment subsidies may not be as effective when there is high cyclical unemployment. In the longer-term, however, when the labor market has recovered more from the recession and the focus can shift to longer-standing employment problems and distributional concerns, greater reliance on worker subsidies may do more to increase employment while shifting the distribution of benefits more toward lower-income households.

http://papers.nber.org/papers/W16866