Stanley Fischer to speak at MAE Distinguished Speaker Series

On Thursday, May 23, 2019 from 6:00-7:30 PM, UCLA’s Department of Economics MAE Distinguished Speaker Series will be hosting Former Vice Chairman of the Federal Reserve Stanley Fisher speaking on the topic of “Monetary Policy Challenges Eleven Years After the Great Recession.”

Stanley Fischer is the former vice chairman of the Federal Reserve and served as Governor of the Bank of Israel, First Deputy Managing Director of the International Monetary Fund and chief economist at the World Bank. While Professor of Economics at MIT, Dr. Fischer served as thesis advisor to Ben Bernanke, Chair of the Federal Reserve, and Mario Draghi, President of the European Central Bank.

Please click on this link if you would like to RSVP for the event.

Pablo Fajgelbaum’s research featured in national news

UCLA Department Economics Associate Professor Pablo Fajgelbaum is featured in a variety of national news stories of late.  Along with co-authors Pinelopi Goldberg (Yale (leave) and World Bank), Patrick Kennedy (UC Berkeley), and Amit Khandelwal (Columbia), their paper “The Return to Protectionism” has been cited by The Los Angeles Times, Bloomberg, The Washington Post,  TIME, and Slate, among other outlets. The paper analyzes the aggregate and regional impacts of the 2018 trade war on the U.S. economy.  Update: 05/16/2019: the paper has also been cited by The Washington Post, The Economist, The New York Times, The Wall Street Journal, CNN, CBS News, Bloomberg, Rolling Stone, Fortune, Vanity Fair, New York Magazine, and Financial Times.

 

 

 

 

The NBER Digest highlights research by Pablo Fajgelbaum

The May 2019 Edition of the National Bureau of Economic Research The NBER Digest highlights a paper by Pablo Fajgelbaum.  Along with co-authors Pinelopi Goldberg (Yale (leave) and World Bank), Patrick Kennedy (UC Berkeley), and Amit Khandelwal (Columbia), their paper “The Return to Protectionism” has been cited for its analysis of the welfare effects of tariffs during the recent trade war, and of the impact across U.S. regions with different voting patterns in the last presidential election

Jay Lu wins Winter 2019 Warren C. Scoville Distinguished Teaching Award

The winner of the Department of Economic’s Warren C. Scoville Distinguished Teaching Award for Winter 2019 is Assistant Professor Jay Lu.  Jay won for his Econ 148 class, Behavioral Economics.

Scoville was on the faculty of the department of economics for 28 years before his death in 1969.  He is remembered by this quarterly award.

Quantifying the Cost of Caregiving

Professor Kathleen McGarry

The aging of the population brings with it a host of pressing economic issues. Chief among these is the rising cost of health care and the need to provide care for our elderly population.  While health care costs are high across the age distribution, they are far larger among the elderly.  And among those 65 or older, costs are highest among the oldest old.  For example, in 2014 per capita health care spending for the population ages 19-64 was $7,153, while it was $19,098 for the population ages 65 or old, and $32,903 for those 85 or older.  (Data available at here.)

Much of this cost at older ages stems from the cost of long term care, particularly care for the cognitively impaired. In 2016 the cost of nursing homes and home health care totaled $255 billion. Medicare does not cover most long-term care and few individuals have private insurance to cover the expense. Thus, in contrast to other types of medical care, much long-term care is paid for out-of-pocket. In work with Amy Kelly (MSHS, UCLA) and Jon Skinner (PhD, UCLA), Professor Kathleen McGarry shows that average out-of-pocket spending in the last 5 years of life for those who die from Alzheimer’s disease or related dementias is more than twice that for those who die from cancer. Furthermore, among those with dementia as a cause of death, 56 percent of the out-of-pocket spending was on long-term care.

While the cost of this formal long term care is indeed large, these numbers provide only part of the picture. Missing from these costs is the cost of informal care. Back of the envelope calculations put this number at $565 billion (in 2017 dollars), more than twice the cost of formal care.  These imputed costs are calculated by multiplying the average hourly wage of formal home health providers by the number of hours of informal care provided.  However, we know little about the extent to which informal caregivers reduce their efforts in the labor market because of caregiving responsibilities and how costly any reduction may be.

In a second project, Professor McGarry’s investigates the economic impact of caregiving on working age women. Because women provide the majority of care and often care for elderly parents while the women themselves are still in their prime working years, this group is especially at risk for negative consequences.

In joint work with Sean Fahle (PhD, UCLA), McGarry follows a cohort from their 50s through their 70s to assess both the immediate and long-term effects of caregiving.  The authors find that approximately one-third of these women provide care to an elderly parent at some point during this time and the number approaches 45 percent if care for a spouse is included.  Caregiving is associated with a significant decline in working, in hours worked, and in annual earnings. However, the largest effects are when examining changes over a longer period of time.  Those who provide care to an elderly parent at some point start off in a stronger economic position than non-caregivers—they have greater earnings, more labor market experience, and greater household wealth–but by the end of the window of observation, caregivers have lost wealth relative to non-caregivers, are less likely to be employed and work fewer hours.  They are also significantly more likely to report being in poor health.

These results suggest serious long-term effects of caregiving that likely have negative consequences that affect the quality of life throughout retirement, and potentially lead to the dramatically higher poverty rates observed for elderly women relative to men.

Key to any policy analysis is the potential impact going forward. The lower rates of fertility for the coming cohorts of elderly mean fewer children to care for an elderly parent and the greater the burden on any particular child, while higher rates of labor force participation for working-aged women signal a greater opportunity cost for caregiving. Finally, improvements in the treatment of heart disease and cancer have increased life expectancy and the probability that an individual lives long enough to develop a cognitive impairment—suggesting a great demand for long term care.

Greg Buonaccorsi

Greg Buonaccorsi

Greg Buonaccorsi

There’s a lot more that goes on at a Dodgers game than Clayton Kershaw striking out batters or employees serving hot dogs to spectators. Behind the scenes lies an intricate operation comprised of hard-working, innovative individuals collaborating to put on the experience millions of fans adore. Greg Buonaccorsi lives out this dream by merging his love for sports with his interest in business, a marriage of passions that began long ago.

Greg did not originally envision himself being admitted to UCLA, much less attending. But as an avid sports fan and enthused student, he couldn’t resist the possibility of contributing to the university’s athletic program while simultaneously learning from influential professors teeming with insights. The school’s pallet of prestigious athletics coupled with its academic reputation made Westwood the perfect fit for him.

For Greg, reinforcing his passion for business stemmed from interacting with a variety of different fields, as he dabbled with architecture and engineering before concentrating on his aptitude for business. He then enrolled at UCLA as a business economics major, an area of study that he felt “had a perfect marriage between the practicality on the business side, and the critical thinking on the economics side.”

Coming from a small hometown, Greg sought out numerous avenues of support to adjust to the vastness of UCLA, and found a home in the basketball program built by Coach John Wooden.  Having arrived in Westwood after supervising his high school basketball team’s operations, he marketed his managerial experience to obtain a position in college basketball’s most storied program. He acted as a manager for all four of his years at UCLA, and served as head student manager in the 1994-1995 season, the same year the Bruins emerged victorious to claim their record-setting 11th national title.

“Being part of a program that Coach Wooden created was an absolutely phenomenal opportunity. A few months before season, I’m in my hometown. The next thing I know, I’m in Pauley Pavilion looking up at national championship banners.”

In addition to the unforgettable experiences Greg accumulated through the basketball program, he also absorbed valuable skills in the classroom that would serve him for the rest of his life. One of Greg’s most memorable teachers, Professor David Ravetch, not only taught him the complexities of accounting, but also inculcated a dynamic approach to learning. Greg quickly discovered that his key to success did not lie merely in his propensity to comprehend the material. He understood the necessity of learning to apply the material to new and challenging situations he had never seen before, a skill that transcended his academic performances at UCLA and permeated into a key tool in his professional endeavors.

Upon graduating from UCLA in 1995 with a bachelor’s degree in business economics, Buonaccorsi integrated his education with his passion for sports and sought out a position at accounting firm Ernst & Young, who at the time audited professional sports organizations such as the Los Angeles Clippers. Working on the Clippers engagement allowed Greg to thrive under the mentorship of Anderson alumnus Dan Beckerman, whose guidance influenced Buonaccorsi to pursue a graduate education before returning to industry.

Following his graduation from the Darden School of Business at the University of Virginia, Buonaccorsi held positions at venerable institutions such as the New York Times and Warner Brothers. While financial planning for journalists might not have been a perfect marriage of his two passions, he gained valuable experience that proved vital in his return to a competitive sports industry. Greg understood that jobs in sports management have little turnover, and individuals who work such positions generally reap the benefits for as long as they deem reasonable. His largest piece of advice to a prospective sports businessman? “If you’re not able to get into sports immediately, find the best job you can find within your functional area (such as finance), and do the best you can at it.” Buonaccorsi made his return to sports by assuming the position of Director of Financial Planning and Analysis at the Charlotte Bobcats.

After delving back into industry, Greg faced no shortage of challenging professional experiences, but a sense of obligation to his family encouraged him to geographically transition back to the West Coast. In 2014, Buonaccorsi utilized his networking skills to promote himself for a position with the Los Angeles Dodgers, and was subsequently hired to fill an opening in the franchise’s Finance Department. His breadth of work might not be the face of the organization in the same way Clayton Kershaw’s statistics captivate the Dodger faithful, but his collaboration with a vast group of high-achieving individuals proves fundamental to operating a professional sports club that generates hundreds of millions of dollars in revenue. Now serving as a Senior Director, Greg and his team look for ways to expand their operations beyond baseball and often explore worthwhile startup investments, a practice not all franchises undertake.

“We’re always stretching and reaching for those new opportunities,” Greg said. “To be at an organization that doesn’t just think of themselves solely as an MLB franchise, is really interesting.”

Communication skills serve as one of the hallmarks of Greg’s occupation, as a mere understanding of financial analysis does not suffice when conveying complex proposals to employees from the nearly fifty departments he partners with. He says his “soft skills’’ are imperative in assuring that the meticulously-crafted plans of his department are optimally implemented to improve the operations of the franchise.

Now fully immersed in his professional ventures, Buonaccorsi still fondly reflects on his time at UCLA and the gratifying sensation of graduating from an institution he never imagined attending. “If you told me when I was in high school that I would graduate from UCLA…I would have been extremely shocked. Graduating from UCLA was my biggest accomplishment.”

Greg still remains an active Bruin, administering guidance to undergraduate students through the UCLA One program, as he hopes to inspire the next generation of leaders in business and finance. Buonaccorsi notes that the most invaluable piece of wisdom he can express to an aspiring young leader is to “utilize the four years of college to experiment with different ideas and to discover what is most authentic to yourself.” Once that happens, he remarks, it is essential to become a sponge for knowledge, to hone your craft, and become an expert in that field. Doing so, he concludes, will ease the decisions that an individual will come across as she explores her professional path.

By Andreas Papoutsis

Hugo Hopenhayn in the Marginal Revolution

Professor Hopenhayn’s paper “From Population Growth to firm Demographics” was featured in Marginal Revolution today. Alex Tabarrok described it as “The best paper I have read in a long time”.

He goes on to write: “The authors do a great job at combining empirics and theory to explain an important fact about the world in an innovative and surprising way. The question the paper addresses is: Why is dynamism declining? [They] point to a factor which is widespread across the entire economy, declining labor force growth.”

Edit: April 4, 2019

Professor Hopenhayn’s paper was also featured in “Revisiting the Discourse on Dynamism,” a report by Patrick Harker, President and Chief Executive Office of the Federal Reserve Bank of Philadelphia.

Changes in between-group Inequality: Computers, Occupations, and International Trade

By Ariel Burstein, Eduardo Morales and Jonathan Vogel

We provide a unifying framework to quantify the impact of several determinants of changes in US between-group inequality. We use an assignment framework with many labor groups, equipment types, and occupations in which changes in inequality are driven by changes in workforce composition, occupation demand, computerization, and labor productivity. We parameterize the model using direct measures of computer usage within labor group-occupation pairs and quantify the impact of each shock for various dimensions of between-group inequality between 1984 and 2003. We find, for example, that computerization and shifts in occupation demand jointly account for roughly 80 percent of the rise in the skill premium, with computerization alone accounting for roughly 60 percent. In an open-economy extension of the model, we show how computerization and changes in occupation demand can be caused by changes in the extent of international trade and perform counterfactual exercises to quantify these effects.

Read full paper here

 

Kathryn Brewer

Kathryn-Brewer2“Kathryn, you’re in!” declared the UCLA admission officer as she immediately recognized the voice on the other side of the phone. Why could an admission officer, who dealt with thousands of students each year, recognize a voice so quickly? It was because she had been receiving daily phone calls from a young Kathryn Brewer, anxious to learn of her admission application status. This kind-of hunger and determination has pushed Kathryn to grow and succeed in her diverse career.

Kathryn believes that it is always important to find challenges and strive for more accomplishment. In fact, it was this philosophy that led her to UCLA. After high school, Kathryn was eager to become an adult, be independent and join the workforce right away. Starting as a Secretary Sales Assistant for Hewlett-Packard, Kathryn vividly recalls a life-changing moment. Her supervisor congratulated her on her excellent performance during her annual review and remarked, “You’re going to be a Secretary 3 in no time!” However, Secretary 3 wasn’t here career ambition and she knew her lack of a college education was capping her potential. Determined, it was on that exact night that she started her application to UCLA. Looking back, Kathryn believes it is imperative to “make the commitment to be the best version of yourself.”.

In addition to the financial and analytical skills that she gained from her education as an Economics major, Kathryn learned two skills that would serve her for the rest of her life – teamwork and perseverance in the face of adversity. Kathryn worked close to a full-time job with her studies. This made it difficult for her to find enough time to study. However, she was able to always form study groups which helped her push through UCLA’s demanding curriculum. Kathryn loved forming as many study groups as possible; to her, collaboration was key to success within the classroom. In her career after UCLA, it was her ability to work with and lead colleagues that helped her achieve remarkable success. For instance, she remembers when she took over a struggling aviation company operating in a tight labor market. She was able to take the company and triple the revenue in less than 2 years. In fact, the company culture she developed had technicians calling to express a desire to work for her company.

Furthermore, Kathryn has the ability to make the best out of difficult situations. This ability again goes back to her college experiences. Kathryn’s father gave her limited funds during her college years. She had a mere $500 per month to cover textbook costs, rent, transportation, groceries, and all of her other living expenses. Oftentimes as the month came to end, so did her cash. However, Kathryn did not complain or simply ask for more money. Instead, she found a solution to the problem. She would go to the Student Center and eat the 5-cent oatmeal for breakfast, lunch and dinner. This less-than-ideal predicament showed her how to survive and thrive in difficult conditions and possess the initiative to work your way out of a bad situation.

This creed led to some of her proudest moments. Kathryn is a single mother of two boys for more than 30 years. Despite the challenges brought on by this, she attended Whittier Law School, and received her M.B.A. from Pepperdine University while working demanding full-time jobs. One of the defining moments of her life came on the day of her Pepperdine graduation. As she went up on stage to receive her diploma, she could hear her boys cheering from the crowd. Even though they were just children, they had watched how hard she worked for her diploma and appreciated her accomplishment. Recalling this, she says she has never been prouder or felt a greater sense of accomplishment.

Since then Kathryn has held a variety of positions in a range of companies. Though years have gone by, Kathryn remains as excited for new challenges as ever. From being CFO at a baby clothes brand to accepting the CEO position at an aviation company, Kathryn has a rich treasure trove of experiences. In fact, she emphasizes the importance of trying out different jobs to UCLA seniors who might be stuck with the mentality of finding their final job right out of graduation or facing eternal doom. By working in various fields, Kathryn has been able to discover what she’s truly great at. The aggregate of what she’s learned at her many positions in life has been invaluable to her career.  Additionally, no matter which field you are in, it is important to think of problems in terms of their potential solutions. She says that she loves working with people who get excited if challenged with a new problem. Problems are not a hindrance to success but a mechanism through which we can achieve success. When it comes to the risk and uncertainty associated with these problems, Kathryn recalls words from one of her favorite books, The Road Less Traveled, “Problems are the cutting edge that distinguishes between success and failure.” The courage and wisdom we develop from problem solving is foundation to Kathryn’s simple philosophy: “If you put clear intentions into the universe, the universe will conspire to give them to you”.

Lastly, Kathryn believes it is imperative to give back to the community. As a member of the Board of Directors for The Literacy Project, Kathryn adores witnessing “the effervescent joy on children’s faces”.  She reasons that there is a lot we can learn from these children. She recalls an experience when they gave snacks at an event sponsored by the LA Angels called “Readers in the Outfield”. Several of the at-risk children from the program asked if they could take the left-over snacks back home for their siblings. That day, they gave an extra snack box to all the kids to take home. The impact of the joy these kids expressed, brought on not by selfish desires but an innocent and selfless love for their family, was clear by Kathryn’s face as she told us this story. When you give, you get a lot more back.

Kathryn is grateful to UCLA for teaching life’s essential ingredients. She proudly declares, “I’m always going to be a Bruin”. This sense of identity has been important for her as she faces challenges head on. Using her education as a foundation, she is always striving to be better; a better person, a better CEO, a better mother. In the process, she has achieved success not only in her career, but in her personal life despite challenges that could have derailed her.   She hopes her story provides inspiration to others understanding that life is difficult; but having purpose in what you do changes hard work into a labor of love.

By Bailey Brann and Harsh Gupta

The Cost of Bad Parents

Arteaga

Carolina Arteaga

Almost three million children in the U.S. have a parent in prison. Do these missing parents harm child development or, conversely, remove a negative influence?

Imprisoning a parent may have many effects on a child. On the negative side, parental incarceration could create emotional trauma and impose financial hardship. Often childcare arrangements are disrupted and in many cases incarceration triggers house and school moves. On the other hand, we can also think of reasons for parental incarceration to be positive. Removing a violent parent or a negative role model from the household can create a safer environment for the child.

There is a literature that looks at the broad correlations between parental incarceration on children’s outcomes. This finds negative associations between parental incarceration and a host of important variables such as mental health, education, and crime. However, households with incarcerated parents are disadvantaged along many dimensions. For example, such households are more likely to experience domestic violence and mental illness, and be involved in drug use.

In her job market paper, “The Cost of Bad Parents: Evidence from the Effects of Parental Incarceration on Children’s Education”, UCLA PhD student, Carolina Arteaga, estimates the causal effect of parental incarceration on children’s educational attainment. She does this in the context of Colombia, using random differences in judge leniency to identify causal effects. Intuitively, she compares the children of two identical prisoners, where one is assigned to a lenient judge, and the other to a strict judge.

Carolina finds that parental incarceration increases educational attainment by 0.8 years. With an average schooling of 7 years, this corresponds to an increase of 11% in education. In the study, she also finds that the benefit of parental incarceration increases when parental quality decreases, that this positive effect is larger for boys, when the parent is incarcerated for a violent crime, and when the mother is the one going to prison.

Her findings suggest that on average, parents who are on the margin of incarceration in Colombia are likely to reduce their child’s educational attainment if they instead remain in the household. These findings are consistent with previous research that shows how removing a violent parent or negative role model from the household can create a safer environment for a child. Criminal parents may also deplete economic resources, and the economic contribution of defendants is likely to be small. Parental incarceration may also reduce the intergenerational transmission of violence, substance abuse, and crime. Lastly, parental incarceration may result in the child being placed with an alternative caregiver who has better resources to care for the child. Indeed, she finds that after an episode of parental incarceration, children often move in with their grandparents. They are also more likely to move to a household with higher socioeconomic status.

Carolina Arteaga will graduate this summer, and will be joining the Department of Economics at the University of Toronto.