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Another Look at Whether a Rising Tide Lifts All Boats

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Author Info
James R. Hines Jr.
Hilary W. Hoynes
Alan B. Krueger

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Abstract

Periods of rapid U.S. economic growth during the 1960s and 1970s coincided with improved living standards for many segments of the population, including the disadvantaged as well as the affluent, suggesting to some that a rising economic tide lifts all demographic boats. This paper investigates the impact of U.S. business cycle conditions on population well-being since the 1970s. Aggregate employment and hours worked in this period are strongly procyclical, particularly for low-skilled workers, while aggregate real wages are only mildly procyclical. Similar patterns appear in a balanced panel of PSID respondents that removes the effects of changing workforce composition, though the magnitude of the responsiveness of real wages to unemployment appears to have declined in the last 20 years. Economic upturns increase the likelihood that workers acquire jobs in sectors with positively sloped career ladders. Spending by state and local governments in all categories rises during economic expansions, including welfare spending, for which needs vary countercyclically. Since the disadvantaged are likely to benefit disproportionately from such government spending, it follows that the public finances also contribute to conveying the benefits of a strong economy to diverse population groups.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8412.

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Date of creation: Aug 2001
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Handle: RePEc:nbr:nberwo:8412

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2006. "The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates," NBER Working Papers 12159, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Daniel Suryadarma & Rima Prama Artha & Asep Suryahadi & Sudarno Sumarto, 2005. "A Reassessment of Inequality and Its Role in Poverty Reduction in Indonesia," Development Economics Working Papers 525, East Asian Bureau of Economic Research. [Downloadable!]
  3. Daniel G. Sullivan & Till von Wachter, 2006. "Mortality, mass-layoffs, and career outcomes: an analysis using administrative data," Working Paper Series WP-06-21, Federal Reserve Bank of Chicago. [Downloadable!]
  4. Davis, Elizabeth E. & Bosley, Stacie A., 2005. "THE IMPACT OF THE 1990s ECONOMIC BOOM ON LESS-EDUCATED WORKERS IN RURAL AMERICA," Working Papers 18918, Oregon State University, Rural Poverty Research Center (RPRC). [Downloadable!]
  5. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," IZA Discussion Papers 1665, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Janet L. Yellen, 2004. "Stabilization policy: a reconsideration," Speech, Federal Reserve Bank of San Francisco, issue Jul 1. [Downloadable!]
  7. Harry J. Holzer & Paul Offner, 2001. "Trends in Employment Outcomes of Young Black Men, 1979-2000," JCPR Working Papers 245, Northwestern University/University of Chicago Joint Center for Poverty Research.
  8. Davis, Elizabeth E. & Connolly, Laura S. & Weber, Bruce A., 2003. "Local Labor Market Conditions and the Jobless Poor: How Much Does Local Job Growth Help in Rural Areas?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(03), December. [Downloadable!]
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  13. Kim, Jongsung & Tebaldi, Edinaldo, 2009. "The Immigrants Odds of Slipping into Poverty during Business Cycles: Double Jeopardy?," MPRA Paper 15248, University Library of Munich, Germany. [Downloadable!]
  14. Hilary Hoynes & Marianne Page & Ann Stevens, 2005. "Poverty in America: Trends and Explanations," NBER Working Papers 11681, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Marianne Bitler & Hilary W. Hoynes, 2006. "Welfare Reform and Indirect Impacts on Health," NBER Working Papers 12642, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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