tv Key Capitol Hill Hearings CSPAN August 10, 2016 8:58am-10:59am EDT
you that there will be a book table here with books from both speakers on sale. and also that you were welcome to come up and ask questions as well after we closed. i would like to close, since i already mentioned would be deadly, with the final words of this essay, is mathematics necessary, which is worth reading. i think in a way it intersects with a lot of the comments that were made tonight by both speakers, but it also is slightly different. he finishes his essay with these words. what's mathematics, what's mathematics education is for is not for jobs. it is to teach the race to reason that it does not, heaven knows, always succeed but it is the best method that we have. it is not the only road but there is none better.
furthermore, it is worth teaching, were i given to hyperbole i would say that mathematics is the most glorious creation of the human intellect but i am not given to hyperbole so i will not say that. [laughter] however when i am before the bar of judgment, heavenly or otherwise, and ask to justify my life, i will draw myself a proud and say, i was one of the stewards of mathematics, and it came to no harm in my care. i will not say i help people get jobs. thank you very much, and good night. [applause] [inaudible conversations]
day-long economic conference covering range of issues concerning minority populations, jobs, wages, student loan debt and economic and societal changes are all topics to be taken today. the national economic association and cio, it's just getting under way. >> and hopefully we will see some of my students here in future conferences except they'll be your colleagues. so having said that, having said thank you, i want to hand it over to bill washer who has been a friend of mind for years back when i was with the economic media of congress and so we want to have you come up so that you can welcome us and we thank you very much for this opportunity to be here. [applause] >> thank you, bill, and as you
can guess, i'm not an intern. [laughter] >> welcome to the federal reserve board. we are extremely pleased to be hosting this morning's session of the 2016 freedom and justice conference sponsored by the american society of hispanic economists and the national economic association. i think at the board we -- we -- what bill said resinates with us . we hear from a diverse set of researchers and policy analysts and hosting this event contribute to goals. we look forward the opportunity to everyone gathered here and we expect that as often occurs at conferences such as this, fruitful research networks will develop. beyond that, we hope to promote
future collaboration between our organizations and in that spirit i want to point out some people in the board, staff that are members of diversity council and perhaps you could wave or acknowledge when i say your name. dan vovetz. beth kaiser. i don't know if beth is here right now. michael colombu over here. we will will be hearing from her. robin. andrew collin who bill mentioned. stephanie, bill schumaker and debbie flores. did i miss anybody? i guess not. please seek them out to share your ideas on how we would together in the future. our division director david couldn't be here today and sends
regrets. david is a strong advocate to increase staff not only through development of more thoughtful recruiting process but by using resources of the board to increase diversity of the units who go onto pursue an economics ph.d and andrew which was very -- was strongly supported by david is an example of that. in addition, david has been a strong component of efforts and economic inclusion. finally, on behalf of the federal reserve board i want to thank all of the conference participants who made their way over to the board and to all the board staff who are in attendance and i want to specially thank bill, amanda, carolyn palmer, karen pence and stephanie for arraigning the session to be held tat board and i would to thank the other board members who are assisting today to make sure we have an enjoyable event. personally, i'm looking forward to the program and the
opportunity to speak with many of you through the course of the morning. so with that, ill suggest that we move on to the first session of the moment which are disparities and income wealth and access. i will turn it over to the chair. >> thank you, bill. hi, my name is nina banks, a professor. this first session will focus on disparities, earnings and access, each presenter will have 20 minutes to speak. our time keeper is antonio flores. tony will give each other a ten-minute warning followed by 5-minute and two-minute warning and after that we appreciate it when he holds up the zero card that you wrap it up very quickly. and so after each presenter has had a chance to talk at the very end, we will then open it up for questions and answers. our first presenter is mónica garcía pérez, mónica is an associate professor at st. cloud university.
her presentation will be on local labor demand factors and immigrant workers, the affect of minimum wage of disemployment zero. >> good morning, thank you. i second all the thank you for the organizers for allowing us to present our preliminary work. i am going to start with motivation about this topic, i don't need to motivate that much minimum wage but there has been an increasing at level and there's been bill that is passed and 12 in the process of passing. there's also a new discussion on methodologies, comparisons and discussion. so since 2003, all the cd have
been having minimum wage at the local level and some of you can see the red, those are the proposed ones. abundance of not all the states, cities and all the state have participated but one of the recent, local minimum wage has become a mainstream policy tool for fighting income inequality. so this is from the national employment project cd's minimum wage, so recent april released, so the reason behind it is to adjust to high cost and living standards, the difference between rural and urban and to have quicker decision in terms of minimum wage and to provide local experiments. also at the same time the change in demographics which is teens a proportion of total population and a proportion of native adult
population has been going down at the same time that recent immigrant as a total of -- shared of total population has been going up. and this -- the share of teenagers going to the lower in 2015. this was one is from 2013. it was posted in the washington post, article in 2015. this is almost a vision but at the same time the proportion of teenagers have been going down the employment rate, population rate has gone down faster than the share of population, however, this is -- this is a revision from 1994. teenagers to have their earnings very close to minimum wage, we still see that but it's a gap that's getting closer, closer
between groups and the other suspect groups which is lowest skill adults and lowest skill immigrant specially recently arrivals, lower-skilled immigrant. on the background, that's the motivation of background, i can spend hours of talking minimum wage, we all have read it at some point specially if your background is labor economics. but there have been a long history with whether it affected employment and otherwise, but there was consensus that from the 90's, early 90's about it affects particular groups and teen employment will decrease, minimum wage decrease. so we expect according to some of the researchers that we will see employment opportunities decreasing for less skilled
workers. but there has been recent discussion, kind of challenging those specially who have been used two effect models and the discussion has been focused on the issues of bias -- special correlation and state selectivity and business cycle. but all the major one with state has been one of the major discussion and when you include those kind of controls, then in the order -- older results you will find out no effects on teen employment. so the consistency and literature in minimum wage has been to focus on two major things, one identifying the potential effective workers, either teens or service worker and the second point find
reliable control group. so whether you're using neighboring counties or state, so and some of those state incentives from the recent working people 2015 take advantage of those, the number of states that minimum wage, minimum wage. our research is going to be trying to focus the light on a particular group, recent low-skilled immigrant and try to find a reliable control group and in this scenario what that means is that we are going to make the importance of having control for the share of teenagers in that state and i'm going make it, i'm going make the case why. in immigration literature which is there's also literature of
the mobility of immigrant, but not only mobility, impact of immigrant flow on local economy. so when we talk about minimum wage and we talk about immigration, we have to -- [inaudible] >> extensively discussion of economic impact of immigrant flow and local economy and that national level. consensus in 2000 -- early 2000 small impact on economic outcomes for natives. but later results have been mixed in the discussion, well, we had to incorporate analysis of inmobility in this analysis of the impact on local wages, so we are considering issue in many local economies. when we put this two large groups of literature into one, immigrant workers and minimum
wage, there's no literature on this. maybe one or two. one of them -- the most interesting one for me personally is that they want from pf -- 2008 and 2010 two papers that focus on low-skilled immigrant and compare native teens with low-skilled immigrant. one of the things that paper is the two-way -- they can only call model but include business cycle indicators, very interesting ones and compare to teens. they have zero effect on workers an hour but they found a positive effect on earnings even after controlling for business cycle proxy and something
connected is paper in 2011. they didn't do immigrant workers but they did hispanic and black workers and they found inconclusive results on earning and employment but they get effect on hours worked. they were a little bit concerned of the size because they were concentrated on teenagers hispanic and teenager black, black teenagers. so in all this there has been -- the methodology of minimum wage and there have been research who looked at immigrant workers and the mobility of immigrant working specially the recent arrivals and how that has moved economic for natives.
low-skilled immigration compare with native and -- [inaudible] >> the rate is very high. this is a correlation and very close to one, there's high connection where teen works and recent low-skilled immigrant. there was also some work done in the past about low-ten employment rates relate to immigrant flows. so recent lower-skilled immigrants as move around nation because in some way when something happens they need moving around and they will minimize the effect of the shock. i will explain what he uses. so when low-paid jobs, the labor is very high there's more available in the market so increase minimum wage is going
to result in expected income because there's going to be a larger effect and what's going to happen like recent low immigrant who tend to be more mobile and teen -- so to move away from increases, the opposition will be true in model. he creates this kind of indicator that average the -- some kind of tendency to low-scaled immigrants to choose a particular state and use that value to data, identify minimum wage or that actually identify minimum wage. those affect in the state shared of immigrant increase.
it's a little more complicated. this is his model and affected income that actually depends on the separation rate and in some kind of relationship between separation rate and elasticity. one is more elastic than the other. so they it's more elastic and substitute in the labor market, then employment effect is going to be higher in that it has labor demand. so in his result those who are more in the elastic market will be move away and the elastic market will stay or we attract. so i'm going to try and capture some of his favor and i'm not in any way using exactly his conclusion but the opposite of his conclusion because at the
same time immigrants may move away, immigrant may stay in markets where the -- where the labor demand is elastic. when immigrant -- low-skilled immigrant are not competing with teens, the markets should be less aplastic and the more competition, more elastic labor demand then the states -- kind of the opposite but in the same flavor. what i'm going to use is the lead that everybody is using, cps rotation groups. in 1994 to 2014, 'in 94 they started asking questions about immigration statutes, country of birth. i'm not going to show those results. i'm just going fast on some over all.
a wage is around 125% of the minimum wage. we can see that teenager participation in that market has fallen down and this has been described in many other researchers in the past. the employment ratio between natives recently immigrants and native is widening, in the same period. and the gap of the concentration around the minimum wage is also getting very similar to it's still teens are very close to the minimum wage. so what i'm going to use, i'm going to use three different models. sorry, i went too fast. i'm going to economic model and i'm going to have the models that include the effect and i'm going to have the model that includes state effect, division, census division, control and some version of state to capture the business cycle the way
abbrc, some versions of that model and the extension of that model that is what my work is about is i'm going to interact the minimum wage with the teen as a proportion of native population, trying to make it less related to the entrance and exit of immigrant in that state, at the state level. and this particular component is going to be different than the previous, that's what my expectation is and also going to represent something different too. i'm going to run each one separately. the teenagers -- what i consider teenagers 16 to 19 year's old. the lowest-skilled immigrants are adults who have less than a high school. i do something with less than five years. when i use the aggregate model i
do found similar results, these results are very similar but then i start using the versions that are being developed now and at some point we start getting no effect and some could be small examples. i found all across all the models all the versions of the models with no special with state -- [inaudible] >> a large effect on employment in areas that are low share of teens, teens are still competing with immigrant but the large of the share of teens the lower effect of disemployment effect.
.4, .5 which is higher than the elasticity for teen employment. there's some levels that saturated model but it's hard to be reliable on those results. one of the problem i have with cps, doesn't really capture some of this particular market specially if immigrant are part of an informal market in terms of payment that's not included even cps indirectly may include some of the undocumented immigration, that's the worrisome that i have behind it, everybody that works with immigration data, specially earnings and immigration data. so i try to see how different is my paper from the -- [inaudible] >> the difference unemployment
rate, rate has changed dramatically and the recent lowest-skilled immigrant follow increase of the minimum wage but the teen even told me that you cannot notice -- fall more closer than minimum wage on the market. him grants are paid on average when we have a little bit slightly more than the minimum wage compared to teens, so maybe during less boundary effect for them, maybe that's another explanation of why i find an ambiguous effect. i look at more recent immigration with five or less years arrival and i get the strong effect. i look at recent established low-skilled immigrant overall and i look in effect -- [inaudible] >> but i cannot find the same relationship, this is low-skilled. low-skilled is the most defining characteristic.
i try to do the counterparts so they are not low-killed and not recent. i find no effect. i do citizen, noncitizen, hispanic and regardless of whether it's low skill or not, i use replicate cadena. cadena is the paper i mentioned in 2004 -- 2014. i kind of get what he get but the problem is maybe because i have more years, my values are not significant and errors are actually high, i don't know what. but he got a negative effect on employment, low-share immigrant areas, i do get the effect but once i start adding business
cycle components i don't get -- i don't get anything. do i get the effect of the -- binding effect of the minimum wage. i see the negative -- he didn't show the log of hours. this is my own work and everything is my own work but this is not comparable to anything because he didn't show that. so in conclusion, one of the thing is about low-skilled immigrant is specially recent arrival affected minimum wage and affects oh to be very high compared to other estimations, earnings effect that's not consistent, data may have some issues of capturing the actual earnings of the particular population. so but important -- it's important to consider locally main component, specially one that is becoming more local discussion. and we need to ask if we are
going to use this policy as a tool for labor status, like removing transitions to employment, we are moving across different labor levels, low skill, high skill and whether it's going to be a permanent change and everybody bounded by what is going to increase all earnings. the potentially affected workers are changing dramatically and end with this. this is the teen participation in low-skilled jobs, low-paying jobs and these are the native high school. so thank you, thank you for your time. >> thank you. [applause] >> our next presenter is belinda, belinda is assistant
professor. she will be talking on historical origins of persistent inequality in nigeria. >> okay. hi, good morning. my name is belinda, thank you for the introduction. i'm presenting this paper which you might -- some people in the room have seen in another version previously with other data, so this is an extension. so anyway, let's begin. all right, so very, very growing literature currently in development economics looking at the effect of inequality, inequality by group specially ethnic inequality on developing outcome. there was a recent paper i think this year that looked at inequality that kind of explored the ethnic inequality as being bad for development.
there's also some literature on ethnic inequality and conflict. the idea is we don't want types of inequality to exist because they have negative outcomes for development. so far people have been focused on the effect of inequality and there's not much research, in the literature trying to understand the origins and the mechanism of driving on equal outcomes within states. so this is what my research comes in and i'm looking at nigeria, nigeria if anybody familiar with nigeria, one of the most ethically diversed county in the world. 250 ethnic groups. perfectly to study ethnic ine -- inequality. i have a pointer. okay, nigeria today looks like this. this is in a.
36 states plus federal capital territory divided in to what you see zones, six of them. this is not an accident, this is by design. the geopolitical zones correspond to ethnicities in the country. for instance, you have the northwest which is largely populated by the housas compared to this graph here and in the northeast you have the canuri, in the north central you have kind of a mix of canuri and the south side you have a mix of other ethnic groups, et cetera. the southwest in red here and in the southeast you have ebos. very aligned ethnicity this color-coded map. this is nigeria today, this is nigeria today basically repeating what i said today with actual ethnicities in the map corresponding to this one. this is nigeria and this is -- we will come to this graph.
this is distribution of ethnic states in 1950. trying to look at the -- any paper that look at historical economic history aspects of ethnicity and we will use this map from george murdoff. also an important map in here macro level of political states in 1850 in nigeria. this is caliphate, muslim empire that consumes much of northern nigeria. i put this map up here to say that the correlation between nigeria and present, nigeria in the past, i've done this looking at data about .7. so people are pretty much residing in where they were more or less. if you trust .7, significant correlation .7 in 1850 and today. so map of nigeria. i should also mention details on administrative boundaries. i mention it had geopolitical
zones, corresponding to that six states and local level they have 774 local government areas, the smallest level -- administrative flefl nigeria. i mention all of this and i look at zone as my proxy for ethnicity here. i talk about zone. i use the map matching ethnicity to geopolitical zones to make sure i'm not just looking at this visually and seeing that the zones correspond to ethnicities. so what i'm going to do is present some kind of simple statistics first on ethnicity using zone, again, as proxy for ethnicity and look at ethnic inequality across different indicators, sanitation water,
education and across wealth. i'm looking at data over the years. i'm showing you this, ethnicity zone are very highly in nigeria. okay. results i'm going to discuss here. inequality -- particularly for access to what i'm going to call federally administrative services. i make a distinction, things like electricity from the grid and flush-toilet access. this is not because of infrastructure capability, this is federal policy. the federal government many years ago issued grants for flushed toilets, for instance and electricity has been under
the purview of the federal government in nigeria. so i'm going to call federally administrative services and there's outcomes in terms of access to services to the federal administrative services. i will also use more mobility in locally administrative services, things that have traditionally been under the purview of local government in nigeria. sanitation, access to improved water access, pipe portable water access. we will talk about that more. also sticky outcomes, education and wealth. i will show here. what you also notice here and this is something if you're familiar with nigeria not too surprising but we see in the data in the northeast and northwest, the two zones populated in nigeria the northeast is where you have the boko haram crisis in the country .
every single category since 1990. when you look at the gender gap and education, for instance, something that a lot of people have been talking about, it's actually closed in every other zone, among every other ethnicity except the northwest. it's very surprising result. so i will show this as well. but again, improvement in administrative services, they're not as sticky, federal administrative services and stickiness in education and wealth. why is this the case? i'm going to explore a few different mechanisms, one mechanism that i will discuss, i will focus on here, i touched on previous paper that all of this is -- the stickiness that we see in the access oh federally administrative services is as a result of policy to groups in the country. so specifically i'm going look at this variable which has been, again used previously,
development economics, centralization variable. i'm going to say that this relationship of corporation and reward between federal and local government in the country so that if you are a centralized group, centralized meaning that you are a group in 1850 which has an ethnic traditional leader, if you're corporated with the federal regime which over the time period i'm looking at 1885 through 19 -- sorry, 1960, 1960 and 1966 through 1999 so british and military government. if you're incorporated with any of the governments you get services. services from allocation. this is the mechanism, propose that really explains distribution of resources and explains the stickiness in federally administrative versus
locally administrative public service that is we see in the country today. i will also say that why do we have such mobility in locally administrative services, actually when i look at some -- correlations but strong correlations, you see that government quality trust in local government is strongly associated with improved access to the locally administrative, but what i'm going to say that basically in these areas where the federal government has underinvested in services, you see that the local government is stepping in. so why do you have this persistence, you know, for the federally administrative services? you have low investment and you can think of it initial investment and then kind of geographic skill as well and combined to take this initial law investment to low present day investment.
you have lower initial cost of investment and so you are able to see local governments stepping in to provide services here. okay. stickiness, standard deviation, i look at various indices which is the group genie by ethnicity or by zone, you see lots of mobility in sanitation category driven by this locally administrative service. and then the water access, pipe water to well access and kind of, you know, less mobility in wealth, education, federally administrated services. also using the data, these are my indicators, water, portable water access, improve sanitation and i'm looking at a range of
inequality indices as well. i look at the fields, group genie, variation, the group field as well. so these are just some results. i think i have time. i will pass over some of this. wealth has been rather flat in the country. education has been improving and then you have some -- variation in the infrastructure categories, something like water, sorry, sanitation variables have a lot more movement here since 2003 which we have data for. something like power, flushed toilet, not so much movement in those categories. by gender this is the kind of persistent gender gap, if you will, on top is male, on the bottom red is female and then you see this is the northwest and the northeast of the bottom
for education by zone here. so southern and north central zone to the top, north western, north eastern simply at the bottom since 1990 and then this is -- again, this is in the conditional means, you see this is the education by gender, this is going to be gender gap in education, closing everywhere else but this northwest zone where it's actually widen since 1990 here. so i will skip over this but, again, these maps are trying to show, this is -- [inaudible] >> and you have a lot more kind by north, south, low values for wealth, your high value is north. that pattern has remained consistent since 2003 where if you have a lot more variation here and here for administrative
service for sanitation access. okay, so these are the -- some of the trends in the -- the inequality indices, focus on the horizonal by zone. i did this by using language, by different measures of ethnicity, et cetera. i look at the vertical inequality indices. this is for wealth. also here you can see the group genie, down here in green, slight dip in 1990 and remained largely flat in 2003, this is the stickiness i was talking about. for infrastructure this is the group's genie by ethnicity by zone, variables and flushed toilets as i mentioned federally administrative service kind of sticky, relatively flat since 2008, and similar pattern for education, quite sticky and then
for horizontal inequality gender but down here. okay, let me go into trying to understand why i am seeing the patterns herement i -- here, i mentioned literature understanding inequality, not so much of origin inequality. these people looking at impact of historical institutions, et cetera, what i'm going to say is i'm going to look at the precolonial centralization, if you have sovereignty in 1750, centralized and a lot of papers coming out if you were centralized in 1750 you have better development outcomes today. what i found in previous paper, yes, you have better access
goods, federally administrative services but not administrative service and the reason for this as i mentioned in the beginning you have bilateral relationships, and if you're lead e you get rewarded by services that the federal government can control. your noncorporate you get punished. i won't discuss it too much because i don't have that much time. but, again, sticky versus less sticky category. you see less -- more mobility in the services and i'm going to say that this punishment, evidence of this punishment that i'm seeing in services can be seen in lower trust in symbols of federal government, like the police, for instance, in areas that i'm going to say are under the policy regimes in nigeria. so i show this map again, we should remember this and very, very simple framework, this is a
bilateral bargaining gain. nature defines your type if you're centralized or noncentrallized. the british, federal government come in. let's say they choose set of tax, this is a trivial outcome. you as ethnic state leader can decide to cooperate with them or not cooperate. you cooperate you get some initial wealth less amount that you have to give up in taxes and also maybe you get some access to some public work's project, et cetera, that the british are doing at the time. so i'm going to say that in this cooperation is good outcome. in the second -- that's why i explain this. that's the caliphate i showed you. muslim empire.
they say, this is great, we can use them to collect taxes which is what we want to do. so they say, okay, we will give political economy to the people that we meet, very muslim, right, and we give less political to the people that are centralized but not muslim. so depending on whether you were centralized, when the british -- when the military, sorry, in the second period, the british have left and the military comes in, you have to step down from power, local government to the federal government. you can step down or choose not to step down, cooperate or not cooperate. here i am going to say noncooperate was a dominant strategy. very muslim. again reasons which i show you here that you cannot read. essentially cost is much higher
than the benefit of cooperation here. so i show this, i'm using the data but i said in murdoff map, everybody is using in development economic, i use my preindependence, and then i use extensive controls. look at the defect of the civil war in nigeria which also struggled between federal and local governments over state resources so fits nicely into this theory, mechanism that i'm talking about and then we skip to my results. so this is the -- you know, effect that i'm seeing, this is the historical effect. if you are centralized in 1850, yes, you do have better access to federally-controlled access today. increases access by about 9%. outcome variables are averages.
extensive controls here. if you were centralized but not cooperative, centralized and not cooperative is the interaction with the majority muslim indicator, you actually see decrease in access to about 6%. if you were centralized and cooperated you have active access about 14%. this is illustrating the relationship for federally administrative services. makes sense in the context that i'm presenting here, right, so these -- this cooperation only works for federally but not locally control. it's bargaining between you and -- the local government and the federal government but not for the local decentralized services . again, strong history of missionary education in nigeria so it makes sense that you have majority muslim areas.
and then this is the trust and police of traditional leaders, these people who were under the punishment regime, unstable results but negative throughout have less trust in police or traditional leaders, which again fits in punishment story. and again, they have more trust in local government. we see that the federally administrative services are associated with local -- they're not -- federally administrative not associated with local government but the local ones are associated with local government. it fits into this thesis. let me skip over. skip that over. all of this trying to say that we really need to dig deeper into what the pattern that is we -- patterns that we see. in conclusion, horizontal inequality has been persistent
for wealth, education and access to federally administrative services in nigeria for the reason i layed out previously. there have been cig -- significant gains like certain sanitation, for water access. again, because i'm saying that the local government are stepping in where the federal government has stepped up. very interesting, i thought results, you see the nice huge movements there. stagnant for wealth as i mentioned. the gender gap in education has increased which we should explore in future research. again, this framework to initial investment with investment, geographic economic skills might explain access to federally administrative services that i mentioned earlier. but again, this is -- you know, ongoing research is much more that we are doing here and
looking for any comments. thank you. [applause] >> all right, and our final presenter for the morning session is thomas masterson, thomas is a research scholar and director of applied modeling, distribution income at the institute of bart college. >> first i would like to thank professor banks and springs for organizing this congress and thank you to howard university and afl-cio for hosting us. it has been going on for about 13 years so you'll get the latest, greatest results.
the work has been supported by the foundation. today i am going to briefly talk about some of the racial patterns in enemployment and wealth over the great recession specially more recently and then i will talk about the measure of economic well-being, what it is and why we use it. i will talk about household and racial inequality. over the 90's as a kind of reference and then over the 2000's specially focusing on the period 2007. so that's what i'm going to do today. okay. so first starting with employment population ratios which i like to look at rather than the unemployment rate. this is a quarterly employment
population ratio for going back to 1989. this is based on the bureauy labor of statistics data and you can see there are some striking patterns. you'll notice there's a pronounced dip in the employment population ratio for all the racial groups represented here after 2008, after the first quarter of 2008. across the board there's a big drop in the employment population ratio, which is, you know, probably not a huge shock. but you know the drop is specially pronounced among hispanics and black individuals. white and asian also saw a drop in population ratio but not quite as pronounced.
after initial drop there's been recovery specially for black individuals, right, so you see the bottom blue line is the gap between white and black individuals in terms of employment population ratio over time, right. and you can see that the first quarter of 2016 it's basically more or less the lowest point in the last 25 years, so that's interesting. it's an interesting feature of the labor market right now. you can also notice that whereas the employment population ratio for black individuals has increased since the bottom, employment population ratio for white individuals which is kind of yellowish line has more or less flattened out since dropping, okay. so it's an interesting pattern, i think, part of the story of why that pot earn is there is represented by this.
this is median network group. this is the survey of consumer finances produced by the fed and we have data going back to 1983 up to 2013 which is the latest available estimates of wealth and you can see that, you know, there's a pattern, there's a racial pattern here. the medium net worth of white households has grown quite a bit. it peaked in 2007 and dipped since then but the median net worth of black and hispanic household, households has not really risen at all. there's been no -- no gain in the last 25 years, 30 years, right. the -- and in 2013 for black
households, anyway, it's the lowest measure median net worth. so this -- this, you know, for white households there's a cushion that isn't there for black and hispanic households which might explain part of the reason why employment population of white individuals has not increased as much, right. so early retirement is much more an option for some people than others. okay. so looking at home ownership rates which is the other big impact of the great recession given the housing crisis and the crash in housing, we notice that for all of the groups, let me take a step back and explain the racial groups that we are using here which are not as detailed
as we saw yesterday in randal's presentation. the composition specially as we saw yesterday of the others in this case has been changing quite dramatically over the last 25 years. it's grown in size and in distribution of countries of origin within that other group. but we noticed that for groups other than -- well, for black and white household is in 2004 for the other hispanic households in 2007 but for all groups there's a trailing off much less pronounced for white households which have not really lost much in terms of the 2004 to 2013, over the last nine years, just a couple of
percentage points in home ownership. for black in 2004 -- so there's been in some areas but not so much in others. okay, that's home ownership. i want to talk about home equity by race. i can't really use median here since median for groups that have less than 50% is zero, 50% home ownership in terms of overall home ownership. so home equity has followed a somewhat similar patterns at network and this isn't much of a surprise. so you can see, though, that similar patterns, 1983 to 2013,
there's not much difference for black and hispanic households, right. hispanic households are up a little bit 38 to about 40,000 of black households just about 30,000 in both years. these are in 2013, dollars, by the way. $2,013. you know, the interesting story is the others who have shut out in 2007. there were more than double than they were in 1983 but still doubled in 1983, despite the losses in the crash of housing, white households are still about a third higher in terms of home equity in 2013 than they were in 1983 and other households are more than doubled, more than
double. so that's picture of the main components of the impaskt -- impact of the great recession. income is another which i will get to in a bit. first, i want to kind of present the framework that we use to produce kind of a more comprehensive measure of economic well-being, captures household command over commodities, both market and none market commodities. we begin with gross money income, household income, the usual measure of economic inequality in the u.s. and we subtract the government cash transfers and property income from that, right, which gives us base income. to that we add rent for the share based on the share of home equity of individual households which comes from the totals and
then imputed assets and debts, so the annuity is based on historical rates of return and -- wow, i yurry don't talk much but get me in front of an audience, and i can't shut up. [laughter] >> so this is on rates return and based on different types of household. then we add net government expenditures which includes transfers and taxes. so we subtract taxes, it's an after-tax measure. ..
so that's where we are in 2013. just to look at the trends over all in income and work by our measure and others. the overall trends, there are different patterns in our measure and household income. you can see that increase is pretty much without interruption to about 2013 and then drops a bit in 2013, warehouse money income is much more a cyclical trend. it's growing and then gets out of the tech bubble burst, grows again through 2007 and then falls. so very different patterns. if you look back for the with estimates back to 1959. you can see there are very different trends, being measured
by our measure as opposed to household income. we include the equipment scales. the interesting thing in terms of the median hours of work, the median annual hours of total households market work and household production. so you can see that market hours have been flat since 2004 but household hours have kind of been decreasing steadily. there some short rises between 2000-2004, and 2010-2013 but still substantially lower in 2013 than in 1989. so these are the same measures, beating income by race. notice that for all the groups
household income is higher except for others. well, i shouldn't say higher. it's about, it's not much higher, a little higher for black households. it's a little door for hispanic, really not much difference. or nonwhites in general it's higher. this is though coming for this because for 1989 and 2000 the way we put our data together as we doing statistical match of three data sets. for 1989 and 2000 we could use detailed categories to do it because the numbers of records were not sufficient. if you just look at non-white household income between 1989-2013 their looks like there's a big improvement. what it is there's a larger share of the others in the total which is driving the nonwhite
average higher. is the look of black households there's a very small increase of hispanic households. even among the others there's just a simply no difference between 1989-2013. in between there are increases, but basically reduced. so in terms of our measure between 89-2010, for white households increased, there's a decrease to 2013. for black households more or less the same pattern although much lower. in 2013 lakh households are at 74,000 in terms of our measure whereas white households were at 86,000 in terms of 1983. they're still a long way to go live in terms of household economic well being. hispanic households are at a higher percentage of well being
than black households in relation to whites and there's this same pattern, a much bigger loss for hispanic households between 2010-2013. other households are above white households in all the years in terms of lmew. interesting result. also true for household income. i haven't been looking at tonex i don't know how much time i have left. >> four minutes. >> no problem. i just have 10 more slides. [laughter] from going to skip over this since it's more or less what the last slide said. just briefly i want to show that the contributions to growth in
lmew is buried quite a bit over time. for the 1990s, for each period here i have the contribution to the overall growth and the growth of the third quintile. this is a way to look at the growth of the median for all these years. the meaning of the third quintile is very close to the median. you will notice that the overall growth in lmew in the overall 90s as a big great elephant in the name. it's not all wealth. financial assets blew up in the '90s. we will see while that was somewhat the case for nonwhite, for the third quintile, so the middle quintile, much smaller growth and a much smaller growth in pacing, which is mostly earnings.
if you look at 2000-2013, all of the growth is in public spending. taxes and spending. a big losses are in base income for the most part and some in down-home wealth, which the numbers were less than 1% so i just left them off. so moving on though, want to look at more or less the same thing. this is the contribution to mean lmew by racial groups. so two minutes, ha ha. long story short, there is one group that benefited from growth and financial growth more than any others in the '90s. he might've guessed it was white folks. and for the other groups, base income was larger come and large
contributor to growth than for white households but this is driven mostly by the others. now, for the great recession, notice that between 2007-2010 for all the groups the only positive, the positives are in public spending for public consumption and transfers. the negatives are all, especially for black households and base income. black households lost in terms of earnings much more than any other household, group of households. during the period between 2007 2007-2010. but between 2010-2013 black households gained more and this is driven by that faster increase in the employment population ratio we saw before. so for the entire period between
2000-2013, almost all the growth for white households, for black households, hispanic households is about fiscal policy, reduction in taxes t, increase n spending, increases in transfers were as for the other group, those are also large components of the growth in limew but the others also benefited from increases in financial wealth and in housing wealth. you will notice even during the great recession, these small increases for white and other households are in home wealth. that reflects the increase in rents over those periods. because the income that we give to household depends on their share of equity times the total of computed rents, which has been growing.
so another fun graph, and i have more if you like, but i need to skip ahead. just to sum up, the great recession, its overall impact on household well being, on household income is a large increase in poverty and increase in inequality. the inequality in household income increase between 2007 2007-2013. in terms of our measure though the overall reduction in any court of labor income was the biggest factor. overall inequality fell between 2007-2010 and then rose again between 2010 and 13. labor income was the biggest factor in the reduction, and at the bottom transfers more than made up for lost earnings. but at the top larger losses in earnings and wealth without offsetting net transfer increases so that's why so
increase in initially but after 2010 you may remember that there was a shift in stance towards fiscal policy. a pronounced shift. so homeownership rates have fallen dramatically for black and hispanic households, more than 5% in the former case. black household limew decreased during the great recession and is still falling. the largest fault is in base income. the largest increase has been net government spending but the latter wasn't enough initially and it's been cut in half. the hispanic household transit kept rising to the great recession that started falling afterward. between 2007-2010 it grows and then fell again. the hispanic households had a small initial drop in pacing, in earnings, but a larger drop in spending afterwards.
so that's the story. so thank you very much, and you can look at all of our need reports on limew on our website. [applause] >> thank you. we have about 15 minutes for questions and answers. sam? i'm sorry, bill. [laughter] >> thank you. belinda, i thought might help the audience if we put your paper in a different perspective, and then someone explained, you don't have to apologize for doing a paper according to 45 million people. but there are lessons to be learned here. i think this might be helpful to put into context. so first of course everybody is
very concerned about boko haram and the spread of the kind of activity that can destabilize governments and that are very important to all of us. it is an important thing. but this persistent rebellion against the federal government also shows in the west of course and our election because we have pockets that are persistently against the federal government. the curious thing of course in the u.s. and i think it would be interesting to see you do a parallel, right, in the u.s. the very people who complai complaif those, actually the federal government, gives them huge transfers. so i think it would be interesting to look at the kind of opposition we see in nigeria which seems to be predicated on
persistent of federal discrimination, let's say, to certain regions versus the u.s. where we do all these transfers and the same pockets hate the federal government yet we know they couldn't make it without the federal transfers. i think it would be kind of interesting your next paper, your next iteration to look at these persistent gaps in the federal response. just to give it a different context at a different sort of flow. and it would be interesting to then high that in two now current date in nigeria on where we know boko haram has been most active and sort of give us like a correlation between these incidents in nigeria to what your fund.
i think that would be a couple context for folks. >> thank you. derek. >> like all the presentations, i have comments on the latter two. so starting with belinda, question and, i guess is, the usefulness of game theory seems group with making predictions about where to go, but i question the usefulness in this explanatory power because of agency, the question of agency. i imagine the british might've set the game up to begin with and maybe even have influenced on the relative power of the various entities might have had in making strategy. so i guess i would push to say think about what might've been counterfactual's and if the british are ultimately maximizing their update to function, what does that say to the choices of the other group? the other question is with
regards to even oil, not controllable, what regions was in and its impact on development? thomas, i especially like the breakdown the shows the relative contributions. i had seen it be done before. and then now i have a shameless plug since i'm in the audience of the federal reserve to talk about some limitations of the sort of consumer finance that report out by your presentation, such as that big of a group that the classification of putting lots of americans as we become more plural into another category where we know there's lots of heterogeneity within that category. one can even argue the heterogeneity within the black and latino categories as well. also telling is the role of local markets, particularly the housing crisis. that's another limitation of a survey consumer finance. it's hard to identify wealth any
specific geography. and then the final limitation would be clearly there are huge structural in because across racial and ethnic groups. are we able to come up with questions that can look at resource accumulation as well as laws that are specific to certain groups like remittances, like the role of incarceration? perhaps we should consider -- the shameless plug comes from an apparatus that sandy and i are private investors are which is a national asset scorecard for communities of color which identifies specific regions of the country that are very plural like los angeles, like miami, like washington, d.c., ever look at asset the commission disaggregated by specific ethnic groups. perhaps there are ways to link that methodology with a survey of consumer finance that can give us better information and surveillance of our country.
>> did you have a response, either of you? >> i can respond. yes, definitely, i was hating myself over the head because i didn't mention what i mentioned the british, it's a choice that's not a choice. if you get massacred if you don't cooperate. you did cooperate and you got beheaded and exiled him or exiled and then beheaded. anyway -- [laughter] of it was like the corporation was the only outcome that could result out of this. it's a choice that wasn't really a choice. and then the second part of it will control template. i mentioned the military, the reason they felt that they could pass a policy that said that the local governments, the leadership to step down from power and whoever the military wanted within the elected into office was because of the influx
of oil money in the '70s. this was like all of a sudden they didn't need the taxation of the british have been depending on all this time and now you have oil government revenue from oil. this was a definitely a big part of the story there, the kind of oil money and its impact on the decision-making of the military. >> yes. so i definitely share the concerns you raised, derek, about the details we can get. unfortunately, for our synthetic data set it is even worse because it is specifically matched. we can talk about the kind of marginal distribution by groups that were used to match for later use, we do use those detailed raise groups, including other. but in order to statistically match the wealth survey with cbs at the time with cbs and we
can't really use their detailed groups unfortunately. it's kind of a limitation of the way that we produce a synthetic data set we use to prove the estimates. it's multiply. i saw you shaking your head when i said black household wealth the decrease to i'm interested in what you know. >> the quick point is even your point about black at the highest percentage gain in income over a certain period, well, you know, if you start at a low level, and lopez to begin with but a small change is a huge percentage of change, so the question is absolute versatility. the racial wealth gap for blacks did improve dramatically by to start a adding dramatically low level. so a small change can look dramatically when, in fact, it's not meaningfully big.
>> i enjoyed all three percentage. i was interested in monica's given my own work on minimum wages. i like your focus on less skilled immigrant workers. i think focusing on teens as much as lucas done this is a substantial group that may be affected by minimum wages. your presentation went by pretty quickly and gave a lot of result i'm looking forward to reading the paper more carefully. had a couple of questions but i wasn't sure i quite got come on treeto say this but i'm not quie sure got the intuition of why states with a higher share of teenage, teenagers have lower effects of minimum wages on immigrants. i normally think of a lot of the -- so when the minimum wage goes up, employers substitute a slight higher skilled worker for the lower skilled worker. i guess i would think that would apply in the case of lower
skilled immigrants, that they would probably on average be highly skilled in the teenagers. i wonder, is that consistent with what you're finding? do you find, are your results in system with the labor labor substitution away from teenagers towards lower skilled immigrants? we qaeda found something similar when we look at the idc and minimum wage together. that combination tended to draw in single mothers, single women with children but that was, there implement ratios went up but that was expense of lower skilled teenagers so that was a trade off there. i'm wondering if you viewed your results as similar? >> there were two intuitions. one was the labor labor
substitution that you and other people have found of looking at higher skilled individuals. but also in the mobility, also immigrants reacting, reacting beforehand, which i didn't show because i am doing analysis on how lower skilled immigrants react to predicted increase of the minimum wage and have a competition in that particular market. so there could be a pretty minimum wage increase in areas where they see they have larger competition. that means not only competing with other immigrants but also competing with teenagers. then they leave those areas. so when they are a larger demand. there are two things i use an explanation of that come on the
interaction of low-wage and teenage share. >> barbara? >> could you talk more about -- [inaudible] very interesting that you included that. >> what we do, as i mentioned, we specifically matched the survey with the see bs degree our data set. for every individual household production hours, so we include cooking, cleaning, care or shopping, household management, all those kinds of things in there, right? and then we use a replacement cost method basically. to evaluate the hours that are spent by the household. we do a little bit of adjustments for skill and stuff like that. >> could you talk a little bit about what's in homeownership?
ism mobile homes are not a part of that. >> i believe they are. i think it does include mobile homes in their listing of residences. i'm pretty sure that they are included. so the land would not include in that case at the valley of the home itself would be. speed that would also be included in your meeting equity? okay, thanks. >> i'll ask the question. monica, first of all of want to applaud your ability to successfully married to different very important areas of research. and so since, countries about your findings to get any with respect to the impact of minimum wage increases on native-born low-skilled black workers?
>> yeah, the researchers refocused on immigrant, and the last slide that i showed that i was curious about how the distribution of minimum wage workers or potential minimum wage workers was, i was curious about the other groups. i haven't had time to go into detail but i did separate it by racial groups. that's surprising even though i haven't done this work in the past by raise. i did know if this increase i'm black, low skilled workers and minimum wage, minimum wage jobs. i was suspecting as much as low skilled immigrant workers. so the group that has the fastest growing rate is lower skilled immigrant workers. that's why we focus on the greater i think in the future i'm going to start focusing on
his change of the dynamic and the composition of low-paid jobs. because the things i'm saying that i started with motivation was changed demographic and how teenagers have become lower proportion of that particular group at how much of the discussion has been focused on teenager workers and now on these other groups. >> michael. >> one of those interesting results from my perspective here the large growth in home and financial wealth of the other category. do you have a sense of how much of that is due to performance versus the composition of the other? i suspect that other category includes a lot of immigrants from their east countries and that there's a shift they're coming from wealthier countries, that they may be bring in some of their own wealth when they arrived and that might be
driving the increase in like portfolio wealth of that kind of stuff. do you have any sense of that, a makeup? >> yeah, i'm skeptical about the ability to get a lot of the detail out of the survey refinances. but that being said i haven't tried either. the other category basically includes asian immigrants, native, how wind pacific islanders, native americans and alaskan native. those are the other groups in the other category. some of those on native-born asian and some are recent immigrants. so there's just a huge heterogeneity within that group that includes south asian engineers and cambodian immigrants. [inaudible]
>> my sense is probably that's a lot of it. >> andrew? >> okay. a question for monica, and then one for belinda. in terms of the mechanism, you so described it as immigrant workers exiting particular geographies in response to competition. so i guess my question is, do we think that's the mechanism, or is it a lack of entry by immigrants coming in to the particular geographies when they see that they are more competitive? and then for belinda, i guess i will echo bills earlier comment about, i think it's fascinating to think that this in the
context of the u.s. as well. and i had a question about the sort of fiscal resources at the local level, and whether the actual resources available to the different localities are more equal across them, or whether there are differences that are driven by wealth, differences that would sort of meaning that because a locality is spending on august been relatively more in resources down the wealth of the people on the locality would support, or is the mechanism that everybody kind of has the same endowment at the local level, but this comment federal endowment is being applied unequally? so that's the question.
>> before i answer the question i forgot to say something, this is a thank you to all senior economist at also offer replication data and data for young scholars like me. because this is cbs's david to answer your question i think you are right the i should have -- they could be both. it could be an exit of the marketplace facing competition also a lack of entry. move away but it doesn't attract again, so yeah. >> and on the question, to broad periods in the cloud appeared, so a lot when a mission initial wealth is agricultural wealth. palm oil, cocoa, that kind of thing. all we do is control for
agriculture in which is the closest i have. point taken that definitely like looking into the colonial blue books to dig further into what kind of their agricultural taxes would talk about fiscal cancer. it's a lot easier in the military period because the oil appeared. its oil wealth concentrated physically in the southern region, so south of the country but however by law, all oil revenue goes to the federal government and the federal government can decide to the application among regions. it doesn't matter. which is a big point of contention right now. there's another election group, the movement for the emancipation of the delta in nigeria and this has been a big point of contention because the oil is physically located in our region and get we are extremely poor and we don't get anything close proportional to the amount
of oil coming out of our region. it's one of those things where the federal government still owns and decides even the physically the oil is concentrated in a particular region of the country. >> thank you. we will reconvene in 10 minutes at 10:45. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations]
[inaudible conversations] [inaudible conversations] [inaudible conversations] >> the national economics association and afl-cio conference taking about a 15 minute or so break. scheduled to resume with speeches about wealth and inequality including the performances of minority owned banks, latino businesses and student loans.
at 12:30 p.m. the federal reserve board research and statistics to visual speak and more from the conference live at 2:30 p.m. with a focus on societal inequality and that includes the impact of the incarceration rate on the economy and public education. the conference is expected to wrap up at about 4 p.m. eastern. you can watch any of the conference later today on our website c-span.org. until the forum resumes a look at a portion of today's washington to on donald trump's tax reform plan. >> senior economic adviser for the trump presidential campaign. also is the president of economic research and consulting firm. good morning. >> guest: good morning. >> host: could you talk about your role in advising mr. trump on economic issues? what specialty do you bring a what you talk about?
ethnic i've done a lot of economic issues over my career so what the campaign wants to do is have a broad economic program and have the details put out. that's what we've been working on in the speech on monday described parts of the plan which are the reforms of taxes, trade, regulatory policy and energy policy. they will be followed one, more parts of the program coming out. as you may know i was in washington in 1984 through 1991, have to think about that a little bit, a long time ago. but i worked on issues such as the tax reform act of 1986 and also some of the trade legislation, and quite a bit of the way that the government interacts with each other. so the department of agriculture works with the department of commerce it is this giant
conglomerate, some of which, a lot of which i think is excessive. >> host: we have a bit of a section of the speech from mr. trump's presentation on monday specifically taking a look at taxes. we will ask you some questions on that. >> my plan will reduce the current number of brackets from seven to three and dramatically streamline the process. we will work with house republicans on this plan using the same brackets they have proposed 12%, 25% and 33%. for many american workers their tax rate will be zero. >> host: can you flesh out, first of our most y. three tax brackets? some of the analysis from the paper she wouldn't those automatically favor those who make more? >> guest: the three tax
brackets are part of civil fining the code. and no, it doesn't mean people will pay more. for one don't be a larger standard deduction to take a lot of people off the tax rolls to reduce the taxes for others. what you end up with is a reduction in income taxes for most americans, and i think that would be stimulative. i really need to emphasize and point out that a lot of job growth in wage growth comes from small businesses. one of the major thrust of this program is to get small businesses operating better, and that creates a rising middle class income. the real median income, which is the 50th percentile, a middle, has been going down in this recovery which is unprecedented. a primary goal of the economic program is to get people's incomes going out.
in contrast in one of the worst that i have if hillary clinton became president, she said she's going to raise the income tax rates on individuals, on upper income individuals but that also had small businesses. a lot of small businesses. so it's going to hurt jobs. she's going to lose a lot of jobs with that program. >> host: with the pieces in "usa today" saying that mr. trump would probably struggle to get large tax breaks even through congress. republican congress because they been bent on slashing the deficit without some compromise the do you think that the reality should mr. trump become president? >> guest: it's a lot of hard work. i started in 1984 at the staff of the senate budget committee so i was a senior tax analyst ananthony moved over to the treasury department in 1986 as the tax reform bill went forward in congress. everyday people across the
administration working with people in congress in order to work out the details, to cut a deal. i have to say trump has been a dealmaker in his career. one of the things that people should realize is and how to get things done in washington you have to find a way to get people to work together. i think he will do a better job at that than hillary clinton could. >> host: is modeling his approach to taxes to house republicans approach, is that right? what are the differences? >> guest: modeling as they be going a little too far. he chose the rates, the tax rates that were in kevin brady is built the ways and means committee. in other areas there are differences but look, this is a process that's going to go on for a long time. both in the campaign but that also if you are elected president, then you would have a
long process of combining different concepts. one of the concepts that has to be worked on is how to work internationally? one of the big figures of the current economic, the current economy and the current tax system is that corporations have a very high tax rate. that stops them from hiring them having jobs in the u.s. they create jobs abroad and then they keep the cash abroad because there's not a tax efficient way to bring it home. one of the key point of the program is that 10% kind of penalty rate for corporations to bring the cash, the capital back into the u.s., that creates jobs. so this is a big growth program that needs to be done because the growth rate has been so slow. >> host: here to answer your questions about proposals by donald trump for the economy. if you would ask questions --
you can tweak this comments as well if you want. you can do so @cspanwj. one of the op-ed's that came out after mr. trump's plan from the new times, the talked about the proposal specifically but also talk to what he would do for revenue. they said the problem with mr. trump ideas is it would leave a multi-trillion dollar deficits with no benefits and the games are much more modest because many businesses would invest in less demand for the products is growing. many people are not motivated by lower tax rates to work more. the idea of revenue that's going to be lost by this tax proposal, how does he propose to make that up? >> guest: well, i don't think it would lose revenue the way that they're saying. one of the things you should ask when you beat studies like that
is what growth rate, economic growth rate to the assume? that's in doubt. my view is that if there's a big tax reform program you get growth like the reagan administration did, and also even like george w. bush did in 2004 and 2005. as the tax cut was put in place, growth surged. that's usually not in those revenue loss estimates. a second key thing, one of the studies that was done by moody's that showed a loss on this kind of a plan had the assumption that the federal reserve would raise interest rates to 4% next year and over 6% in 2018. and then the would be a recession. one of the things mrs. clinton has been campaigning on is the idea that trump would cause the recession but that comes directly from the idea that the fed would put interest rates to
6%. that just doesn't make sense. the reality is the growth rate of the economy, the job growth would be much faster under a trump economic program than under a clinton economic program. one thing you mentioned in the "new york times" article was demand growth wouldn't be enough to cause people to want to work. i really think we should push back on that and talk about the people's desire to work. once they work the art income and then there is demand growth. the reason we have such weak demand growth now is because people are not not enough people working. they are left out of the labor force. the participation rate is one of the lowest in many, many decades. that's a key obstacle in the economy. growth was only 1.2% in the second quarter, and 1.2 over the last full year. that's nearly a recession.
the economic program has to change massively in order to get us out of it. >> host: one more question before we go to calls. mr. trump said the unemployment rate as he sees it as a hoax. would you agree with that? >> guest: they're reporting the official red hat 4.9% but what that doesn't tell you is how many people are assumed not to be in the labor force but it turns out there's 94 million people right now over 16 who are excluded from the labor force. i think there are millions, probably tens of millions, excuse me, i will stick with millions at maybe 10 million people who would like to work if they have an opportunity for a good job. they are so but not counted in the unemployment rate in less they're actively looking. a lot of people unfortunately don't have the skills or they've been beaten down so much. it's been years and years and years of very slow growth right now.
my view is that we can unleash the growth of the economy. we have no idea right now today how many of those people would like to work and would rush back into the workforce if they were good jobs. that can be achieved. >> host: david malpass joining us. questions for you. the first one is from ralph in battle creek, michigan, democrat's line. you on with our guests, david malpass. go ahead. >> caller: i would like to correct one thing he said about ronald reagan, the tax cuts under ronald reagan. even though there was a large growth under reagan after the tax cuts, that was still not enough to erase the deficit. there were deficit spending everything the year under ronald reagan. at the end of ronald reagan's term, the national debt had more than doubled. so this idea of trickle-down economics under ronald reagan solving the deficit problem is exactly incorrect. it will exacerbate the debt
problem. i had a question about mr. trump's tax returns. does this advisor know how much mr. trump is a billionaire, correct? a wealthy super successful billionaire. i wonder how much he pays in taxes? i'm worried he is not paying his fair share. perhaps less than 50%, something like that, maybe what mitt romney would pay. >> guest: right. i have an aunt who is in battle creek so hello to ross. as for the deficit, i didn't address it so i agree with the point about the reagan administration that national debt went up too much. remember, that was at the time of the cold war and also you were recovering from a very high inflation rate under jimmy carter. but i agree with the thrust of the caller that are needs to be cost control on the federal government and aggressive steps
taken to bring down the fiscal deficit. one worry we have to have come right now cbo's projections are that under current policy, and i presume that would be similar under hillary clinton's policy, the deficit is going to average $1 trillion per year -- >> [inaudible conversations] >> thank you. welcome back to our afternoon session, financial sector and inequality. our first presenter is maude
toussaint-comeau, senior business economies, community development and policy studies division federal reserve bank of chicago. she'll be talking about the performance and survivability of minority owned banks in times of financial stress. >> good morning. it's a real pleasure to be here. i have been enjoying the conference so far. it was a little more tax income to this morning then going to university. i should be used to that because i'm with the chicago fed. this is going to be -- my colleague, robin neuberger. pretty much like the title is the same, we essentially are looking at minority owned banks,
and in recent areas of time. so study from the 1990s after the financial crisis. i know i speak aloud, but not that loud. so in recent years, as we know, we've had huge housing crisis and by many indications, the housing shock and foreclosure, et cetera, was disproportionate in sort of low income places. concurrently, there are certain institutions that also serve markets. so in light of those recent events, there's a lot of
interest in terms of looking at issues related to the financial inclusion, relating to access to financial services for communities but also look at the institutions which primarily especially those targeted to serve those communities. there's always been in essence very specific interest in minority institutions that are viewed as sort of special type of institutions. we can see one of the earliest program was a minority bank depository program, which was to come and still is, to encourage minority banks to become depositors and financial agent of, let's say, government,
et cetera and just encouraging that deposits be put in those institutions come and more formal you've had some revision with the community investment act which is sort of provides specific sort of mention that those institutions to be preserved in some of the regulators as part of that are heavily involved in outreach activities whether it is to provide ethical systems and also networking and collaboration with potential, the hope to increase flow of capital to minority depository institutio institutions. >> this interests is clear by the fact that these are
institutions that have high exposure to more vulnerable markets come as i mentioned sort of low income markets. so if you look at in essence the% of dutch and you look at it by mdi versus non-indie icon you can see that really close to half of bank branches for mdi are in low income communities. granted it's a smaller chunk but speaking of the exposure of that sector as a whole. and it is a lot of those institutions have a lot of branches that would be like the one or two branches that is fully exposed or is serving low-income and high minority place.
and the also reflected in their lending portfolio. compared to non-fbi. we see that over a third of their lending come in general the lending portfolio is twice as exposed to sort of laces that traditionally have been underserved by perhaps th for lk of a better term, mainstream financial institutions. so we are therefore very interested in these institutio institutions. and some of you may have heard some presentations on the topic, we essentially are looking at various aspects of mdi, trying to take almost -- so not only in this presentation i'm going to focus more on the institution
itself, but from previous research, and to support our motivation, that those institutions are in the very important in places they serve. one of the ways to see that come with the recent financial crisis offer us an opportunity to sort of look at me the peak of bank failure and sort of see and to test the extent to which what happened when banks failed. does it even matter or not. so taking sort of this pseudo-experiment come in the previous research we were able to demonstrate that it seems to matter in that if you look at sort of the predicted landing which means you sort of try to isolate what's going on with demand in the community and you sort of tried to pull out sort of the credits of shock is
coming from institutions and what the impact is in terms of those communities. and what we've seen in the research is that, so if you sort of look at sort of peak of the bank closure, and what you can see is that, you sort of look at what is the impact on subsequent flows of credit to small businesses, what we see is that if we are talking about non-lmi, generally national data also shows for other researchers like winston who have looked at these for large banks and national data. we see that in non-lmi, credit
to small business is essentially restored to pre-crisis level. but we are not seeing that in the case of low income places in which, especially one which was survived in the eye and which has experienced closure. so we are seeing that there's still not really come close to looking like they're going to go back to pre-crisis level. so we believe that the impact is somewhat by a low income places which is another motivation for us to perhaps look also more closely at the institutions themselves. so in this particular study we are going to look pretty much at the financials