Pandemic policy, STEM programs, etc.

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Policy responses during the COVID-19 recession have mitigated sharp declines in income, especially for those at the bottom of the income distribution, find Jeff Larrimore of the Federal Reserve Board and his co-authors. Using US administrative tax data, the authors found that taking taxes and transfers into account reduced the proportion of adults experiencing a large drop in income in 2020 (greater than 10%) by 16.2 percentage points. percentage, dropping from 33.4% to 17.2%. The effect was particularly large for people in the bottom income quintile, where accounting for taxes and transfers reduced the share of people experiencing a large drop in income by 27.6 percentage points, from 44.0% at 16.4%. The authors found that unemployment insurance benefits and stimulus checks explained 95% of these stabilizing effects, while tax and transfer programs other than unemployment insurance explained only 5%. Public policies, the authors conclude, have stabilized incomes across the distribution, with those at the bottom of the distribution enjoying the greatest benefits.

Sarah Cohodes of Columbia, Helen Ho of Harvard, and Silvia Robles of Mathematica conducted a randomized controlled trial to investigate a STEM summer program for high-achieving high school students from underrepresented minorities. They find that being offered a place in one- and six-week programs increased the proportion of students graduating on time from a four-year college with a STEM degree by 12.8 percentage points. and 16.7 percentage points, respectively, and increased across the college. graduation rate of 8 percentage points. The authors show that almost all of the gains in graduation rates resulted from students choosing more competitive universities, with admission rates to elite universities increasing by 10% to 17%. Among first-year STEM students, those who completed the six-week program earned a STEM degree 5.7 percentage points more often than their peers. This article is the first to show experimental evidence that summer programs for underrepresented minorities have a positive impact on achievement in STEM.

The job satisfaction gap between low-wage workers (the bottom third of the income distribution) and professional workers (the top fifth of the income distribution with a college degree) has grown during the pandemic, according to Elizabeth Johnson and Ashley Whillans of Harvard Business School. Using nationally representative Gallup survey data from 2019 to 2021 and controlling for worker demographics and location, the authors document a decline in job satisfaction among low-wage workers, a persistent gap between the satisfaction ratings of low-wage and professional workers, and a 0.1 increase in this gap (on a scale of 1 to 4) over the three-year period. Additionally, the authors find that salary is the most important determinant of job satisfaction for low-wage workers and that its importance has increased during the pandemic. The authors conducted their own survey of 400 managers to explore the role of manager psychology in explaining this job satisfaction gap. They find that managers overestimate the job dissatisfaction of low-wage workers, leading them to believe that these workers would be less engaged in their jobs and therefore deserve lower pay.

Exchange rate change from a year ago for Chinese RMB, Canadian Dollar, Australian Dollar, British Pound, Norwegian Krone, Euro and Japanese Yen.

Graphical data courtesy of the Federal Reserve Board

“We are closely watching recent events where risks in the system have crystallized and many crypto investors have suffered losses,” said Lael Brainard, Vice Chairman of the Federal Reserve Board.

“Despite significant losses for investors, the crypto financial system does not yet appear to be so large or so interconnected with the traditional financial system that it poses systemic risk. Now is therefore a good time to ensure that similar risks are subject to similar regulatory outcomes and similar disclosure to help investors distinguish between genuine and responsible innovation and the false allure of seemingly easy ones that hide a significant risk. Now is a good time to establish what crypto activities are permitted for regulated entities and under what constraints so that the fallout on the basic financial system remains well contained.


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