How I learned to stop worrying and love the minimum wage

How I learned to stop worrying and love the minimum wage

When we talk about inclusive prosperity, what's top of mind is usually the 40-plus years of stagnation for the bottom 90% of American wage earners that began in the mid-1970s. It’s been the primary driver today’s record levels of inequality. University of Massachusetts economist Arin Dube has spent a significant portion of his career studying what caused that pay gap, which began with a decoupling of wage growth from productivity growth, and ways to address it. In fact, he’s been called the “go to guy on minimum wages” by Nobel Prize-winning economist Paul Krugman. Now Dube has a new book titled “The Wage Standard: What's Wrong in the Labor Market and How to Fix It,” where he argues that U.S. wage stagnation has not been about irresistible economic or societal forces, but instead mostly about policy choices. Among those choices has been a reluctance among politicians to raise the minimum wage—including the federal minimum wage, which he says at $7.25 per hour is so low that it’s functionally like having no minimum at all. His research has gone a long way to dispelling stubborn myths about minimum wages that have persisted despite growing empirical evidence to the contrary, but also to explain other forces driving employment monopsony—the market condition where a small number of employers effectively control the market for jobs and pay. To address those forces, Dube is advocating a number of measures ranging from trading slightly higher inflation for tighter labor markets to sectoral bargaining and stronger unions. Resources mentioned in this episode: The Wage Standard: What's Wrong with the Labor Market and How to Fix It [https://www.penguinrandomhouse.com/books/708374/the-wage-standard-by-arindrajit-dube/](book)  Monopsony in Movers: The Elasticity of Labor Supply to Firm Wage Policies [https://jhr.uwpress.org/content/57/S/S50] (paper)  About our Guest: Arin Dube is the Provost Professor of Economics at the University of Massachusetts Amherst. His research focuses on labor economics, along with health economics, public finance, and political economy. His current areas of research include wage inequality, the importance of labor market competition, minimum wage effects on employment and inequality, the role of fairness concerns at the workplace, the interplay of behavioral biases and labor market power, the impact of unemployment benefits, and the role of firm wage policies in explaining the growth in inequality. He has also conducted research on employer health mandates; unions and collective bargaining; outsourcing and sub-contracting; gun laws and violence; and capitalization of private information in stock prices. Dube received his B.A. in Economics and M.A. in Development Policy from Stanford University, and his Ph.D. in Economics from the University of Chicago. He has previously held positions of Visiting Professor at the MIT Department of Economics and Boston University’s Questrom School of Business. He is a NBER research associate, a research fellow at IZA, and a research affiliate of the MIT Stone Center on Inequality and Shaping the Future of Work. Economics for Inclusive Prosperity (EfIP) is a network of academic economists from Harvard, Princeton, Columbia, and other leading universities who are committed to an inclusive economy and society. EfIP members are working to transform their field around a new vision of prosperity—a vision that includes traditional economic metrics, but also expanded measures of wellbeing including access to health, to democratic participation, and to a livable planet. They’re also highlighting the important changes in economics that are already underway.   Host Ralph Ranalli is a longtime Harvard podcaster, an entrepreneur, and former journalist. He previously hosted “HKS PolicyCast,” the award-winning flagship podcast of the Harvard Kennedy School. He holds a BA in political science from UCLA and a master’s in journalism from Columbia University.   The Economics for Inclusive Prosperity Podcast is recorded at the Malcolm Wiener Center for Social Policy at the Kennedy School of Government at Harvard University. The co-directors of Economics for Inclusive Prosperity are Dani Rodrik, Stefanie Stantcheva, Suresh Naidu, Atif Mian, and Ilyana Kuziemko. The show is co-produced by Ralph Ranalli and Tony Ditta, with social media management by Violet Van Buckman.

Why agricultural R&D is helping less where it's needed most

Today we’re talking about food, specifically agricultural R&D. The world’s population has grown from about 2 billion to 8 billion people in the last century. That’s a lot of mouths to feed. But the silver lining was that technology was advancing—particularly during the so-called “Green Revolution” from the 1940s to the 1980s when new high-yield grain varieties, fertilizers, and pesticides dramatically increased harvests in developing nations like Mexico and India. But during that time, economists were also developing an economic theory called the “inappropriate technology hypothesis.” It says that technological innovations developed for wealthy countries are specifically designed for conditions and environments in those countries, meaning they were often unproductive or inapplicable in developing countries. Fast-forward to today, when the effects of climate change—rising heat, drought, and extreme weather events—are already affecting farmers around the world, meaning we’ll need even more technological breakthroughs to mitigate them. But will those technologies help where they are needed most? In their research, economists Jacob Moscona of MIT and Karthik Sastry of Princeton have taken a new look at the intersection of the Inappropriate Technology Hypothesis—they like to call it “technological mismatch”—and agricultural research and development. They say there is a systematic rich-world bias in ag R&D that explains a large share of global disparities in both the adoption of new technology and agricultural productivity. They’re here today to discuss where that bias comes from, it’s effects, and some potential responses. Resources Mentioned in this Episode:  "Inappropriate Technology: Evidence from Global Agriculture" [https://www.nber.org/papers/w33500] About our Guests: Jacob Moscona is the 3M Career Development Assistant Professor of Economics at MIT. His research explores broad questions in economic development, with a focus on the role of innovation, the environment, and political economy. His work investigates the forces that drive the rate and direction of technological progress, as well as how new technologies shape global productivity differences and adaptation to major threats like climate change. He also studies the political economy of economic development, with a focus on how variation in social organization and institutions affects patterns of conflict and cooperation. Moscona joined MIT's Economics Department as an Assistant Professor in July 2024. He received his PhD from MIT in 2021 and was a Prize Fellow in Economics, History, and Politics at Harvard from 2021-2024.  Karthik Sastry is an Assistant Professor of Economics and Public Affairs at Princeton University, in the Department of Economics and the School for Public and International Affairs. Sastry studies macroeconomics, with broad interests that also intersect with economic theory, the economics of innovation, and environmental economics. Two specific themes in his work are understanding the role of bounded rationality and social dynamics in business-cycle fluctuations and modeling how societies adapt to climate change through policy changes and technological innovation. Sastry received an AB in Economics from Princeton in 2016 and a PhD in Economics from MIT in 2022. Heis  a Faculty Research Fellow of the National Bureau of Economic Research in the Economic Fluctuations and Growth program and the Environment and Energy Economics program. Economics for Inclusive Prosperity (EfIP) is a network of academic economists from Harvard, Princeton, Columbia, and other leading universities who are committed to an inclusive economy and society. EfIP members are working to transform their field around a new vision of prosperity—a vision that includes traditional economic metrics, but also expanded measures of wellbeing including access to health, to democratic participation, and to a livable planet. They’re also highlighting the important changes in economics that are already underway.   Host Ralph Ranalli is a longtime Harvard podcaster, an entrepreneur, and former journalist. He previously hosted “HKS PolicyCast,” the award-winning flagship podcast of the Harvard Kennedy School. He holds a BA in political science from UCLA and a master’s in journalism from Columbia University.   The Economics for Inclusive Prosperity Podcast is recorded at the Malcolm Wiener Center for Social Policy at the Kennedy School of Government at Harvard University. The co-directors of Economics for Inclusive Prosperity are Dani Rodrik, Stefanie Stantcheva, Suresh Naidu, Atif Mian, and Ilyana Kuziemko. The show is co-produced by Ralph Ranalli and Tony Ditta, with social media management by Violet Van Buckman.

How meritocracy can help solve—or exacerbate—our inequality problem

It’s a widely held belief in our society, even among groups that disagree with each other on other issues, that meritocracy is a public good. Broadly, meritocracy speaks to our innate sense of fairness—people should get what they deserve. But what exactly constitutes merit? In the dictionary, it’s defined as a “praiseworthy quality” or being deserving of praise. That’s about as subjective as it gets, since it depends entirely on the values of the person doing the praising. In academia, the definitions get more refined, but there is still disagreement. Is merit about “intrinsic excellence,” as defined by philosopher Thomas Mulligan? Or is it context-specific, as argued by Harvard economist Amartya Sen, who says it depends more on an individual’s ability to help achieve a society’s chosen values and goals? Our guest, economist and University of Chicago Professor Steven Durlauf, is the founding director of the school’s Stone Center for Research on Wealth Inequality and Mobility, and has been researching meritocracy and its influence on inequality for decades, particularly in the area of university admissions. Durlauf says that done poorly, so-called meritocratic systems can be gamed by social groups in ways that help them to hoard their advantage and privileges. But done well, meritocracy can create greater equality of opportunity and help individuals from a broad swath of society to fulfill their potential.  Listen to more of Steven Durlauf on The Inequality Podcast [https://podcasts.apple.com/us/podcast/the-inequality-podcast/id1693218758] About our Guest: Steven Neil Durlauf is the Frank P. Hixon Distinguished Service Professor and the Director of the Stone Center for Research on Wealth Inequality and Mobility at the University of Chicago Harris School of Public Policy. Prior to this appointment, he was William F. Vilas Research Professor and Kenneth J. Arrow Professor of Economics at the University of Wisconsin-Madison. Durlauf's research spans many topics in economics. His most important substantive contributions involve the areas of poverty, inequality and economic growth. Much of his research has attempted to integrate sociological ideas into economic analysis. His major methodological contributions include both economic theory and econometrics. He helped pioneer the application of statistical mechanics techniques to the modelling of socioeconomic behavior and has also developed identification analyses for the empirical analogs of these models. Other research has focused on techniques for policy evaluation and the econometrics of cross-country income differences. Durlauf is also known as a critic of the use of the concept of social capital by social scientists and has also challenged the ways that agent-based modelling and complexity theory have been employed by social and natural scientists to study socioeconomic phenomena. Durlauf received a BA in economics from Harvard in 1980, where he was elected to Phi Beta Kappa, and a Ph.D. in economics from Yale in 1986. He is a Fellow of the Econometric Society, a Fellow of the Society for the Advancement of Economic Theory, a Fellow of the International Association of Applied Econometrics, and a Research Associate of the National Bureau of Economic Research. He was elected to the American Academy of Arts and Sciences in 2011. From 2010 to 2022 he was co-director of the Human Capital and Economic Opportunity Working Group, an international research network linking scholars across disciplines in the study of inequality and the sources of human flourishing and destitution.  Economics for Inclusive Prosperity (EfIP) is a network of academic economists from Harvard, Princeton, Columbia, and other leading universities who are committed to an inclusive economy and society. EfIP members are working to transform their field around a new vision of prosperity—a vision that includes traditional economic metrics, but also expanded measures of wellbeing including access to health, to democratic participation, and to a livable planet. They’re also highlighting the important changes in economics that are already underway.   Host Ralph Ranalli is a longtime Harvard podcaster, an entrepreneur, and former journalist. He previously hosted “HKS PolicyCast,” the award-winning flagship podcast of the Harvard Kennedy School. He holds a BA in political science from UCLA and a master’s in journalism from Columbia University.   The Economics for Inclusive Prosperity Podcast is recorded at the Malcolm Wiener Center for Social Policy at the Kennedy School of Government at Harvard University. The co-directors of Economics for Inclusive Prosperity are Dani Rodrik, Stefanie Stantcheva, Suresh Naidu, Atif Mian, and Ilyana Kuziemko. The show is co-produced by Ralph Ranalli and Tony Ditta, with social media management by Violet Van Buckman.

Why we must teach today’s students the economics of inequality

Today's college students will soon face a challenging job market that will potentially be made worse by AI. The cost of living is up, housing is painfully expensive, and future home ownership seems more like a cruel fantasy than the American Dream. And they know it’s tough out there. In fact, they’ve lived their entire lives in a world that’s been getting progressively less economically equal. They know the system is broken and that every day it gets more stacked against them. Our guest today, Boston College economics professor Can Erbil says those are pretty common worries today among his students too. That’s why he’s been working on ways to integrate teaching about economic equality using empirical data and real-world case studies into even the most basic economics courses. He says it’s important both for economics majors—many of whom now have to seek out inequality studies in elective courses—and for students for whom an introductory econ class might be their only exposure to the field. The goal, he says, is to help students become better economists, engaged citizens, and informed voters who’ll help shape a future that they’ll want to live in.  About our Guest: Professor Can (pronounced "John") Erbil specializes in international trade, development economics and macroeconomic policy recommendations at Boston College. His applied work extends to education and health policy and energy economics. Between 1999-2012, Erbil worked at the International Business School (IBS), the Department of Economics and Heller School of Social Policy and Management at Brandeis University. He held the positions of Assistant Professor, Senior Scientist and Senior Lecturer. Erbil was also the Assistant Director of Center for German and European Studies. He is currently the Director of Turkey Outreach at IBS. Dr. Erbil is currently the Director of Economic Modeling School at EcoMod, Global Economic Modeling Network. Since 2012, Erbil has been a Senior Fellow at Bahcesehir University, Turkey, where he contributes to several programs, including the BAU-NYU Research Methods Center. In 2014, Erbil joined MindBridge Partners as Senior Advisor, where he engages in projects with a focus on innovation, EdTech, IT and executive training. Dr. Erbil is a Research Associate at the Economic Research Forum for the Arab Countries, Iran and Turkey (ERF). Erbil is on the Board of the Washington D.C. based think tank, Capital Turkish Connections, where he helps to facilitate evidence-based dialogue; he also used to work at the Boston Federal Reserve Bank. Erbil continues consulting for the World Bank on projects related to international trade, regional development, education and health policies. Resources mentioned in this episode: Why, When, and How to Teach the Fundamentals of Inequality in Principles [https://econfip.org/policy-briefs/why-when-and-how-to-teach-the-fundamentals-of-inequality-in-principles/] Economics for Inclusive Prosperity (EfIP) is a network of academic economists from Harvard, Princeton, Columbia, and other leading universities who are committed to an inclusive economy and society. EfIP members are working to transform their field around a new vision of prosperity—a vision that includes traditional economic metrics, but also expanded measures of wellbeing including access to health, to democratic participation, and to a livable planet. They’re also highlighting the important changes in economics that are already underway.   Host Ralph Ranalli is a longtime Harvard podcaster, an entrepreneur, and former journalist. He previously hosted “HKS PolicyCast,” the award-winning flagship podcast of the Harvard Kennedy School. He holds a BA in political science from UCLA and a master’s in journalism from Columbia University.   The Economics for Inclusive Prosperity Podcast is recorded at the Malcolm Wiener Center for Social Policy at the Kennedy School of Government at Harvard University. The co-directors of Economics for Inclusive Prosperity are Dani Rodrik, Stefanie Stantcheva, Suresh Naidu, Atif Mian, and Ilyana Kuziemko. The show is co-produced by Ralph Ranalli and Tony Ditta, with social media management by Violet Van Buckman.

Manufacturing won't save us—but the service sector might

Creating "good jobs" is the holy grail of both politics and economics these days. The problem is that surveys show that most people don’t think they have one. In fact as many as 60 percent of Americans who are currently working say that. So where do we look for good jobs? For three successive presidencies, the answer has been the manufacturing sector, but Harvard economist Dani Rodrick says the evidence now shows that’s wrong. It’s a rethinking for Rodrik, the Ford Foundation Professor of International Political Economy and co-founder of the Reimagining the Economy Program at Harvard Kennedy School, who in the past seen manufacturing as a route to more equitable prosperity. But Rodrik says the evidence has changed his thinking—despite investments and tariffs, factory work is just 8 percent of U.S. employment and falling and even manufacturing powerhouses like China are bleeding millions of jobs in the sector. Now he sees the service industries as the most promising source of good jobs for the future, a position that puts him in the familiar position of outlier, since he was one of the earliest voices predicting the inevitable crash and burn of hyper globalization. Rodrik admits it will be challenging to solve the big problem with service jobs, how to make them productive enough to support good wages and benefits, but he says we urgently need to start asking the right questions and start experimenting with ways to make it happen. He joins Economics for Inclusive Prosperity podcast host Ralph Ranalli to explore those questions and how things like AI and public investment could factor into the answers.  Dani Rodrik is an economist whose research revolves around globalization, economic growth and development, and political economy. His current work focuses on how to create more inclusive economies, in developed and developing societies.Rodrik is the Ford Foundation Professor of International Political Economy at Harvard's John F. Kennedy School of Government. He is co-director of the Reimagining the Economy Program [https://www.hks.harvard.edu/centers/wiener/programs/economy] at the Kennedy School and of the Economics for Inclusive Prosperity [https://econfip.org/#] network. He was President of the Inernational Economic Associationduring 2021-23 and helped found the IEA's Women in Leadership in Economics. His most recent book is "Shared Prosperity in a Fractured World: A New Economics for the Middle Class, the Global Poor, and Our Climate [https://press.princeton.edu/books/hardcover/9780691268316]" (2025). His previous books include "Straight Talk on Trade: Ideas for a Sane World Economy," and "The Globalization Paradox: Democracy and the Future of the World Economy." Economics for Inclusive Prosperity (EfIP) is a network of academic economists from Harvard, Princeton, Columbia, and other leading universities who are committed to an inclusive economy and society. EfIP members are working to transform their field around a new vision of prosperity—a vision that includes traditional economic metrics, but also expanded measures of wellbeing including access to health, to democratic participation, and to a livable planet. They’re also highlighting the important changes in economics that are already underway.   Host Ralph Ranalli is a longtime Harvard podcaster, an entrepreneur, and former journalist. He previously hosted “HKS PolicyCast,” the award-winning flagship podcast of the Harvard Kennedy School. He holds a BA in political science from UCLA and a master’s in journalism from Columbia University.   The Economics for Inclusive Prosperity Podcast is recorded at the Malcolm Wiener Center for Social Policy at the Kennedy School of Government at Harvard University. The co-directors of Economics for Inclusive Prosperity are Dani Rodrik, Stefanie Stantcheva, Suresh Naidu, Atif Mian, and Ilyana Kuziemko. The show is co-produced by Ralph Ranalli and Tony Ditta, with social media management by Violet Van Buckman.