Publications

This paper estimates the pass-through of minimum wage increases into the prices of US grocery and drug stores. We use high-frequency scanner data and leverage a large number of state-level increases in minimum wages between 2001 and 2012. We find that a 10% minimum wage hike translates into a 0.36% increase in the prices of grocery products. This magnitude is consistent with a full pass-through of cost increases into consumer prices. We show that price adjustments occur mostly in the three months following the passage of minimum wage legislation rather than after implementation, suggesting that pricing of groceries is forward-looking. The rise in prices occurs mostly through an increase in the frequency of price increases. Prices rise to the same extent for goods consumed by low-income and high-income households. Our results suggest that consumers rather than firms bear the cost of minimum wage increases in the retail sector.

The earnings difference between black and white workers fell dramatically in the United States in the late 1960s and early 1970s. This paper shows that the extension of the minimum wage played a critical role in this decline. The 1966 Fair Labor Standards Act extended federal minimum wage coverage to agriculture, restaurants, nursing homes, and other services which were previously uncovered and where nearly a third of black workers were employed. We digitize over 1,000 hourly wage distributions from Bureau of Labor Statistics industry wage reports and use CPS micro-data to investigate the effects of this reform on wages, employment, and racial inequality. Using a cross-industry difference- in-differences design, we show that wages rose sharply for workers in the newly covered industries. The impact was nearly twice as large for black workers as for white. Within treated industries, the racial gap adjusted for observables fell from 25 log points pre- reform to zero afterwards. Using a bunching design, we find no effect of the reform on employment. We can rule out significant dis-employment effects for black workers. The 1966 extension of the minimum wage can explain more than 20% of the reduction in the racial earnings and income gap during the Civil Rights Era. Our findings shed new light on the dynamics of labor market inequality in the United States and suggest that minimum wage policy can play a critical role in reducing racial economic disparities.

Carbon offsets allow greenhouse gas emitters to comply with an emissions cap by paying others outside of the capped sectors to reduce emissions. The first major carbon offset programme, the United Nations’ Clean Development Mechanism (CDM), has been criticized for generating a large number of credits from projects that do not actually reduce emissions. Following the controversial CDM experience, California pioneered a second-generation compliance offset programme that shifts the focus of quality control from assessments of individual projects to the development of offset protocols, which define project type-specific eligibility criteria and methods for estimating emissions reductions. We assess the ability of California’s ‘standardized approach’ to mitigate the risk of over-crediting greenhouse gas reductions by reviewing the development of two California offset protocols – Mine Methane Capture and Rice Cultivation. We examine the regulator’s treatment of three sources of over-crediting under the CDM: non-additional projects, inflated counterfactual baseline scenarios, and perverse incentives that inadvertently increase emissions. We find that the standardized approach offers the ability to reduce, but not eliminate, the risk of over-crediting. This requires careful protocol-scale analysis, conservative methods for estimating reductions, ongoing monitoring of programme outcomes, and restricting participation to project types with manageable levels of uncertainty in emission reductions. However, several of these elements are missing from California’s regime, and even best practices result in significant uncertainty in true emission reductions. Relying on carbon offsets to lower compliance costs risks lessening total emission reductions and increases uncertainty in whether an emissions target has been met.

Key policy insights

- Substantial and ongoing oversight by offset programme administrators is needed to contain uncertainty and avoid over-crediting.

- California’s Mine Methane Capture Protocol may have influenced federal decisions not to regulate methane emissions from coal mines on federally-owned lands.

- Government priorities and methodological choices drive outcomes in carbon pricing policies with large offset programmes, contrary to the common perception that these policies delegate decision-making to private actors.

- Offsets are better understood as a way for regulated emitters to invest in an incentive programme that achieves difficult-to-estimate emission reductions, than as accurately quantified tons of reductions.

On May 21, 2020, the University of California (UC) Board of Regents unanimously approved the suspension of the standardized test requirement (ACT/SAT) for all California freshman applicants until fall 2024. UC plans to create a new test that better aligns with the content the University expects students to have mastered for college readiness. However, if a new test does not meet specified criteria in time for fall 2025 admission, UC will eliminate the standardized testing requirement for California students. The Board’s decision is the seeming culmination of a 19 year debate over the role of standardized test scores at UC. Opponents of the widespread use of the SAT have long claimed that the SAT promotes needless socioeconomic stratification: The test favors students from upper income families and communities, in part because they can afford a growing range of expensive commercially available test preparation courses and counseling. The Regent’s 2020 decision echoes this view. Yet UC has an even longer history of concern with the standardized testing. In fact, and as discussed in this essay, UC was relatively slow in adopting the SAT as a requirement in admissions when compared to other selective universities, public or private. This provides the basis for a brief discussion of the current politics related to admissions at UC. Setting admission policy is not simply the result of rational policy solutions; they are, in some form, a reflection of the internal and external politics that shape the policy behaviors of a university – particularly at highly selective public institutions with greater levels of expected accountability and expectations than their private counterparts. Another axiom that is largely lost in the debates over the usage of test scores and a growing array of admissions requirements: selective public universities may attempt to create relatively transparent admissions criteria, but in the end much of the decision-making is arbitrary when choosing among a large pool of highly qualified candidates. I then offer a number of observations: First, that changes in admissions policies focused, to some extent, on equity and greater access to underrepresented groups means redistribution of what is essential a zero sum, access to a selective public university. Second, that the path to the Regent’s 2020 vote ignored the recommendations of UC’s Academic Senate, designated by the Regents to set admissions policies. The Senate, UC’s representative body of the faculty, recommended retaining the SAT and ACT in setting UC eligibility policies and for campus selection of students for admission. This raises internal questions of the purpose and future of shared governance.

Like California, South Korea’s system of higher education is a work in progress. Each must evolve and reshape themselves at various points in their histories in their quest for relevancy and, increasingly, to external pressures and demands of governments and, more generally, society. Utilizing California’s pioneering higher education system as a comparative lens, I provide an outsider’s view of South Korea’s higher education system from two perspectives. First, a national system viewpoint: How is the higher education eco-system organized and managed, and what funding and other incentives are provided by the national government? The second is an institutional viewpoint: What is the academic and management culture of national universities and how might they seek self-improvement and a greater impact on their regional role? In pursuing this analysis, I leverage my knowledge and research related to California’s efforts to build its mass higher education system with institutions of high quality and world prestige as well as aspects of my New Flagship University model that focus on institutional self-improvement and management. Two general observations are offered: First, Korea needs to reorganize its network of public and private tertiary institutions; that includes reducing the number of private institutions, while also improving regional role and impact of its public institutions. Second, a major challenge for Korea, in my view, is to deemphasize the race for rankings and to focus more on the internal management capacity of institutions, and to pursue a more holistic societal role for its universities. The New Flagship University model is one way to examine this issue for Korea.