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Journal Article
The Rise and Fall of College Tuition Inflation
The cost of college tuition increased rapidly from 1980 to 2004 at a rate of about 7 percent per year, significantly outpacing the overall inflation rate. Since 2005, college tuition inflation has slowed markedly and has averaged closer to 2 percent per year for the last few years. Understanding what drives tuition inflation is important for predicting future tuition as well as personal income mobility. However, untangling the various supply and demand factors influencing college tuition can be challenging. {{p}} Brent Bundick and Emily Pollard document changes in college tuition inflation ...
Journal Article
What Explains Lifetime Earnings Differences Across Individuals?
Expected lifetime earnings are a key factor in many individual decisions, such as whether or not to go to college and what kind of occupation to pursue. However, lifetime earnings differ widely across individuals, and uncovering the factors that explain these differences can be challenging. Some characteristics, such as race and sex, are observable. But other intangible characteristics, such as work performance, are more difficult to quantify. To what degree observable characteristics explain lifetime earnings is an empirical question. {{p}} Jos Mustre-del-Ro and Emily Pollard use a unique ...
Journal Article
Inflation Expectations Limit the Power of Negative Interest Rates
Both the federal funds rate and longer-run yields have dropped to near zero, renewing discussion of negative interest rate policy. Although negative rates would allow for additional cuts in the United States, negative policy rates in line with what other countries have implemented would not be able to achieve the nominal rate reduction of previous easing cycles. Moreover, inflation expectations remained flat or fell after negative rates were introduced in most countries, limiting the expansionary power of these additional rate cuts.
Briefing
A New Approach to Industry and Occupation Recoding in the CPS
This paper presents a new approach to recoding industry and occupation in the Current Population Survey (CPS) from 1976 to 2019. This recode uses the three- and four-digit Census codes present in the CPS to create consistent aggregate categories that closely align with the detailed and major industry and occupation categories used in the 2019 CPS. This approach yields more consistent aggregate categories than previous recoding schemes. This approach can also successfully be applied to recoding industry and occupation in all panels of the Survey of Income and Program Participation (SIPP).
Journal Article
As Manufacturing Weakens, Consumers Pull Back
The United States has faced two recent downturns in manufacturing: one from 2014 to 2015 and one that has been ongoing since 2018. We examine consumption growth at the state level to see how consumers have responded to the current downturn relative to the last. We find that during the current downturn, changes in consumption growth at the state level have been negatively correlated with the state?s share of workers in manufacturing. In contrast, we find the opposite relationship during the 2014?15 downturn.
Journal Article
Nominal Wage Rigidities and the Future Path of Wage Growth
Wage growth has been modest since the end of the Great Recession, puzzling many market observers and policymakers. Article examines the relationship between wage growth and nominal wage rigidities?the share of workers whose wages have not changed?and find the current pace of wage growth is not historically unusual. The results suggest wage growth may continue on its gradual path as long as the incidence of wage rigidities remains elevated.
Journal Article
Does the Recent Decline in Household Longer-Term Inflation Expectations Signal a Loss of Confidence in the FOMC?
Households have lowered their longer-term inflation outlooks, but they appear confident in the FOMC?s ability to achieve stable prices.