Clinton makes worrying pick for chief economist of transition team

While tonight’s debate will be watched by millions, and the polls are narrowing, it still seems likely Hillary Clinton will be elected as the next president of the United States. According to the betting markets, which generally outperform polls, the probability of a Clinton presidency is around 63 per cent. An analysis of the policy positions of key individuals who are expected to play a role in a Clinton presidency may therefore shed some light on the types of policies likely to be pursued by the U.S. in the next four years.

Enter Heather Boushey, who was named in mid-August as the chief economist of Clinton’s White House transition team. A PhD economist trained at the New School for Social Research, Boushey is currently the executive director of the Washington Center for Economic Growth and a senior fellow at the Center for American Progress think-tank.  

The issue of inequality has become a major preoccupation in public policy and academic circles. Accordingly, it’s perhaps unsurprising that Clinton’s pick as chief economist for her transition team would be an individual like Boushey whose research has dealt mainly with inequality-related issues.

However, unlike many inequality scholars, Boushey’s focus is on inequality at the family level and its consequences for overall economic performance. In her book Finding Time: The Economics of Work-Life Conflict (recently published by Harvard University Press) Boushey argues that inadequate work-life policies in the United States—specifically, the absence of subsidized daycare, paid sick leave, and paid parental leave—impose disproportionate costs on women, who tend to shoulder most of the burdens of home production. This depresses female labour force participation, and, in an environment of stagnant real wages, not only makes it harder for families to “get ahead” but also imposes a constraint on productivity and overall economic growth.

Boushey therefore advocates the adoption of Scandinavian or Canadian-style work-life policies as a solution to the current economic malaise in the U.S.

A growing body of research suggests that supply-side constraints—for instance, labour market regulations such as occupational licensing laws, excessively restrictive zoning ordinances, a flawed corporate income tax regime, and overly generous disability benefits—are important barriers to economic growth in the U.S., as well as other developed economies. It’s refreshing to find Clinton’s chief economic advisor also paying attention to constraints on the supply side.

Unfortunately, whether the set of policies preferred by Boushey will in fact deliver the goods remains almost entirely untested. It seems plausible that Boushey’s preferred set of policies—universal paid parental leave, subsidized daycare, and paid sick leave—might, at the margin, improve female labour force participation. Data from the World Bank indicate that in 2014 female labour force participation rates in Canada (61 per cent), Denmark (59 per cent) and Sweden (60 per cent)—three countries that have work-life policies favoured by Boushey—are higher than in the U.S. (56 per cent).

Nevertheless, it remains an open question as to whether these initiatives would have a substantial impact on productivity and economic growth, for Boushey presents very little credible evidence to suggest that these policies have large macroeconomic consequences.

Indeed, according to a recent Conference Board study, the level (in 2015) and growth rate (between 2007 and 2013) of labour productivity in Canada, Denmark and Sweden are lower than the U.S. (see Tables 5 and 8 of the study), which casts some doubt on Boushey’s claim that more generous work-life policies are a panacea for productivity.

Finally, as Tyler Cowen notes, apart from claiming that the costs of such policies are “very small,” Boushey makes no systematic effort to estimate the costs of her preferred set of work-life policies. Accordingly, it’s unclear whether Boushey’s policy package would pass a rudimentary benefit-cost test.

In an era where economics is increasingly empirical, and where the analysis of large data sets is all the rage in academic economics and policy analysis, it’s discouraging that the Clinton team is likely to settle for policies that rest on so little evidence.