Michael Stepner, who completed his PhD in economics at MIT, received the Academy’s 2020 John Heinz Dissertation Award for his “Essays on Health and Social Insurance.” Later in 2020, Academy Member David Autor, MIT Ford Professor of Economics and one of Stepner’s dissertation advisors, was recognized by the Heinz Family Foundation with a special 25th Anniversary Heinz Award. The Academy’s Distinguished Visiting Fellow, Fay Lomax Cook, spoke with both scholars to learn more about their work on inequality and social insurance, their influence on each other, and big research questions for the future given the impact of COVID-19.
(The winner of the 2021 Heinz Dissertation Award will be recognized at a ceremony as part the Academy’s March 2021 policy conference, Pathways to Economic Security.)
The excerpt below is the opening question from their conversation. Listen to the recorded conversation (30 minutes) and read a full transcript of the conversation here.
Fay Lomax Cook: Congratulations to both on your Heinz awards. I think this is the first time the winner of the Heinz Award was on the dissertation committee of the winner of the Academy’s Heinz Dissertation Award! You both know about Senator Heinz, who was concerned about the state of working conditions and how they affect workers and families, and how social policies can really make a difference. To begin our conversation, could you talk about some of the key takeaways from your research that you think Senator Heinz would appreciate?
David Autor: I think the work I’ve done that would most resonate with Senator Heinz would be the impact of rising trade pressure with China, especially after China’s entry into the world trade organization in 2001, on the plight of workers in manufacturing. Pennsylvania, which Senator Heinz represented, has and had many manufacturing workers, and in my research I pull out specific towns there that have been directly affected.
International trade, which economists favor and which I favor as well, has aggregate benefits but very strong and stark distributional consequences. Economists have not paid enough attention to those distributional consequences. As a result, they may have helped spearhead policies that, while making some nations wealthier have made some people poorer, without preparing adequately for that. I think Senator Heinz would very much want us to take that into account and think about the policies that insulate and provide social insurance to workers even as we embrace the benefits of full trade policies.
FLC: I totally agree with you and think that he would resonate with that research. Michael, what about you? What do you think Senator Heinz would especially appreciate about your work?
Michael Stepner: I think in the most recent months Senator Heinz would probably be concerned with precisely the same problems so many economists and truly everyone is concerned with, which is the state of the economy in the midst of the COVID-19 crisis. Particularly when thinking of the state of working conditions, and how that’s affecting families. I think about how, as the economy has started recovering from the depths of the recession that we saw in mid-April (2020), we have really seen a bifurcation of economic activity.
For much of the upper middle classes, employment and income has returned to normal levels, but for people at the bottom quarter of income distribution, about one in five are still out of work. There’s been no recovery in that group since mid-July (2020). Large portions of American families are still suffering, while the upper classes are doing just fine. One real concern for me is what that might portend for the future.
For instance, David Autor’s work has shown that, increasingly, the economy for low-end workers has been concentrated in the service sector. Despite the fact that retail spending was up toward the end of the summer and into the fall—actually higher than a typical year—only high-income workers have returned to their normal levels in the retail sector, while low-income workers are still out of work in disproportionate amounts, about one in five. I wonder whether this is going to be a short-term adjustment, and as the vaccine rolls out and the economy returns to a new normal if we will see a return to full employment. Or will this reflect on more long-term technical change as businesses shift to new modes of production?
DA: I share Michael’s concern and I do think that we’re in for a big change that will be highly disruptive. Although there has been some growth of work in services such as food, restaurants hospitality, and business travel, will they ever return to “normal”? Why would they, given how we’ve all embraced telepresence?
MS: That really highlights the importance of social insurance, because this is a group for whom work has disappeared and no matter how hard they want to find a job there are none available. At the beginning of the crisis, we saw massive expansion of social insurance; in fact, the rate of poverty went down in the United States. But now we’re in a period where not only has the expanded social insurance expired, but regular social insurance—unemployment insurance—is also starting to expire for workers who were laid off at the beginning of the pandemic even though their jobs haven’t recovered. For those workers, the social safety net has been really important in 2020 and the need might extend into 2021.
Read the full transcript here.
Listen to the recorded conversation here.
About David Autor
David Autor is Ford Professor of Economics and associate head of the MIT Department of Economics. He is co-chair of the MIT Task Force on the Work of the Future, an Institute-wide project examining technology, employment, and labor policy. His scholarship explores the labor market impacts of technological change and globalization, earnings inequality, and disability insurance and labor supply. Autor is an active contributor to the policy discussions around human capital and labor force participation. He has received a number of awards, including the National Science Foundation Career Award, the Alfred P. Sloan Foundation Fellowship, and the Sherwin Rosen Prize for outstanding contributions in the field of labor economics. David Autor earned his Ph.D. in public policy from Harvard University’s Kennedy School of Government. He has been a Member of the Academy since 2018.
About Michael Stepner
Michael Stepner is an economist studying public finance, health, and social insurance and will be an assistant professor at the University of Toronto starting in July 2021. Stepner received his PhD in economics from MIT and is currently a post-doctoral fellow at Harvard University. Stepner is collaborating with a team of researchers at Opportunity Insights, studying health inequality around the world. (Learn more about his current research on his website.) He became an Associate Member of the Academy after receiving the Academy’s 2020 John Heinz Dissertation Award.
About Fay Lomax Cook
Fay Lomax Cook is professor emerita of human development and social policy at Northwestern University and faculty fellow of the Institute for Policy Research (IPR), where she served as director for 16 years. From 2014 to 2018, Cook was assistant director of the National Science Foundation (NSF) and headed the Directorate of Social, Behavioral, and Economic Sciences (SBE). Her research focuses on the interrelationships between public opinion and social policy, the politics of public policy, public deliberation, and the dynamics of public support for programs for older Americans, particularly Social Security. She has been a Member of the Academy since 1990.
About the Academy’s Heinz Dissertation Award
The John Heinz Dissertation Award was established in 1993 in honor of the late Senator John Heinz, who was a founding Member of the Academy and an advocate for healthcare reform and social insurance. With support from Teresa Heinz and the Heinz Family Foundation, the Academy’s annual Heinz Dissertation Award recognizes and promotes outstanding doctoral research by new scholars focusing on policy questions in social insurance and related areas, including health, aging, and economics. It is one of several Academy programs designed to promote scholarship in the field of social insurance and encourage a new generation of scholars, administrators, and other professionals essential to a strong social insurance infrastructure.
Senator John Heinz was an early advocate for health care reform, seeking to control costs while improving benefits for all Americans. When the National Academy of Social Insurance began operating 30 years ago, founder Bob Ball saw a policy environment filled with misinformation and confusion. He reached out to others to form a bipartisan effort to counter the confusion. His first Board of Advisors consisted of Senator John Heinz (R-PA), Senator Patrick Moynihan (D-NY), Lane Kirkland (AFL-CIO), and Alexander Trowbridge (National Association of Manufacturers). Today, the Academy is a community of over 1,100 of the nation’s top experts on social insurance.