At the St. Louis Fed's Fall Conference, it was my great fortune to see a presentation this week by Casey Mulligan, UChicago economist, NYT columnist, and book author Casey Mulligan. Casey's presentation was of a paper entitled "The New Full-time Employment Taxes," which is all about the implicit taxes on full-time work relative to part-time work that have been imposed or (presumably) will be imposed by Obamacare.
During that talk, Casey mentioned his book, "The Redistribution Recession," and made some other remarks that I interpreted as meaning that Casey thinks that efforts at redistributive policy were the primary cause of the Great Recession. However, it appears I was not quite right, as Casey was quick to point out in an email. Here is an excerpt that he allowed me to post:
I see a couple of possibilities:I confess that I had interpreted Casey's position as ascribing more explanatory power to redistribution than he does. I may have been influenced by recollection of Casey's New York Times articles, which attributed a substantial amount of the recession to redistribution-incentivized drops in labor supply as early as December, 2008.
(1) Redistribution did not cause the recession (by which I mean reductions over time in national average labor hours per capita), but it “thwarted the recovery.” This has been the WSJ’s interpretation on a couple of occasions. It means that, but for redistribution, the labor market would have hit bottom at essentially the same level (-10 percent for labor hours per capita) but would have returned to baseline significantly (i.e., years) more quickly.
(2) Redistribution made the recession, say, twice as deep as it would have been without (changes in) redistribution. Under this possible interpretation, labor hours per capita would never have fallen 10 percent even “for five minutes.” Instead, the recession would have bottomed out at, say, –5 percent.
(3) I do not have a pinpoint estimate of the relevant elasticities, which means that the –5 percent cannot be taken as a pinpoint-accurate estimate. A reasonable person could believe that the behavioral elasticities are larger than I take them to be, in which case they could reasonably believe that labor hours per capita would have hardly fallen at all but for the enhanced redistribution. I could not be sure that large-elasticity opinion is wrong, but I would tell that person that he is in danger of exaggerating the effects of redistribution. The same applies to a reasonable person who thinks that the redistribution was depressing the labor market somewhat less.
In any case, I apologize for over-interpreting Casey's statements, and I hope this post will make clear the nuance of his view of the Great Recession.