Beverly Hirtle: Opening remarks - Heterogeneity Blog Series
Webinar
Opening remarks by Ms Beverly Hirtle, Executive Vice President and Director of Research of the
Federal Reserve Bank of New York, for the Heterogeneity Blog Series Webinar, Federal Reserve
Bank of New York, New York City, 4 March 2020.
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As prepared for delivery
I am delighted to be here today to introduce this webinar about our Liberty Street Economics blog
series on heterogeneity in labor market outcomes. These blogs describe several ways that the
forces shaping U.S. labor markets cause the experiences of workers to vary for different cohorts
of individuals, including for women as compared to men; for high-wage versus lower-wage
workers; and for workers who face more or less stringent constraints on their ability to borrow.
These posts are based on research and analysis being conducted by New York Fed economists,
part of continuing efforts by our economists to understand how economic outcomes vary for
different groups in the economy. This series follows our inaugural set of posts on heterogeneity
in October of last year, in what we hope will be an on-going discussion of work being done at the
New York Fed and elsewhere to understand these important topics.
In recent years, we have devoted considerable time and resources here at the New York Fed to
develop data and analytical approaches to gain deeper insights into the experiences of workers
and consumers. For instance, we sponsor the Consumer Credit Panel, or CCP, a quarterly
report on household credit based on a large sample of credit data from Equifax. We have also
developed the Survey of Consumer Expectations, or SCE, a monthly survey of consumer
expectations about inflation, the labor market and household finance. These reports and
summary data are available from the New York Fed's Center for Microeconomic Data, which can
be accessed on the Bank's website, newyorkfed.org.
Aside from producing these public reports, New York Fed researchers also use the underlying
data to do detailed econometric analysis, some of which forms the basis of the blog series you'll
hear about today. In some cases, we are able to link the CCP, SCE and other data sets to derive
insights into a wider set of factors affecting workers and consumers, such as educational
attainment, student debt burden, job satisfaction, job transitions, access to credit and housing
choices-and consumer expectations about many of these factors.
Why do we do this? Why is it important to generate insights about individual workers rather than
relying just on analysis of the aggregate data? The first, and most obvious, point is that the
aggregate masks the experiences of individuals. Not all workers and consumers experience the
economy in the same way. Employment, wage and income growth, housing, education, credit
and a host of other outcomes vary significantly across different cohorts of individuals and these
differences in turn can vary over the business cycle. To understand important economic
concepts like full employment, financial security, productivity growth and the impact of education,
it is vital to understand not just the average experience but rather how all cohorts of the
population are faring.
This understanding is important in and of itself, especially in evaluating the impact of critical
trends affecting the economy, like technological innovation or demographics, as well as the
policies intended to respond to the impacts of those trends. We cannot fully understand whether
policies have improved social welfare unless we understand how the impact of those policies
varies across individuals.
But understanding heterogeneity is important even if we are just examining policy impact in the
aggregate. The most innovative macroeconomic models, those at the frontier of current
economic work, recognize heterogeneity across consumers in assessing how monetary and
fiscal policy changes are transmitted through the economy. These models incorporate
individuals with different marginal propensities to consume, with different amounts of wealth or
access to borrowing, or who face different risk exposures, such as the chance they become
unemployed, over the business cycle. Incorporating these factors can yield quite distinct insights
about how changes in monetary or fiscal policy can affect growth, employment, wages and
inflation. For those who want to know more, we published a blog post on Monday of last week
that describes the output of just such a model. Regardless of the specific details, the key is that
differences across individuals can be important for understanding how the economy works, even
in the aggregate.
For all these reasons, the Research group at the New York Fed is committed to continue our
work on heterogeneity, across several dimensions of what we do. We are always looking for
ways to expand and deepen our knowledge, to enhance the data that is available to our
economists and others to do deep, sophisticated research on these topics, and, critically, to
publish the work so that we are adding to the store of knowledge both among academic
researchers and among policymakers. We are well-placed to understand what the important
questions are, to generate the data needed to answer them and to speak to diverse audiences
about the results. This webinar and blog series are important parts of our strategy for
communicating about our work and for advancing thought about the critical role that
heterogeneity plays in our economy.
Thank you.