 Sam Ball's lecture was established to provide the avenue for highlighting and celebrating work for the tradition of Sam Ball. Sam is well known in the room, so I will not bore you with the long history of his vital contributions to the foundation and development of this department. Yet that history is well told in the department's biography, written by a colleague Don Katzner. A few things about Sam. Three. One, Sam's very career, as you all know, and his historical move to UMass from Harvard, is a testimony that our profession, the academia, is highly idealizing. There is no other way to explain how a premier research institution like Harvard University would deny tenured to a to a previous political and dynamic writer, one of the very best in his generation. It is only because he was advancing methods and ideas and interrogating acquired social and political beliefs in ways that challenge the mainstream. Second, Sam is a living example of a true man of principles. He remained true to his beliefs, even when it meant losing a pushy job at Harvard University. UMass became the lucky beneficiary. Many of us will not be standing here today, if it wasn't for Sam's dedication to pursuing honest and critical inquiry into economics as a socially relevant discipline. Third, Sam is the symbol of a true intellectual. He was and still continues to engage with the mainstream, even if he disagrees with its methods and teachings. As human beings, faced with adversity, the natural instinct is to retreat inward and only engage with folks who think and act like us. But social change and progress in knowledge only comes from productive and positive confrontation of diverging ideas. It takes courage to be a true thought leader. Finally, Sam as a teacher, even in his retirement, Sam continues to offer his landmark course in economics. It's called the Economics of Competition, Coordination and Cooperation and Conflicts for Seasons, which we very much appreciate. Only he knows when he gets the energy to keep functioning at such high intellectual and physical level, serving not one, not two, but three institutions, UMass, Santa Fe and the University of Seattle. Testimonies from his current past students tell the story of a caring and delicate teacher. And today we have the privilege of hearing from one of Sam's first international students, Nancy Holbrook. Nancy was born and raised in Texas. She earned her bachelor's degree in philosophy and her master's in Latin American studies at the University of Texas, attracted by the nice four colors of New England. She decided to move up north for her graduate studies enrolled at UMass where she earned her PhD in economics. In 1984, Nancy became the very first UMass economics graduate to be hired as a tenure system faculty in her home department, an extremely high bar in the tradition of the department. That was a testimony of her excellence, but most importantly, the department saw in her a prospective thought leader and change agent. Time has now proven that the department's decision was indeed wise and that it now sits on the right side of history. Nancy has had an illustrious career as a researcher, teacher, community intellectual and activist. Nancy is currently known nationally and worldwide as a leader in the intellectual movement that challenges conventional approaches to economic analysis that focuses solely on the market economy, leaving aside a major part of human activity that is so critical to the well-being of society, namely the clear economy. To illustrate the reach of Nancy's work on clear economy, I will draw from one of her recent papers with which I have a personal connection. Here personal in the sense that I actually saw the paper from its creation. The first time Nancy told me that she was retiring, we were both sitting on a plane heading to Arusha, Tanzania. For a meeting of the African Economic Research Consortium, she was, she had been invited to present a paper on the clear economy in Africa, subsistence production and unpaid care, which was later published in the Journal of African Economics, one of the premier journals that published on Africa. In this paper, Nancy restates the importance of what has become a prominent paradigm in the profession, the clear economy paradigm. She says, the clear economy paradigm calls attention to bargaining, property rights, and in the parties based on gender and age, rather than taking families as a given and treating households as undifferentiated units of analysis. In the same paper, Shila mentions that the clear economy has been involved in the measurement of economic activity with detrimental consequences for economic analysis. She says, because mainstream theory shaped the assumptions embedded in national census and income accounts, it also influenced data collection. As a result, little official effort was made to collect data relevant to the measurement of unpaid work. The absence of data in turn contributed to the underdevelopment of economic analysis. Nancy has written extensively, publishing dozens of books and a multitude of academic journal articles. Just on one publication, the abstract of one of her books, which is called Green, Last and Gender, A History of Economic Ideas. It says, the history of Western economic ideas shows that men have given themselves more cultural permission than women for the pursuit of both economic and sexual self-interest. Feminists have long contested the boundaries of this permission, demanding more than mere freedom to act more like men. Women have gradually gained the power to revise our conceptual and moral maps and to insist on a better and less gendered balance between self-interest and care for others. Two things strike me with this statement. One is that it is a moral question. Indeed, society has tremendously suffered from excessive, irresponsible cultural permission of men, especially those in power. The financial crisis of 2008 was a major testimony to this. But I'm actually glad that women are demanding more freedom to change the world by not being more like men, rather by playing a role in redirecting society's moral contacts. Second is the fundamental equity problem. Societies that tolerate gender—this is me now—societies that tolerate gender inequality and gender discrimination are most likely to tolerate inequality and discrimination along other dimensions, including race, religion, moral beliefs, and others. I see the gender equity agenda as an agenda for a complete overhaul of social and political norms towards a broadly more egalitarian society along all those dimensions. To conclude, this afternoon I was talking to a senior colleague and I thought I would remind him about the Sam Bowles lecture. He said, of course I know. That is why I came today. Nancy always has something deep and interesting to say. Colleagues and guests, please help me welcome her. Thank you so much. It's a great honor and a privilege to be here to deliver the Bowles lecture. I did begin this journey in 1978 as a student of Sam's, and a lot of the themes that I'm going to talk about today have sort of emerged piecemeal over those years. And many of them thanks to the patient skepticism and occasional enthusiasm of my students and colleagues, for which I'm very grateful. Both the process of kind of realizing this intellectual project and the experience of being here today makes me feel really good about our intellectual community and what we have accomplished, not to mention the art of the introduction. I feel like some people here have heard part of what I'm going to say, but I'm going to try and put it together in a kind of new and different way. And I'm choosing to focus on some theoretical issues that I think connect with your interests and the interests of the kind of research that many of us have engaged in collectively. So the basic question I want to ask is why some groups of workers earn more or less than others. And there's been a lot of attention on our profession to this question lately, especially to the top 1% and how, what kinds of explanations might serve to better understand why earnings themselves, not just income, have become increasingly concentrated. But of course, the same question kind of connects to a longstanding interest in workers at the bottom end of the wage spectrum earning less than others. And there's a lot of research on those aspects of inequality as well. But I think sometimes the relationship between more earnings and less earnings isn't as fully developed as it might be. And that's what I want to try to speak to today. So one basic question that often is asked as a starting point is just, are earnings unequal because of who people are or because of what they do? Is it the characteristics of individuals or the characteristics of jobs that are driving inequality? And more broadly, you could think of that as a tension between thinking about agents and agency and thinking about the structure of the economy as a whole. In the feminist problematic, this often comes up in looking at or contrasting views based on individual discrimination, like the discrimination of employers who are agents of discrimination, versus the structure of jobs and the fact that women are very concentrated in certain female dominated occupations. The earlier research on comparable worth is a really good example of an effort to look at jobs rather than individuals. And I want to emphasize that I don't think it makes sense actually to pose the question starkly as either or. The two things are interrelated. Individual characteristics sort people into jobs and jobs change the way the characteristics of individuals. But there's still a kind of difference in the way in which these two aspects of the determinants of earnings inequality are treated. And there's kind of an ideological force field that I think is particularly relevant to those of us who care about an agenda for progressive change. So neoclassical economists often argue that workers get either what they deserve or at least they kind of get what they want. And I'm just going to give you two quotes that I think dramatize that distinction. This is the first as a quote from Gregory Mankiw, author of the bestselling introductory economics text in the U.S. which I understand grosses millions in revenue. And he writes the rich earn higher incomes because they contribute more to society than others do. And actually I recommend this essay to you if you haven't read it defending the one percent because it's a very direct and frank articulation of a point of view that people are often reluctant to, you know, confess openly to. And, you know, honestly Mankiw chooses examples like movie stars or great basketball players. And, you know, it's not a totally ridiculous assertion. Sometimes people who are outstanding and productive and make incredible contributions do earn a lot of money. But it's kind of a preposterous generalization in my view. Claudia Golden and Lawrence Katz are much more diplomatic and, you know, much more measured in their explanation of gender inequality. But this quote from them kind of boils it down. Employees differ in their demand for workplace flexibility and thus their willingness to pay for a translation. Women just like family friendly jobs and those jobs aren't as productive. So women are getting a compensating differential in return for their employment in these jobs. And that doesn't necessarily mean that we should be opposed to social policies that could make some good changes or to changing social norms. But these aren't really necessary or pressing problems because markets are working efficiently and evolving in ways that might, will likely give women the opportunity to perhaps minimize the cost of this extravagant preference for family care. So heterodox economists, I think most of us here would argue that workers, there's inequality among workers because partly at least, because workers face different forms of discrimination and they experience different forms of exploitation. But I think that this general proposition is not as coherent, as complete as it needs to be and I would like to advance the argument further. So one version that I think has had a particular, found a big audience in recent years is the argument about high earners being successful rent seekers. So here's a quote from Josh Bivens and Lawrence Michele. It's from that same issue of the Journal of Economic Perspectives in which Gregory Mankiw defended the 1%. So this is the other side, right? And they argue high earners capture rents that cannot be explained simply as the outcome of functioning competitive markets rewarding skill or productivity based on marginal differences. And this idea that wages at the top reflect rents has been articulated by a lot of other empirical researchers including Jim Crotty whose work on the financial rainmaker firm offers additional, additional substantiation for this point. I'm not so happy with this particular formulation. I think the term rent is a little bit confusing in this context and it can explain why earners at the top earn more but it doesn't really explain why workers at the bottom earn less. In fact, if you look at this quote it sort of suggests that all wages are fair except those at the top who are able to capture rents. And by the way I think most people would argue that the effort to raise the minimum wage is a form of rent seeking. That's a form of rent seeking that seems to have many of us would support. So I'm not so sure that we want to base our critique of high earners on the notion that it's a result of interference with competitive forces. So I think a broader explanation of the earnings inequalities that we see is that relative earnings are shaped by differences in individual and collective bargaining power. But that just kicks the can down the road because the next question is well what are the factors that determine the bargaining power of workers? And what I want to persuade you today is that feminist research on care work and the care penalty can help explain the power premium at the very top of the earnings distribution in the U.S. and vice versa that the way in which economists have talked about that power premium at the top can help us understand why workers in care occupations and industries earn less than we might expect. I believe there is strong support from my view from an airline magazine ad that I've been seeing for like 30 years. Surely you have seen it as well. Chester Carras, it's quite expensive to sign up for this program. But if you do, you will get some skills to succeed in the business world. I like this distinction between getting what you deserve and getting what you negotiate. And that's pretty key to my argument. Okay, so now let me just lay out for you in very abbreviated form the kind of theoretical basis for arguing that there is a care penalty. It goes in a nutshell, this is the argument that women's specialization in care provision can offer efficiency gains for society as a whole but it reduces women's individual and collective bargaining power. And this is an argument that kind of grew out of initially efforts to understand inequality in the household and inequality in the family. In fact, I'm thinking back to the mid-1980s when Paula England and I were Paula England the sociologist with whom I've collaborated a great deal. We were arguing about or discussing trying to problematize this issue of inequality in the family and the household. And Paula and her colleague George Farkas wrote a really interesting and important book called Households Employment and Gender in which they explained why women are disadvantaged by not producing a good or a service over which they had property rights in which they could revoke access to or which they could easily withdraw. And this became a theme in our theoretical and also our empirical work that has evolved over the years in a number of different venues, research networks and also many collaborations. And the reasons here are related to... I want to kind of come back to agency and structure. They have to do with some characteristics of individuals, namely their preferences, their values, their commitments. So commitments to caring for others tend to increase dependency, especially if you're caring for people who rely on you, then you become in a sense hostage to their needs or their requirements. The term prisoner of love I think kind of captures it, but it's taken from a rock song. It's a love song. In fact, a lot of love songs are about being a prisoner of love, chains, chains, chains, etc. But it's... I think it's kind of poignant. It says something about the nature of human attachment and the fact that it is often very specific, very unique, and it's not fungible in the same sense that a lot of other decisions are. And then there's also kind of a structural point to accompany the point about agency. And the structural point is that care provision in general and child rearing in particular are creating especially public benefits that are difficult for providers themselves to capture. And that doesn't mean that many activities generate positive spillovers or public benefits. But the process of raising the next generation is a pretty powerful example. And if you think about the way discount rates work and the way in which we apply discount rates, you can see that the process of producing the next generation of citizens and workers and taxpayers is something that is basically paying... it involves a lot of paying forward rather than paying back is kind of a way to think about it. So this argument leads to kind of a different interpretation of... or a different explanation of gender inequality than one that I think remains pretty standard in both economics and sociology. Because it suggests that the problem is not that women's work is somehow devalued by women or merely discriminated against, but that there's something about specialization in care provision that creates gender disadvantage. Now, I mean, you could frame it as... it's of course kind of a circular process. Devaluation of women or discrimination against women lowers the valuation of care. That's one possible causal arrow. But it's also the causal arrow that I think I want to emphasize here that specializing in care tends to disempower those who engage in it and because those who engage in it are primarily women, it's women who experience the greatest effects of that. So if we're going to rest this theoretical argument on the characteristics of care work, we need to define it pretty carefully and there's now pretty big literature that tackles this issue with a ton of two competing definitions and it's worth paying attention to these because they are going to have relevance to some of the empirical issues that will come up in the context of explaining earnings. So the narrow definition or the narrow word definition of care work is very much based on agency or the labor process and sometimes it's called direct or nurturing care and it's work in which you think that concern for the well-being of recipients is likely to affect the quality of the services provided. So if you're caring for a dependent, a child or a person who's sick or an elderly person, they don't have any consumer sovereignty. If they don't like your services, they can't easily exit and it's often hard to really observe the quality of care that is being provided. So when we look for somebody to provide care, we look for someone who's concerned, who has some intrinsic motivation for the well-being of the care recipient because that's kind of really key to being able to ensure that those services are of high quality. I regard that as literally a definitional aspect of the problem. It's more relevant, you know, it's not a binary. It's not that some people have no concern for the well-being of others and some people are totally consumed by it. It's kind of a spectrum, but I think what's distinctive about care is that that's a general feature of it. In fact, when I was talking about this in a class yesterday, I had a student who said he had actually gone to social work school for a couple of years before he switched to economics, perhaps recognizing that care is not a very economically rewarding profession. But he was explaining that in social work, and this is also true in nursing, there's actually a pretty serious effort to teach empathy, to improve people's skills, and to foster feelings of concern for others because that's seen as part of the professional identity and requirement of the job. But it's also true that a lot of this work is very personal. That is, it's done on a first name basis, it often involves touching, or if not kind of being on a first name basis. And I think many people would argue that even services that are purchased or sold, like the way we sell our services, are often enhanced by a personal connection and a personal engagement. Did you have a question about it? Okay. So there's also a broad definition, and the broad definition is more about the structure. That is, it's not about the people so much as it is about the nature of the product, the nature of the output. And this kind of work is kind of often designated indirect care, the sociologist Minyan Defi refers to it as reproductive care. So it might be called provision of services for those who can't care for themselves, or indirectly contributing to the development or maintenance of human capabilities. So here you might think of people who participate in a care industry, that is, they're employed in health, employed in education, employed in social services. They're not necessarily in an occupation. That's a hands-on care occupation. But the institution that they work for is in the care business. And a lot of institutions in the care business are non-profits and public institutions, not private-for-profit firms. Although we're seeing increasing expansion of for-profit provision in there. So how do we go about operationalizing paid care work in order to look at how this might affect the distribution of earnings? Well, most of the research today has focused on occupation, i.e. the nature of the labor process. And a lot of it is categorical. Like just listing, here's a care occupation, child care worker, elder care worker, nurse, teacher. Sometimes the divisions are really clear. There's always some fuzzy areas. Should college professors be considered care workers? Maybe not as much as elementary school teachers, but I would include them as being in a care occupation. An alternative to the categorical assignment of occupations to care and non-care is a continuous coding. And there are occupational characteristics. Since the ONAT database has a long list of characteristics of jobs that are based on interviews with workers about what are the qualities, what are the characteristics that are required in these jobs. And a lot of those questions can be kind of loaded into a factor analysis that gives you a way to code a high-care occupation or a low-care occupation with a ranking from, say, one to five. And there's one interesting paper that I know that does this, and I think it's a really promising approach. But another way to slice the labor force is in terms of industry. That is to use the structural type of product criteria. And by that criteria, all those who are employed in health, education and social services, regardless of occupation, might be considered as workers in care industries. And I think it's kind of an open question at this point, and I'll return to this at the end, which of these definitions is best and how we go about empirically kind of getting some traction on some of the causal arrows that might be involved. So, I have to say this is really, I want to review the research showing that workers in care occupations and industries do pay a care penalty. And this is really dear to my heart because in the 1980s, when I sat around with Paula Englund, we literally said to each other, well, if we think there's a penalty for this type of work and unpaid work, shouldn't there also be a penalty in paid work? And Paula, being a really skilled empirical researcher, collaborated with Michelle Budig is here today in one of the first analyses of the care penalty that looked at longitudinal data from the National Longitudinal Survey of Youth in a fixed-effect model that is a pretty robust specification. That is, net of individual characteristics when people go from a care job to a non-care job, they experience a pay increase. And when they go from a non-pay care job to a care job, this is defined in terms of occupation, they experience a pay decrease. So it's a pretty strong indicator that you're controlling for unobserved as well as observed human capital characteristics in this. And with the help of Melissa Hodges, they've recently updated this analysis and further confirmed these results. So let me just remind you, these are controlling for gender. So these care penalties apply to men as well as women, as the argument suggests, because it's the type of work, not the characteristics of the individual that are driving it, but of course, we're trying to control for the characteristics of individuals. There are also some industry level effects, net of occupation, and this is work I've just begun doing with a sociologist, Kristin Smith, at the University of New Hampshire. And we've gotten some grant support from the Washington Center for Equitable Growth that I acknowledged on my kind of cover slide. And it's very much in process, but we've been really startled by seeing how significant the industry differences are. Women are very highly concentrated in health, education, and social services. And health, education, and social services are very concentrated in the public sector. And the distribution of occupations is very different across industries. If you look at financial services, managers are a larger percentage of all of those workers in that industry than in any other industry. It's very managerial intensive. In care services, in care industries, over 50% of workers are called professionals in care industries, partly because of nurses and teachers, but because care industries themselves involve a high degree of professionalization. So that is one indicator, I think, that industry and occupation are not really separate. They're very correlated. And I think understanding that correlation better, you know, that relationship is actually important to a lot of different empirical projects, not just this one. Okay, here's the really important question. How do we take this analysis and come back to the larger goal, which is to think about earnings in terms of individual and collective bargaining power? Well, let me start with a list of some standard determinants of bargaining power in the empirical literature. And there has been, in just the last five years, a tremendous efflorescence of work trying to puzzle out industry and firm-level effects on earnings. And a lot of it has kind of gained momentum from the availability of new data sets that link employer and employee data. So you're able to look at both the characteristics of the firm, which you can't in an individual database, and the characteristics of individuals, which you often can't do with an employed database. So I think this is a really, really interesting area of research. And I think there's a lot of agreement about what, you know, how these things affect bargaining power. So human capital in general, education and experience, we knew that already, has a positive effect on earnings. I guess I'm framing it as a kind of, in terms of bargaining power, rather than marginal productivity, but being a very productive worker gives you bargaining power with your employer. So you're able to look at the individuals, job tenure we know is both, can affect worker productivity and also the bargaining power that workers have with their employers about the threat of leaving. We know that demographic characteristics, including race and gender, and age are relevant. And there's also some growing interest in social identity, like what groups do you belong to, are you, does being a woman or a person of color, or a person with a, you know, Islamic sounding name affect your treatment in the labor market as kind of a function of that kind of social identity. And the list of factors for jobs, firms and industries is also pretty standard. Is it a rapidly growing industry? So there's demand for workers that helps workers and those industries are kind of in a buyer's market. Elasticity of demand, can you pass on wage increases to consumers? If so, the firm is more likely to pay higher wages if those wage increases can be passed on. Firm size and market power, a lot of new emphasis on increased monopoly power in the U.S. labor market, that might affect the elasticity of demand. Workers in monopoly industries can actually be in a good bargaining position because they can demand higher wages that can be passed on. On the other hand, monopsony in the labor market would work against them. Public versus private, I think that is pretty clear, levels of unionization, we know how that affects earnings. Credentialization is now getting more attention as unionization has diminished so drastically. Credentialization just means requiring a license or completion of an educational requirement in order to get the job. And there's a lot of evidence that suggests that that restricts supply and raises wages in credentialized jobs. Can you outsource it? Can you automate it? What's the ownership structure? The efficiency wage literature looks at the difficulty of monitoring effort. Okay, so do these factors really explain care penalties? Well, not really. They don't really explain it. I mean, some of them do. On the yes side, that is they do help explain care penalties. Most care workers are women and so they're facing some discrimination. They have less experience, less job tenure. They have higher levels of human capital in terms of quantity. That is more years of education. But there are people out there like Gregory Mankiw arguing that that quality of their human capital is lower English majors instead of engineering students. And then the large role of the public sector could also help explain why that's a structural factor that could help explain the care penalty. But on the other side of the ledger, there's a growing demand for care workers, nurses, childcare workers, elder care workers. Elder care in particular is projected to grow very rapidly. It's hard to automate care although who knows what kind of AI tools are going to emerge in the future. But some people argue that it's a better bet to specialize in care for that reason. At least some care occupations, nurses and teachers, pretty high unionization, high credentialization. There's a lot of licensing, there are a lot of licensing requirements in the care sector. And it's very difficult to monitor effort in the care sector. So maybe care workers should get an efficiency wage. I'm going to come to that in a minute. So I think here is where I want to bring in some of the specific characteristics of care that I outlined earlier and argue that they reduce bargaining power. So I think preferences, altruistic preferences or caring preferences or moral values, they don't have to be preferences. They can be commitments or obligations. Reduce bargaining power because if you feel committed to your clients, the people that you're taking care of, you're less willing to withdraw your services. It's kind of a nice scowl's finished last argument. Care work often involves person-specific skills. This is what I was emphasizing earlier about care penalties in the home and the family. So you can become very good. You can become very, very productive at taking care of a very specific small group of people. But once those children grow up or once that marriage ends, those skills are not really transferable and that is also relevant to some that lack of fungibility or transferability might be relevant to some paid care jobs. But the really interesting I think additions to the bargaining power framework come on the right-hand side, the characteristics of care industries. It's very difficult to define output. It's very difficult to measure individual contributions and it's very difficult to capture contributions. So, output and care is very multi-dimensional. Is our job to increase our student standardized test scores? That might be one component, but surely that's not the only one. You know, what is the doctor's how do you measure the output of a physician's services? Well, sometimes you can do it like rates or morbidity or mortality, but there are some long run benefits of health over the life cycle that are very hard to factor in to an analysis. It might be harder, for instance, to rate the output of a pediatrician who's protecting children against a lifetime of possible ill effects versus an orthopedic surgeon who is performing a very specific operation whose successor failure can be easily measured. Orthopedic surgeons earn three times about what pediatricians do. That's not the only reason, but it might be one reason. A lot of care work is teamwork. That is, it involves collaboration with other people, other teachers, doctors collaborate with nurses, with aids, etc. But what's really distinctive I think about care work is it often requires collaboration with the quote-unquote consumer. That is, if your student isn't doing the reading if your student isn't doing the homework if you can't persuade the student to work with you on teaching, that lowers your output. Big problem in healthcare is patients not taking their medication or not following orders. If the physician is unable to elicit full cooperation from the consumer, the output is lower even if you can measure it. And the difficulty of measuring individual contributions is I think beautifully dramatized by the growing field of sports economics. Because if you think about it, what Michael Lewis did in Moneyball in the story of the introduction of statistical methods in baseball was he basically dramatized the evolution of a methodology for looking at individual value added in a team sport. And it changed recruiting practices in the baseball industry. Some people argue that that wasn't such a good thing but I'm not a baseball expert so I can't really, I can't cover that. But since that became very popular in baseball it's been extended to the analysis of basketball and also hockey with some success. So now that you can sort of look at how individual performance contributes to the likelihood of team success. But there's one sport where it's proven very, very difficult to do this and I find this actually both gratifying and amusing. It's basically it's football not the offensive team not the offensive players. You can look at how a quarterback team success, but the defensive line plays a really important role in football and if you have a good foot, if you have a good quarterback but you don't have a good defensive line the quarterback isn't going to do you much good. And so far all of the efforts to measure the individual value added of a defensive player in that context have not been very successful. I think care work is a little bit like that defensive line. It's a it's a kind of defense it's a defense against against threats to the development of human capabilities and I think that I don't know, I just think that's a good illustration of of why how can you demand more for your contribution if it's if you really can't measure your individual contribution. So it's let me just give you a few more illustrations and then we'll be done. So I mentioned earlier the efficiency wage issue and the puzzle. Well, why is it why don't care workers get an efficiency wage because there's a really interesting connection with with Sam's work in particular well, I think in standard efficiency wage models there's there's one big information problem which is that the employer can't directly ascertain the workers' efforts and so the employer resorts to either expensive monitoring or paying a higher than market clearing wage in order to increase the cost of job loss and improve effort. But you know that wouldn't do any good unless consumers cared about price and quality of the services that they're getting right and it's employers have to control workers or have an incentive to pay an efficiency wage precisely because they know their bottom line will be affected by both the quantity and price. Well in paid care work there's another information problem it's not only difficult to observe effort, it's very very difficult for consumers to act on the price and quality of the services provided. Now not always you can shop around for your doctor I don't know how effective you think that is you could shop around for your health plan I personally don't feel very empowered by that process but but children can't choose their care providers or their teachers. People in nursing homes especially if they're being paid for by Medicaid they have absolutely no consumer sovereignty so there is no you know there is really no incentive for the employer in this context to ensure high quality and their pricing strategies are largely determined by kind of regulatory requirements rather than market requirements so I think you end up with a problem of low pay for both low quality and high quality work or kind of lemon acrolavian problem that might be part of it but I think maybe another illustration closer to home is to think about how universities solve this problem. One way we solve it is just through credentialization and tracking so we can't really observe who the better teachers are or better faculty members are so let's just have let's find a rootinized bureaucratic way of funneling some into tenure track positions and some into adjunct positions and we're going to use some criteria that we think are merit based to do that. Well in this process as I've heard in many faculty meetings in this department service work tends to be under rewarded because it's very, very difficult to assess. It's very hard to measure the contribution and the efficacy of it and as a result service is very dependent on intrinsic motivation and service tends to be economically penalized. I wish I had a solution to this problem don't ask me what the solution is I don't know I'm thinking about it but I think it's an illustration it just I just want to show you how these arguments I'm making relate to the environment that you are operating in. The fiduciary rule this was a regulatory requirement that the Obama administration introduced which is now basically stalled out as a result of the change in political control in Washington and if you look at the wording of the fiduciary rule it's incredibly telling it would require this would require financial advisors to act in the best interest of their clients why do they care it's it's actually kind of interesting like how would you define acting in the best interest well it turns out that there's a lot of evidence that financial advisors don't act in the best interest of their clients and there's a really great article by Cindal Mullanathan and some others they did an experimental study where they actually went and see financial advisors with different financial plans them to assess it and they found a tremendous problem that they estimated was costing American investors 17 billion dollars a year that had to do with basically self-dealing that is making investment decisions that benefited the firm for one reason or another and the tremendous resistance that the financial services industry has voiced against the fiduciary rule is I think very telling by the way even TIA which many of us have our nest eggs invested in lobbied very very heavily against this simple fiduciary rule and oh here's the best part the regulatory process required an open forum where people could express their their reactions online pro or con the fiduciary rule I don't know if you notice but in December the Wall Street Journal did some investigative reporting that found that 40% of all the comments registered on that site were bogus it was entirely I mean this was clearly an effort at spoofing is that spoofing or trolling I can't keep these terms straight but they basically they were fake fake news, fake comments so I ask you why would an industry you know what why would an industry push back so hard against a simple change in wording about a duty to care unless they believe that would be costly I think maybe that maybe that's a little anecdotal but here's where I bring in a heavy hitter to support my case a Nobel Prize winner Colmstrom his work I think really deserves more attention in this department than it has received he summarized his Nobel Prize literature his lecture is called pay for performance and beyond and it was published in the AER in 2017 and it's really relevant to this story because pay for performance is very common in financial services it's very common at the top 1% of the earnings distribution and it is very small and very very limited in the care sector some efforts to include it as a factor in teacher pay but quantitatively very very small and what Colmstrom points out is that if you richly reward efforts that can be easily measured what you will do is you will induce people to reallocate effort towards less measured outcomes this is exactly what we were talking about about university service but he goes into a considerable detail about malfeasance as a result of high powered incentives the scandals at Wells Fargo what happened to the Atlanta teachers who tried to cheat their way through the pay for performance system that was implemented there and so Colmstrom argues it's really efficient to sort workers into two groups those who get high powered incentives and those who get low powered incentives because if you don't sort them what will happen is those who get the high powered incentives will shirk the parts of their job that can't be measured so in jobs where output can be measured you want to give these high powered incentives and in jobs where it can't be rely on more intrinsic motivation or what do you call low powered incentives well if you think about that this is basically about market incentives versus non-market incentives this is kind of a point about capitalism as a system in fact workers are divided into these two groups men are disproportionately located in jobs with high powered incentives where output can be easily measured and women are disproportionately located the care sector, the family and the welfare state where their contributions cannot be easily measured so here's the final summary of the argument the care penalty arises in my view from the difficulty of organizing care provision on the basis of purely voluntary exchange and that includes voluntary exchange within families families are structured by very specific rules of family law hierarchy, social norms that vary over time but they have never relied on purely voluntary exchange for any significant group of people over any significant group of time and the care penalty is exacerbated in capitalist systems by the difficulty of successfully commodifying the personal emotional non-standard team base and public goods aspects of care provision so I think this kind of connects to the Marxian problematic of social reproduction and a crisis of social reproduction in the long run it's very clear that capitalist dynamics can penalize aspects of care provision that cannot be commodified and you know as we look around us we find ourselves asking or social democratic welfare states going to be able to withstand the effects of increased wealth concentration and intensified global competition I just think it's something we should add to the list of crises I think there's a parallel with environmental crisis both of them have some public goods aspects and some perverse incentives aspects and both of them concern the articulation between market, non-market easily privatized not easily privatized and so forth and so on so I sort of wanted to leave you to this broad theoretical conclusion but before I let you get away I just want to mention that there is an empirical research agenda here that I'm working on in particular in collaboration with Michelle and others trying to dig more deeply into this relationship between occupation and industry in the care sector how do they interact how can we better understand their effects I would also like to look more closely at the effects of specific values and preferences on job choice and earnings there's a lot of survey data out there that relates to economic outcomes and Nicole Fortin as a labor economist who's worked in this area and also I think it's really important to redefine the care penalty in broader terms a lot of the econometric work is trying to isolate a care penalty controlling for gender controlling for occupation controlling for industry controlling for public but all of these control factors are themselves influenced by the care penalty and I think we need to look at care penalty in a broader kind of lifetime a broader model of the lifetime risk of reduced economic security as a result of specialization in care provision there's I think it's actually raises some really interesting empirical and theoretical kind of modeling questions thank you so much for bearing with me on this time