Edward Glaeser’s latest Bloomberg View column draws on the work of Mark Duggan and Scott Imberman on the evolution of the disability rolls to make a broader point about America’s labor market:
The political response to the low labor-force participation is to offer policies aimed at job creation. The right favors tax cuts. The left favors subsidized help through building roads and other infrastructure, and favoring particular sectors, such as “clean energy.”
I’m skeptical that either approach can succeed, especially in helping the lower-skilled. Most sensible government investments require well-trained employees, such as engineers, not high school dropouts. Even if tax cuts help private-sector activity, there is little guarantee that businesses will start hiring from the bottom of the labor market.
Specifically, Glaeser suggests that the rise in the disability rolls reflects both the loosening of eligibility requirements and the deterioration of the labor market position of less-skilled workers, a thesis that we have explored in this space in our discussions of the work of Duggan and David Autor. His proposed remedy, or rather one component of the broader overhaul he recommends, is a simplification of the work supports and social transfers provided by the federal government to encourage labor force participation. This would be a fruitful agenda for center-right wonks, though it will require a high level of analytical sophistication.