The Hutchins Roundup brings the latest thinking in fiscal and monetary policy to your inbox. Have something you'd like us to include in the next Roundup? Email us and we'll take a look.
This edition was written by Tristan Loa, Georgia Nabors, Jack Spira, and Louise Sheiner.
Examining the effects of Chinese import competition on U.S. manufacturing markets, David Autor of MIT and co-authors find that trade-exposed places compensated for employment losses while trade-exposed workers on average did not. Worker-level data from 2000 (the year before China's entry into the World Trade Organization) to 2019 (the year before the COVID-19 pandemic) show that areas that lost manufacturing jobs saw job growth in other industries, especially in relatively low-wage service jobs. These employment gains were strongest among first-time workers, especially women, the college-educated, members of minority racial and ethnic groups, and the foreign-born. Meanwhile, overall employment-to-population ratios fell in these areas, since workers initially employed in manufacturing were more likely to exit or reduce employment and less likely to relocate.
The U.S. has two place-based tax incentives intended to encourage private investment in low-income communities: the New Markets Tax Credit, where government-approved entities select investments, and Opportunity Zones, where private investors choose projects. Using tax return data, Kevin Corinth of the American Enterprise Institute and co-authors find that, while both programs target census tracts with relatively high poverty rates, Opportunity Zone investment tends to flow to Census tracts with more pre-existing economic strength. Specifically, 65% of Opportunity Zone investment goes to tracts in the top quintile of commercial investment and 55% in the top quintile of multifamily housing investment. In contrast, for New Markets, the shares are 31% and 26%, respectively. The authors find that both programs leave out a large number of areas and conclude that “assisting distressed areas not ripe for productive investment on their own likely requires alternative policies.”
From 1976 to 1998, the Gautreaux housing program relocated over 7,000 Black families from urban Chicago neighborhoods to other areas, usually predominantly white and low-poverty neighborhoods. However, due to limited housing availability, some were placed in “revitalizing” areas with large Black populations. Eric Chyn of the University of Texas, Austin, Robert Collinson of Notre Dame, and Danielle Sandler of the Census Bureau find that children relocated to predominantly white neighborhoods earned 20% more from ages 24 to 28 than those placed in revitalizing ones. These children were more likely to own a home by their mid-30s and lived in areas with lower poverty rates and higher rates of upward mobility in adulthood. Children relocated to predominantly white areas were 24% more likely to be married, twice as likely to have a white spouse, and more often chose to live in racially diverse neighborhoods. The authors conclude that “housing mobility programs targeted to families with children can be an effective anti-poverty policy.”
"Given current economic conditions—specifically, inflation that remains modestly above our target and a labor market that is solid—and my projections of future economic conditions, I voted last week to maintain our current policy stance. As long as the economy and labor market remain strong, I see it as appropriate for the Committee to be cautious in making further adjustments," says Philip Jefferson, Vice Chair of the Federal Reserve.
"Over the medium term, I continue to see a gradual reduction in the level of monetary policy restraint placed on the economy as we move toward a more neutral stance as the most likely outcome. That said, I do not think we need to be in a hurry to change our stance. In considering additional adjustments to the federal funds rate, I will carefully assess incoming data, the evolving outlook, and the balance of risks. As is always the case, monetary policy is not on a preset course. To that end, I could envision a range of scenarios for future policy. For example, if the economy remains strong and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer."
"Alternatively, if the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, it may be appropriate to reduce the policy rate more quickly. Our current stance of policy is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate."
Call for papers
We are seeking papers on the municipal bond market, state and local fiscal issues, taxes, infrastructure spending, and climate change for the Municipal Finance Conference to be held in-person Tuesday, July 22, 2025 and Wednesday, July 23, 2025 in Washington, D.C.
About the Hutchins Center on Fiscal and Monetary Policy at Brookings
