Prospects for the U. S. economy

Speech to the California Independent Bankers Annual Convention, Laguna Beach, CA, October 9, 2006Economic conditions - United States

Enhancing Fed credibility

Speech to the annual Washington Policy Conference sponsored by the National Association for Business Economics (NABE), March 13, 2006Monetary policy

Welcoming remarks to the 2006 National Community Reinvestment Conference

Remarks to the National Community Reinvestment Conference, Las Vegas, NV, March 20. 2006Community development ; Community Reinvestment Act of 1977

Economic inequality in the United States

Speech to the Center for the Study of Democracy 2006-2007 Economics of Governance Lecture, University of California, Irvine, November 6, 2006>Income distribution ; Public policy ; Wages

Financial Development and Wage Inequality: Theory and Evidence

We argue that financial market development contributed to the rise in the skill premium and residual wage inequality in the US since the 1980s. We present an endogenous growth model with imperfect credit markets and establish how improving the efficiency of these markets affects modes of production, innovation and wage dispersion between skilled and unskilled workers. The experience of US states following banking deregulation provides empirical support for our hypothesis. We find that wages of college educated workers increased by between 0.5 - 1.2% following deregulation while those of workers with a high school diploma fell by about 2.2%. Similarly, residual (or within-group) inequality increased. The 90-50 percentile ratio of residuals from a Mincerian wage regression and their standard deviation increased by 4.5% and 1.8%, respectively