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Rise of the "Quants" in Financial Services: Regulation and Crowding Out of Routine Jobs |
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BY: Christos A. Makridis, Alberto Rossi
DATE: October 1, 2020
Abstract: “We document three recent trends in employment in financial services: (a) the share of science, technology, engineering, and math (STEM) workers grew by 30 percent between 2011 and 2017; (b) while the earnings premium of working in finance has grown, the STEM premium in finance has declined since 2011; and (c) regulatory restrictions in financial services have grown faster than in other sectors. We investigate three economic mechanisms underlying these patterns: (a) capital-skill complementarity, (b) relabeling of non-STEM degree programs as STEM degree programs, and (c) regulation. We show that only the rise in regulation can explain our observations.”
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Regulation and Poverty: An Empirical Examination of the Relationship Between the Incidence of Federal Regulation and the Occurrence of Poverty Across the US States |
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BY: Dustin Chambers, Patrick A. McLaughlin and Laura Stanley
DATE: October 30, 2018
ABSTRACT: “We estimate the impact of federal regulations on poverty rates in the 50 US states using the recently created Federal Regulation and State Enterprise (FRASE) index, which is an industry-weighted measure of the burden of federal regulations at the state level. Controlling for many other factors known to influence poverty rates, we find a robust, positive and statistically significant relationship between the FRASE index and poverty rates across states. Specifically, we find that a 10% increase in the effective federal regulatory burden on a state is associated with an approximate 2.5% increase in the poverty rate. This paper fills an important gap in both the poverty and the regulation literatures because it is the first one to estimate the relationship between the two variables. Moreover, our results have practical implications for federal policymakers and regulators because the greater poverty that results from additional regulations should be considered when weighing the costs and benefits of additional regulations."
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Comprehensive Regulatory Reform |
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BY: Patrick A. McLaughlin, Jerry Ellig, Michael Wilt
DATE: May 18, 2017
ABSTRACT: “Americans expect federal regulation to accomplish many important things, such as protecting the country from financial fraudsters, preventing workplace injuries, preserving clean air, and deterring terrorist attacks. Regulation also requires tradeoffs—there is no such thing as a free lunch. Depending on the regulation, consumers may pay more, workers may receive less, retirement savings may grow more slowly, and Americans may have less privacy or personal freedom. In a democratic society, these tradeoffs require government regulators to carefully and completely disclose the likely effects of individual rules and of the regulatory system as a whole. In this and other ways, our regulatory system has fallen short. Congress needs to address the shortcomings of this system with comprehensive regulatory reform."
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Regulation and Income Inequality: The Regressive Effects of Entry Regulations |
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BY: Patrick A. McLaughlin and Laura Stanley
DATE: January 2016
ABSTRACT: “A new study for the Mercatus Center at George Mason University examines the relationship between income inequality and the number of regulatory steps necessary to start a business. Looking at 175 countries and multiple variables, the study finds that there is a positive relationship between entry regulations and income inequality."
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Trade Flow Consequences of the European Union’s Regionalization of Environmental Regulations |
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BY: Patrick A. McLaughlin
DATE: June 2009
ABSTRACT: “Groups of countries in a region sometimes impose environmental regulations on themselves, particularly inside the European Union. Regional environmental regulations might affect trade flows to and from the regulated countries differently than unilaterally generated regulations for two reasons. The first we term the uneven competitiveness effect: A given increase in production costs across all countries is a higher percentage increase in production costs for countries that produce low-cost goods than for those that produce high-cost goods. The second reason we term the uneven burden of compliance: Because high-income countries are more likely than low-income countries to have relatively stringent environmental regulations in place prior to the creation of regional environmental regulations, the cost of compliance with a given regional environmental regulation might be lower for high income countries than for low-income countries."
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Regulation’s Unintended Consequences Can Hurt Everyone—the Poor Most of All |
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BY: Patrick A. McLaughlin
DATE: April 2018
ABSTRACT: “Regulators and policymakers often justify regulations that slow innovation or economic
growth on the grounds of protecting society, especially its poorest and most vulnerable
members. But despite these good intentions, regulation many times ends up hurting the
very people it seeks to help—the poor. Regulatory burdens are often regressive, disproportionately borne by the members of society least able to do so. Increased levels
of regulation detract from the quality of their lives in at least four ways: sluggish wage
growth, diminished employment opportunities, higher consumer prices, and disproportionate burden on small businesses."
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Regulatory Review Commission + Regulatory Budget = A Diet for Better, More Effective Regulations |
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BY: Patrick A. McLaughlin and Tyler Richards
DATE: November 12, 2019
ABSTRACT: “All regulations, however well intended, create unintended consequences. Regulatory accumulation (that is, the buildup of rules over time) leads to slower economic growth and fewer small businesses, and it deepens wealth inequality as the burden of regulatory accumulation is disproportionately borne by low-income households. Furthermore, organizational and political incentives inherent to bureaucracies lead regulators to tirelessly create new rules while paying little attention to past regulations that are outdated, overlapping, or simply ineffective—not to mention that they rarely address the general growing mass of regulations. Addressing this excessive regulatory accumulation by identifying and removing costly regulations as well as limiting regulatory growth to only the most beneficial regulations would be a significant step in managing the social costs of regulations."
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The Effect of Regulation on Low-Income Households |
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BY: Dustin Chambers, Diana Thomas, Patrick A. McLaughlin, and Kathryn Waldron
DATE: January 8, 2019
ABSTRACT: “Regulation dictates the lives of ordinary American citizens in a myriad of ways. Although most regulation is created with the intention of protecting people from possible dangers, it can have the reverse effect. Even regulation that focuses on consumer, workplace, and environmental protection has economic costs, as it requires businesses to hire additional staff to navigate the legal landscape, among other costs. Even more worryingly, red tape can also discourage outside companies from entering more heavily regulated industries in the future."
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The Unintended Consequences of Federal Regulatory Accumulation |
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BY: Patrick McLaughlin and Robert Greene
DATE: May 8, 2014
ABSTRACT: “Federal regulators often have good intentions when proposing new rules, such as increasing worker safety or
protecting the environment. However, policymakers typically view each regulation on its own, paying little
attention to the rapid buildup of rules—many of them outdated and ineffective—and how that regulatory
accumulation hurts economic growth. The continuous accumulation of rules over the last several decades has not only slowed economic growth
but has also reduced employment opportunities and disproportionately harmed low-income households.
Unless Congress and agencies address this growing backlog, it will continue to stifle innovation and entrepreneurship."
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Regulations Contribute to Poverty |
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BY: Patrick McLaughlin
DATE: February 24, 2016
ABSTRACT: “Chairman Marino, Ranking Member Johnson, and members of the committee: thank you for inviting me to
testify today. As an economist and senior research fellow at the Mercatus Center at George Mason University, my
primary research focuses on regulatory accumulation and the regulatory process, so it is my pleasure to testify
on today’s topic. My testimony focuses on how our regulatory process, contrary to what many expect, contributes to poverty."
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Regulatory Reform Can Amount to a Progressive Tax Refund, If Done Right |
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BY: Patrick McLaughlin
DATE: March 2, 2015
ABSTRACT: “Chairman Marino, Ranking Member Johnson, and members of the committee: thank you for inviting me to
testify today. As an economist and senior research fellow at the Mercatus Center at George Mason University, I
focus my primary research on regulatory accumulation and the regulatory process, so it is my pleasure to testify
on today’s topic."
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