Newswletter

Spring 2007  

Chair’s Letter

Greetings for 2007 from the UMass Boston Department of Economics!

As I write this letter, we are in the midst of hiring a new faculty member for the department. We are bringing several candidates for the position to campus, and each of them is both interesting and extremely capable. So we are looking forward to continuing the very favorable development of our faculty that has been underway for the past several years.

Perhaps the most exciting developments in the department, however, are with our students. A group of our students placed third in the Federal Reserve Challenge, and we have recently been able to engage several of our students in some very interesting and valuable internship programs. The Fed Challenge is a competition among several teams from New England universities, in which each team presents an analysis of the macroeconomic situation of the U.S. economy and then faces questioning by representatives of the Fed. We were extremely impressed – as, apparently, were the judges from the Fed – with our team’s performance. (See the picture of our team on page 8.)

As you may know, the Department of Economics has long had its own internship program, in which each spring term several of ours students are placed with government and non-profit agencies that are engaged in economics-related work. These internships have provided valuable training, and, in some instances, have led directly to interesting jobs for the students.

Now, however, we have become engaged in a couple of additional internship programs. One of these is with the State Street Bank. UMB has developed a program that will place several students each year in paid internship programs, working in the Mutual Fund Administration branch of the bank. The program began this past fall on a limited basis, and four of our best students from the Department of Economics were included (along with a group of similar size from the College of Management). The students – Mwanyota Allen, Diego Covarrubias, Jennifer McGlynn, and Marcy Renken – get paid for their twenty hours a week at the bank, and each gets a $2,500 tuition scholarship.

I have met with the four economics students several times, and they are quite pleased with the way the program has developed. No, they are not running the world of high finance. But they are learning a great deal, much more than they would expect from the run-of-the-mill internship. Not only are they learning the details of mutual fund administration; they are, as one student put it, “learning how to operate in a corporate environment.”

Next year the program will expand considerably. Though students from other departments will also be eligible, we still hope and expect to place another group of our best economics students in the program.

Also, we have started a relationship with the Boston regional office of the Bureau of Labor Statistics, placing one of our top students, Michelle Green, in a paid internship there. She has worked in the Economic Analysis and Information Office on a variety of projects including the National Compensation Survey. She says the internship has “helped turn somewhat abstract economic theories into a practical method of analysis...and shown me the value of public service.” We anticipate that this relationship with the BLS will continue to benefit our students.

The students in these special internship programs and many of our other students arecontinuing to do excellent work. Last spring at graduation we were quite pleased to honor Mark Baldi, Swaati Eklund and Andrew Zwicker with our three departmental prizes, recognizing the outstanding records they had established in their classes. Also, in 2006-07, we have awarded the second Joanne P. Stewart Memorial Scholarship, a prize of $500 to a top economics student for the final year of her/his studies, to William Montague.

We look forward to hearing from you, and hope to include news of you in future newsletters.

Finally, this spring term we are fortunate to have with us as a Visiting Professor, Julie Nelson, who is on leave from her regular position as a Senior Research Associate at the Tufts University Global Development and Environment Institute. She will teach “Sex Segregated Labor Markets” and “Introductory Economics.” In the latter, she will be trying out a new textbook that she and colleagues have written. Professor Nelson recently published Economics for Human Beings (University of Chicago Press).

We look forward to hearing from you, and hope to include news of you in future newsletters; please let us know what you are doing. We would like the newsletter to facilitate networking among our graduates. Let me take this opportunity to thank those of you who have provided us information about job possibilities for our graduating majors, or have participated in job networking events, as well as all of you who have so generously donated to the department’s alumni fund. We want to stay in touch with you and we look forward to your continued support and interest. Please contact us by email at the addresses listed at the end of this newsletter, drop by, or telephone me at 617-287-6956. You can also always check out our website at www.economics.umb.edu .

My best regards,
Arthur MacEwan

Made in India
By Arjun Jayadev

[An earlier version of this essay appeared in LUX, a UMass Boston student-run magazine.]

For many in this country, India and its economy remains relatively obscure. Unlike as with China, India’s presence as a growing economic power is not registered and reinforced by every visit to the mall. Its exchange rate policies are not front page news, and its burgeoning middle class and educated workforce are seen not so much as a threat as a future opportunity by American business. Notwithstanding the occasional hysterical debate around outsourcing and periodic simple minded articles in the New York Times by Thomas Friedman about my hometown of Bangalore, the Indian economy remains a faint echo in the American imagination. If you consider yourself less informed than you would like to be about the Indian economy, here are the bare essentials that you may need to know about a country which, according to many, will be a very important world economic power in the years to come.

In 2005-2006, India was the 4th largest economy in the world in terms of total output. But as the second most populous country in the world per person income is quite low at about $3500 (measured in terms of purchasing power). The Indian economy has been growing fairly rapidly and continuously now for a quarter of a century, with output rising at about 5% annually (or, about the rate that the U.S grows in a very good year). In the last few years however, the growth rate has been sharply higher at about 8%.

A broad change in economic vision is credited with altering the low growth rates (pejoratively called the “hindu rate of growth”) which prevailed during the first three decades following Indian independence. First, in 1980, there was an ‘attitudinal shift’ by the Prime Minister Indira Gandhi and later by her son Rajiv Gandhi to encourage the business sector. India was a heavily controlled economy prior to the 1980s and 1990s and firms required many permits and licenses to operate their business. In addition, the Indian economy was relatively closed to foreign trade, as the government attempted to allow domestic firms to build their own productive capacity before being exposed to international competition. In 1991, India formally scrapped its vision of a controlled economy, and began a period of economic liberalization. Permits for business were made easier, the economy was opened up gradually to international competition, public owned businesses were privatized, financial markets were decontrolled over time and the government retreated from providing goods and services.

What followed has undoubtedly been a period of rapid growth and development. There is a large Indian middle class, the members of which have access to much greater opportunities and income than ever before. The major cities have witnessed explosive growth as international and national firms vie for growing markets. Highly skilled and cheap labor (compared with international standards) successfully compete for global business in such fields as software development, business process outsourcing, and biotechnology.

While all of this is undoubtedly positive news, the last decade has also been a period of very unevenly spread development. States which were richer to begin with have grown much faster than those which were initially poorer. There has been rapid growth in urban areas, but despite decent growth in agriculture, the rural economy faces a crisis as rural livelihoods have collapsed. The manufacturing sector remains small, and the coming years will see an increasing severe problem of providing decent employment to the growing labor force.

What followed has undoubtedly been a period of rapid growth and development…While all of this is undoubtedly positive news, the last decade has also been a period of very unevenly spread development.

These negative aspects of economic change have been the dark side of liberalization. As an infamous example, consider the story of cotton farmers. They have faced severe international competition, and, at the same time, the government has moved away from subsidizing their input costs (fertilizers, electricity). Consequently, their profits and livelihoods have been squeezed. As a result over two thousand farmers have committed suicide since 2000. An equally problematic situation is the peculiar the pattern of development. For reasons not very well understood, India has seen very little growth in labor intensive manufacturing (as might be expected in the normal trajectory of growth) and much larger growth in services. Those who are in agriculture and who wish to move to finding jobs in manufacturing have a very difficult time simply because these jobs are not being created at a rapid enough clip. (This pattern is also why you don’t see many goods manufactured in India in US malls.) As time goes on and the labor force becomes larger and larger, those with low skills are faced with a greater probability of unemployment and a bleak future. Given that the large mass of the population is in this situation, the problem becomes urgent.

In 2004, a new government was sworn into power which explicitly promised to address the problems faced by the rural hinterland. The challenge facing Indian policymakers today is therefore clear. They have to find a way to continue the rapid growth and poverty reduction that they have achieved over the last two decades, while at the same time addressing some of the structural inequalities and imbalances wrought by previous policies and the politically unsustainable divergence between the rural and the urban areas. This is by no means an easy task. While government intervention in the economy is looked upon with suspicion by those who have benefited from the progressively deregulated environment of the last decade, it is urgently needed by those who have not been as fortunate. Liberalization has improved the overall economic environment, but at the cost of creating multiple Indias in which some areas have prospered while others have buckled and declined.

But the future, at least to the present writer, is very hopeful. There are certainly ways to conceive of intelligently designed policies which seek to redress the worst failings of liberalization and to combine these with incentives for lagging regions to find ways to make use of the opportunities provided by growing internal and external markets. How India goes about implementing these policies and reacting to the forces unleashed by them will determine the manner of its continued emergence on the world stage in the decades to come.

Faculty Notes

Randy Albelda and co-author Alan Clayton-Matthews released their report Sharing the Costs, Reaping the Benefits: Paid Family and Medical Leave in Massachusetts (published by UMB’s Labor Resource Center and the Women’s Institute for Policy Research in Washington, DC) the same day a bill on paid leave was being heard before the Massachusetts State Legislature in June 2006.  Professor Albelda was quoted in the Boston Globe, Time, and the Christian Science Monitor with their findings.    She is currently working on a multi-year project examining the combination of earnings and public benefits that Massachusetts families receive as their earnings increase.  Professor Albelda has been appointed the Associate Chair of the Department of Public Policy and Public Affairs, so her teaching in the Department of Economics has been limited.  (Sharing the Costs is available at http://www.cpcs.umb.edu/lrc/paidleave/LRC_report_May06_Final.pdf)

 Minsik Choi presented his co-authored work on “The Development of Korean American Banks in the US” at the first National  Korean American Economic Conference in Los Angeles, February 2006; the paper will appear as a chapter in an edited book by the  Korean American Economic Development Center. He also published “Threat Effects of Capital Mobility on Wage Bargaining” in an  edited volume on Globalization and Egalitarian Redistribution and “Do Foreign Firms Really Pay Higher Wages than Local  Ones?” in the Korean Journal of Labor Economics. After spending spring 2007 conducting his research on Korean labor policies  in Seoul, Professor Choi will return to the Department of Economic in the fall.   

 Jeremiah Cotton is currently working on a project that, among other things,attempts topinpointsome of theelements and  eventsin the U.S.economy that in the 1972-1990 period pushed the nationalblack-white unemployment ratio so far above its  traditional two-to-oneaverage. The ratio during this periodaveraged 2.30, whereasprior to 1972 it hovered fairly close to2.00,  andsince 1990it has been around 2.10. The restructuring of the economythat occurred during this period in question appears to  have worked particularly to the detriment of black employment.Professor Cotton has been teaching core courses in  microeconomic theory and macroeconomics as well as “The Political Economy of Black America.”

Arjun Jayadev took a group of students to the Federal Reserve for the annual “Fed College Challenge” with substantial success (see Chair’s Letter).  Not only successful, but also “exciting and fun for all.”   Professor Jayadev has recently completed two papers, one on “Feminization and the Labor Share of Income,” and the other on “The Correlates of Rentier Income in OECD Countries.”  He is also developing a project on wealth inequalities in India, and he has continued his work as an indirect advisor to the Cambodian government. Professor Jayadev has been teaching “Money and Financial Institutions” and is developing a new course on Asian economies.

Pascale Joassart has continued with her research on housing subsidies and access to employment opportunities. One paper that has emerged from this project has been  accepted for publication in Housing Policy Debate. She also published an article on poverty segregation in Urban Geography and an extensive report on the underground economy in Los Angeles. She has received agrant from the Robert Wood Johnson Foundation to investigate variations in state and localgovernment expenditureon parks and recreation facilities and how these may relate to local health disparities. In addition to teaching in the economics department, she also taught a courseon the New England economic environment in the Public Affairs Masters Program. In May, she was elected as a representative from the College of Liberal Arts on the UMB Faculty Council.

Janis Kapler  recently had her paper “The Theory of the Firm, the Theory of Competition and the Transnational Corporation” accepted for publication in Competition and Change. She is currently doing research on technological standardization and outsourcing. Professor Kapler teaches “International Finance” and “Multinational Corporations” in the department, and “Intermediate Macroeconomics” in both the department and the Public Policy Ph.D. Program.

 Marlene Kim completed her book, Race and Economic Opportunity in the 21st Century, which will be published in spring 2007  by  Routledge.  She presented new research on race discrimination at the Allied Social Science Association meetings and at the  Western Economic Association meetings.  She also spoke at Northeastern University on “Women, Feminism, and Race”, and at  MIT on “Bridging the Divide Between Academia and Activism” and on “Women, Wealth, and Poverty.”  She organized, chaired,  and discussed a research paper at the Western Economics Association meetings in San Diego.  She has been teaching “Sex  Segregated Labor Markets,” the “Economics of Social Welfare,” and “Unions and Collective Bargaining.” 

Aduga Lemi had his article on the “Determinants of Sales Destinations of Affiliates of U.S. Multinational Firms in Developing Countries,” published in the fall in the International Trade Journal.  He is currently working on a paper entitled “Profile of Foreign Aid to Ethiopia: 1960-2003.” In addition, he is revising two other papers: “Do Capital Flows Promote Good Governance in Africa?” and “The Impacts of Trade Liberalization on Poverty.” The first paper was presented at the Eastern Economics Association (EEA) meetings in February 2006.  Professor Lemi has been teaching “EconomicDevelopment,” “International Trade” and core microeconomics courses in the department, as well as “International Political Economy” in the Masters of Science in Public Affairs program.

 Catherine Lynde is engaged in research on the political economy of women’s health. She is writing a book investigating issues  affecting women in advanced and developing countries – for example, artificial birth control, HIV/AIDS, workplace and home safety  issues.  During the last year Professor Lynde has continued to teach “Macroeconomics,” “Health Economics” and “Econometrics.”   She is also currently serving as a member of the UMB faculty union’s collective bargaining team.

 Arthur MacEwan is chair of the Department of Economics.  Aside from his various administrative responsibilities, he is working on  a project challenging the lack of attention to issues of income distribution in poverty alleviation efforts such as the UN Millennium  Development Goals program.  In addition to teaching courses on economic history and Marxism in the department, Professor  MacEwan has been teaching “The Origins of Global Inequality” in the UMB Honors Program.

 Enrico Marcellirecently had two co-authored papers accepted for publication related to Mexican immigration – one will appear in  the Social Science Quarterly and the other in Sociological Perspectives.  He is engaged in a set of projects on Mexican  immigration and also in work on how social determinants (e.g., residential segregation, income inequality, social capital) affect  various health behaviors (e.g., diet, exercise, sleep, smoking) and outcomes (e.g., obesity, diabetes, subjective well-being).   Professor Marcelli recently received grants from UMB and from the National Institutes of Health to support the design and  implementation of the 2007 Boston Metro Brazilian and Dominican Immigrant Household Surveys.  In addition to teaching courses on urban and labor economics, Professor Marcelli has developed new courses on immigration in the department and in the Public Policy Ph.D. program.

 Tammy Barlow Murphy continues her research on estimating the value society places on reducing environmental health and   safety risks, with a particular focus on drinking water quality and risk communication issues. She teaches courses in   microeconomics, statistics, and environmental and natural resource economics, and she is also serving as the director of the   economics internship program. In addition, Professor Murphy is working on a committee with Friends of the Blue Hills, an   organization devoted to preservation of the Blue Hills Reservation and Neponset River, to develop a survey examining community   usage of these natural resources.

 Mary Stevenson is currently serving as Associate Chair of the Economics Department. She is also chairing the Admissions  Committee for the Public Policy Ph.D. Program and welcomes inquiries from Economics alumni. The book she is writing with  her co-authors, Barry Bluestone of Northeastern University and Russell Williams of Wheaton College, The Urban  Experience:  Economics, Society and Public Policy, is nearly complete and will be published by Oxford University Press.  Professor Stevenson teaches Economics for Policy Analysis in the Public Policy Ph.D. Program. She is currently teaching “Economics of the Metropolitan Area,” which is an Intermediate Seminar Course, and “Introductory Microeconomics” in the Department of Economics.

 David Terkla published a co-authored article on the Massachusetts renewable energy industry in Massachusetts Benchmarks.  He  also participated in a study of the value of the marine and coastal economies in Massachusetts, which led to a major report being  produced for the Massachusetts Office of Coastal Zone Management.  This will be used as background for the development of an  Ocean Management Plan for Massachusetts.  Professor Terkla divides his teaching time between the Department of  Environmental, Earth and Ocean Sciences and our own department, where he teaches courses in “Public Finance,” “Environmental Economics” and “Microeconomic Theory.”

Alumni  Notes

Wendy B. Davis (1980) volunteered with the U.S. Peace Corps in Thailand immediately after graduation, teaching English and Agriculture at a middle school. Upon return to the U.S., she attended Boston College Law School, graduating in 1985. She practiced law for twelve years before deciding to return to teaching as a law professor. She taught at Suffolk University Law School in Boston, and later was appointed Dean of Students at the Appalachian School of Law in Grundy, Virginia. She is now a professor at Albany Law School, and is currently writing a book on Mergers & Acquisitions, having published a book on Aviation Law in 2004. She is a volunteer chairperson of the Restore for Capital District Habitat for Humanity.

Todd McMahon (1991) joined Putnam Investments upon graduation and then went on to earn his MBA at Boston University. After receiving his MBA, Todd went to work for Bank of Boston in their emerging markets investment banking area, financing infrastructure related projects in Central and South America. Upon leaving Bank of Boston, Todd switched his focus to technology related investment banking transactions where he preformed M&A advisory mandates for smaller, high growth companies, mainly in the software and telecommunications industry. Todd recently founded Bluewater, a company focused on consolidating the waste management industry.

Michael Plante (2002) spent the year after graduation as a Fulbright Fellow in Japan at Osaka University, and he then stayed and taught English there for another year.  In 2004 he entered Indiana University in pursuit of a Ph.d. in Economics, focusing on monetary economics in both developed and developing nations.  He is currently working on two projects.  One of them looks at the interaction between monetary policy, durable goods spending, and oil price shocks in the US.  His other project is investigating the potential macroeconomic effects of (and possible policy responses to) the large inflows of foreign aid to Sub-Saharan Africa due to the Millennium Development Goals.

Barbara McGonagle (2005), after she achieved “mylong term dream that was continuously interrupted byvarious eventsand graduated from the economics program,” found that she wanted to continue with her education. She applied to graduate school and was accepted to the Public Policy, Ph.D. program at UMASS Boston. She has been a full time student for the past two years.  The first year she was a research assistant to Randy Albelda, working on her Bridging the Gap research project. This past year she has been assigned as a teaching assistant to Alan Clayton-Matthews in the statistics sequence. In addition, she has pursued research on social security reform and long-term elderly care in classes withProfessor Yung Ping-Chen in the Gerontology Department.By the end of this semester she will have the core courses completed and hopes to begin to consider a focus for a dissertation.

Please Support Your Department of Economics and UMass Boston

We very much appreciate the support that alumni have given to the department.  Your contributions have made it possible for us to establish our own computer lab, which is heavily used by students in economics.  Not only does the lab serve students’ obvious computer needs (including high speed internet access).  In addition, the lab is a place where students can meet each other, get help from one another on their work, learn about courses, etc.  Also, your support has made it possible for us to hold more departmental events that bring the students together – including, in particular, a fall reception for all our majors and prospective majors and a spring dinner for our honors students.

We hope you will be able to continue the generous support you have given us in the past.  One particular need we have is the upgrading of our computer lab.  We will certainly appreciate whatever help you can give us.  Of course, if you wish to donate to the university or the College of Liberal Arts, we will be very grateful as well. 

You can donate by check or on line.  Checks should be sent to the Office of Institutional Advancement, UMass Boston, 100 Morrissey Boulevard, Boston, MA 02125-3393.  A check can be made out to the UMB Foundation or, if you choose to designate your gift for the Department of Economics, make it out to UMB Foundation – Economics Department.  Alternatively, you can donate on-line by going to https://www2.www.umb.edu/donation/form.html, where you can also designate Economics.

Your support makes a difference in the lives of our students.  Thanks very much!

Faculty Email Addresses:

                                                    UMass Boston’s Fed College Challenge Team

      Mohammad Ali, Luiz Rabelo, Federal Reserve Bank of Boston President Cathy Minehan, Fritz Hyppolite, Kelly Castro,
                                        Josh Conlon and advisor Assistant Professor Arjun Jayadev