The Opportunity & Inclusive Growth Institute was founded in 2017 to conduct
and share research that works toward expanding economic opportunity
and inclusive growth for all Americans. Five years in, how has the opportunity
and inclusion research agenda evolved?
Anniversaries offer a moment to pause and reflect: Where have we come
from, and where are we going? So for this issue, For All gathered four individuals
who have been instrumental to the work of the Opportunity & Inclusive
Growth Institute over the last five years and asked their perspective.
Mark Wright served as research director of the Minneapolis Fed from the
Institute’s early days until July 2022, when he assumed a new role at the
Federal Reserve Bank of St. Louis. He steered the effort to bring together a
diverse and distinguished group of social scientists to serve on the Institute’s
founding advisory board. Those advisors include Greg Kaplan, professor of
economics at the University of Chicago, and William A. (“Sandy”) Darity Jr.,
the Samuel DuBois Cook distinguished professor of public policy, African
and African American studies, and economics at Duke University. They were
joined by Abigail Wozniak, who has led the Institute as its first director since
her arrival in early 2019.
Illustrations by Daniel Hertzberg for Minneapolis Fed
The Institute’s focus is on research that can help expand
opportunity and inclusion in the economy. This focus
often touches on inequality, a feature of the economy
that we can more readily measure than opportunity or
inclusion. But there are also distinctions among these
three concepts. What are the relevant connections
between opportunity, inclusion, and inequality?
Abigail Wozniak: I think this question is really relevant
when we think about how we should steer the Institute.
As the director, I am often involved in conversations
about inequality, and the Institute has ongoing projects
that seek to better measure economic inequality.
“There are conditions under which producing equal outcomes is a precondition for producing equal opportunity. That happens when we shift away from thinking about inequality across a general population to inequality between social groups.”
Yet inequality is not in our name. And I think there’s an
important reason for that, which is that the ultimate goal
the Fed is looking to pursue is to ensure that people have
the ability to fully participate in the economy, they are fully
utilizing their talents, and they have a range of choices
to fulfill what’s best for them in terms of economic participation.
But we are not seeking to necessarily equalize
outcomes. There are examples of economies that have
attempted to equalize outcomes, and they’ve done so in
ways that really constrain opportunity or constrain inclusion.
These would not be economies that you would point
to and describe as particularly enabling opportunity.
Greg Kaplan: I agree that it’s a great decision to not
have the word “inequality” in the name of the Institute. I
teach classes on the macroeconomics of inequality, and
I tell my students, “You tell me whatever message you
want to make about inequality, and I’ll find you a statistic
that will make it.”
I think the reason that statistics can tell such a range
of stories about inequality is that what we really are
talking about are distributions. Whenever we work with
a large-dimensional object like the U.S. economy, there’s
not going to be an easy way to summarize it. Even if
we’re talking about just one dimension—income, for
instance—you get very different stories about “inequality”
across groups and over time if you look at different
parts of the distribution.
Sandy Darity: I think it’s useful to make a distinction
between inequality and inequity. It is not at all clear that
all forms of inequalities are necessarily a product of
unfairness. I think that it’s the issue of unfairness that,
ultimately, we really are concerned about.
I worked on the analysis “The Association between
Wealth Inequality and Socioeconomic Outcomes,” led by
Omer Ali, in which we demonstrated that with the exception
of political equalities, the degree of wealth inequality
didn’t have much to do with well-being measures.
What’s critical is the nature of the social floor in a society.
Does the society ensure that everyone has the minimum
conditions for a decent existence?
I think that part of the issue that Abbie raised involves
the distinction between equal opportunity and equal
outcomes. And I think there are conditions under which
producing equal outcomes is a precondition for producing
equal opportunity. That happens when we shift away
from thinking about inequality across a general population
to inequality between social groups.
Mark Wright: I agree exactly with what Sandy said.
I don’t think you can have equality of opportunity in a
world in which outcomes are so different that one person’s
children will not have the same opportunities
as another person’s children in the future. Equality of
opportunity is a necessary condition to have fair or equitable
outcomes, but generating that equality of opportunity
depends on the outcomes themselves. So you can’t
completely separate the two.
What are some of the pressing questions at the
frontier of the economic opportunity and inclusion
“Maximum employment is an explicit distributional goal. We’re not told to get employment for some and not for others. We’re trying to get maximum
employment, and while we can debate how to define it, in some sense it must be related to equality of opportunity to get jobs.”
Kaplan: One recent advance is that, for probably the
first time, I think we have useful structural models and
tools to study the distributional implications of different
paths of inflation and disinflation. That’s something that
I think is a real practical concern where good progress
has been made.
But there are a number of other issues at the frontier
of the research agenda that have not yet been successfully
incorporated into macroeconomic models. How can
we model the building of community and community
capital? How do we model culture, its evolution, and its
impact on outcomes and opportunities?
And I think there’s a lot more to be done around
housing and urban policies. There’s very little research
that models the effects of the geographic distribution of
economic activity within a country, city, or community
on overall growth. For example, what are the longer-term
implications of trends in housing disparities?
A final frontier I’ll mention is labor markets. How do
we set up the current generation of young people to participate
in the labor market in a meaningful and productive
way as they grow?
Wozniak: The research that I do comes from a tradition
in economics that uses policy changes and other situations
that look like experiments and tries to learn from
them in a social setting, similar to the type of research in
What I hope we’ll see in the next five to 10 years is
taking what this approach does well, which is using and
evaluating real-world policies, and then layering on questions
about why policies get set the way they are and what details of those policies matter. In other words, not looking
only at “we threw education dollars at this district and
not at that district, let’s compare outcomes.” But instead
asking, How exactly were those dollars used? What were
the kinds of adjustments the other district made?
One development I see in recent research is the
understanding that policy operates at the community
level. For a long time, this approach focused on individual
participants. Now there’s a shift towards recognizing
that, for instance, a jobs program rolls out in a community,
not just to individual workers that we then add up
together. Thinking about community-level outcomes
will be an important addition to this kind of analysis.
Darity: I’ve been actively involved in the process of trying
to develop a subfield that we refer to as stratification economics. Its focus is to better understand inequality
across social groups, whether they’re racial groups, gender
groups, ethnic groups, groups that are distinguished
by religious affiliation, or groups that are distinguished on
the basis of caste. Whatever the way in which we identify
these distinct social groups, we need to better understand
what the sources are of the disparities that these groups
experience, particularly those that are marginalized.
What I think is really unique is the circumstances that
have occurred in the past two years or so, particularly
in the aftermath of the highly visible murder of George
Floyd, when a number of professional organizations,
including economics, have engaged in some form of
reckoning with their own tradition of research. One of the
significant changes that has occurred is, I think, a greater
degree of credibility and interest in research on racial
inequality. I don’t know if this change in orientation is
something that’s going to be permanent in the economics
profession, but for somebody who’s been laboring in
this area for many years, it’s certainly a refreshing turn.
What is the Fed’s role in the research agenda that has
been articulated here? Are there particular advantages
of doing this research within the Federal Reserve System?
What in particular does the Fed need to know?
“The vast majority of Ph.D. economists, including economists at the Fed, never talk to a policymaker except when they’re giving a briefing to somebody at the Fed. ... At the same time, policymakers have no sense of what questions are easy for economists to answer ... and what are questions that are just like, wow, that’s a great question, but to be honest, people will be thinking about that for all of human existence.”
Wright: The Fed is a creation of Congress; we do what
Congress tells us to do. One of those tasks is to use monetary
policy to pursue stable prices and maximum employment.
Maximum employment is an explicit distributional
goal. We’re not told to get employment for some and not
for others. We’re trying to get maximum employment,
and while we can debate how to define it, in some sense it
must be related to equality of opportunity to get jobs. So
we need to do work on that to understand it.
Congress has also told us to represent our districts,
which inevitably gets us into discussions of inequality across regions, inequality within our districts. It also
means that we have to represent the views of the people
who live in our district at meetings in Washington, and
much of the time, the people in our district are talking
about distribution, opportunity, and inclusion.
One thing I would love to know more about is the
extent to which institutional change is influenced by
the Fed. For example, around 2018, 2019, firms changed
their hiring practices to waive requirements such as drug
tests or credit checks when the labor market got tight. In
fact, they started recruiting directly from communities
that didn’t have as many opportunities in the past.
I think that was important, because it shows you
that the connection between monetary policy and distributional
outcomes doesn’t just work through the
traditional movements of aggregate demand, but there
are spill-on effects to other institutions that affect these
Darity: I would say amen to that. And in the context
of some other work that I’ve been engaged on in the
past, I see a very strong role for the Fed. A few years ago,
a team of us did a series of studies on wealth inequality
at the metropolitan level, looking at outcomes of specific
national origin communities. So instead of looking exclusively
at categories like Blacks or Asians or Hispanics, we
attempted to drill down and look at specific communities
within those groups—for example, Cubans in Miami,
Florida, and Mexican Americans in Los Angeles, etc.
I would love to see the regional Federal Reserve Banks
expand those kinds of studies and make them sustainable
over time, in multiple cities.
In addition to supporting and pursuing research,
the Institute aims to make research findings usable
by policymakers both inside and outside the Fed.
What does “usable” research look like? What are the
challenges in making rigorous research accessible or
usable by policymakers?
Wozniak: I think underscoring why it’s hard to communicate
well is a useful part of this conversation. There are
at least two reasons. Being able to describe the world to
people in a way that resonates with them and that they
find useful is really important. But when you use rigorous
research tools to study the world, those contributions
come out at a very slow rate. Especially the last two
years, we have had to think about how we communicate
in a way that’s more “real time”—yet that also maintains
the rigor that we strive for.
“There seems to be a potential for policies that seem incremental to actually be relatively transformative. ... This is a great thing economics does: It really looks at long-run impacts.”
The second reason is, often many researchers have
good points that go in different directions, and somehow we have to find the space that’s useful to everybody. I
often say that economic advising cannot look like a dog
walker trying to walk five dogs. Policymakers need to
know not only is this going to help some people, but how
many people is it going to help? And is it worth the tradeoff
with the other thing that we’re going to have to give
up because we chose to do this? You need to know the
magnitudes to answer that question, and those are places
where there is often a lot of disagreement. We have to
find a credible consensus.
Kaplan: I agree completely, Abbie. I think there are
some simple, small steps that can be taken. The vast
majority of Ph.D. economists, including economists at
the Fed, never talk to a policymaker except when they’re
giving a briefing to somebody at the Fed. So they have no
concept of what the questions are that active policymakers
are grappling with. At the same time, policymakers
have no sense of what questions are easy for economists
to answer, that we know a lot about, and what are questions
that are just like, wow, that’s a great question, but
to be honest, people will be thinking about that for all of
human existence, and sorry, we’re just not going to be
able to give an answer on that one.
The other practical step is to collaborate with policymakers
on research projects from the conception stage.
Policymakers are more likely to pay attention to work
when they have a vested interest in that work.
Research often proceeds by answering relatively
narrow questions deeply, and this can be criticized
as narrow or incremental progress. Of the ideas that
you’ve discussed, how much might they move the
needle to advance economic opportunity and inclusion?
Is there an argument to be made that incremental
change has value too? Should researchers and
policymakers focus mainly on one or the other?
Wright: I think it’s true that over the course of the history
of economics, we’ve gone from talking about the biggest
questions of all—Why are some countries rich and others
not? Is capitalism the right way to organize society?
What role for government is there?—and we’ve increasingly
moved to narrower questions we can answer more
accurately. But I think there is value in talking about the
big questions, too.
But can you identify these things in advance? All
research starts with a question. Sometimes it’s a small
question. The answer is almost inevitably going to be
incremental. Sometimes it’s a big question, and the answer
is almost certainly going to be many steps away from practical
application. I think you have to do a bit of both.
Darity: I definitely think we should ask ambitious
questions. And I think we should recognize that there
have been many policies that have been adopted in
this country that were far from incremental in character,
such as the Homestead Act of 1862, the G.I. Bill in
the 20th century—these were not incremental policy
changes at all. The New Deal itself was not an incremental
I think the tools that economists have customarily
used have been best suited to trying to evaluate incremental
changes. That means we have not been able to
really assess the scope of nonincremental policy changes.
Kaplan: I think there is a role for thinking about these
big-picture questions. For example, over the past 25 years
we’ve learned a lot about fiscal policy, monetary policy,
labor market policy, and competition policy through
many smaller, incremental projects. What if we now got
to design a policy environment or an institutional environment
from scratch using this knowledge we have
acquired? What would it look like? This “ideal” policy
might not be attainable, but I think it’s a useful exercise
to explore—what have we learned about the big picture
and where nonincremental change might lead us?
Wozniak: There seems to be a potential for policies
that seem incremental to actually be relatively transformative.
I’ll give a very negative example. Imagine
you were sitting in the room when someone suggested
implementing redlining. Someone would say, we’re
going to lend, but just not to this one neighborhood over
here. That might have sounded like an incremental policy
And in fact, it was tremendously destructive and had
generational impacts on American cities and on American
communities. So I think we need to be cautious
about thinking that what we are looking at is an incremental
policy, when in fact, potentially the long-run
impacts are really large.
Fortunately, there are positive examples too—better
access to early nutrition for children as well as to Head
Start and Medicaid. Some of these sound incremental,
right? But it turns out that, for instance, early childhood
nutrition over the course of a couple early years is transformative
for those children, and it’s not that expensive
or hard to do.
This is a great thing economics does: It looks at longrun
impacts. We can use our models in ways that suggest
what those impacts might be. I think it can be a helpful
role for us to push back on this idea that we have to
choose between ripping everything out at the roots or
just tinkering at the margins.