The research community
at the Institute includes
visiting scholars, consultants,
economists, research analysts,
and research assistants. These
scholars bring a diversity of
backgrounds, interests, and
expertise to research that
deepens our understanding
of economic opportunity
and inclusion as well as
policies that work to improve
When he joined the Federal Reserve Bank of San Francisco in
1995, Rob Valletta remembers feeling “on the margins of the
conversation”—an applied microeconomist at an institution focused on
Times have changed. Today, questions about worker and firm behavior
that have long fascinated Valletta have moved center stage. “Over
the last couple decades there’s been a shift in the Fed system to think
about how the economy operates on a microeconomic basis,” said Valletta,
now a key policy advisor to San Francisco Fed President Mary Daly.
“The topics I’ve focused on in terms of labor market dynamics—things that cause people to change jobs, what they think about when
they’re deciding to accept a job, how long they stay unemployed—are
crucial for understanding how the labor market works and the Fed’s
maximum employment goal,” Valletta said.
Valletta serves on the Institute’s System Affiliates
Board, where he helps shape the Institute’s research
and conference agendas. Each member brings a career
steeped in topics related to inclusive growth.
For Valletta, that includes critical scrutiny of the
notion that government social supports dissuade people
from working. From Medicaid expansion under the Affordable
Care Act to extended unemployment insurance
(UI) benefits amid COVID-19, Valletta’s research has
found that while such “moral hazard” might feel intuitive and powerful,
the effect is often modest or missing in real-world data.
One lesson for economists and pundits: Circumstances matter.
“Unemployment insurance might have large disincentive effects in
normal times,” Valletta said. “By contrast, when the economy is weak,
unemployment insurance is likely to have a different impact. It’s a way of
keeping people alive—bridging them from an economic shock to a labor
“It’s common to think
about workers as
empty vessels. ...
But people are
smart. They know to
plan for the future.”
On the heels of an unprecedented expansion of U.S. jobless benefits, Valletta’s ongoing analysis suggests workers were aware that the supports were temporary and that skills could go stale if they stayed
out of work for too long. His findings, along with work by others, suggest
that the impact of the UI expansions on the labor market was limited.
This research offers a needed reminder, Valletta said, that human
beings generally want to work—not coast.
“It’s common to think about workers as empty vessels, making decisions
without any meaningful, forward-looking thinking,” Valletta said.
“But people are smart. They know to plan for the future.”
More scholar spotlights from this issue