Richard Freeman, Distinguished Fellow 2016
Richard Freeman is an enormously innovative labor economist who has made pioneering contributions to virtually every aspect of the field including the market for highly educated labor, the economics of discrimination and poverty, the economics of trade unionism, comparative labor market institutions and empirical methodology. Freeman’s analyses have been notably expansive, eye opening, revealing, policy-relevant and often provocative, no more so than on trade unionism and the role of employee ownership. His contributions have melded traditional models with less standard views of how labor markets operate.
His early work concerned the market for highly-educated professionals whose training is lengthy. He sought an estimate of the supply response to understand how labor markets operate when individuals must make long-term investment decisions in an environment of changing demands. His analysis traced out a classic cob-web model. In response to increased demand, supply increased and overshot the long-run equilibrium, setting forth a readjustment. He began by analyzing the market for physicists and then worked on the larger market for the college educated during the rapidly increasing college enrollments of the 1960s. The supply of college graduates continued to expand in the wake of slowing demand in the 1970s leading Freeman to title his work The Overeducated American. But Freeman foresaw that market forces would, once again, produce a correction and that a new boom in the market for college graduates would arise (as it did with a vengeance). Freeman also inquired about the degree to which different cohorts were close or distant substitutes for each other and found that different birth cohorts of men were rather imperfect substitutes for each other. Those of women, however, were relatively good substitutes for each other. Therefore, the large demographic shifts at the time of his writing impacted younger men more than older men but affected women independent of age.
What Do Unions Do? (1984), written with James Medoff, is Freeman’s most cited, influential and thought-provoking work. Although trade unions were formed for a variety of reasons, economists had primarily emphasized their monopolistic power to raise wages and the concomitant distortions in resource allocation. Freeman and Medoff, acknowledging the multiplicity of union’s roles, analyze their impact in providing collective voice to improve workplace efficiency. The volume rigorously explores the role of collective action in maintaining specific skills of workers through employment continuity, shaping nonpecuniary conditions of employment, setting the rules of the workplace, and increasing positive spillovers particularly in team settings. Freeman then extended this line of work to employee stock ownership plans (ESOPs) as private sector unions declined and has written extensively about the ability of ESOPs to decrease economic inequality.
Freeman was an innovator in the related research realms of race, inner city poverty, youth unemployment and homelessness. This research agenda began with an analysis of the great economic strides made by a black Americans in the late 1960s and 1970s and especially by those who benefited from higher education. His historical work showed the influence of the state in maintaining black poverty but also the power of the federal government to enforce greater equality. Yet many blacks were omitted from the advances, and the gains did not continue for long. Crime seemed to be a major factor hindering black youths and Freeman realized that understanding inner city youth labor markets was also vital. To learn more about the economic problems of inner city black youths Freeman and his associates collected novel data by running their own large surveys.
Freeman’s work has had enormous appeal and influence largely due to the subject matter, but also because he employs methods that are spare (only what is needed for the job) and yet wide-ranging in the type of data employed. In addition, he is a compelling communicator. As a result, he inspires others to probe further into the areas he has pioneered. Freeman, always the roamer and traveler actually and intellectually, has returned to many of the issues he researched earlier, such as on scientific personnel and shared capitalism. His recent preoccupation with China continues his work on comparative labor markets. Freeman has worn many hats (figuratively and literally) within and outside the academy, always probing and thinking deeply about current, past and future trends in highly policy-relevant issues.
Richard B. Freeman is the Herbert Ascherman Professor of Economics at Harvard University and co-Director of the Labor and Worklife Program at Harvard Law School.
Freeman was the founding director of the NBER’s Labor Studies program and currently directs the NBER’s Science and Engineering Workforce Project (SEWP). His Distinguished Fellow award recognizes his wide-ranging contributions to the broad field of labor economics.