Owen Zidar’s interest in economics was piqued during the 2007-08 financial crisis when he was “trying to understand what’s … going on, how widespread are these effects going to be, and what should we do about it?”
When Owen Zidar took his first economics course at Dartmouth College, he found enjoyment in the way economists think about the world. During his doctoral studies at the University of California, Berkeley, he worked for the Obama administration — first with the National Economic Council, then the Council on Economic Advisers — and saw firsthand the impact of his research: “If you design policies a bit better, you can help millions of people,” he says. Today, Zidar is a professor in Princeton’s Department of Economics and the School of Public and International Affairs, where his research focuses on tax policy and sources of, and potential solutions to, rising income inequality in the United States.
Zidar’s Work: A Sampling
Zidar’s research highlights the role of private firms in generating massive wealth for a relatively small number of Americans. While analyzing tax returns from the U.S. Treasury, Zidar found that people in the top 1% who own private firms “are way more prevalent than you might expect from reading the newspaper,” he says. These “regional millionaires” largely fly under the radar, yet collectively earn far more than executives at publicly traded companies. Zidar says he believes that understanding the amount of wealth concentrated in private firms is crucial for developing more effective tax policies.
Another focus of Zidar’s research is “the effect of rising health-care costs on labor market inequality and how much more college-educated people earn relative to [non-college-educated people].” In the United States, more than 50% of adults receive health insurance through their employer. Employee health-care plans have become so expensive — on average, $12,000 annually for a single adult, or $20,000 for a family plan — that employers seeking low-wage workers are often stymied by the cost of providing health care. Zidar theorizes that financing health-care plans through a payroll tax, rather than the head tax that is used now, would increase employment opportunities for non-college-educated workers, helping to reduce income inequality between those with college degrees and those without.
Zidar is studying disparities in the likelihood of different demographic groups to start high-growth businesses. His current research looks at the impact of factors such as gender, race, and parental income on the likelihood that an individual will start this type of business. According to Zidar, the most important factor appears to be early labor-market experience. For example, “if you happen to be in San Francisco [as a young person] and the tech sector is booming, you’re more likely to be pulled into the tech sector” and to continue along a “highly entrepreneurial job path.” Zidar is also interested in policy interventions aimed at helping young people land job opportunities that would prime them for entrepreneurship.