EconSouth (First Quarter 2007)

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Volume 9, Number 1
First Quarter 2007


After the Boom, Housing Affordability a Growing Challenge

Florida Drives the National Auto Market

A Falling Dollar: Good or Bad News?


Fed @ Issue


State of the States

Q & A

Research Notes & News

Southeastern Economic Indicators




Research Notes and News

Research Notes and News highlights recently published research as well as other news from the Federal Reserve Bank of Atlanta.

Labor market intermittency explains genders' wage differences
That workers pay a penalty for exiting and entering the labor force is widely accepted. Typically, such workers earn lower wages than workers who remain in the labor force consistently; recent estimates indicate that intermittent workers earn roughly 16 percent lower wages than workers with continuous labor market attachment.

In a recent working paper, Julie L. Hotchkiss and M. Melinda Pitts look at how this intermittent behavior affects the wage differential between genders. Since women are more likely than men to exit the labor force at any given time and since such behavior is penalized in the labor market, it is theorized that some of the observed lower wages of women must be attributable to the intermittent labor market behavior of women. Hotchkiss and Pitts determine how important women's labor force behavior is in explaining the wage gap relative to other potential contributors such as education, occupation, and industry.

Using information on lifetime labor market and other activity and current earnings, they determine that women's intermittent behavior is the most important observed characteristic in explaining the wage gap, accounting for roughly 19 percent of the observed total wage gap. Their research also determines that not only does the total labor market experience component of intermittent behavior matter but that the timing of that experience and the frequency of absences matter as well.

Hotchkiss and Pitts note that, in spite of the importance of intermittent behavior and other characteristics documented in their paper, the bulk of the wage gap—70 percent—remains unexplained by observable factors.
Working Paper 2007-1

February 2007

Atlanta Fed names Dennis P. Lockhart new president and chief executive officer
Dennis P. Lockhart became president and chief executive officer of the Federal Reserve Bank of Atlanta on March 1. Lockhart, 60, succeeds Jack Guynn, who retired from the bank on October 1, 2006.

Lockhart came to the Bank from the faculty of Georgetown University's Walsh School of Foreign Service. In the master's program there, he chaired concentrations in International BusinessÐGovernment Relations and Global Commerce and Finance. He also served as an adjunct professor in the economics department at Johns Hopkins University's Nitze School of Advanced International Studies, where he taught a course in international business.

From 1971 to 1988, Lockhart held a variety of international and domestic positions with Citibank/Citicorp (now Citigroup), including assignments in the Middle East, Latin America, New York and Atlanta. While in Atlanta between 1978 and 1986, he served as Citibank's senior corporate officer for the Southeast and was active in educational and civic affairs. From 1988 to 2001, he served as president of Heller International Group Inc. Following that service, Lockhart was managing partner at the private equity firm Zephyr Management in New York City.

Lockhart earned a bachelor's degree in political science and economics at Stanford University and a master's degree in international economics and American foreign policy at the Johns Hopkins University School of Advanced International Studies. He also attended the senior executive program at the Sloan School of Management at the Massachusetts Institute of Technology.

Check 21 continues rapid growth
In 2006, the Atlanta Fed processed 10 times as many Check 21 transactions as it did in 2005: more than 166 million items compared with more than 16 million previously, according to the Atlanta Fed statistics. In December 2006, the most recent month for which figures are available, volume grew to more than 24 million transactions, up from more than 4 million in December 2005.

The 2004 Check Clearing for the 21st Century Act—Check 21 for short—facilitates the electronic exchange of checks by allowing banks to send digital images into the processing system instead of the original paper checks.

The electronic processing that Check 21 allows means financial institutions don't need to physically ship paper checks around the country, saving substantial money and considerable time getting deposits into institutions and ultimately into business and consumer accounts. The business case for Check 21 has become more compelling as evidence mounts of its benefits, said Fred Herr, senior vice president in the Fed's Atlanta-based Retail Payments Office and a member of the Federal Reserve's Check 21 Steering Group.

Several forces are converging to propel Check 21 growth. Most high dollar–value transactions are now primarily handled electronically, so the cost of processing mostly small-value paper checks rises, Herr said. "So all these dynamics are coming together, and we think we'll see significant growth continue in 2007 and carry on through the first half of '08," Herr said.
Financial Update

First Quarter 2007