While Yellen and Akerlof were teaching at Berkeley in the 1980s, their search for a baby sitter for their son, Robert, now an economist teaching in Britain, inspired a 1990 research paper about wages. The couple willingly paid a premium for baby sitters, figuring it would attract superior talent.
Their research found that employees tend to slack off once their pay falls below a “fair wage.” This trend, in turn, contributes to unemployment because many people don’t want to work for pay they deem unfairly low, they found.
Yellen’s multiple periods in Washington influenced each other’s career paths. When she first joined the Fed’s board nearly 20 years ago, Yellen feared that Berkeley might let her go and her colleagues might forget her. So she gave her colleague Andrew Rose a photo, which other professors turned into a shrine with a votive candle, a few sculptures and even rosary beads, Rose said.
Akerlof took a leave from his professorship at Berkeley to join his wife in Washington. He accepted positions at the Brookings Institution and, now, as a scholar in residence at the International Monetary Fund.
Statements from the two about the plight of the long-term unemployed since the Great Recession have noticeably overlapped. At a Brookings panel in April 2011, Akerlof said he’d “never seen anything like” the more than 45 percent of the unemployed who had been jobless for more than six months, a share that has since slipped to a still-high 37 percent.
“It makes life hell for the people who are unemployed,” Akerlof bluntly declared.
Likewise, in her first congressional hearing as Fed chair last month, Yellen repeated her fears that the recovery had been too weak to help many of the recession’s victims.
“The fact that we have very long spells of unemployment,” she told a House committee, “suggests that the job market is not strong enough to be able to provide people with jobs who want to work.”