Yellen was born on August 13, 1946, to a family of Polish Jewish ancestry in the Bay Ridge neighborhood of New York City's Brooklyn borough, where she also grew up. Her mother was Anna Ruth (née Blumenthal; 1907–1986), an elementary school teacher, and her father was Julius Yellen (1906–1975), a family physician, who worked from the ground floor of their home. Her mother quit her job to take care of Janet and her older brother, John. Yellen graduated from local Fort Hamilton High School in 1962; she was the class valedictorian.
Yellen graduated summa cum laude and Phi Beta Kappa from Pembroke College in Brown University in 1967 with a bachelor's in economics. At Brown, she switched her planned major from philosophy to economics and was particularly influenced by professors George Borts and Herschel Grossman. She received her MA and PhD in economics from Yale University in 1971. Her dissertation was titled "Employment, Output and Capital Accumulation in an Open Economy: A Disequilibrium Approach" under the supervision of (later to be) Nobel laureate James Tobin. As a teaching assistant, Yellen was so meticulous in taking notes during Tobin's macroeconomic class that they ended up as the unofficial textbook circulated among generations of graduate students, and known as the "Yellen Notes". Her former professor Joseph Stiglitz, another Nobelist, has called her one of his brightest and most memorable students. Yellen was the only woman among the two dozen economists who earned their doctorates from Yale in 1971.
After receiving her Ph.D, Yellen was appointed as an assistant professor of economics at Harvard University, where she taught from 1971 to 1976. In 1977, she was recruited to become an economist with the Federal Reserve Board of Governors by Edwin M. Truman, who had known Yellen from Yale. Truman was a junior professor and heard her oral exam, and had recently taken over the Fed's Division of International Finance. She was assigned to research international monetary reform.
While at the Fed, she met her husband George Akerlof in the bank's cafeteria; they wed in 1978, less than a year later. By the time of their marriage, Akerlof had already accepted a teaching position at the London School of Economics (LSE). Yellen left her post at the Fed to accompany him, and was employed as an economics lecturer by LSE. They remained in London for two years, then returned to the United States.
In 1980, Yellen joined the faculty at the Berkeley's Haas School of Business to conduct macroeconomics research and teach undergraduate and MBA students, also held a joint appointment with the University of California, Berkeley's Department of Economics from 1999 to 2003. Yellen was the second woman at Haas to earn tenure in 1982, as well as the title of full professor in 1985. She was appointed Bernard T. Rocca, Jr. Professor of International Business and Trade in 1992, and later Eugene E. and Catherine M. Trefethen Professor of Business Administration and Professor of Economics in 1999. She subsequently became professor emeritus at Berkeley-Haas. Prof. Yellen has been awarded the Haas School's outstanding teaching award twice.
Yellen has had a remarkable academic career largely focused on the mechanisms of unemployment and labor markets, monetary and fiscal policies, and international trade. She's written a few of widely cited papers, often collaborating with her husband professor George Akerlof on their research. Here are some principal ideas of Dr. Yellen's academic studies:
Since 1980s, Yellen with Akerlof address what's known in the economics literature as "efficiency wage theory" – the idea that paying people more than the market wage does, in fact, increase their productivity. Their 1990 paper entitled "The Fair-Wage Effort Hypothesis and Unemployment," christen "the fair wage-effort hypothesis," considered by economists a significant contribution to the topic: "is a precursor to the efficiency wage literature", "It had an influence, although the work on efficiency wage theory has had a bigger influence." Akerlof and Yellen introduced the gift-exchange game, a model in which argue that workers who receive less than what they perceive to be a fair wage will purposely work less hard as a way to take revenge on their employer.
Another important work "An Analysis of Out-of-Wedlock Childbearing in the United States" co-written with Akerlof and Michael Katz and published in 1996, aims to explain why out of wedlock births had grown considerably in previous decades in the United States. Research study led to a theory called "reproductive technology shock," arguing that the increased availability of both abortion and contraception in the late 1960s and early 1970s eroded the social norms surrounding sex, pregnancy and marriage, leading to a sharp decline in the stigma of unwed motherhood.
In July 1996, the Federal Reserve under Chairman Alan Greenspan, resisted pressure to raise interest rates as unemployment declined. But Yellen marshaled academic research to dissuade Greenspan from committing the Fed to a zero inflation policy and demonstrate that the central bank should seek to moderate inflation rather than eliminate it. The study showed that a little inflation rate in the 2-4 percent range actually was better basis to minimize unemployment and increase economic growth than the goal of zero.
On February 17, 1997, Yellen left the Federal Reserve to become chair of the Council of Economic Advisers.
During her time with the Council of Economic Advisors, Yellen oversaw a landmark report "Explaining Trends in the Gender Wage Gap" focused on the gender pay divide in June 1998. Within this study, the Council analyzed data from 1969 to 1996 to determine the cause for women to earn substantially less than men. By observing trends attributable to issues like occupation/industry as well as familial status, it was determined that while the Equal Pay Act of 1963 was a step forward, there was no explanation as to why there was a 25 percent difference between average pay for women and men – an improvement from the 40 percent gap two decades earlier. It was concluded that this gap had no correlation with differences in productivity and, as such, was the repercussions of discrimination within the workforce.
In June 1999, Yellen announced that she was resigning from the CEA for personal reasons and would return to teaching at the Berkeley.
Return to the Federal Reserve (2004–2018)
Federal Reserve Bank of San Francisco
On June 14, 2004, Yellen was chosen as president and chief executive officer of the Federal Reserve Bank of San Francisco, the first woman to hold those positions. She was a voting member of the Federal Open Market Committee (FOMC) on a rotating basis once every three years. During her time at the San Francisco District Fed, she spoke publicly and in meetings of the Fed's monetary policy committee, regarding her concerns about the potential consequences of the boom in housing prices. However, Yellen did not lead the San Francisco Fed to "move to check [the] increasingly indiscriminate lending" of Countrywide Financial, the largest lender in the U.S. She served from 2004 to 2010, and left to take appointment as vice chair of the Federal Reserve Board of Governors.
Yellen was sworn in by Fed Chairman Ben Bernanke in October 2010.
On April 28, 2010, President Obama nominated Yellen to succeed Donald Kohn as vice chair of the Federal Reserve. In July, the Senate Banking Committee voted 17–6 to confirm her, though the top Republican on the panel, Senator Richard Shelby of Alabama, voted no, saying he believed Yellen had an "inflationary bias". At the same time, on the heels of related testimony by Fed Chairman Bernanke, FOMC voting member James B. Bullard of the St. Louis Fed stated that the U.S. economy was "at risk of becoming 'enmeshed in a Japanese-style deflationary outcome within the next several years.'"
Bullard's statement was interpreted as a possible shift within the FOMC balance between inflation hawks and doves. Yellen's pending confirmation, along with those of Peter A. Diamond and Sarah Bloom Raskin to fill vacancies, was seen as possibly furthering such a shift in the FOMC. All three nominations were seen as "on track to be confirmed by the Senate".
On September 29, 2010, Yellen confirmed by the Senate on a voice vote, to be both a Member of the Board of Governors, and Vice Chair of the Federal Reserve System. On October 4, 2010, Yellen was sworn in as vice chair for a four-year term that ended on October 4, 2014. Simultaneously she began a 14-year term as a member of the Federal Reserve Board filling a vacant seat last held by Mark W. Olson. Yellen was the second woman to hold the No.2 post at the Fed, after Alice Rivlin, who had that role from 1996 to 1999.
Yellen as vice chair, by contrast with her predecessors, has acted more as an independent force within the institution. She has trying to persuade Bernanke and the rest of the committee to adopt her preferred course for monetary policy, advocating more aggressive steps to pump money into the economy to bring down unemployment. In January 2012, the Fed announced its own inflation target of two percent a year, after a long campaign by Bernanke and Yellen, who was an early supporter of inflation targeting in the face of opposition from Chairman Greenspan since 1990s.
Yellen was considered as the front-runner to succeed Bernanke as chair of the Federal Reserve when his second term was to expire. The other leading candidate to the post was former U.S. treasury secretary and director of President Obama's National Economic CouncilLawrence Summers. During the race, Summers has come under fire for his support for deregulating parts of the banking sector while he served in the Clinton administration, he also sparked controversy for his comments on women's aptitude in math and science when he was the president of Harvard University in 2005. In July 2013, Senate Democrats were circulating a letter that has been signed by roughly a third of the 54 Democratic and allied senators, largely represent the liberal wing of the Senate Democratic Caucus, urging President Barack Obama to appoint Yellen as chairwoman of the central bank. In addition, more than 500 professional economists across the United States signed an open letter in support of Yellen for Fed chair and sent it to the White House. On September 15, 2013, after weeks of opposition to his candidacy, Summers withdrew his name from consideration for the position.
Chair of the Federal Reserve
Yellen delivers opening statement at the FOMC press conference in December 2014.
On October 9, 2013, Yellen was officially nominated to replace Bernanke as chair of the Federal Reserve, the first vice chair to be elevated to that role. During the nomination hearings held on November 14, 2013, Yellen defended the more than $3trillion in stimulus funds that the Fed had been injecting into the U.S. economy.
On December 20, 2013, the U.S. Senate voted 59–34 for cloture on Yellen's nomination. On January 6, 2014, she was confirmed as chair of the Federal Reserve by a vote of 56–26, the narrowest margin ever for the position. In addition to being the first woman to lead U.S. central bank, or any major central bank, Yellen is also the first Democratic nominee to run the Fed since Paul Volcker became chairman in 1979. Until her appointment there has been only one female head of the central bank in history of Group of Eight ("G8") countries – Russia's Elvira Nabiullina. After being elected by the Federal Open Market Committee as its chair on January 30, 2014, she took office on February 3, 2014. In her 2014 semiannual testimony on monetary policy, Yellen said that while real estate, equities, and corporate bond prices "have risen appreciably and valuation metrics have increased" they were "generally in line with historical norms"; Yellen noted some concerns about valuations of "lower-rated corporate debt" (i.e., junk bonds), and noted that she and the Fed were monitoring trends, but did not believe that a so-called "everything bubble" was forming.
With Yellen as chair, the Federal Reserve increased its key interest rate on December 16, 2015. This was the first time the key interest rate was increased since 2006. During her tenure, the Fed has gradually raised rates four additional times, leaving its key rate in a still-low range of 1.25 percent to 1.5 percent – well low by historical standards. However, Fed policymakers once again have the ability to cut the rates to stimulate growth in case if the economy slows.
Trump considered renominating Yellen for another term, but on November 2, 2017, nominated Jerome Powell to succeed Yellen when her term ended on February 3, 2018. After Trump's decision, Yellen announced that she would leave the Fed at the end of her term as chair. She was the briefest-serving Fed chair since G. William Miller from 1978 to 1979, and first in nearly 40 years to not receive a second term.
Yellen has been one of the most successful chairs of the Federal Reserve System from perspective of the labor markets. During her term, the unemployment rate has dropped from 6.7 percent to 4.1 percent, the lowest in 17 years. It marks the first time the economy has added jobs throughout every month of any Fed chair's tenure. Yellen wrap up her time at the Fed with the lowest final unemployment rate of any Fed chair since William McChesney Martin in 1970. Even more impressive that under her leadership, the U.S. unemployment rate has fallen the most of any Fed chair term in modern history if you compare where it was at the start of her tenure vs. the end. It has declined 2.6 percentage points, maximum in the post-World War II era. Meanwhile, inflation remains below the Fed's annual two percent target, which also led to suggestion that the Federal Reserve could have done more to bolster the economy without the risk of price increases.
Dr. Yellen holds a unique place in Federal Reserve history. In addition to being the first woman to lead the institution (from 2014 to 2018), she was also the first person ever to have served as a Fed Reserve vice chair (from 2010 to 2014), president of the regional Federal Reserve Bank (at the San Francisco Fed, from 2004 to 2010), Fed governor (from 1994 to 1997), as well as Fed staff economist (from 1977 to 1978).
After the Federal Reserve (2018–2020)
Yellen delivers her farewell speech to Federal Reserve staff in 2018.
On February 2, 2018, the Brookings Institution announced that Yellen would be joining the think tank as a distinguished fellow in residence with the Economic Studies program, effective February 5, 2018. She's been affiliated with the Hutchins Center on Fiscal and Monetary Policy at Brookings. Yellen was on a leave from position since selected as nominee to head Treasury Department.
On June 27, 2017, Yellen stated that she did not expect another financial crisis "in our lifetime". Yellen explained that this assumption can be made due to her belief that banks are "very much stronger" as a result of Federal Reserve oversight. On December 11, 2018 Yellen later warned of the possibility of a financial crisis by citing "gigantic holes in the system" after her departure from the Federal Reserve.
On February 25, 2019, Yellen criticized President Trump's economic policies. When asked if she believes Trump has "a grasp of economic policy", Yellen said "No, I do not." In an interview with Marketplace, Yellen explained that she doubts that Trump could articulate the Federal Reserve's explicit goals of "maximum employment and price stability". Yellen pointed out Trump's claims that the Federal Reserve's goals involve trade, which she explains to be objectively false. This interview was a change in tone for Yellen, who traditionally handled her differences with Trump in a neutral manner.
On August 13, 2020, it has been reported that Yellen was among a handful of economists who briefed the Biden-Harris team on economic issues, but not officially joined the presidential campaign. The meeting made headlines for being one of the first times the Biden campaign announced who it was turning to for economic expertise. But few at the time predicted Yellen for any Cabinet posts. In the end, however, she edged out other top contenders for the Biden Treasury post, including Fed Board Gov. Lael Brainard and Roger W. Ferguson Jr., a former vice chairman at the central bank.
Between 2018 and 2020, Yellen had received over $7million in speaking fees from financial companies such as Barclays, Citigroup, Goldman Sachs, and the hedge fund Citadel after leaving the Federal Reserve. She's pledged to get official permission before taking part in any federal regulatory decisions involving companies that had paid speaking fees to her to avoid any conflicts of interest.
In April 2021, Yellen proposed a global minimum corporate tax rate, to prevent profit shifting used by multinational companies for purpose of tax avoidance. On June 5, 2021, finance ministers from the Group of Seven (G7) – the major advanced economies – have reached a historic agreement to reform the global tax system, agreed to back a minimum global corporate tax rate of at least 15%; while French Finance Minister Bruno Le Maire calling it "a starting point" that could be increased in the future. On June 10, 2021, Treasury Secretary Yellen joined four foreign finance ministers in penned op-ed that described the new accord as "a historic opportunity to end the race to the bottom in corporate taxation, restoring government resources at a time when they are most needed".
Yellen is a Keynesian economist and has been described as a "Keynesian to her fingertips"; during the Great Recession, she "warned against an over-hasty removal of stimulus"; "insisted that the Fed pay as much attention to unemployment as to inflation"; and "believes the state has a duty to tackle poverty and inequality". When her appointment as Treasury secretary was announced in December 2020, Yellen was viewed by Wall Street "as a Treasury secretary who will push hard for expansionary policies aimed at boosting growth, profits and share prices", although the ability of Yellen to push through her preferred fiscal policies was seen as likely to be constrained by congressional gridlock.
Honors and awards
Federal Reserve Chair Yellen during a weekly meeting with Treasury Secretary Jack Lew in February 2014
Dr. Yellen, has received numerous honors in recognition of her career in academia and politics. These include:
Chancellor, visitor, governor, rector, and fellowships
In December 2018, Federal Reserve Board presented an annual Janet L. Yellen Award for Excellence in Community Development to recognize the exemplary work of Federal Reserve System staff, and intended as honor of former chair Yellen's commitment to public service. Ariel Cisneros of the Federal Reserve Bank of Kansas City, has been named the first recipient of the newly created Award.
Yellen and Akerlof have often collaborated on research, including topics such as poverty, unemployment and a paper on the costs of out-of-wedlock childbearing. One of their most talked-about papers at Berkeley, on why lower wages do not always lead to higher employment, came from the personal experience of hiring a nanny for the first time. Yellen says Akerlof (along with James Tobin) has been her biggest intellectual influence. Both frequently state that their lone disagreement is that she is a bit more supportive of free trade than he is.
Yellen has a net worth of $16million, accrued from stock holdings, speaking engagements and various government and academic positions. As she takes public office, she will divest holdings in corporations including Pfizer, ConocoPhillips and AT&T, among others.
^Grace, Stephanie (January–February 2014). "Banker to the Nation". Brown Alumni Magazine. Providence, Rhode Island: Brown University. Archived from the original on May 24, 2015. Retrieved May 23, 2015.
^Rappeport, Alan (April 5, 2021). "Yellen calls for a global minimum corporate tax rate". The New York Times. ISSN0362-4331. Archived from the original on April 19, 2021. Retrieved April 5, 2021. Treasury Secretary Janet L. Yellen made the case on Monday for a global minimum tax, kicking off the Biden administration’s effort to help raise revenue in the United States and prevent companies from shifting profits overseas to evade taxes. Ms. Yellen, in a speech to the Chicago Council on Global Affairs, called for global coordination on an international tax rate that would apply to multinational corporations regardless of where they locate their headquarters. Such a global tax could help prevent the type of “race to the bottom” that has been underway, Ms. Yellen said, referring to countries trying to outdo one another by lowering tax rates in order to attract business.
^Foroohar, Rana (January 9, 2014). "Janet Yellen: The Sixteen Trillion Dollar Woman". Time. Archived from the original on April 29, 2021. Retrieved January 21, 2014. “Firms are not always willing to cut wages, even if there are people lined up outside the gates to work. So why don’t they?” asks Yellen. The couple’s conclusion: some employers set pay higher to demonstrate that they value employees in a way that motivates them to do good work, even when markets are ready to undercut those wages. As any parent paying more than market rates for a nanny knows, child care is a labor market in which the conventional wisdom doesn’t always hold.