Showing papers by "Daniel Aaronson published in 1999"

The Effect of School Finance Reform on Population Heterogeneity.

Abstract: This paper tests whether state school finance reform al- ters neighborhood income homogeneity. One implication of the Tiebout model is that within-community homogeneity declines as a result of an exogenous decrease in the ability of jurisdictions to set local tax and expenditure levels. The property tax revolt and the school finance equalization reform of the 1970s and 1980s offer a test of the role of state fiscal reform on aggregate population sorting behavior. The re- sults show that school finance has a significant effect on school dis- trict income sorting, especially among low-income communities.

The Impact of Technology on Displacement and Reemployment

Abstract: Introduction and summary The U.S. economy is booming, with 30-year lows in the unemployment rate, historical highs in labor force participation, and the lowest displacement rates (a measure of the incidence of involuntary job loss) in a decade. Displacement rates are especially low among groups, such as blue-collar workers, that have traditionally been most vulnerable to displacement. However, many groups may still be feeling the bite of the drawn-out corporate restructuring of the early- and mid-1990s. For example, The Wall Street Journal recently described the difficulty experienced by some older professional workers in finding new employment following the mass layoffs of the early 1990s (Horwitz, 1998). Recent studies document trends in job displacement ratios and related anxiety among workers with at least five years of job tenure (Aaronson and Sullivan, 1998a, b). Like other work that analyzes job displacement, these studies focus more on the demographic determinants and consequences of displacement than on the fundamental causes of layoffs. Yet very little is known about the causes of displacement, particularly the roles of technological change, increased foreign competition, changes in domestic demand, low productivity within an otherwise growing sector of the economy, poor management, regulatory changes, or regional or national recession (Kletzer, 1998). Understanding the causes of displacement is important for policymakers charged with designing job search assistance, retraining, relocation allowances, and other programs to aid displaced workers. For example, a stronger case for training subsidies could be made for workers who are displaced due to technological reasons. Although research on the benefits of government training finds little return to such programs (relative to their cost), it is possible that the impact is more significant for workers displaced because of technology.(1) At a minimum, a relationship between displacement and technology contributes to a vast literature that shows the importance of education and training throughout a person's career. Furthermore, the relationship between technology and displacement is important in understanding government's role in restricting natural job flows, say through the imposition of policies such as mandated severance packages in Europe intended to provide higher job security. In a technologically dynamic environment, labor markets need to be able to react to shifts in industry skill demands. While a case could be made for job security provisions if job destruction were due to poor management, unnecessarily constraining labor mobility in technologically innovative industries is likely to curtail long-run employment growth (Bentolila and Bertola, 1990). In this article, we seek to fill a gap in the displacement literature by exploring the implications of technological change for job displacement and reemployment. We describe some reasons technological innovation might affect displacement and argue that the labor market status of less skilled and older workers might be particularly influenced by technology. We use several different datasets, including the Bureau of Labor Statistics' Displaced Worker Survey (DWS), to test whether high-tech sectors are more likely to displace workers and, conditional on such displacement, whether these workers find it more difficult than their peers in low-tech industries to reenter the labor market. Our results provide evidence that industry-specific technological innovation affects the probability of displacement and reemployment. However, many of the results are not robust to the particular measure, or proxy, of technology used. This is not surprising since our technology proxies are from five different data sources, often do not cover the same industries, and cover a variety of topics, including computer usage, computer investment, productivity growth, and research and development (R&D) activity. …

Worker insecurity and aggregate wage growth

Abstract: To adequately evaluate claims that increased worker insecurity had reduced wage growth in the 1990s, research must answer two questions: (1) Has worker insecurity increase?, and (2) Does worker insecurity reduce wage growth? Examining data on displacement rates from the Displaced Workers Surveys and data on workers' perceptions of job security from the General Social Survey, we conclude that worker insecurity has been high in the 1990s relative to what would have been expected on the basis of the falling unemployment rate. Moreover, examining the relationship between measures of displacement and aggregate wage growth using panel data covering the 50 states over the years 1979 to 1997, we conclude that worker insecurity does reduce wage growth for classes of workers. However, we only find evidence of an effect of insecurity on wage workers without college degrees and the increase in insecurity during the 1990s is limited mainly workers with college degrees. Thus we concluded that increased worker insecurity many not have had a large effect on aggregate wage growth.