Showing papers by "Institute for the Study of Labor published in 1980"
TL;DR: In this article, the authors examine how UI will affect the consumption of recipients and find that a large part of social insurance payments does not go to prevent serious imbalances in individuals' lifetime consumption profiles.
Abstract: The main stated purposes of social insurance programs have been the maintenance of consumption by people suffering from misfortunes, and the stabilization of employment. Despite this, most recent research on unemployment insurance (UI) and Old Age Insurance has focused on secondary labor-market effects, with only a few studies looking at stabilization, and none considering effects on consumption. In this study we examine how UI will affect the consumption of recipients. For some individuals UI will help remove the constraints on consumption during periods of reduced income that arise from insufficient savings and imperfect capital markets, while for others the UI benefits merely augment the entire lifetime consumption stream. The model enables us to estimate what fractions of the population fall into these two categories. If individuals are also constrained in the allocation of their reduction consumption, consumption propensities out of UI will differ from those out of nonrecipients' income. The model is tested on aggregate time-series data covering 41 consumption categories for 1959-1978:II, and on over 14,000 individuals from the 1972-73 Consumer Expenditure Survey. In both data sets we find no more than half of UI benefits are consumed as if the recipients' consumption were constrained during times of unemployment. In both samples spending out of UI benefits is disproportionately on luxuries, though UI recipients spend greater shares of their income on necessities. The results imply that a large part of social insurance payments does not go to prevent serious imbalances in individuals' lifetime consumption profiles.
63 citations
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TL;DR: In this article, a model is constructed that allows estimation of costs and returns to education for each individual, based on the assumption that all individuals face the same borrowing rates, and an optimal wealth-maximizing level of education is obtained.
Abstract: In this paper, another aspect of optimizing behavior is considered. Specifically, it asks whether variations in levels of attained schooling across groups can be explained by a model that assumes that capital markets are perfect and that individuals maximize wealth. The logic of the analysis proceeds as follows: First, a model is constructed that allows estimation of costs and returns to education for each individual, based on the assumption that all individuals face the same borrowing rates. Given costs and returns, one can obtain an optimal wealth-maximizing level of education for each individual. Differences between actually acquired and wealth-maximizing levels of education can then be calculated, and one can determine whether or not the residuals are systematically related to background variables. If, for example, low-income individuals have a consistently larger estimated wealth-maximizing level of education than actual level, one could conclude either that returns to schooling differed between groups or that capital market differences exist. The model allows these two explanations to be distinguished. Since differential returns are caused by wage differences across groups, the wealth-maximizing level can take these labor market variations into account. Any residual variation will be due to factors other than differential wage rates, presumably capital cost differences .
38 citations
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TL;DR: In this paper, substitution possibilities among a set of age-race-sex groups in the labor force were estimated based on cross-section data from SMSAs in 1969, and they allowed us to consider how substitutable adult women are for young women or young men.
Abstract: We estimate substitution possibilities among a set of age-race-sex groups in the labor force. The estimates are based on cross-section data from SMSAs in 1969,and they allow us to consider how substitutable adult women are for young women or young men. The estimates are used, along with assumptions about the extent of wage rigidity and elasticities of labor supply, to simulate the direct and indirect effects of the growth of the female labor force on job opportunities for youth, assuming rigid wages for young workers, and on the wage rates of adult males, assuming these wages are flexible.
38 citations
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TL;DR: In this article, the first empirical application of a model of trade union behavior that has been discussed in the literature for over thirty years is presented, where the wages and employment of typographers are examined to see whether they can be usefully characterized as the outcome of a process by which the union maximizes an objective function containing wages, and is constrained by a trade-off between these two variables as represented by the employer's labor demand function.
Abstract: This paper represents the first empirical application of a model of trade union behavior that has been discussed in the literature for over thirty years. The wages and employment o typographers are examined to see whether they can be usefully characterized as the outcome of a process by which the union maximizes an objective function containing wages and employment and is constrained by a trade-off between these two variables as represented by the employer's labor demand function. Our functional form assumptions permit investigation of some familiar special cases of union behavior. We find the parameter implications of both the wage bill maximization hypothesis and the rent maximization hypothesis to provide inferior explanations of the movement of wages and employment of these workers compared with our more general formulation.
4 citations
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TL;DR: In this paper, the impact of tax and transfer policies on the aggregate unemployment rate is examined in a detailed, microeconomic examination of the effects of individual tax and tax transfer program structures, which is likely to provide a far better guide to discovering how changes in these policies have worked through the economy.
Abstract: Just as war is too important to be left to the generals, the impact of taxes and transfers on the aggregate unemployment rate is too important to be left to the macroeconomists. I therefore subject the issue of how tax and transfer policy affects unemployment and aggregate supply to a detailed, microeconomic examination of the effects of individual tax and transfer program structures. This inductive approach is, I believe, likely to provide a far better guide to discovering how changes in these policies have worked through the economy than would a macroeconomic approach that ignored the programs' complexities.
1 citations