Showing papers in "Journal of Human Resources in 1975"

Overinvestment in College Training

Abstract: The college job market underwent an unprecedented downturn in the 1 970s when the earnings of graduates relative to other workers, the rate of return to investing in higher education, and employment opportunities dropped sharply, especially for new graduates This paper examines the quantitative dimensions, causes, and consequences of the "new depression" in the market It explains the downturn by slackened demand due to changes in the industrial structure and continued growth of supply A major finding is that the fraction of young men choosing college fell in the seventies, apparently the result of responsive supply behavior to the depressed market One of the major labor market developments of the 1960s, and to a lesser extent of the 1950s as well, was the enormous expansion of individual and social investments in higher education The proportion of GNP allocated to colleges and universities jumped from 08 percent to 22 percent between 1950 and 1970; college enrollments more than tripled; the number of BA graduates rose by 91 percent; master's and doctorate production more than tripled These increases in the supply of college-trained specialists notwithstanding, the ratio of the earnings of the college-trained to the educated workers was quite stable [14], and the rate of return to investment in higher education remained high [2, 15] Toward the end of the 1960s and the outset of the 1970s, however, the market for college graduates began to change, with the boom of previous decades coming to an end What are the dimensions of this turnaround in the college labor market? Has the rate of return to investing in higher education fallen? What has been the enrollment response of students to changes in rates of The author is Associate Professor of Economics, Harvard University * The author wishes to thank the National Institute of Education for their support under Grant No G-00-0202 [Manuscript received September 1974; accepted January 1975j The Journal of Human Resources * X * 3 This content downloaded from 1575539104 on Mon, 20 Jun 2016 05:57:09 UTC All use subject to http://aboutjstororg/terms

Potential Biases in Measuring Male-Female Discrimination.

Abstract: By addressing the problem of life-cycle division of labor within the family, this study considers the question of the effect of family characteristics on both male and female earnings capacities. The paper illustrates both theoretically and empirically that being married and having children have opposite effects on the wage rates of husbands and wives, and further that these diverging wage patterns are perpetuated over the length of the marriage. Neglecting the fact that family characteristics have opposite effects on male and female wage structures leads to biases in the computation of the male-female discrimination coefficient.

Are There Unusually Effective Schools

Abstract: : The results of a statistical search for schools capable of increasing educational achievement are presented. No conclusive evidence of superior schools was found once non-school background factors were controlled. However, schools were located which appear deserving of further, more detailed study.

Cost-Related Tuition Policies and University Enrollments.

Abstract: This paper explores the analytical issues which a university would face in implementing a cost-related tuition policy and presents empirical estimates of the impact of implementing such a policy using data from the University of Minnesota The empirical results suggest that universities can use standard econometric analyses of enrollment demand behavior to reduce considerably the uncertainty about the effects of changes in tuition policy However, substantial uncertainty remains for some categories of enrollments In this context the paper addresses the relevant analytical issues in combining incomplete empirical predictions with a procedure of gradual implementation of a cost-related tuition policy and a careful monitoring of enrollments as the policy is implemented

The University Professor As a Utility Maximizer and Producer of Learning, Research, and Income.

Abstract: Numerous plans have been proposed for improving the teaching quality at major universities. These schemes typically do not rest on identifiable economic models. In this paper, a professorial decision-making model is presented for the purpose of exploring alternative plans to raise teaching quality. Using a Lancaster methodology, where time is a variable input, it is demonstrated that an increase in the pecuniary return to teaching will raise teaching quality while exogenous changes in teaching and/or research technology need not. The slack academic market for Ph.D.'s, the difficulty in securing state financing, and falling undergraduate enrollments have led to many speculations and proposals for appropriate methods to improve the quality of college teaching. In the case of economics, the American Economic Association, via its Committee on Economic Education, is emphasizing the development of better alternative university teaching technologies (for example, improved course content and teaching techniques). Siegfried and White [12, p. 315], however, question the effectiveness of improved technology: " . .. we are not optimistic that instruction at these schools will be noticeably improved by a further outpouring of new teaching techniques." They state that an alternative way of improving instruction might be to devise means of capitalizing on the research orientation of the university professor and the associated research-oriented reward structure at large universities. This suggestion is not based on an identifiable economic model, but rather on the observation that contemporaneous The author is an Assistant Professor and Director of Economic Education at the University of Minnesota. * Constructive criticism of an earlier draft was provided by John Danforth, John Hause, Jack Rodgers, Jim Simler, and other members of the Fall 1973 Minnesota Human Capital Workshop. Jack Rodgers was of special assistance in rechecking algebraic manipulations and implications. [Manuscript received February 1974; accepted August 1974.] The Journal of Human Resources * X * 1 This content downloaded from 207.46.13.86 on Sun, 16 Oct 2016 04:43:39 UTC All use subject to http://about.jstor.org/terms 108 I THE JOURNAL OF HUMAN RESOURCES teaching output is statistically less significant in salary determination than is cumulative research output. Based on a two-dimensional argument involving only professional research and teaching time considerations, Richard McKenzie [11, p. 617], on the other hand, suggests " . . . that if more research is desired, an appropriate policy may be to increase the maximum teaching [time] requirements; if more teaching [time] is desired, administrators should consider, along with other changes, raising the research [time] requirements." To follow McKenzie's argument, it is necessary to assume, in addition to "standard assumptions," that (1) a professor can be forced into spending a given maximum amount of time in teaching and research activity while his income is fixed regardless of total time assigned; (2) the professor's two-dimensional preference ordering can be summarized by a circular indifference surface; and (3) the professor is operating in the inefficient region of his indifference surface. A more direct plan to improve the quality of college teaching has been elaborated by Kenneth Eble [3, pp. 21-35]. Eble's plan rests on the speculation that an increase in the pecuniary return to teaching, given accepted evaluation instruments and procedures, will improve the quality of teaching, but not necessarily at the expense of research.' Such speculation, however, is questioned by William Arrowsmith [1, p. 58]. He advocates viewing the professor as a "Socratic teacher," and he concludes that we will not raise college teaching quality "by the meretricious device of offering prizes or bribes." As yet, no one appears to have specified in a formal manner the alternative economic determinants for improving the quality of college level teaching. All that we do have are conflicting verbal speculations as to the possible means of improving instruction. In this study, a formal comparative static model is presented for the purpose of exploring the implications of alternative plans to raise teaching quality. Based on a Lancaster [8, 9] methodology, where time is a variable input, it is demonstrated that an increase in the pecuniary return to teaching output will raise teaching quality at major universities while exogenous changes in teaching and/or research technology need not. Empirical methods of testing this model are also suggested. PROFESSORIAL DECISION-MAKING FRAMEWORK It is generally accepted that a professional not only derives utility from consumption activity, but also acquires satisfaction out of professional activities-in 1 Hansen and Kelley [6, pp. 11-12] also predict that an increase in the relative reward for teaching will increase the output of this activity. Their prediction rests on some unspecified relationships in which a change in the relative return to teaching-psychic and pecuniary-does not affect the production possibility set, but only causes a change in the marginal rate of substitution between teaching and research in the utility function. This content downloaded from 207.46.13.86 on Sun, 16 Oct 2016 04:43:39 UTC All use subject to http://about.jstor.org/terms

A markov model of turnover in aid to families with dependent children

Abstract: In order to gain some insight into turnover in the welfare population, a two-state (on and off welfare) Markov chain transition probability matrix is estimated with longitudinal data on welfare recipients coming on welfare in 1965. Results indicate that an enormous amount of turnover occurs in the welfare population and that the average duration of time on welfare per time on welfare is relatively modest for this group. Persons facing a wage below the minimum wage and/or high unemployment are less likely to leave welfare and more likely to return, likely to stay off for shorter periods and on for longer periods, and more likely to be on welfare than are those with low expected unemployment or wages above the minimum.

Factors affecting college attendance

Abstract: Three factors that may influence a high school graduate's decision to attend college are considered: (1)his ability, (2) the cost of attending college, and (3) the socioeconomic status of his parents. The results, based on a probit analysis, indicate that factors (1) and (3) are strong influences on the probability of attending college. Among the socioeconomic variables, however, family income is the least important influence on college attendance. The low income elasticity of demand for college implies that unrestricted income transfers to the low income population would not be an effective way of increasing their rate of college attendance. INTRODUCTION AND SUMMAR Y This paper is an addition to the empirical studies of the variables that influence whether high school graduates go on to attend college (see [2, 3, 4, 7, 8, 9, 10, 11, 12, 13]). We consider three major factors which might influence a youth's decision to attend college: high ability, the cost of attending college, and the socioeconomic status of his parents. Measures of ability and socioeconomic status have been the principal explanatory variables used by the previous studies This study was initiated by the late John Melder as part of his proposed Ph.D. dissertation at the University of Wisconsin and was completed by Sandra Christensen and Burton A. Weisbrod. Christensen is Assistant Professor of Economics, Simon Fraser University, and Weisbrod is Professor of Economics and of Educational Policy Studies, University of Wisconsin, and a Fellow of the University's Institute for Research on Poverty. * This study was supportec by funds granted to the Institute for Research on Poverty, University of Wisconsin-Madison, by the Office of Economic Opportunity pursuant to the Economic Opportunity Act of 1964; by the University of Wisconsin Center for Studies in Vocational and Technical Education; and by the Computer Science Center, University of Maryland. The opinions expressed are those of the authors. However, we wish to thank the editors and referees of this Journal for a number of variable comments and suggestions. [Manuscript received February 1973; accepted June 1974.] The Journal of Human Resources * X * 2 This content downloaded from 207.46.13.51 on Sun, 19 Jun 2016 06:25:28 UTC All use subject to http://about.jstor.org/terms Christensen and Others 1 175 cited. Fenske's [4] is the only one to attempt to take cost factors into consideration, in the form of college accessibility. However, he fails to include income, an important component of the family's socioeconomic status, in his analysis. A Carnegie Commission monograph [1], published after work on this paper was well under way, includes a thorough analysis of college attendance for Wisconsin and other areas. The authors of that study consider the same factors considered here-ability, socioeconomic status, and college accessibility. We shall refer to the results of this monograph later, in comparison with our results. Our results indicate that ability and socioeconomic status are strong and consistent influences on the probability of attending college. However, among the socioeconomic variables, family income is the least important in fostering college attendance. The low income elasticity of demand for college implies that unrestricted income transfers to the low income population would not be an effective way of reducing the disparity in college attendance rates between youths from high status families relative to those from low status families. There is some indication that lower attendance rates for females, relative to males, might be eliminated by increasing the availability of local public college facilities. Since the local college provides a relatively low cost education, we use the estimated response to its presence or absence as a measure of the price elasticity of demand for college. Our results seem to indicate that the price elasticity is high for females, but virtually zero for males. DESCRIPTION OF DATA AND METHODS OF ANAL YSIS In our analysis, socioeconomic status is represented by four separate variables: family income, occupation of the father, and the educational level of the father and of the mother. The socioeconomic variables are thought to influence a youth's college decision in two ways: First, family income is the primary determinant of resources available to finance an education and should, therefore, be positively related to college attendance. Second, the level of education and, perhaps, the occupation of his parents would likely be closely related to the amount of parental encouragement to attend college the youth perceives; hence, education and occupational status' should also be positively related to college attendance. A rough measure of the effect that cost or price has on college attendance can be obtained from the set of dummy variables used to represent the kind of college facility which exists in the youth's community. If no public college exists, the student must either attend a nearby private college or board away 1 We consider the professional and managerial occupations to be high status. Workers in the clerical, sales, skilled, unskilled, and laborer occupations are increasingly lower status jobs. Our final occupational category, for farmers, is of mixed status, since it is composed of farm owners, managers, and workers. This content downloaded from 207.46.13.51 on Sun, 19 Jun 2016 06:25:28 UTC All use subject to http://about.jstor.org/terms 176 I THE JOURNAL OF HUMAN RESOURCES from home in order to attend a public college in another community. In either case, the cost of college attendance is likely to be higher than if a public college were located nearby. The presence of a four-year public university offers the least costly education if the student seeks to complete a degree, since the student may reside at home throughout the period of attendance. A two-year university extension offers an equally low cost education for the first two years, but to complete the degree the student must transfer to a four-year campus in another community. Because of transportation and boarding costs, the student with only a university extension in his community faces a higher price for the third and fourth years of college than does the student with a four-year university in his community. The student with only a two-year county college in his community faces a still higher price for his education since there is only limited transferability of credits from a county college to a university. Thus, we would expect youths from communities where a four-year university is present to have the highest probability of attending college, after controlling for other determinants; youths from communities with only a county college or with no public college should have the lowest probability of attending college, after controlling for other determinants. However, it is not possible to control completely for other determinants. In particular, the dummies used to represent the type of public college facility accessible to the youth may confound college accessibility with other community characteristics which also affect attendance rates. The Anderson-Bowman-Tinto [1] study indicates that this problem can be mitigated (though not eliminated) by controlling for socioeconomic characteristics, as we do. Ability is measured by two variables: high school class rank and score on a standardized scholastic aptitude test. The test used was the Henmon-Nelson Self Administering Test of Mental Ability. These variables should be positively related to the youth's probability of attending college, since his ability is a large factor in determining the return (either in enjoyment or increased earning power) he can expect from additional education. The data we used to study the importance of these influences were collected in part by Robert Fenske [4]. He gathered information on ability and parental characteristics for high school seniors living in selected Wisconsin cities in May 1963. Four years later, a follow-up study was made by Norman Dufty and Richard Whinfield, of the University of Wisconsin Center for Studies in Vocational and Technical Education, to determine which of the students originally surveyed had attended college. Subsequently, income data for a random sample of the youths' families for the years 1959 through 1965 were obtained from the Wisconsin Department of Revenue by John Melder. The result was a sample of 440 high school graduates-208 females and 232 males.2 2 Mean values of the variables are in Table 4. A correlation matrix as well as the variance and minimum and maximum values for each variable are available from the authors on

Short-Run Supply Responses of Professional Nurses: A Microanalysis.

Abstract: This article presents estimates of labor supply functions for married and single professional nurses using a twin linear probability approach and Tobit analysis. Data on individual nurses and their families come from the Public Use Sample of the 1960 Census of the United States. The results imply a substantial supply response to the nurse's hourly wage and the wage of the nurse's spouse. Policy issues include the relationship of our evidence to the hypothesis that hospitals exercise monopsony power and the relative merits of increasing the supply of RN services by raising nurse wages versus an educational policy aimed at increasing the number of nursing school graduates.

Job Search Models, the Duration of Unemployment, and the Asking Wage: Some Empirical Evidence.

Abstract: Three recent untested theoretical models of the wage setting behavior of the unemployed jobseeker by Gronau, Mortensen, and McCall are compared. While the Mortensen model predicts that the minimum asking wage is constant over the duration of unemployment, the models of Gronau and McCall, for different reasons, predict that the minimum asking wage declines over the duration of unemployment. Data from a sample of unemployed jobseekers are used to test the alternative implications. The McCall model, emphasizing downward flexibility in the minimum asking wage in response to revised wage expectations over the duration of unemployment, is the best description of the wage setting behavior of unemployed jobseekers. The search for the microeconomic foundations of macroeconomics has called attention to the wage setting behavior of the unemployed jobseeker. This wage setting behavior has been analyzed as neoclassical maximizing behavior, given incomplete knowledge of demand. Several competing theoretical models have been offered. Dale T. Mortensen has advanced a search model which implies the jobseeker's minimum asking wage would remain constant throughout the duration of search and unemployment [6]. More recently, Reuben Gronau has developed a search model in which he showed that an unemployed job-hunter would reduce his minimum asking wage over the duration of unemployment [3]. Earlier, J. J. McCall [5] proposed a job search model in which a job-hunter lowered his minimum asking wage over the duration of unemployment for a reason other than that suggested by Gronau. The different implications of the The author is currently a Brookings Economic Policy Fellow, Department of Health, Education, and Welfare. * The author wishes to thank Edward D. Kalachek, H. Gregg Lewis, Ethel B. Jones, and the referees for helpful comments. [Manuscript received March 1974; accepted October 1974.] The Journal of Human Resources * X 2 This content downloaded from 157.55.39.27 on Wed, 07 Sep 2016 05:50:25 UTC All use subject to http://about.jstor.org/terms

Medicare and the Utilization of Health Care Services by the Elderly.

Abstract: Payments per enrolled Medicare beneficiary are much higher for high income elderly persons than for low income elderly persons Payments are also much higher for elderly whites than for elderly blacks, particularly in the South To determine whether these differences reflect differences in health status, educational levels, physical access to health care services, the financial deterrent of Medicare cost-sharing requirements, or other factors, this study analyzes physician and hospital utilization patterns of the elderly using 1969 data from the Health Interview Survey conducted by the National Center for Health Statistics When Medicare was enacted in 1965, it was expected that the financial barrier to adequate medical care for the elderly would be removed, enabling them to seek medical attention commensurate with their need In spite of Medicare, health care expenditures for the elderly still pose a large financial burden and continue to grow Private payments for personal health care averaged $293 per elderly person in fiscal year 1966 and $560 per capita in fiscal year 1974 (including $75 in Medicare premiums) [1, p 14] Concern has been expressed not only over the continued high level of medical expenses for the elderly, but also over the distribution of utilization of services generated by the cost-sharing provisions of Medicare (See, for example, [2, 9, 12]) Under Part A of Medicare, the basic hospital insurance plan (BHI), beneficiaries are currently required to pay $92 for the first 60 days of care in the year and $23 per day from the 61st to 90th day After that the beneficiary must The authors are, respectively, Senior Fellow at the Brookings Institution and graduate student, Department of Economics, University of Chicago * The views expressed are those of the authors and not necessarily those of the officers, trustees, or other staff members of the Brookings Institution Financial support for this study was provided by the Robert Wood Johnson Foundation [Manuscript received August 1974; accepted January 1975] The Journal of Human Resources ? X * 3 This content downloaded from 2074613120 on Wed, 14 Sep 2016 05:49:23 UTC All use subject to http://aboutjstororg/terms 362 I THE JOURNAL OF HUMAN RESOURCES draw on a "lifetime reserve" of 60 days, paying $46 per day after which Medicare coverage ceases BHI also provides a similar pattern of coverage for stays in extended care facilities Part B, the voluntary supplementary medical insurance plan (SMI), covers physicians' services and selected other types of care Persons subscribing to this plan pay a monthly premium which pays for half the expected cost of the plan, as well as a $60 annual deductible and 20 percent of all "allowable charges" In addition, if the physician does not accept assignment of charges, the beneficiary must pay the excess over the allowable charge Allowable charges are those considered customary and usual for a given service in a particular area States may "buy-in" elderly Medicaid recipients to SMI by agreeing to pay all premiums and charges accruing to those individuals under SMI While reducing the federal cost of Medicare, uniform cost-sharing provisions are believed to pose a greater deterrent to poor elderly persons than to those with higher incomes in the utilization of health services Marked disparities by income are certainly evident for SMI benefits received (see Table 1) In 1968, high income persons were not only more likely to receive services exceeding the deductible, but also to receive more reimbursable services and to be charged more for such services Table 2 also gives some support to the belief that income has an effect on overall utilization of health services for the elderly The number of physician visits an elderly person makes and the number of days he will spend in the hospital, while not consistently increasing with income, are considerably higher at the above $15,000 family income level than for persons with incomes below $5,000 Furthermore, the effect of income on use of medical services may be obscured by failure to adjust for health status For example, higher utilization by persons in the poorest income class than by those with family incomes from $5,000 to $9,999 may be attributable to markedly poorer health status found in that group1 If access to medical care were indeed equitable, it would be expected that the greatest utilization would be by those with the poorest health status This paper will focus on the distribution of utilization of health services by the elderly Several important questions with respect to the Medicare experience will be addressed: (1) Has Medicare enabled the aged to seek medical care primarily on the basis of need? (2) To what extent do socioeconomic characteristics continue to affect the utilization of health services by the elderly? (3) What is the differential impact of these factors by type of provider and service? The following section will discuss a model for analyzing the determi1 Persons 65 and over with incomes under $5,000 are 13 percent more likely to suffer from chronic conditions and have 48 percent more restricted activity days per year than those with incomes between $5,000 and $9,999 (Tabulated from the 1969 Health Interview Survey tapes supplied by the US Department of Health, Education, and Welfare, National Center for Health Statistics-hereafter cited as Tabulations from the 1969 HIS) This content downloaded from 2074613120 on Wed, 14 Sep 2016 05:49:23 UTC All use subject to http://aboutjstororg/terms Davis and Reynolds I 363

The Returns to Investments in Higher Education: Some New Evidence

Abstract: Census data for 1970 are used to generate age-income distributions by educational categories. After adjusting for such factors as growth and ability differentials, these distributions are used together with cost data to compute both private and social rates of return to investments in one and two and in three and four years of college. The results suggest that the rates of return have not decreased over the 1960s and that the return to those completing two-year programs may be much higher than previously thought.

On the Labor-Supply Effects of Age-Related Income Maintenance Programs

Abstract: In this paper a model is developed which is designed to capture the channels through which income transfer programs are likely to affect working hours of family members. The model demonstrates that the appropriate framework is neither a pure one-period or life-cycle one, but rather one that contains elements of both models. The final section illustrates a method of estimating the labor-supply reactions to income maintenance programs. The labor-supply effects are functions of the duration of a family's participation and the relevant importance of male market investment.

Private/Public Higher Education and the Competition for High Ability Students.

Abstract: This study examines the changing college preferences of able high school students for private vis-a-vis public higher education. It is determined that public higher education not only is enrolling more students but has become more attractive to able students-even when attractivity is adjusted for enrollment. If private institutions of higher learning justify their higher tuition charges with an image of selectivity, one can expect that many will have an increasingly difficult time filling their freshman classes. When several state policies are examined, both low public tuition and expansion of the number of public colleges adversely affect the private institutions in the competition for able students. Although the private sector is commonly viewed as the impecunious sister in the higher education field, there is some disagreement on the relative fiscal vitality of private colleges and universities. Cheit, for example, observes: "The evidence is slender, but it suggests that private institutions may be doing more about both expenditures and income problems than are public institutions" [4, p. 48]. Furthermore, while the number of students in private colleges and universities has not kept pace with the number of students enrolled in the public institutions, enrollment has reportedly grown absolutely over the past decade. Without directly intervening in this debate, this author contends that surpluses (or, more typically, deficits) and enrollment data do not fully convey the competitive problems of private colleges and universities. Because tuition at private institutions of higher learning (IHL) is usually four to five times the charges at public institutions, it is imperative that more expensive institutions The author is Administrator of the Joint Program in Higher Education Finance, Teachers College, Columbia University. * The author wishes to thank the National Merit Scholarship Corporation, the Educational Testing Service, and the College Entrance Examination Board for providing data which made this study possible. It should also be noted that the data requested were released to the author in a manner which maintained anonymity for the individual colleges and universities. [Manuscript received August 1974; accepted March 1975.] The Journal of Human Resources * X * 4 This content downloaded from 157.55.39.102 on Sun, 25 Dec 2016 06:47:30 UTC All use subject to http://about.jstor.org/terms

The continuing struggle for a negative income tax: a review article*

Abstract: After a summer of furious analytic activity, the Office of Economic Opportunity suomitted to President Lyndon Johnson in October 1965 its first National Anti-Poverty Plan that contained a recommendation for a universal negative income tax for all of the poor according to the single criterion of need. So began the major bureaucratic/political struggle within the federal government for "Negit," as negative income tax schemes came to be called.' The ensuing decade reached a dramatic climax in the congressional defeats of President Nixon's Family Assistance Plan (FAP) and of a modified version of FAP referred to as H.R. 1. Even though Congress twice rejected a negative income tax scheme for families with children, it did enact four pieces of legislation that have important components of the original OEO Negit proposal-the Welfare Amendments of 1967, the 1971 amendments to the Food Stamp Act, Supplemental Security Income, and the so-called Long amendment providing a one-year work bonus to low income families.2 And although the recommendation of a full-blown Negit seems a victim of President Ford's efforts to hold down spending and new initiatives this year, it may be only a temporary hiatus in the continuing struggle for basic reform in the American income security structure.

An Econometric Model of the Low-Skill Labor Market.

Abstract: The model describes the demand and supply of low-skill labor (private household workers, other service workers, and nonfarm laborers) by state. The parameters of the model are estimated primarily with data aggregated from the March 1970 Current Population Survey for 43 states and groups of states by a simultaneous-equations method. The estimates indicate that demand is slightly inelastic, while both primary (heads of families) and secondary (other family workers) supplies are backward bending, with the large states being on the negatively sloped range. For all but the smallest states, the explanatory power of the model as a whole in 1969 is good. The incidence of poverty in the United States has proved remarkably resistent to a variety of social programs designed to narrow income disparities among families. It is partly for this reason that there is widespread interest in new approaches to closing the poverty gap. The negative income tax, family allowances, wage subsidies, and training subsidies are among the most widely discussed of these approaches. Central issues in nearly all discussions are the effect Dr. Crandall is in the Department of Economics, Massachusetts Institute of Technology; Dr. MacRae is on the Senior Research Staff of the Urban Institute; and Dr. Yap is in the Department of Economics of the State University of New York at Binghamton. * This research was supported by funds from the Office of the Assistant Secretary for Policy, Evaluation, and Research, U.S. Department of Labor, and the Social and Rehabilitation Service, U.S. Department of Health, Education, and Welfare. Opinions expressed are those of the authors and do not necessarily represent the views of the Urban Institute, U.S. Department of Labor, or U.S. Department of Health, Education, and Welfare. We wish to thank Christine deFontenay and Christopher Gibbons for proficuous programming assistance and Judith Greenwald and Valerie James for valuable research assistance. We are grateful to Herrington Bryce, Alan Fechter, Charles Holt, and Terence Kelly for helpful comments. [Manuscript received October 1973; accepted June 1974.] The Journal of Human Resources * X * 1 This content downloaded from 207.46.13.120 on Wed, 14 Sep 2016 05:49:23 UTC All use subject to http://about.jstor.org/terms 4 I THE JOURNAL OF HUMAN RESOURCES of such proposals upon the incentive to work and the distribution of the benefits and costs of these programs between the subsidized and unsubsidized. Many of the uncertainties surrounding new proposals for social programs may be traced to lack of information on very basic parameters of low-skill labor markets. The poor are poor in part because they have little human capital and are, therefore, relegated to lower skill jobs. In order to evaluate the aggregate work incentive effect of any direct income maintenance program information on the wage and income responses of the low-skill labor supply is needed. Similarly, if the choice of policy instrument is to be wage or training subsidies, knowledge of lowand intermediate-skill labor demand elasticities would be especially useful. Moreover, when the choice among competing strategies to raise incomes of the poor must be made, a consistent framework in which to evaluate demand-oriented and supply-oriented programs is crucial. Much of our empirical knowledge about labor market parameters has been derived from separate studies of either demand or supply, but few studies have attempted to estimate a market model of demand and supply utilizing simultaneous-equation techniques.1 This is particularly true of the market for lowskill labor, the market most relevant for an evaluation of policies dealing with poverty. Clearly, a complete, detailed model of the operation of labor markets in these skill categories is needed if sound judgments on the wage and employment effects of alternative policy strategies are to be reached. The purpose of this paper is to develop an econometric model of the low-skill labor market. We begin by reviewing the labor demand and supply theory which is used in formulating the model. The data and method of estimation employed in the model are described. Then we present the parameter estimates and compare the values predicted by the entire model with the actual values used to estimate the model.

A Labor Shortage Model Applied to the Migration of College Professors.

Abstract: This study tests the impact of labor market conditions for college professors on their migration behavior between academic institutions and on their income gains from migration for the period 1960-68. A cross-sectional approach analyzes the correlations across seven disciplines between academic labor market conditions, on the one hand, and interstate migration rates and base salary gains from migration, on the other. There is evidence of high correlations, as hypothesized by the appropriate labor shortage model.