Showing papers in "Journal of Human Resources in 2002"
TL;DR: In this article, four alternative but related approaches to empirical evaluation of policy interventions are studied: social experiments, natural experiments, matching methods, and instrumental variables, and the necessary assumptions and the data requirements are considered for estimation of a number of key parameters of interest.
Abstract: Four alternative but related approaches to empirical evaluation of policy interventions are studied: social experiments, natural experiments, matching methods, and instrumental variables. In each case the necessary assumptions and the data requirements are considered for estimation of a number of key parameters of interest. These key parameters include the average treatment effect, the treatment on the treated and the local average treatment effect. Some issues of implementation and interpretation are discussed drawing on the labour market programme evaluation literature.
1,185 citations
TL;DR: In this article, a brief overview of the theory of incentives is given, with special attention to issues that are important in the public sector, in general and human capital in particular.
Abstract: The paper begins with a brief overview of the theory of incentives, with special attention to issues that are important in the public sector, in general and human capital in particular. It then reviews some case studies and empirical studies of incentives in the public sector, examining how these studies relate to the theory. Some implications for reform and design of organizations are drawn.
990 citations
TL;DR: In this paper, the authors use a multitask model to develop a two-parameter characterization of performance measures and show how these two parameters-distortion and risk-affect the value and use of performance measure in incentive contracts.
Abstract: Performance measurement is an essential part of the design of any incentive system. The strength and value of incentives in organizations are strongly affected by the performance measures available. Yet, the characteristics of valuable performance measures have not been well explored in the agency literature. In this paper, I use a multitask model to develop a two-parameter characterization of performance measures and show how these two parameters-distortion and risk-affect the value and use of performance measures in incentive contracts. I show that many complex issues in the design of real-world incentive contracts can be fruitfully viewed as tradeoffs between these two features of performance measures. I also use this framework to analyze the provision of incentives in several specific environments, including R&D labs and nonprofit organizations.
440 citations
TL;DR: This paper found that immigrants who acquire U.S. schooling earn higher wages than other immigrants. But they did not find that the higher returns were not the consequence of ability bias or greater English proficiency of those who acquire US schooling.
Abstract: Immigrants in the United States who acquire U.S. schooling earn higher wages than other immigrants. Using data from the U.S. censuses and the National Longitudinal Survey of Youth, we show that this wage advantage results from both greater educational attainment and higher returns to education. The higher returns are not the consequence of ability bias or greater English proficiency of those who acquire U.S. schooling. Returns to years of non-U.S. education are higher for immigrants who complete their schooling in the United States, consistent with the view that U.S. schooling upgrades or certifies education received in the source country. For those without U.S. schooling, returns are higher for immigrants from highly developed countries and countries for which English is an official language.
266 citations
TL;DR: In this paper, the authors discuss the logic of achievement tests, issues that arise in using them as proxy indicators of educational quality, and the mechanism underlying the inflation of scores, and make suggestions for improving the incentives faced by teachers by modifying systems of student assessment and combining them with numerous other measures, many of which are more subjective than are test scores.
Abstract: Test-based accountability rests on the assumption that accountability for scores on tests will provide needed incentives for teachers to improve student performance. Evidence shows, however, that simple test-based accountability can generate perverse incentives and seriously inflated scores. This paper discusses the logic of achievement tests, issues that arise in using them as proxy indicators of educational quality, and the mechanism underlying the inflation of scores. It ends with suggestions, some speculative, for improving the incentives faced by teachers by modifying systems of student assessment and combining them with numerous other measures, many of which are more subjective than are test scores.
266 citations
TL;DR: This paper examined the effect of changes in the availability of financial aid on the behavior of older students in their twenties and thirties, finding that sizable effects of the introduction of the Pell grant program on college enrollment decisions for older students.
Abstract: Much of the research examining the question of how federal financial aid affects decisions to enroll in college has focused on the behavior of students in the relatively narrow range immediately following high school graduation, leaving unanswered the question of how changes in the availability of aid affect the behavior of older students. This analysis examines the question of how changes in the means-tested federal Pell grant program affects enrollment decisions of potential students in their twenties and thirties. Our results indicate sizable effects of the introduction of the Pell grant program on college enrollment decisions for older students.
246 citations
TL;DR: The authors used the estimates from a hazard model of college student departure to simulate how changes in financial-aid packaging affect students' departure decisions over time, and found that changing loans to scholarships, as Princeton has recently done, has a large impact on retention and that frontloading aid has a more modest impact.
Abstract: We use the estimates from a hazard model of college student departure to simulate how changes in financial-aid packaging affect students' departure decisions over time. We find that changing loans to scholarships, as Princeton has recently done, has a large impact on retention and that frontloading aid has a more modest impact. Our results also suggest that financial aid represents more to the student than just the dollar value of the aid offered. Increased knowledge about the temporal effects of different types of financial aid will help policy makers make more informed choices about the structure of financial aid packages.
232 citations
TL;DR: In this paper, the authors analyzed the effect of economic incentives on worker absenteeism, using panel data on work absence for 1990 and 1991 with a sample of 1,396 Swedish blue-collar workers.
Abstract: We analyze the effect of economic incentives on worker absenteeism, using panel data on work absence for 1990 and 1991 with a sample of 1,396 Swedish blue-collar workers. During this period Sweden implemented major reforms of both its national income replacement program for short-term sickness and income taxes. Both affected the worker's cost of missing work. Our econometric model allows for state-dependent dynamic behavior and control for unobserved heterogeneity. The latter proves to be an important consideration. We find that the cost of being absent significantly affects work absence behavior.
203 citations
TL;DR: In this paper, the effect of income inequality on individual health status for both the general population and those individuals in poverty was examined using data from the 1995-99 March Current Population Survey.
Abstract: Several recent studies have identified an association between income inequality and aggregate health outcomes; this has been taken to be evidence that inequality is detrimental to individual health. We use data from the 1995-99 March Current Population Survey to examine the effect of income inequality on individual health status for both the general population and those individuals in poverty. We find no consistent association between income inequality and individual health status. Our results contradict recent claims that the psychosocial effects of income inequality have dramatic consequences for individual health outcomes.
175 citations
TL;DR: The authors examined the impact of childcare prices and wage rates on the joint employment and childcare mode (center, sitter, relative, and husband) choice decisions of married mothers by estimating both a mixed logit and universal logit choice model.
Abstract: This paper examines the impact of childcare prices and wage rates on the joint employment and childcare mode (center, sitter, relative, and husband) choice decisions of married mothers by estimating both a mixed logit and universal logit choice model. Data are drawn from the 1988 Canadian National Child Care Survey and the 1988 Labour Market Activity Survey. The estimation results show that wages have a positive impact on the probability of choosing any of the working states and that childcare prices for center, sitter, and relative care reduce the probability of working and using each respective mode of care. Sensitivity analyses reveal that the wage elasticity for employment is fairly robust across model specifications, while the own-price elasticity of childcare is sensitive to model specification, differing identifying assumptions in the estimation of childcare price equations, and sample selection. The simulation results show that differences exist in the degree to which government subsidies in the form of wage subsidies, targeted childcare subsidies, or unconditional childcare subsidies, impact on labor supply decisions and decisions to substitute across different modes of care by those mothers already in the labor market.
168 citations
TL;DR: This article used a nonstructural, ordered discrete choice model to measure the effects of various parent and child characteristics upon the independent caregiving decisions of the adult children of elderly parents sampled in the 1982 and 1984 National Long Term Care Survey (NLTCS).
Abstract: This paper uses a nonstructural, ordered discrete choice model to measure the effects of various parent and child characteristics upon the independent caregiving decisions of the adult children of elderly parents sampled in the 1982 and 1984 National Long Term Care Survey (NLTCS) While significant effects are noted, emphasis is placed on test statistics constructed to measure the independence of caregiving decisions The test statistic results are conclusive: The caregiving decisions of adult children are dependent across time and family members Structural models taking dependencies among family members into account note effects similar to those in the nonstructural model
TL;DR: In this paper, the authors examined the timing of exit from the teaching profession and the reasons for these exits and concluded that the presence of a newborn child is the single most important determinant of female teachers' quitting.
Abstract: This article deals with two problems: the timing of exits from the teaching profession and the reasons for these exits. Approximately 67 % of exiting female teachers leave the work force altogether. The presence of a newborn child is the single most important determinant of exits for females. The paper discusses why studies of quit behavior that simply include a person's total number of children may fail to capture the true importance of fertility behavior on a female's quit decision. It is also examined in this paper the return rates of departing teachers and compares the exit behavior of teachers to that of nonteachers.
TL;DR: In this article, the authors examined the relationship between profitability, growth and ownership changes, product market power, and the sex composition of a plant's or firm's workforce and found that among plants with high levels of product market powers, those that employ relatively more women are more profitable.
Abstract: The authors report new evidence on the existence of sex discrimination in wages and whether competitive market forces act to reduce or eliminate discrimination. Specifically, they use plant- and firm-level data to examine the relationships between profitability, growth and ownership changes, product market power, and the sex composition of a plant's or firm's workforce. Their strongest finding is that among plants with high levels of product market power, those that employ relatively more women are more profitable. No such relationship exists for plants with apparently low levels of market power. This is consistent with sex discrimination in wages in the short run in markets where plants have product market power. The authors also examine evidence on the longer-run effects of market forces on discrimination, asking whether discriminatory employers with market power are punished over time through lower growth than non-discriminatory employers, or whether discriminatory employers are bought out by non-discriminators. There was found little evidence that this occurs over a five-year period, as growth and ownership changes for plants with market power are generally not significantly related to the sex composition of a plant's workforce.
TL;DR: This paper found evidence that choice makes schools place more value on teachers' effort, teachers' independence, the quality of teachers' college education, and teachers' math and science skills than traditional forms of choice (Tiebout choice, choice of private schools).
Abstract: When parents have some form of school choice, schools should want to hire and keep teachers who help them attract students. Thus, parental freedom to choose schools may affect how schools structure teaching jobs and teachers' pay. This paper investigates whether schools that face choice-based incentives actually do create teaching jobs that are different. Using data on traditional forms of choice (Tiebout choice, choice of private schools) and a new survey of charter school teachers, I find evidence that suggests that choice makes schools place more value on teachers' effort, teachers' independence, the quality of teachers' college education, and teachers' math and science skills.
TL;DR: The authors found that Japanese married women are more likely to reside with parents-in-law if their spouse is the eldest son, which suggests the persistence of the traditional Japanese value that the elder son is more responsible for family matters.
Abstract: This paper finds that after controlling for the endogeneity offamily structure, coresidence with one's own parents or in-laws has a significant positive effect on Japanese married women's labor force participation This suggests that coresidence allows married women to share the burden of household work with their parents or in-laws, thus leading to the increased probability of labor force participation It is also found that married women are more likely to reside with parents-in-law if their husband is the eldest son This suggests the persistence of the traditional Japanese value that the eldest son is more responsible for family matters
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TL;DR: This paper found that women spend substantially more time on housework than men, and that controlling for housework time increases the explained component of the gender wage gap by 14 percentage points, regardless of marital status.
Abstract: Gender differences in labor market outcomes are often attributed to gender differences in household responsibilities, and substantial empirical evidence documents the direct negative impact of housework time on wages, particularly for married women. Using data from the National Survey of Families and Households, we find that housework has a negative effect on wages regardless of marital status. Furthermore, this relation is strongest for housework tasks such as cooking and cleaning that constitute a daily routine. Because women spend substantially more time on housework, controlling for housework time increases the explained component of the gender wage gap by 14 percentage points.
TL;DR: In this article, the authors present case study evidence from a county where one high school piloted a merit pay system to reward student retention while another comparable high school maintained a traditional compensation system, concluding that merit pay increased retention, had no effect on grade point averages, reduced average daily attendance rates, and increased the percentage of students who failed.
Abstract: Although merit pay systems have been established in many school districts across the United States, little empirical evidence exists concerning their influence on student achievement. This paper reviews that evidence and presents case study evidence from a county where one high school piloted a merit pay system to reward student retention while another comparable high school maintained a traditional compensation system. A difference-in-differences analysis implies that merit pay increased retention, had no effect on grade point averages, reduced average daily attendance rates, and increased the percentage of students who failed.
TL;DR: In this paper, the authors used a new database on average alumni donations at the institutional level and institutional characteristics to explore the role that lagged institutional characteristics and policy have on subsequent donations to the institution.
Abstract: Institutions of higher education are increasingly relying upon alumni giving and endowment earnings as sources of funding. This paper utilizes a new database on average alumni donations at the institutional level and institutional characteristics to explore the role that lagged institutional characteristics and policy have on subsequent donations to the institution. Our results confirm the noncontemporaneous effects of variations in the average scholastic achievement of matriculated students (a proxy for both student quality and student socioeconomic status) on subsequent donative revenue flows and indirectly address some of the open questions left by previous theoretical inquiries.
TL;DR: In this paper, the authors present simple time series and cross-state evidence suggesting that the growth in the Social Security Disability Insurance (DI) program can account for much of the decline in the relative employment position of men and women with disabilities.
Abstract: During the 1990s, while overall employment rates for working-aged men and women either remained roughly constant (men) or rose (women), employment rates for people with disabilities fell. During the same period the fraction of the working-aged population receiving Social Security Disability Insurance (DI) benefits increased quite dramatically. We present simple time series and cross-state evidence suggesting that the growth in the DI program can account for much of the decline in the relative employment position of men and women with disabilities.
TL;DR: This paper found that human capital measures such as number of years of schooling have a significant impact on criminal choice in adulthood, while social capital measures, such as peer influences during youth, are also key predictors of criminality.
Abstract: This paper builds on the neoclassical model of time allocation introduced by Gronau (1977), and revisited in the context of crime as work by Grogger (1998), by disaggregating the types of capital characterizing an individual to include social and criminal capital in addition to traditional human capital. The combination of juvenile and adult arrest data, labor market, and background variables make the sample we analyze, the 1958 Philadelphia Birth Cohort Study, especially well-suited to examining the relative importance of these aspects of individual capital. We find that human capital measures such as number of years of schooling have a significant impact on criminal choice in adulthood. We find that social capital measures such as peer influences during youth are also key predictors of criminality.
TL;DR: The classic selection effect posits that deferred wages attract "stayers" as discussed by the authors, and the results in this paper suggest an alternative explanation, that "staying" is merely the result of a selection process, and not the underlying factor that drives selection.
Abstract: The classic selection effect posits that deferred wages attract "stayers." The results in this paper suggest an alternative explanation. Deferred wage contracts attract "savers." All else constant, savers are better workers than nonsavers. A firm naturally works harder to retain better workers, and thus, is led to pay them higher wages; thereby encouraging savers to remain in the firm's employ. This process creates a confluence of deferred wages, high levels of compensation and low quit propensities. In this explanation, "staying" is merely the result of a selection process, and not the underlying factor that drives selection.
TL;DR: The authors show that the structure of teacher pay in public education is more consistent with rent-seeking than efficient contracting, and that the costs of turnover are high enough to make this an optimal use of school resources.
Abstract: Returns to seniority account for a substantial share of public K-12 expenditures. Over the first ten to 15 years of a career, public school teachers enjoy average wage growth at least equivalent to that of other white-collar workers. Explanations for this structure in terms of human capital or costly monitoring lack theoretical and empirical support. A steeper wage-tenure profile reduces turnover, but it is doubtful that the costs of turnover are high enough to make this an optimal use of school resources. We conclude that the structure of teacher pay in public education is more consistent with rent-seeking than efficient contracting.
TL;DR: In this article, the impact of employer-provided health insurance (EPHI) on the job mobility of males over time using a dynamic empirical model that accounts for unobserved heterogeneity is estimated.
Abstract: We estimate the impact of employer-provided health insurance (EPHI) on the job mobility of males over time using a dynamic empirical model that accounts for unobserved heterogeneity. Previous studies of job-lock reach different conclusions about possible distortions in labor mobility stemming from an employment-based health insurance system: a few authors find no evidence of job-lock, although most find reductions in the mobility of insured workers of between 20 and 40 percent. We use data from the National Longitudinal Survey of Youth which includes variables describing the health insurance an individual holds, as well as whether he is offered insurance by his employer. This additional information allows us to model the latent individual characteristics that are correlated with the offer of EPHI, the acceptance of EPHI, and employment transitions. Our results provide an estimate of job-lock unbiased through correlation with positive job characteristics and individual specific turnover propensity. We find no evidence of job-lock among married males, and produce small estimates of job-lock among unmarried males of between 10 and 15 percent.
TL;DR: The authors used pseudopanel data constructed from the March Current Population Surveys from 1967 to 1998 to measure both intertemporal wage elasticities and uncompensated wage elasticity.
Abstract: The results of some recent ingenious labor supply research may appear incompatible with the notion that uncompensated wage elasticities for men are small, perhaps negative. This paper argues there is no incompatibility. The methodology in this recent research results in computing wage responses that come closer to measuring intertemporal wage elasticities than to uncompensated wage elasticities. To demonstrate this, I use pseudopanel data constructed from the March Current Population Surveys from 1967 to 1998 to measure both intertemporal wage elasticities and uncompensated wage elasticities. The latter appear sensitive to the particular specification of the hours equation.
TL;DR: Evidence that workers' compensation insurance affects not only the occurrence but also the composition of reported injuries is provided, confirming the theoretical prediction that the effect of WC coverage is greater on the probability of reporting a injury with difficult diagnosis than on the likelihood of reporting an injury with easy diagnosis.
Abstract: This paper provides evidence that workers' compensation insurance (WC) affects not only the occurrence but also the composition of reported injuries. In our theoretical approach, WC is the source of two interrelated moral hazard problems: underprovision of accident-preventing efforts by the insured worker (ex ante moral hazard) and false reporting of injuries (ex post moral hazard). Our model predicts that, under certain assumptions, the impact of WC benefits is stronger on the probability of reporting a difficult-to-diagnose injury than on the probability of reporting an injury that is easy to diagnose. Panel data on 9,800 workers in the Quebec construction industry over each month of the period 1977-86, combining administrative data from the Quebec Construction Board with data from the Quebec Workers' Compensation Board, are used for the estimates. The parameters of the model are estimated using a threealternative logit kernel [hybrid multinomial probit (MNP)] framework with individual random effects. Our results confirm our theoretical pre
TL;DR: In this article, a static neoclassical structural model is used to investigate the labour supply of the wives of the heads of households in Mexico City, with a focus on the impact of family structure.
Abstract: This paper investigates labour supply of the wives of the heads of households in Mexico City, with a focus on the impact of family structure. A static neoclassical structural model is used. We assume that each woman chooses her labour supply and corresponding income so that her utility is maximized, conditional upon her husband’s labour supply and earnings. We use a direct translog specification, and include family composition variables as taste shifters. Also taken into account are fixed costs of working, nonlinear taxes, unobserved preference variation, prediction errors in wages of nonworkers, and potential endogeneity of wages. The models are estimated by smooth simulated maximum likelihood using data from Mexico’s Urban Employment Survey drawn in 1992. We find income elasticities of labour supply of about -0.35, and wage elasticities of about 0.5. The latter is substantially overestimated if wage rate endogeneity is not taken into account. The results are robust with respect to other specification choices. We find that the impact of family structure variables on participation is different from that on hours worked, so that their total effect is ambiguous.
TL;DR: This article presented an alternative method of estimating minimum wage effects using similar data that relaxes these assumptions, using a disequilibrium approach, and applied this approach to the data and sample period used in many earlier state-level studies.
Abstract: Research using state-level data to estimate minimum wage effects on employment follows the textbook treatment of minimum wages, assuming that minimum wages are binding and that labor markets are competitive. We present an alternative method of estimating minimum wage effects using similar data that relaxes these assumptions, using a disequilibrium approach. Applying this approach to the data and sample period used in many earlier state-level studies suggests that simple state-level reduced-form estimates of minimum wage effects on employment depend on the sample used, and may badly understate the disemployment effects of a binding minimum wage.
TL;DR: In this article, the authors examined the impact of the spouse's allowance on the Canadian Income Security (IS) system and found that it was associated with a six to seven percentage point relative decrease in labor force participation among males in eligible couples.
Abstract: I examine the introduction of the Spouse's Allowance to the Canadian Income Security (IS) system. This program was nominally targeted at females in couples attempting to live on a single pension, allowing them to receive the age related benefits of the IS system at age 60, up to five years earlier than other members of the population. The results indicate that the introduction of the Allowance is associated with a six to seven percentage point relative decrease in labor force participation among males in eligible couples. Eligible females did not share the rising employment rates of their counterparts (of the same age) who were not eligible for the Allowance.
Journal Article•
TL;DR: In this paper, the authors investigate the implications of the existence of forward-looking behavior for estimation methodology and estimate the effect of welfare on those decisions adopting an empirical specification that is consistent with forward looking behavior and interpretable within that framework.
Abstract: An extensive literature in economics seeks to determine the quantitative impact of welfare benefits on economic and demographic behaviors. Most studies adopt a static choice framework to motivate their empirical specifications. The behaviors that are studied, however, have both immediate and long-term consequences. If potential welfare recipients are forward looking, they will consider these long-term consequences when making current decisions. In this paper we investigate the implications of the existence of forward-looking behavior for estimation methodology. In the companion paper that follows, we estimate the effect of welfare on those decisions adopting an empirical specification that is consistent with forward-looking behavior and interpretable within that framework.
TL;DR: In this paper, the authors investigate the implications of the existence of forward-looking behavior for estimation methodology and estimate the effect of welfare on those decisions adopting an empirical specification that is consistent with forward looking behavior and interpretable within that framework.
Abstract: An extensive literature in economics seeks to determine the quantitative impact of welfare benefits on economic and demographic behaviors. Most studies adopt a static choice framework to motivate their empirical specifications. The behaviors that are studied, however, have both immediate and long-term consequences. If potential welfare recipients are forward looking, they will consider these long-term consequences when making current decisions. In this paper we investigate the implications of the existence of forward-looking behavior for estimation methodology. In the companion paper that follows, we estimate the effect of welfare on those decisions adopting an empirical specification that is consistent with forward-looking behavior and interpretable within that framework.