Showing papers in "Journal of Labor Economics in 1997"
TL;DR: In this paper, the authors analyze how a falling gender wage gap occurred despite changes in wage structure unfavorable to low-wage workers, and find support for the notion of a gender twist in supply and demand having its largest negative effect on high-skilled women.
Abstract: Using Michigan Panel Study of Income Dynamics data for 1979 and 1988, we analyze how a falling gender wage gap occurred despite changes in wage structure unfavorable to low-wage workers. The decrease is traced to "gender-specific" factors which more than counterbalanced changes in measured and unmeasured prices working against women. Supply shifts net of demand were unfavorable for women generally and hurt high-skilled more than middle- and low-skilled women. By analyzing wages, we find support for the notion of a gender twist in supply and demand having its largest negative effect on high-skilled women.
806 citations
TL;DR: This paper examined the long-term wage and earnings losses of displaced workers, using longitudinal data from the Panel Study of Income Dynamics, and found that the effects of displacement are quite persistent, with earnings and wages remaining approximately 9% below their expected levels 6 or more years after displacement.
Abstract: This article examines the long-term wage and earnings losses of displaced workers, using longitudinal data from the Panel Study of Income Dynamics. Consistent with previous research, I find that the effects of displacement are quite persistent, with earnings and wages remaining approximately 9% below their expected levels 6 or more years after displacement. I then show that much of this persistence can be explained by additional job losses in the years following an initial displacement. Workers who avoid additional displacements have earnings and wage losses of 1% and 4% 6 or more years after job loss.
649 citations
TL;DR: This article found that volunteers have high skills and opportunity costs of time, that standard labor supply explanations of volunteering account for only a minor part of volunteer behavior, and that many volunteer only when requested to do so.
Abstract: Volunteer activity is work performed without monetary recompense. This article shows that volunteering is a sizeable economic activity in the United States, that volunteers have high skills and opportunity costs of time, that standard labor supply explanations of volunteering account for only a minor part of volunteer behavior, and that many volunteer only when requested to do so. This suggests that volunteering is a "conscience good or activity"-something that people feel morally obligated to do when asked, but which they would just as soon let someone else do.
558 citations
TL;DR: This article examined the effect of Catholic secondary schooling on high school graduation rates, college graduation rates and future wages and found that the gains from Catholic schooling are modest for urban whites and negligible for suburban students.
Abstract: This article examines the effect of Catholic secondary schooling on high school graduation rates, college graduation rates, and future wages. The article introduces new measures of access to Catholic schools that serve as potential instruments for Catholic school attendance. Catholic secondary schools are geographically concentrated in urban areas, and Catholic schooling does increase educational attainment significantly among urban minorities. The gains from Catholic schooling are modest for urban whites and negligible for suburban students. Related analyses suggest that urban minorities benefit greatly from access to Catholic schooling primarily because the public schools available to them are quite poor.
443 citations
TL;DR: The authors analyzed how Mexico's trade liberalization (1985-87) affected employment and wages in indusry, focusing on how it affected average employment and earnings rather than on the link between trade and relative wages.
Abstract: In 1985, after decades of an import-substitution industrial strategy, Mexico initiated a radical liberalization of its external sector. Between 1985 and 1988, import licensing requirements were scaled back to a quarter of earlier levels, reference prices were removed, and tariff rates on most products were substantially reduced. By 1989, Mexico was one of the most open economies in the developing world. Adjusting to trade liberalization required the reallocation of resources between sectors and entailed substantial dislocation of workers. The author analyzes how Mexico's trade liberalization (1985-87) affected employment and wages in indusry, focusing on how it affected average employment and earnings rather than on the link between trade and relative wages. She examines the tradeoff between wage and employment adjustment, identifies which labor groups benefited more from liberalization, and tries to associate changes in employment and wages directly with measures of change in trade protection, rather than link them to changes in imports and exports (which is more common). The author also finds that reductions in quota coverage and tariff levels are associated with moderate reductions in firm-level employment. A 10-point reduction in tariff levels (between 1985 and 1990) is associated with a 2- to 3- percent decline in employment in Mexico. Changes in quota average appear to have no discernible effect on wages, but reduction in tariff levels are associated with increases in average wages. This seems to reflect improved productivity in the reformed industries, which may be related to a shift toward the use of more skilled workers. There seems to have been a slight shift in the skill mix in favor of nonproduction workers. This was paralleled by a sharper increase in the wage differential between skilled and unskilled workers. The wages and employment of skilled production workers were significantly more responsive to changes in protection levels than those of nonproduction workers - perhaps partly because production workers were more heavily concentrated in the industries in which protection levels were greatly reduced.
437 citations
TL;DR: It is found that an unexpected increase in the husband's earning capacity reduces the divorce hazard, while an unexpected rise in the wife's earnings capacity raises the divorcehazard.
Abstract: "This article investigates the role of surprises in marital dissolution [in the United States]. Surprises consists of changes in the predicted earning capacity of either spouse. Data from the National Longitudinal Study of the High School Class of 1972 is used. We find that an unexpected increase in the husband's earning capacity reduces the divorce hazard, while an unexpected increase in the wife's earning capacity raises the divorce hazard. Couples sort into marriage according to characteristics that are likely to enhance the stability of the marriage. The divorce hazard is initially increasing with the duration of marriage, and the presence of children and high levels of property stabilizes the marriage."
421 citations
TL;DR: This paper used British firm-level panel data on actual innovative activity drawn from different statistical sources to identify the effect of technical change on jobs and found that even when one controls for fixed effects, dynamics, and endogeneity, innovations have a positive and significant effect on employment, which persists over several years.
Abstract: This article uses British firm-level panel data on actual innovative activity drawn from different statistical sources to identify the effect of technical change on jobs. Previous work tends to find positive associations of proxies for technical change and employment, but such studies suffer from various statistical drawbacks. In this study, even when one controls for fixed effects, dynamics, and endogeneity, innovations have a positive and significant effect on employment, which persists over several years. There seems to be little direct role for spillover effects from industry innovations, or any role for industry wages or union power.
409 citations
TL;DR: The authors compare the profile heterogeneity model of earnings dynamics, in which the earnings/experience profile varies across individuals, to a competing model in which earnings "has a unit root." The latter specification enjoys increasing popularity among researchers.
Abstract: Using U.S. panel data on adult males, I compare the "profile heterogeneity model" of earnings dynamics, in which the earnings/experience profile varies across individuals, to a competing model in which earnings "has a unit root." The latter specification enjoys increasing popularity among researchers. My analysis questions this favor, suggesting the profile heterogeneity model provides a more consistent representation of the data. I also provide new estimates of the variation in earnings growth rates. Previous evidence is from relatively unrepresentative samples. Individuals one standard deviation above the mean enjoy a 20%-30% earnings advantage in just 10 years.
360 citations
TL;DR: This paper examined the impact of recent trade reforms on employment in the private sector and found that although labor markets were flexible, many firms cut profit margins and raised productivity rather than reducing employment.
Abstract: We examine the impact of recent trade reforms. Although employment in the average private sector manufacturing firm was unaffected, there were significant employment losses to exporters and highly affected firms. Parastatals increased employment by hiring low‐paid temporary workers. Many firms did not adjust wages or employment. We examine two possible explanations. First, barriers to labor market mobility could have impeded adjustment. Second, we develop a model of labor demand which allows for imperfect competition and endogenous technological change. Our results suggest that although labor markets were flexible, many firms cut profit margins and raised productivity rather than reducing employment.
330 citations
TL;DR: This paper showed that changes in profitability are shown to feed through into long-run changes in wages, and these are not temporary wage effects and are not driven by the unionized workplaces in the data.
Abstract: A central question in labor economics and macroeconomics is whether the textbook competitive model provides an adequate representation of the labor market. Using longitudinal data on companies and establishments, this article suggests that it may not. As predicted by rent-sharing models of the labor market, changes in profitability are shown to feed through into long-run changes in wages. These are not temporary wage effects and are not driven by the unionized workplaces in the data. The article's estimates imply that, for rent-sharing reasons alone, Lester's "range" of wages is approximately 16%.
328 citations
TL;DR: In this article, an econometric analysis demonstrates that television ratings for NBA games are substantially higher when certain players (superstars) are involved Thus, these superstars are quite important for generating revenue, not only for their own teams but for other teams as well.
Abstract: An econometric analysis demonstrates that television ratings for NBA games are substantially higher when certain players (“superstars”) are involved Thus, these superstars are quite important for generating revenue, not only for their own teams but for other teams as well Using the econometric analysis and additional information on attendance and paraphernalia sales, we estimate the value of Michael Jordan to the other NBA teams to be approximately $53 million The positive externality superstars have on other teams can lead to an inefficient distribution of player talent We examine several league policies that might be used to address the externality
TL;DR: In this article, the authors provided new evidence on the incidence of payroll taxation by examining the experience of Chile before and after the privatization of its Social Security system, which led to a sharp exogenous reduction in the payroll tax burden on Chilean firms; on average, payroll tax rates fell by 25% over 6 years.
Abstract: I provide new evidence on the incidence of payroll taxation by examining the experience of Chile before and after the privatization of its Social Security system. This policy change led to a sharp exogenous reduction in the payroll tax burden on Chilean firms; on average, payroll tax rates fell by 25% over 6 years. Using data from a census of manufacturing firms, I estimate that the incidence of payroll taxation is fully on wages, with no effect on employment. This finding is robust to a variety of empirical approaches to the problem of measurement error in firm‐level measures of taxes/worker.
TL;DR: For example, this paper found that the reward for taking male majors is larger for men than women in high school and college, and there is some evidence that men and women take significantly different courses.
Abstract: In high school and college, men and women take significantly different courses. Using data from the Survey of Income and Program Participation and the National Longitudinal Study class of 1972, we relate these differences in school content to sex differences in adult wages. Differences in field of highest degree account for a significant part of the male‐female wage gap among college graduates, but differences in coursework account for little of the equally large wage gap between men and women with less schooling. Among college graduates there is some evidence that the reward for taking male majors is larger for men.
TL;DR: In this paper, the authors evaluate the impact of minimum wages on the elasticity of low-paid unskilled employment with respect to minimum wages in both Mexico and Colombia during the 1980s.
Abstract: There are diverging views about how minimum wages affect labor markets in developing countries. Advocates of minimum wages hold that they redistribute resources in a welfare-enhancing way, and can thus reduce poverty, improve productivity, and foster growth. Opponents, on the other hand, contend that minimum wage interventions result in a misallocation of labor and lead to depressed wages in the very sectors - the rural and informal urban sectors - where most of the poor are found, with the effect of wasting resources and reducing the growth rate. Data from Colombia and Mexico for the 1980s provide an opportunity to evaluate the impact of minimum wages. In Mexico in the 1980s, the minimum wage fell in real terms roughly 45 percent. By 1990, Mexico's minimum wage was about 13 percent of the average unskilled manufacturing wage. During the same period, the minimum wage in Colombia increased at nearly the same rate, reaching roughly 53 percent of the average unskilled wage. The author charts how the mandated minimum wage affected the demand for skilled and unskilled labor in both countries during that decade. Findings are as follows. In Mexico, minimum wages have had virtually no effect on wages or employment in the formal sector. The main reason: the minimum wage is not an effective wage for most firms or workers. In the informal sector, in turn, there is considerable noncompliance with the mandated minimum wage, especially among part-time and female workers. As a result, significant numbers of workers are paid at or below minimum wages. In Colombia, minimum wages have a much stronger impact on wages, judging from their proximity to the average wage and both cross-section and time series estimates. The estimates imply that the elasticity of low-paid unskilled employment with respect to minimum wages is in the range of 2 to 12 percent.
TL;DR: Using the March Current Population Surveys and the 1960 census, the authors describes earnings and employment changes for married couples in different types of households stratified by the husband's hourly wage.
Abstract: Using the March Current Population Surveys and the 1960 census, this article describes earnings and employment changes for married couples in different types of households stratified by the husband's hourly wage. While declines in male employment and earnings have been greatest for low-wage men, employment and earnings gains have been largest for wives of middle- and high-wage men. These findings cast doubt on the notion that married women have increased their labor supply in the recent decades to compensate for the disappointing earnings growth of their husbands.
TL;DR: The authors compare various measures of on-the-job training, from a new source that matches establishments and workers, allowing them to compare the responses of employers and employees to identical training questions.
Abstract: This article compares various measures of on‐the‐job training, from a new source that matches establishments and workers, allowing us to compare the responses of employers and employees to identical training questions. Establishments report 25% more hours of training than do workers, although workers and establishments report similar incidence rates of training. Both establishment and worker measures agree that there is much more informal training than formal training. Further, informal training is measured about as accurately as formal training. Finally, we show that measurement error reduces substantially the observed effect of training, in particular the effect of training on productivity growth.
TL;DR: In this article, the authors investigate the role of peer pressure in influencing the optimal incentive scheme offered to workers engaged in team production and develop an agency model of peer policing to identify factors that affect the extent of mutual monitoring.
Abstract: We investigate the role of peer pressure in influencing the optimal incentive scheme offered to workers engaged in team production. We develop an agency model of peer policing to identify factors that affect the extent of mutual monitoring. As the principal must compensate workers for their monitoring efforts and the costs that peer pressure imposes on workers, introducing peer pressure alters the optimal compensation package. We establish conditions under which the principal reduces the marginal compensation rule to reduce monitoring efforts. As such, peer pressure provides a rationale for a reduced link between compensation and output in a team setting.
TL;DR: This article found that the elimination of compulsory French instruction led to a substantial reduction in the returns to schooling for Moroccans affected by the change, which was largely attributable to a loss of French writing skills.
Abstract: Until 1983, the language of instruction for most subjects in grades 6 and above in Moroccan public schools was French. Beginning in 1983, the language of instruction for new cohorts of Moroccan sixth graders was switched to Arabic. We use this policy change to estimate the effect of French language skills on test scores and earnings. The estimates suggest that the elimination of compulsory French instruction led to a substantial reduction in the returns to schooling for Moroccans affected by the change. This reduction appears to be largely attributable to a loss of French writing skills.
TL;DR: Ben-Porath as mentioned in this paper reviewed the literature on the relationship of economic growth to the education levels of the labor force and the importance of personal human capital created by investments in reputation and personal relationships.
Abstract: This article reviews the literature on the relationship of economic growth to the education levels of the labor force. The emphasis is on Yoram Ben-Porath's contribution to some of the issues in this field: the endogeneity of schooling, the role of the public sector as an "absorber" of educated labor, and the importance of personal human capital created by investments in reputation and personal relationships, the F-connection
TL;DR: The authors used a general equilibrium search framework to examine the role of gender differences in labor market behavior patterns (e.g., quit rates for personal reasons) in determining gender wage differentials.
Abstract: A general equilibrium search framework is used to examine the role of gender differences in labor market behavior patterns (e.g., quit rates for personal reasons) in determining gender wage differentials. For samples of high school and college graduates from the National Longitudinal Survey of Youth (NLSY), these behavioral patterns are found to be significantly different across the sexes and account for 20%–30% of the wage differentials. In particular, they play a key role in explaining the male‐female wage differential that remains after controlling for the gender composition across occupations.
TL;DR: This article examined the temporal evolution of job retention rates in U.S. labor markets, using data assembled from the sequence of Current Population Survey job tenure supplements, and found that aggregate job retention rate has remained stable.
Abstract: Two key attributes of a job are its wage and its duration. Much has been made of changes in the wage distribution in the 1980s, but little attention has been given to job durations since Hall. We fill this void by examining the temporal evolution of job retention rates in U.S. labor markets, using data assembled from the sequence of Current Population Survey job tenure supplements. There have been relative declines in job stability for some of the groups that experienced the sharpest declines in relative wages. However, we find that aggregate job retention rates have remained stable.
TL;DR: The effects of welfare payments, wages, and unemployment on women's probability of interstate migration are investigated and ethnic‐specific analyses suggest differences in migration behavior among Anglos, African‐Americans, and Puerto Ricans.
Abstract: "This article investigates the effects of welfare payments, wages, and unemployment on women's probability of interstate migration [in the United States]. It also investigates if the income attraction of locations varies with recency of labor market experience. Welfare gains increase the probability of interstate migration. Welfare effects are largest for single mothers with small children and stronger among women with no recent labor market experience. The welfare effects, albeit small, are larger than the wage effects. The wage effects are weaker among women with no recent work experience. Ethnic-specific analyses suggest differences in migration behavior among Anglos, African-Americans, and Puerto Ricans."
TL;DR: In this paper, gender differentials in professional status attainment are analyzed using data from the Austrian microcensus and find that neither the risk of childbearing nor different productive characteristics can explain the crowding of females in lower hierarchical positions.
Abstract: In this study gender differentials in professional status attainment are analyzed. In the theoretical literature, unequal treatment of females is often rationalized by their higher probability of quitting. To test this hypothesis empirically we use data from the Austrian microcensus and find that neither the risk of childbearing nor different productive characteristics can explain the crowding of females in lower hierarchical positions. Females have to fulfill higher ability standards to be promoted; work experience is not rewarded in the same manner as it is for men.
TL;DR: In this article, the authors studied the role of women's time in elementary and secondary education and found that the dramatic increase in direct costs of education per student in the past three decades is empirically linked to increasing demand and utilization of teacher and staff inputs, attributable to growing market opportunities for women and changes in the structure of families.
Abstract: Rapidly growing costs of elementary and secondary education are studied in the context of the rising value of women's time. The dramatic increase in direct costs of education per student in the past 3 decades is empirically linked to increasing demand and utilization of teacher and staff inputs, attributable to growing market opportunities for women and changes in the structure of families. On the supply side, the "flexibility option" that female teachers who take temporary leaves do not suffer subsequent wage loss upon reentry, is shown to be an important attraction of the teaching profession to women.
TL;DR: In this paper, the authors examine the empirical validity and some implications of Ben-Porath's insights and show that over the working age capacity wages decline before observed wages do.
Abstract: In this work I enquire into the empirical validity and some implications of Yoram Ben-Porath's insights. Section II answers the question, Are the shapes and magnitudes of growth in wage profiles largely attributable to human capital investments? Section III tests the proposition that over the working age capacity wages decline before observed wages do. Implied timing of labor supply provides the test. In Section IV implications are drawn from Ben-Porath's model for interpersonal differences and for the correlation between schooling and training.
TL;DR: In this article, the authors estimate employer-specific wage, tenure, and wage growth differentials using a unique Bureau of Labor Statistics establishment survey of full-time, white-collar workers.
Abstract: We estimate employer-specific wage, tenure, and wage growth differentials using a unique Bureau of Labor Statistics establishment survey of full-time, white-collar workers. Employer wage and tenure differentials, conditional on worker characteristics, are substantial in these data. Education, potential experience, and tenure are highly correlated within an establishment. High-wage establishments generally employ higher quality workers, and the most skilled men and professionals typically work with the most skilled women and nonprofessionals. There is significant variation in wage growth rates across employers, and high wage growth establishments tend to have longer tenure, all else equal.
TL;DR: In this article, the authors show that the mean percentile rank of low-wage groups will rise simply because more dispersed distributions have thicker tails, which is consistent with the observed stability of gender and racial wage gaps.
Abstract: The decomposition of wage residuals into standard deviation and percentile ranks can be misleading because the two measures are not necessarily independent. With rising wage inequality, the mean percentile rank of low‐wage groups will rise simply because more dispersed distributions have thicker tails. This interpretation is consistent with the observed stability of gender and racial wage gaps. In contrast, the unmeasured skill interpretation of wage residuals would predict widening wage gaps in the face of rising wage inequality, unless one posits an increase in the level of unobserved skill for women and blacks.
Abstract: It is a great honor to stand here before you-the first lunch speaker at the first conference of the Society of Labor Economists. If I come here with mixed feelings, it is only because the original speaker, Jacob Mincer, could not be here with us. There are few people whose name is more closely associated with our discipline than Jacob Mincer. We owe him a debt of gratitude for his pathbreaking contributions on the investment in human capital, the distribution of earnings, married women's supply of labor, mobility and the economics of migration-topics which have become (to a large degree because of his contribution) central themes of the \"new\" labor economics. But no less important is his contribution to the methodology-the close link between theory and empirical research, the respect for data, the recognition of the limitations of our empirical tools-features that have become the hallmarks of our profession. The SOLE conference signifies the coming of age of our discipline. The regular sessions point towards the new frontier to be conquered, and it is only appropriate that this lunch address be devoted to some stock taking. I will focus on my own area of specialization-the theory of home production and the allocation of time. Jacob Mincer's paper on the value of time at home was published in 1963. Gary Becker's seminal paper (1965) is by now 31 years old and is widely recognized as one of the new labor economics' major contributions. Time constraints prevent me from doing justice to the topic in 20 minutes. Fortunately, I summarized the history of the first 20 years in my Handbook of Labor Economics survey (1986), so that I can concentrate on the last decade. My 1986 survey had five sections: the theory, the allocation of time, the allocation of goods, the value of time, and the value of home production. I
TL;DR: In this paper, the authors estimate a function that matches vacant jobs and unemployed workers to produce new hires and show that reducing the hiring rate of referrals can explain a 2.1 percentage point increase in unemployment between 1978 and 1990.
Abstract: I estimate a function that matches vacant jobs and unemployed workers to produce new hires. Israeli law requiring vacancy registration yields unique data quality. The literature underestimates matching function coefficients because of a simultaneity bias, as the outflow of hires depletes stocks of unemployed and vacancies. Instruments and a new simulation method address this bias. A new test reveals strong evidence of heterogeneity in unemployed and vacancies. Estimates imply labor market dynamics that absorb shocks completely within only 2 months. Reductions in the hire rate of referrals can explain a 2.1 percentage point increase in unemployment between 1978 and 1990.
TL;DR: Bell et al. as discussed by the authors argue that labor market regulations are necessary to protect the rights of workers and to improve working conditions and point out that most regulations discourage firms from hiring workers and thus have the unintended consequence of harming the very people they are designed to protect.
Abstract: The gap between rich and poor countries has grown over the past century. A hundred years ago, the wealthiest country was 11 times richer ( in per capita income) than the poorest country. By 1985, the ratio of wealth of the richest to the poorest country had grown from 11 to 50. This increase in inequality is a distressing outcome for a globe that seems smaller every day; it is particularly distressing for countries that form the denominator of that wealth ratio. Is this likely to get worse? What can be done to raise the income levels of the poorest countries? Policy prescriptions for the poorest nations are often contradictory. Although providing more employment should alleviate poverty, there is no clear consensus regarding the best policies for expanding employment opportunities in developing countries. Some argue that labor market regulations are necessary to protect the rights of workers and to improve working conditions. Others point out that most regulations discourage firms from hiring workers and thus have the unintended consequence of harming the very people they are designed to protect. Moreover, in developing countries, massive noncompliance is the norm, and regulations like a national minimum wage could simply encourage the expansion of an informal market, where wages are even lower and working conditions even worse. The papers in this issue focus on two issues. The studies by Bell,