Showing papers on "Earnings published in 1976"

Corporate forecasts of earnings per share and stock-price behavior - empirical tests

Abstract: The disclosure of corporate forecasts of projected annual earnings was a topic of intensive debate within the investment community during the years 1970-75. Questions of accuracy, objectivity, independent certification, and investment utility were examined from a number of theoretic and pragmatic viewpoints.' Most of these inquiries appear to assume that an investor's beliefs and/or actions may be affected by the disclosure of a management forecast, and several explore the possible rewards and sanctions that a firm may experience as a result of forecast accuracy. The purpose of this study is to test the hypothesized information content of management forecasts through the examination of the common stock price behavior which accompanied the voluntary disclosure of 336 forecasts of annual earnings per share during the years 1963-67. The results reported here indicate that these forecast disclosures were accompanied by significant price adjustments, from which the inference may be drawn that either the data presented in a management forecast, the act of voluntary disclosure, or both, convey information to investors.

Dynamic Aspects of Earnings Mobility

Abstract: This paper proposes an econometric methodology to deal with life cycle earnings and mobility among discrete earnings classes. First, we use panel data on male log earnings to estimate an earnings function with permanent and serially correlated transitory components due to both measured and unmeasured variables. Assuming that the error components are normally distributed, we develop statements for the probability that an individual's earnings will fall into a particular but arbitrary time sequence of poverty states. Using these statements, we illustrate the implications of our earnings model for poverty dynamics and compare our approach to Markov chain models of income mobility.

A Theory of Life Earnings

Abstract: This paper summarizes an empirical investigation of lifetime earnings of U.S. male high school and college graduates based on the theory of optimum capital accumulation. Suppose we observe the lifetime earnings pattern for some individual. (i) What process generated it? (ii) What can be learned about the generating process from the age-experience observations themselves? These are the central questions raised by the theory of human capital, and a natural extension of familiar rate-of-return methods is applied in this work. In order to avoid the appearance of excessive product differentiation in the face of unfamiliar technical manipulations in what follows, it will be helpful to present a broad overview of the method. More than a decade ago, Becker (1962) and Mincer (1962b) showed how it may be possible to identify and estimate human capital investments from observations on life earnings patterns and estimates of rates of return on human capital investments. That approach simply is reversed in this work. I start with a specific form of the theory that in effect imposes restrictions on investment costs over working life. These imply other restrictions on observed earnings patterns and identify some parameters of the assumed underlying process. Embodied skill and knowledge (capital) and learning (investment) are treated as "latent," unobservable variables in this approach. The

Migration, Age, and Education

Abstract: The shape of the earnings-age function and the way education affects it can explain all the empirically observed relations of migration measures to distance moved, age, and education. No other assumptions (which are often made)--such as attributing lower risk aversion and higher efficiency of job search to more-educated persons, or higher psychic cost of moving to older persons--are needed. The individual's search for jobs and the firm's search for employees are affected by the shape of the earnings function--and, thus, by age and education in a predictable way. In turn, the observed systematic behavior of the migration measures with respect to age and education is responsive to the search behavior.

Sexual Inequalities and Socioeconomic Achievement in the U.S., 1962-1973.

Abstract: Intercohort shifts in mean education, occupational status and earnings for married persons in the experienced civilian labor forces of 1962 and 1973 represent socioeconomic improvements for both men and women. While the occupational and educational achievements of women have kept pace with men's and indeed exceed the male means, the ratio of female to male earnings has declined from 0.39 to 0.38 for persons in the ECLF. Causal models of the processes of socioeconomic achievement show men and women to be allocated to levels of education and occupational status in much the same manner. Women's achievements are somewhat less related to their family origins, especially farm origins, than are men's, and the net effect of educational attainment on occupational status is larger for women. Intercohort changes in the process of occupational achievement have affected both sexes and include an increase in the net occupational status benefit of an additional year of schooling and a decline in the occupational handicap of farm origins. Equality of economic opportunity for women has not followed from women's opportunities for schooling and occupational status. While the net returns to education have improved more noticeably for women than men, the inter-temporal increases in returns to occupational status have benefited only men. Sexual "discrimination" accounts for 85% of the earnings gap in 1962 and 84% in 1973.

Three-and-a-Half Million U.S. Employees Have Been Mislaid: Or, an Explanation of Unemployment, 1934-1941

Abstract: A major conceptual error in the standard BLS and Lebergott unemployment estimates for 1930-43 is reported. Emergency workers (employees of government contracyclical programs such as WPA) were counted as unemployed on a normal-jobs-to-be-created instead of job-seekers unemployment definition. For 1933-41, the corrected unemployment levels are reduced by 2-3.5 million people and the rates by 4-7 percentage points. The corrected data show strong movement toward the natural unemployment rate after 1933 and are very well explained by an anticipations-search model using annual full-time earnings.

Black-White Male Wage Ratios: 1960-1970.

Abstract: : There are two sections to this paper. The first summarizes relative black-white earnings and wage ratios by schooling class and estimated time out of school (work experience) for both 1960 and 1970. The second presents a partial accounting giving order-of-magnitude estimates of import for some sources of black-white income differences as of 1970 and of changes between 1960 and 1970.

Predicting Earnings with Sub-Entity Data: Some Further Evidence

Abstract: In a prior article appearing in this journal, Kinney [1971] presents some preliminary evidence concerning the relative predictive ability of segment versus consolidated data in estimating future total-entity earnings of diversified companies. His study was motivated by the continuing debate about whether segment revenue and profitability figures are useful in assessing the future earnings prospects of multiproduct firms. There is some basis for questioning the reliability and usefulness of such data due to the inconsistencies across firms in defining segments, differences in intersegment transfer pricing policies, and many arbitrary cost allocations. Analyzing twenty-six firms that disclosed segment revenue and profit data in their annual reports, Kinney found that segment-based predictions of 1968 and 1969 consolidated earnings had significantly smaller average absolute prediction errors than did predictions based on historical consolidated earnings figures. In summarizing his findings, however, Kinney warned against generalizing the results to the total population of multisegment firms since his sample was limited to a relatively small group of companies that voluntarily disclosed segment data. He cautions that there may be some characteristic peculiar to the reporting firms which explains their willingness to disclose voluntarily their segments' earnings. The generality of Kinney's findings is also limited by the fact that only two forecasting procedures were employed in conjunction with the consolidated data. These models were chosen with no explicit reference to empirical research concerning the time series properties of accounting income (Beaver [1970], and Ball and Watts [1972]). Market-association studies (Ball and

Estimating the Effect of Training Programs on Earnings with Longitudinal Data

Abstract: GOVERNMENTAL post-schooling training programs have become a permanent fixture of the U.S. economy in the last decade. These programs are typically advocated for diverse reasons: (1) to reduce inflation by the provision of more skilled workers to alleviate shortages, (2) to reduce unemployment of certain groups, and (3) to reduce poverty by increasing the skills of certain groups. All of these objectives require that training programs increase the earnings of trainees above what they otherwise would be. For example, alleviating shortages by training more highly skilled workers should increase the earnings of these workers. Likewise, the concern for unemployed workers is derived from a concern for the decreased earnings of these workers; and if trainees subsequently suffer less unemployment, their earnings should be higher. Finally, training programs are intended to reduce poverty by increasing the earnings of low income workers. Evaluating the success of training programs is thus inherently a quantitative assessment of the effect of training on trainee earnings.' It is an important process both because it helps to inform discussions of public policy by shedding light on the past value of these programs as investments and because it can provide a means of testing our ability to augment the human capital of certain workers. Although there have been many studies of the effect of post-school classroom training on earnings it is by now rather widely agreed that very little is reliably known about the actual effects of these programs.2 Three main problems account for this state of affairs: (1) the large sample sizes required to detect relatively small anticipated program effects in a variable with such high variance as earnings, (2) the considerable expense required to keep track of trainees over a long enough period of time to measure the full inter-temporal impact of training, and (3) the extreme difficulty of implementing an adequate experimental design so as to obtain a group against which to reliably compare trainees.3 The purpose of this paper is to report on efforts to cope with this third problem using a data collection system that comes some way towards resolving the first two. The basic idea of this data system is to match the program record on each trainee with the trainee's Social Security earnings history. The Social Security Administration maintains a summary year-by-year earnings history for each Social Security account over the period since 1950 that may be used, under the appropriate confidentiality restrictions, for this purpose.4 In this paper I have concentrated on an analysis of all classroom trainees who started training under the Manpower Development and Training Act (MDTA) in the first 3 months of 1964 so as to ensure their having completed training in that year. In choosing to analyze trainees from so early a cohort something is clearly lost. On the one hand, the nature of the participants in these early years was considerably different than in the later years. In particular, programs geared Received for publication February 9, 1977. Revision accepted for publication August 1, 1977. * Princeton University. This research was supported by ASPER, U.S. Department of Labor, but does not represent an official position of the Department of Labor, its agencies, or staff. I would like to thank Gregory Chow, Ronald Ehrenberg, Roger Gordon, Zvi Griliches, George E. Johnson, Nicholas Kiefer, Richard Quandt, and Sherwin Rosen for helpful comments. I also owe a heavy debt to D. Alton Smith for computational and other assistance. 'See Reid (1976), for example, for a clear analysis of how knowledge of these effects is required in order to establish the impact of government training on the black/white wage differential. 2 Surveys of many of these studies may be found in Stromsdorfer (1972) and O'Neill (1973). 3For further discussion of these points see Ashenfelter (1975). 4The idea for using these data to analyze the effectiveness of government training programs is apparently quite an old one, having been suggested by the National Manpower Advisory Committee (U.S. Department of Labor, 1972) to the Secretary of Labor at its first meeting in a letter dated October 10, 1962, the year of passage of the Manpower Development and Training Act. Actual efforts along these lines were ultimately reported by Borus (1967), Commins (1970), Farber (1970), and Prescott and Cooley (1972).

Earnings Functions and Nonpecuniary Benefits

Abstract: Past empirical studies of earnings functions have used only pecuniary earnings measures. In this article, pecuniary, fringe, and certain nonpecuniary benefits are treated as additive components of a more comprehensive measure of labor market reward. The implications of including these additional benefits for estimates of earnings functions are assessed with two national sample data sets. It is found that the explanatory power of the simple human capital earnings model increases as the nonwage variables are added into the earnings measure. The importance of education clearly increases when fringe and nonpecuniary benefits are added; the change in the association between labor market experience and earnings is small. The increased importance of education is sustained even when measures of cognitive skills, motivation, and family background are taken into account.

The Impact of Dividend and Earnings Announcements: A Reconciliation

Abstract: Two extensive empirical studies have recently attempted to measure the impact of dividends on stock prices. One was a study by Watts' in the Journal of Business which concluded that "there is little potential information in dividends." The second was an earlier article by Pettit2 which found that "market participants make considerable use of the information implicit in announcements of changes in dividend payments." Because of the diametrically opposite conclusions of these studies, and the resulting ambiguity in the size of the dividend effect, the questions raised merit further examination. To this end this note will evaluate the basis for the divergent findings. It should be kept in mind that the original rationale for the conveyance of information through dividend announcements was that reported earnings may not be an accurate reflection of real earnings since they are subject to random nonrecurring factors that cannot be specifically and exactly identified by the investing public. Since management may have greater insight than the rest of the market as to the level of present and future earning power, they may use dividend payments as the medium through which their expectations are conveyed. Ultimately, of course, it is an empirical question as to whether dividends convey new information over and above that conveyed by published earnings. After briefly summarizing the methodology used in the two studies in Section II, Section III explores for the potential differences in each and offers some empirical evidence to reconcile the differential results.

Racial Discrimination and White Gain.

Abstract: The question of whether or not whites gain economically from economic discrimination against third world people is examined with evidence from the 1970 U.S. census. The impact of racial discrimination is measured by the percentage of the population of third world origin in each state and by the ratio of black to white male earnings for those who work full time. White gain is measured by the level of white male earnings in each state and the Gini coefficient of earnings inequality among white males. If whites gain economically from racism, we would expect to find that the greater the percentage of the population of a state that is third world and the lower the ratio of black/white earnings then the higher the level of white earnings and the less the inequality in white earnings. The basic relationships were examined controlling for percentage of the population that is urban, percentage of the economically active population in manufacturing, level of personal income, region and percentage of the population that is third world. It is found that whites do not gain from economic discrimination; on the contrary, white working people actually lose economically from such discrimination. It is argued that racism is a divisive force which undermines the economic and political strength of working people and acts to worsen the economic position of white workers in the most racist areas. In support of this interpretation, data on the strength of unions is examined.

The Effect of Unions on Earnings and Earnings on Unions: A Mixed Logit Approach

Abstract: A LARGE NUMBER OF STUDIES have attempted to quantify the impact of unions on the wages or earnings of workers. See, for example, Lewis [9] or Ashenfelter and Johnson [1] for critical summaries of many of these studies. Several different research methodologies have been employed to ascertain the extent to which unions have raised relative wages. Empirically, time series and cross-sectional data at the firm, industry and economy-wide level have been examined. Theoretically, most of the analyses have been partial equilibrium in nature, although the recent papers by Johnson and Mieszkowski [7] and Diewert [4] investigate the impact of unionism in a general equilibrium setting. Virtually all of these studies have found a positive, significant effect of unions on wages, although there is considerable variation in the estimated size of the effect. Common to all of these studies is the assumption that unionism exerts a unilateral and exogenous effect on wages. Unfortunately, the interesting issue of the determinants of union membership has been relatively unresearched, and by and large the matter of membership remains unrelated to the effects of unionism on wages. This is at least potentially a serious matter since it seems clear that there may be an effect of wages on unionism as well as an effect of unionism on wages. This may occur because relative wages affect the attractiveness of various industries to a potential union organizer, or because they may affect the probability of a worker voting for a union in a representation election. That relative wages may affect the probability or extent of unionization has been previously noted-see, for example, Reder [12] and Wachter [20]. From a statistical point of view, this would imply that union membership, or extent of unionization, would more properly be viewed as jointly or simultaneously determined with wages, rather than being treated as exogenous. Nevertheless, most studies of the effects of unions on wages or earnings have treated unionization as exogenous. A notable exception in this regard is the recent work of Ashenfelter and Johnson [1], which examined at the industry level the effect of unionization on wages and the effect of wages on unionization. In this paper we perform a similar analysis, except using individual observations. The two endogenous variables

Intergenerational Transmission of Income and Wealth

Abstract: Parents can transmit income and wealth to their offspring directly through bequests and gifts of financial assets. Parents can augment a child's skills and traits through the provision of, for example, education, diet and doctors. Biological parents also supply the genetic endowments which provide skills useful in the labor market. Although practically a virgin territory, it is important to estimate the effects of genetic endowments and common (mostly family) environment on earnings and on other indices of individual attainment in order to gauge the effectiveness of programs designed to improve equality of opportunity. Also if genetics and common environment are not controlled for, biased estimates of regression coefficients of observable variables, such as years of education, often are obtained.

Earnings, education, genetics, and environment.

Abstract: A major and well-recognized difficulty in estimating the effects of education on earnings is that the more educated are likely to be more able, irrespective of education. If ability also determines earnings and is not controlled, ordinary least squares will yield biased estimates of the education coefficient. In this study, we use data on identical twins to control for differences in ability that arise from genetic endowments and family environment. Not controlling for genetics and family environment may cause a large bias, up to two-thirds of the noncontrolled coefficient.

Schooling and Income Distribution.

Abstract: ONE question that arises following recent I attempts to introduce economic theory in explaining income distribution is to what extent schooling can be used as a policy instrument to promote equality in our society. Although the link between the size of individual earnings and education has been rather well established, the change in the distribution of income among individuals resulting from a change in the level of schooling is not yet settled. In this paper we elaborate on the relationship between schooling and income distribution based on human capital theory. In order to answer the question we need an expression relating a measure of income distribution to a measure of education. It would be convenient in this respect to start from the work of what we will call the Becker-MincerChiswick (B-M-C) group,1 as perhaps the best known of those providing such an expression. In their work the level of earnings (Y) of an individual with S years of schooling is determined by an earnings generating function of the form

Information, Screening and Human Capital

Abstract: Given the large and growing body of research into the nature and extent of human investment decisions, it is somewhat surprising that until the recent work of Michael Spence and Joseph Stiglitz there has been little discussion of the information transmission process. Certainly in all the theoretical modeling of human capital accumulation it has been implicitly assumed that throughout the life cycle employers are aware of each individual's marginal value product.' That is, "traditional" human capital theory has included the assumption that information costs are negligible. However, it is by no means clear that a firm can evaluate cheaply the productivity of an individual worker, especially when the nature of the job is nonspecific (e.g., the management trainee). Plausibly information about an individual's value often unfolds only slowly with time on the job. Plausibly also, the costs associated with placing an individual in a job for which he is ill-suited are far from negligible. If so, firms have a strong incentive to offer salary contracts in which earnings are contingent upon long-run performance. But such offers will only be completely successful in screening out the less productive if job seekers are either risk neutral, or have very tight prior probabilistic beliefs about their own lifetime productivity levels. Since it seems reasonable to reject both assumptions, contingent contracting of this type seems likely to be severely restricted. An extension of this argument, emphasized by Stiglitz, suggests that firms are unlikely to incur large expenditures for on-the-job evaluations of their employees' potential. First of all, risk aversion makes job seekers unwilling to bear these costs in the form of considerably lower initial salaries. Secondly, the possibility of raids by other firms makes each firm unwilling to itself bear the costs of identifying top talent. The question then arises as to whether firms might exploit information about an individual's general educational achievements at school and college in attempting to predict productivity on the job. Taking this to the extreme, might firms make initial job offers based entirely upon educational credentials which on average succeed in attracting workers of the desired productivity level? The key element in answering this question is the manner in which marginal costs of education vary across individuals. With everyone staying in school until the marginal increase in earnings resulting from additional education is just offset by marginal costs, those whose costs are lower will plan to accumulate higher credentials. Then if the marginal cost of an additional unit of education is highly negatively correlated with productivity on the job, it will be the more skilled individuals who accumulate more education. But it is surely reasonable to argue that the more productive workers are also, on average, the faster learners hence those with lower opportunity costs. Intuitively then, it seems qute possible that educational screening by firms might result in * University of California, Los Angeles. The helpful comments of Sherwin Rosen, Michael Darby, Dennis de Tray, Jack Marshall and Finis Welch are gratefully acknowledged. 1For a brief summary of recent theoretical and empirical advances, see F. Welch.

Wages of Very Young Men

Abstract: Over the past decade there has been much interest in and a large amount of work done on estimating the economic returns to formal schooling and on trying to untangle such returns from the contributions of native ability, family background, discrimination, and nepotism. The rather large literature that has emerged has been discussed and surveyed by a number of authors (Jencks 1972; Welch 1975; Griliches 1975a; Rosen 1975; among others). Different methodologies and different sets of data have produced very little agreement. It is not the purpose of this paper to review and revive all the debates again. Instead, it will attempt to replicate the results of an earlier study of "Education, Income, and Ability" (Griliches and Mason 1972) on a new set of data, the National Longitudinal Survey of Young Men, focusing on the estimation of the economic returns to schooling in the presence of individual differences in ability. The NLS data base is of interest because it is the most representative data set combining information on earnings, schooling, and measures of ability. It contains data on two measures of ability: IQ scores collected from the high schools attended by the respondents and scores on a test of "knowledge of the world of work" (KWW) administered at the time of the initial interview in 1966. Data were also collected on parental background, wage rates (rather than just total income or earnings), and work experience. These data are also of interest because of the availability of repeated observations on the same individuals and the ability to match family members across surveys. I shall not pursue, however, the last two

The Allocation of Time of Israeli Women

Abstract: The wife's time is like an iceberg: we have plenty of information about the visible tip, the time she spends in the market, but almost none about the submerged part spent at home. The last few decades have witnessed in the Western world a major change in the relative importance of the two parts, with more and more women joining the labor force. This change has implications far beyond the immediate effect on the labor market, affecting marriage and divorce patterns, fertility, and education of children (to name just a few). Not surprisingly, economists have made a large effort to explain the market behavior of married women, that is, their patterns of participation, the number of hours worked, the determinants of wives' earnings, their occupational choice, and the male-female wage differential. However, very little has been done to analyze the reallocation of time within the home sector, a reallocation which may have an impact on the well-being of the family that is not less important than the change in the woman's working habits.' There exist only scanty data on the changes taking place within the household over time. In the absence of such time-series data, it is useful to examine the cross-section evidence and analyze the factors determining the family's allocation of time at a given point of time.

The Effect on Earnings of School and College Investment Expenditures.

Abstract: T is widely acknowledged that time spent in school is an important determinant of earnings. There is less agreement about the effects of expenditures per year of schooling on earnings. Most studies of the returns to schooling consider only the extensiveness (time in school) and not the intensiveness (resources invested per year) of investments.' If schools are efficient users of resources, then intensiveness of investment can be called the quality of schooling.2 Several studies have examined the effects on earnings of school quality (see Morgan and Sirageldin, Johnson and Stafford, Wachtel, and Welch) and college quality (Solmon, Wachtel), but no one has examined the trade-off between the two. In this study I provide some strong additional evidence that expenditures at both the school and college level are important determinants of earnings and examine the relative importance of expenditures at each level. Our examination of school expenditures is based on the NBER-TH sample of World War II veterans whose socio-economic background and life cycle behavior have been followed through test data collected by the Army in 1943 and subsequent surveys by Thorndike and Hagen in 1955 and the National Bureau of Economic Research (NBER) in 1969. Among the extensive background data collected by the NBER was information on schools attended and levels attained. Earnings data were collected in both the 1955 and 1969 surveys. These data follow the respondents through a large part of their life cycles as the mean age in 1969 was 47. The respondents chosen for the initial sample were all volunteers for Army pilot or navigator training qualification tests in 1943. Thus, the sample is all male and probably all white and is also drawn from the top half of the population intelligence distribution. Thus, it is not surprising that they attained high levels of education and earnings in the postwar period. School expenditure data for the pre-college level are difficult to obtain. Most previous studies have used state-wide average data which obscure a great deal of the variation in expenditures. Data for individual school districts are available but are incomplete. These data are used even though we are forced to reduce the potential size of the sample.3 About 85 % of the respondents who attended college provided the names of the colleges, which were matched with expenditure data. The sample size for the model estimated is 1,633. The availability of school expenditure data accounts for most of the reduction from an initial sample of 5,084 NBER-TH respondents. The sample was made more homogeneous by eliminating those in poor health in 1969, those with zero or nominal earnings or real earnings in excess of $75,000 in 1955 or 1969, and airplane pilots. An earnings function similar to many estimated before (see, for example, Griliches and Mason) is used to examine the effect of school expenditures. It includes background measures, labor force experience variables, as well as measures of the extensiveness and intensiveness of Received for publication August 16, 1974. Revision accepted for publication July 21, 1975. *This research has been supported by NIE Grant No. OEG 2-71-04798. The author is grateful to Moshe Ben Horim for research assistance. This paper has not undergone the National Bureau of Economic Research review procedures. 1 The terminology is introduced by Leibowitz. Estimates of the rate of return to investments in higher education which measure both theextensive and intensive costs are found in Leibowitz (1974) and Wachtel (1975). 2Although the profit motive is absent, there are incentives for the efficient use of resources by school administrators that suggest that expenditure levels are a reasonable quality index. A related problem is that expenditure differences reflect regional or other variations in the cost of inputs and not differences in the amount of resources used. This is true for some inputs (e.g., land on which schools are built) but it is not true for most resources. 3 About 80% of the respondents to the 1969 survey provided the name and location of their high school. About half of these responses could be matched with available data on expenditures by school district. Missing data are due to incomplete information provided by the respondents and incomplete data available from the Office of Education. In addition, no data were available for those who attended private high schools, some 8% of the sample.

Experience, Vintage and Time Effects in the Growth of Earnings: AmericanScientists, 1960-1970

Abstract: This paper is concerned with the growth of individual earnings over time Four aspects of time are distinguished: experience, age, vintage and calendar year The first section of the paper provides a brief outline of a theory of planned growth in earnings The second and main section of the paper is devoted to an empirical attempt to estimate the role of experience, vintage and age on the growth in earnings and to separate these effects from exogenous changes in market conditions We present a detailed specification of the earnings function which accounts for the inherent multi-collinearity between variables such as time, vintage and experience One of our main objectives is to point out the implications of this identification problem for the analysis of earnings data Though we cannot completely eliminate this difficulty, longitudinal data, which follows the same individuals over a period of time, allows us to identify more aspects of time than one could obtain from a single cross section We provide a descriptive analysis of the exogenous changes in market conditions occurring during the period No attempt is made to relate them to causal changes, such as past and expected future enrollment and government research grants We find two basic tendencies: (1) Over the decade as a whole, scientists in academic institutions enjoyed better market conditions and thus a higher growth rate than those employed in private industry (2) Toward the end of the decade, there is a marked reduction in the market's contribution to the growth rate In some fields, such as physics, we note an actual reduction in the real earnings of new entrants We conclude with a brief discussion of the changes in relative earnings over the decade by field and type of employer

Earnings Losses of Workers Displaced from Manufacturing Industries.

Abstract: : A particularly sensitive current policy issue is the effect of changes in tariffs and quotas on employment and earnings. This study examines empirically some of the effects of a permanent labor displacement which might result from changes in international trade policy. Specifically, it presents estimates of how job displacement would change the long-term earnings of workers in 11 industries, and relates the findings to industry characteristics so that they can be projected to industries not directly studied. This study was designed to assist in determining industries in which trade liberalization would impose large losses on workers. Results show that average prime age male workers suffer substantial losses of earnings in industries where the normal rate of labor turnover is low and prime age males make up a high percentage of the total labor force. These industries also tend to be high wage industries. Displacement from the auto and steel industries is estimated to reduce earnings over a 6 year period by about 24%, and by almost as much in several other high wage industries. The estimated loss in low wage industries was much smaller, averaging about 5%, in some cases, such as cotton weaving, no appreciable loss could be detected.

Health, Family Structure, and Labor Supply

Abstract: I consider the health, family structure, and labor supply inter-relationships at both a theoretical and empirical level. The paper is organized in the following way. SectionI introduces the material. In Section II, a theoretical model of family time allocation among market, home, and health activities is developed. The concept of a family health maintenance function is formalized to generate qualitative predictions of the effect of wages, health status, health care efficiency, and property income on the labor supply of husband and wife. In Section III, data from the older male portion of the National Longitudinal Surveys are used to estimate labor supply functions for married and single men with special attention to differences in poor health responses. A simultaneous model of male labor supply and other family income (chiefly transfer income and the earnings of the wife) is then estimated to determine whether variations in the work hours of males, largely due to health differences, induce any substantial changes in income producing activities by other family members. Finally, in Section IV the detailed time budget data on both males and females from the Productive Americans Survey are used to estimate more precisely the effect of health on total family time allocations. These data provide estimates of the impact of poor health on home production time as well as market time for both husband and wife.