Showing papers on "Earnings published in 1982"
TL;DR: An error structure that offers a rich statistical framework for panel data analysis is presented that includes as special cases most of the error specifications found in longitudinal studies of wages and earnings.
841 citations
TL;DR: The authors found that real wages at re-entry are lower than at the point of labor force withdrawal, and the decline in wages is greater, the longer the interruption, while immigrants eventually catch up with and often surpass natives, returnees from the nonmarket do not fully restore their earnings potential.
Abstract: The quantitative effects and even the existence of a "human capital depreciation" phenomenon have been a subject of controversy in the recent literature. Prior work, however, was largely cross-sectional and the longitudinal dimension, if any, was retrospective. Using longitudinal panel data (on married women in NLS) we have now established that real wages at reentry are, indeed, lower than at the point of labor force withdrawal, and the decline in wages is greater, the longer the interruption. Another striking finding is a relatively rapid growth in wages after the return to work. This rapid growth appears to reflect the restoration (or "repair") of previously eroded human capital. The phenomenon of "depreciation" and "restoration" is also visible in data for immigrants to the United States. However, while immigrants eventually catch up with and often surpass natives, returnees from the nonmarket do not fully restore their earnings potential.
740 citations
TL;DR: This article argued that the above result is only true in a limited sense, since a modest enlargement of the predictive information set should allow for a rejection of the hypothesis that earnings changes are unpredictable.
Abstract: Over the years, there has developed a fairly substantial body of research on the time series of earnings. As a whole, this literature concludes that changes in (annual) accounting earnings are unpredictable, that is, earnings follow a "random walk."1 Based on this result, some inferences of economic substance (policy) have been claimed.2 In this paper we reconsider empirical issues which, at least to some extent, have been obscured by this conclusion. We argue that the above result is only true in a limited sense, since a modest enlargement of the predictive information set should allow for a rejection of the hypothesis that earnings changes are
438 citations
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TL;DR: In this paper, the authors argue that an optimal transfer program in general must sacrifice productive efficiency to target efficiency, and that a program that incorporates restrictions such as means-tested in-kind transfers, commodity-specific taxes and subsidies, and even ordeals (i.e., the imposition of deadweight costs to qualify for a transfer) will perform better than programs that rely solely on income taxes and cash transfers.
Abstract: Our objective is to design transfer programs that maximize some social welfare function. Following the optimal income tax formulation, we assume that a random process endows individuals with characteristics that influence welfare, such as ability to earn income, medical condition, or unmonitorable income. The goal is to maximize the utility of a randomly chosen individual. (Other individualistic social welfare functions would lead to equivalent results.) If the random characteristics were observable, a first best outcome could be achieved by making them the basis for lump sum transfers. In practice, however, we can observe only indicators of these characteristics, such as earnings, medical expenditures, or consumption patterns. The challenge for policy is to design an efficient second best transfer program based on indicators. In this paper we argue that 1) An optimal transfer program in general must sacrifice productive efficiency to target efficiency. This is done by imposing restrictions on the choices made by intended beneficiaries. 2) A program that incorporates restrictions-such as means-tested in-kind transfers, commodity-specific taxes and subsidies, and even ordeals (i.e., the imposition of deadweight costs to qualify for a transfer)-will perform better than programs that rely solely on income taxes and cash transfers.
414 citations
TL;DR: This article showed that abnormal returns could have been earned almost any time during the 1970's and found that roughly 50% of the adjustment of stock returns to unexpected quarterly earnings occurs over a 90-day period after the earnings are announced.
318 citations
TL;DR: In this paper, the authors examined the relationship between the ownership control status of firms and the accounting methods they adopt and found that management controlled firms are more likely than owner controlled firms to adopt accounting methods which increase reported earnings.
289 citations
TL;DR: This article examined the effects of socioeconomic background on education and earnings of black and white men ages 23-32 and found that neighborhood differences are at least as important as family characteristics in explaining the gaps between black and whites achievement and that the omission of neighborhood characteristics results in a misleading picture of the source of background effects.
Abstract: N recent years, considerable attention has been devoted to understanding the causes of earnings differentials between blacks and whites. Conventional economic analysis of the issue has been divided into supply and demand factors. Demand side arguments point to differential returns to blacks and whites with the same level of market-valued characteristics as a principal cause of the lower earnings of blacks. Supply side arguments, on the other hand, focus on the quality and quantity of the market-valued characteristics of black compared to white workers. Although this dichotomization is obviously a necessary and useful step in understanding the causes of earnings differentials between blacks and whites, it fails to place sufficient emphasis on the process by which market-valued characteristics are actually obtained. In particular, given the effect of parents' economic status on their children, this approach does not illuminate the intertemporal consequences of racial discrimination for the acquisition of market-valued characteristics. Also, given the potential of the effects of the community of origin on achievement, it may, in addition, obscure many of the negative externalities affecting the acquisition process that result from being part of a discriminated-against group. This paper addresses these problems by examining a recursive model of the effects of socioeconomic background on education and earnings of black and white men ages 23-32. The main difference between this analysis and other efforts in this area is that it examines not only the effects of the socioeconomic status of an individual's parents, but also the effects of characteristics of the individual's community of origin. While other studies have included variables measuring differences due to region and/or size of place of origin, this paper also controls for differences between individuals at the more disaggregated neighborhood level. The findings of the study suggest that neighborhood differences are at least as important as family characteristics in explaining the gaps between black and white achievement and that the omission of neighborhood characteristics results in a misleading picture of the source of background effects.
274 citations
TL;DR: This article introduced a new determinant-the "quality" of one's scholarly research, measured by the frequency of references to that work-as an additional, objective measure of productivity and found that this proxy for the extent of a scholar's influence on the work of other researchers is rewarded by the market.
Abstract: While substantial attention has been paid to the determinants of academics' earnings [5; 7; 8; 14; 15], this literature has by implication suggested that the mere fact of having spent more time in the profession, and the publication of more scholarly articles and books, are the major determinants of salary differences Our purpose here is to introduce a new determinant-the "quality" of one's scholarly research, measured by the frequency of references to that work-as an additional, objective measure of productivity We expect that this proxy for the extent of a scholar's influence on the work of other researchers is rewarded by the market In addition to giving a more complete picture of the determination of salaries in academic labor markets, our approach should be useful in establishing a better framework for the evaluation of issues of discrimination in such markets than has been presented before [2; 9]
259 citations
TL;DR: In this article, the authors present an empirical analysis of earnings differentials among male Hispanic immigrants in the United States and find that there are major differences in the rate of economic mobility of the various Hispanic groups.
Abstract: This paper presents an empirical analysis of earnings differentials among male Hispanic immigrants in the United States. The principal finding of the study is that there are major differences in the rate of economic mobility of the various Hispanic groups. In particular, the rate of economic progress by Cuban immigrants exceeds that of other Hispanic groups, the result in part of the fact that Cuban immigrants have invested more heavily in U.S. schooling than other Hispanic immigrants arriving in this country at the same time. The author concludes that these findings are consistent with the hypothesis that political refugees are likely to face higher costs of return immigration than do “economic” immigrants, and therefore the former have greater incentives to adapt rapidly to the U.S. labor market.
196 citations
TL;DR: This is the famous quotation from the Wealth of Nations according to which workers employed in undesirable jobs in competitive labor markets should be paid extra to compensate them for taking such jobs.
Abstract: This is the famous quotation from the Wealth of Nations according to which workers employed in undesirable jobs in competitive labor markets should be paid extra to compensate them for taking such jobs. One obvious nonpecuniary disadvantage of some jobs is that they carry an above-average risk of death or serious injury, and the theory predicts that earnings should be higher than in otherwise comparable jobs with lower risks.1 The main counterargument to this theory is that nowadays, noncompetitive forces dominate labor markets, so that one would be
172 citations
TL;DR: In this paper, the authors explore the incremental explanatory power of replacement cost earnings variables (derived from ASR 190 data) with respect to explaining cross-sectional differences in security returns.
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TL;DR: In this article, the authors examined the relationship between unsystematic returns and the magnitudes of first-year LIFO tax savings for all NYSE firms which adopted or extended their use of LifO during the period 1972-80.
Abstract: Changes in inventory costing methods, especially those involving the last-in, first-out (LIFO) cost-flow assumption, can generate potentially large changes in a firm's cash flows due to their impact on taxable earnings. These cash-flow effects provide not only a motive for LIFO changes (which is consistent with the market value rule) but also implications for associated stock price effects: if investors react to LIFO's cash-flow implications rather than to its effects on reported earnings, then positive stock price adjustments should be associated with LIFO adjustments. However, it was noted that the previous studies have considered only a dichotomous variable, whether or not a firm has adopted LIFO. Most firms switching to LIFO now reveal in their financial statement disclosures the tax savings which have been realized. This study uses these disclosures to examine the association between unsystematic returns and the magnitudes of first-year LIFO tax savings for all NYSE firms which adopted or extended their use of LIFO during the period 1972-80. The research design employs within-group comparisons based on cumulative monthly unsystematic (excess) returns with appropriate controls for unexpected earnings performance. This design avoids several methodological weaknesses inherent in the previous studies and allows more definitive tests of hypotheses relating investor reactions to the income and cash-flow effects of LIFO adoptions. As reported more fully below, results based on LIFO adoptions made in 1974 are consistent with a positive association between cumulative excess stock returns and the magnitudes of LIFO tax savings. The results also provide evidence that changes in systematic risk may accompany LIFO adoptions. However, contrary to previous studies, most of the sample firms exhibit downward rather than upward changes in systematic risk.
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TL;DR: In this article, the authors examined the effect of piece rates and other forms of incentive compensation on individual employee earnings and found that increased effort by incentive employees leads to relatively greater earnings.
Abstract: This paper presents a detailed examination of the effect of piece rates and other forms of incentive compensation on individual employee earnings The study examines the impact of incentives on the earnings of over 100,000 employees in 500 firms within the footwear and men's and boys' clothing industries Two distinct incentive effects are observed First, incentive workers' earnings are more disperse than identical time workers' earnings within both firms and occupations This greater variance is maintained with the addition of controls for heterogeneity of individual characteristics between the two sectors Second, incentive workers receive an earnings premium, in part to compensate for the greater variation in their income, and partially as a result of an incentive- effort effect The incentive earnings premium averages 14%, controlling for individual characteristics, occupational classification, and individual firms Subsequent decomposition of the incentive-earnings premium reveals that the compensating differential for variation in earnings accounts for a minority of the incentive earnings premium This supports the view that increased effort by incentive employees leads to relatively greater earnings
TL;DR: In this article, the impact of minimum wage laws on employment and earnings is investigated. And the authors find that the burden of the minimum wage falls most severely on females, and that adult females are surprisingly neutral with respect to race.
Abstract: This article uses a radically different methodology to address the question of the impact of minimum wage laws on employment and earnings. The methodology uses the adult wage structure which exists prior to a change in the federal minimum wage to identify the members of the subminimum wage population. This allows the parameterization of the disemployment effects of the minimum wage amendment on the subminimum population and the spillover employment effects on the above-minimum population. The members of the subminimum population are found to experience considerably reduced employment probabilities and annual hours worked (conditional on employment). Some evidence of above-minimum spillover effects is also found. The paper evaluates the impact of the minimum on the earnings distribution and concludes that the burden of the minimum wage falls most severely on females. This effect on adult females is surprisingly neutral with respect to race. The greatest beneficiaries of the minimum among the adult populati...
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TL;DR: In this article, the determinants of student choice of under-graduate major field were investigated and it was argued that this choice depends on a variety of pecuniary and non-pecuniary factors.
Abstract: This paper investigates the determinants of student choice of undergraduate major field. It argues that this choice depends on a variety of pecuniary and non-pecuniary factors. After allowing for the recent trends toward Accounting and Business Administration, the empirical results indicate that earnings differentials among fields and differences in the rate of change in earnings among fields are the most important factors in the student's decision.
TL;DR: A review of published research suggests that a number of conflicting results have been obtained. as discussed by the authors concludes that analysts' forecasts are superior to firm-specific Box-Jenkins forecasts and several other naive forecasting models.
Abstract: Recent policy making activities of the SEC [1978; 1979] and the AICPA [1980] have rekindled interest in the subject of management's public disclosures of forecasts. Much of the forecasting literature and related policy considerations concern the comparative accuracy of managerial forecasts relative to other sources of earnings forecasts. The basic premise is that if management forecasts are more accurate than those of other sources, then it may be socially desirable to have the FASB or the SEC govern forecast disclosures.' The economic implications of this policy issue were first discussed by Gonedes, Dopuch, and Penman [1976]. Much of the subsequent empirical work has centered on assessments of the accuracy of managements forecasts in an effort to determine if they are potentially more informative. A review of published research suggests that a number of conflicting results have been obtained. One study reports that firm-specific Box and Jenkins [1970] forecasts are superior to (more "accurate" than) those of management (Lorek, McDonald, and Patz [1976]), while another concludes that analysts' forecasts are superior to firm-specific Box-Jenkins forecasts and several other naive forecasting models (Brown and Rozeff [1978]). If one ignores differences in the samples and the time periods of these studies, the results imply that analysts' forecasts are more accurate
TL;DR: In this paper, the determinants of student choice of under-graduate major field are investigated and it is argued that this choice depends on a variety of pecuniary and non-pecuniary factors.
Abstract: This paper investigates the determinants of student choice of under-graduate major field. It argues that this choice depends on a variety of pecuniary and nonpecuniary factors. After allowing for the recent trends toward Accounting and Business Administration, the empirical results indicate that earnings differentials among fields and differences in the rate of change in earnings among fields are the most important factors in the student’s decision.
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TL;DR: This paper used newly available data from the Social Security Administration's Retirement History Survey to examine the adequacy of saving and found that surprisingly few couples currantly suffer significant reductions in their standard of living in their old age.
Abstract: This paper uses newly available data from the Social Security Administration's Retirement History Survey to examine the adequacy of saving. This data source is particularly rich; survey data for respondents covering the ydars 1969, 197 1( and 1953 have been matched with Social Security earnings records covering the years dating back to 1951. In addition to information on the path of lifetime earnhngs, the survey contains extensive data on individual asset holdings. The evidence indicates that surprisingly few couples currantly suffer significant reductions in their standard of living in their old age. This appears due, in large part, to our compulsory savings institutions, the Social Security and private pension systems. These institutions have succeeded in redistributing the lifetime consumption of private individuals from their youth to their old age.
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TL;DR: This article examined how the structure of earnings and pension opportunities affects retirement behavior and concluded that people with higher base incomes retire earlier and those who have more to gain by postponing retirement, retire later.
Abstract: This paper examines how the structure of earnings and pension opportunities affects retirement behavior. We use a life cycle model of labor supply, paying special attention to the institutional features of private pensions and Social Security benefits. This theoretical formulation is used to develop comparative dynamic pre- dictions and to guide empirical modeling. Data from a new survey of workers and their income alternatives are used to implement the empirical model. Along the way, we highlight a number of interesting and little known facts about older workers' income. Contrary to popular opinion we find that private pensions are not always actuarially neutral; Social Security benefits do not typically decline (in present value terms) the longer retirement is deferred; and for many people, retirement income approaches and even exceeds net labor income. On the basis of empirical estimates of retirement parameters, we conclude that (1) people with higher base incomes retire earlier, and (2) those who have more to gain by postponing retirement, retire later. These findings are relevant to proposed reforms of the Social Security system as well as pension programs.
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TL;DR: This article developed a theoretical model of firm behavior consistent with the maximization of shareholders' utility, and derived empirically testable implications of different theories of equity finance using data on firm earnings and previous investment and financial behavior.
Abstract: This paper develops a theoretical model of firm behavior consistent with the maximization of shareholder utility, and derives empirically testable implications of different theories of equity finance Using data on firm earnings and previous investment and financial behavior, we assess whether firms treat new share issues as a more expensive source of finance than retentions, and whether such behavior varies across firms according to the composition of their shareholders Our results strongly support the hypothesis that firms perceive a higher cost of capital when issuing new shares, and that the cost of capital varies significantly across firms having different estimated tax clienteles, as theory would predict
TL;DR: In this article, a systematic critique of the human capital approach to black-white inequality is presented, which suggests that a serious analysis of the black white earnings gap will require an entirely new approach to the study of racial income inequality.
Abstract: The persistence of earnings differences between blacks and whites in the United States has been a topic that has received a substantial amount of attention in both theoretical and empirical research in economics The differential in earnings typically is tied to racial differences in human capital accumulation This paper advances a systematic critique of the human capital approach to black-white inequality Inadequacies are identified in human capital theory as a general theory of inequality as well as a specific theory of racial inequality The critique suggests that a serious analysis of the black-white earnings gap will require an entirely new approach to the study of racial income inequality
TL;DR: In this paper, a matched sample of Social Security and current population survey records was used to examine life-cycle earnings patterns of white males over the 1951-1976 period, and they found that older cohorts exhibit smaller marginal returns to schooling and larger marginal return to experience, but differences between cohorts are very small.
Abstract: A matched sample of Social Security and Current Population Survey records is used to examine life-cycle earnings patterns of white males over the 1951-1976 period. Estimated direct effects of schooling and experience compare well with other studies, but interaction effects with cohort do not. Younger cohorts exhibit smaller marginal returns to schooling and larger marginal returns to experience, but differences between cohorts are very small. When demographic factors, namely, veteran status, are controlled, direct cohort effects are linear in these data and show no tendency to vary with cohort size.
TL;DR: This paper analyzes how much of the gender earnings gap among physicians is due to women's greater family responsibilities and finds that women physicians earn 11 percent less for being married plus 14% less for having one child and 22% less than that for having two children.
Abstract: This paper analyzes how much of the gender earnings gap among physicians is due to women's greater family responsibilities. Women physicians earn 11 percent less for being married plus 14 percent less for having one child and 22 percent less for having ...
TL;DR: This paper examined the relationship between unionism and earnings dispersion within US manufacturing and nonmanufacturing industries and found that the dispersion in earnings, reflecting the degree of worker homogeneity, influences the level of unionism.
Abstract: This study examines the relationship between unionism and earnings dispersion within US manufacturing and nonmanufacturing industries The author hypothesizes not only that unionism narrows earnings dispersion, as others have shown, but also that the dispersion in earnings, reflecting the degree of worker homogeneity, influences the level of unionism Estimation of a three-equation model, using 1970 three-digit industry data, provides evidence regarding the simultaneous determination of unionism, earnings, and earnings dispersion within US industries The estimated equalizing effects of unionism on within-industry earnings distributions are found to be significant both in the manufacturing and nonmanufacturing sectors, the size of these estimates increasing after accounting for simultaneity In addition, the dispersion in earnings does appear to affect the level of unionism, although the evidence on this point is ambiguous
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TL;DR: In this paper, the relationship between interclass pay equity and product quality was examined in a sample of 102 corporate business units and a small pay differential between lower-level employees and upper-echelon managers was theorized.
Abstract: The relationship between interclass pay equity and product quality is examined in a sample of 102 corporate business units. A small pay differential between lower-level employees and upper-echelon managers (after controlling for inputs) is theorized to ...
TL;DR: In this paper, the focus of analysis was shifted from a comparison of federal and private racial and sexual wage differentials to a study of how different government objectives are translated into federal employment policy.
Abstract: THE federal government is the largest employer in the United States. In 1978, it employed over 2.4 million full-time civilian workers, of whom 31.1 percent were women, and 22.0 percent were classified as minority employees.' The evidence in several recent studies suggests that the earnings of minorities and women employed by the federal government are substantially lower than the earnings of "similar" white males; they also conclude that the extent of wage discrimination in the federal government is slightly less than that found in the private sector.2 Although these studies provide a useful description of the economic status of the various sex and race groups, they do not expand our understanding of the government's behavior in its hiring and placement of these groups. That is, these studies give little hint as to how government objectives are translated into federal employment policy. This paper shifts the focus of analysis from a comparison of federal and private racial and sexual wage differentials to a study of how different
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TL;DR: In this paper, the authors evaluate whether the primary and secondary dissemination of earnings forecast revisions by security analysts is reflected in security prices and determine the profitability of trading strategies based on the nonpublic knowledge of forecast revisions.
Abstract: This paper evaluates whether the primary and secondary dissemination of earnings forecast revisions by security analysts is reflected in security prices Security prices were used to determine the profitability (before the cost of search) of trading strategies based on the nonpublic knowledge of forecast revisions For a sample of 288 weekly earnings forecast revisions, the results were consistent with the hypothesis that early knowledge of forecast revisions could be used to form profitable trading strategies Furthermore, the secondary dissemination of forecasts continued to have information content at the point of disclosure These results are inconsistent with the strong form, but consistent with the semi-strong form, of market efficiency Furthermore, the information contemporaneously available from public sources did not generate equivalently profitable trading rules, indicating that forecast revisions were not deducible from other publicly available information Finally, some general public policy implications concerning mandatory disclosure of forecasts were drawn
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