Knowledge that Transforms

This article studies interfirm racial segregation in two newly developed firm‐level databases. We find that the interfirm distribution of black and white workers is close to what would be implied by random assignment. We also find that black workers are clustered in employers where managers, owners, and customers are also black. These findings may be reconciled by the facts that (a) there are not enough black employers to generate much segregation and that (b) other forces may systematically integrate black and white workers. Finally, we find that the black/white wage gap is primarily a within‐firm phenomenon.

Since technological change influences the rate at which human capital obsolesces and also increases the uncertainty associated with human capital investments, training may increase or decrease at higher rates of technological change. Using the National Longitudinal Survey of Youth, we find that production workers in manufacturing industries with higher rates of technological change are more likely to receive formal company training. At higher rates of technological change, the training gap between the more and less educated narrows, low‐skilled nonproduction workers receive significantly more training than higher‐skilled nonproduction workers, and the proportion of individuals receiving training increases.

"This article utilizes an exact match file between the 1978 March [U.S.] Current Population Survey and administrative records from the Social Security Administration to analyze errors in the reporting of annual income using nonparametric methodology.... Three new findings are of interest: there is higher measurement error in cross-sectional samples than in panels. The negative relationship between measurement error and earnings is driven largely by overreporting among low earners. Median response errors are not related to earnings."

This article considers the estimation of the structure of wages in union and nonunion sectors. It proposes an estimator that extends standard panel data techniques to the case in which the return to the permanent component of the error term is differently rewarded in the two sectors. The econometric model is used to estimate the effect of unions on both the level and the variance of wages in Canada. The findings indicate that unions increase the average wage of workers and compress the returns to observable measures of skill and to a time‐invariant unobservable measure of skill.

This article examines the impact of a workplace education program at two companies (one in the manufacturing sector, the other in the service sector). We examine a broad range of outcome variables, including earnings, turnover, performance awards, job attendance, and subjective performance measures. We estimate a small, positive impact of the program on earnings at the manufacturing company but an insignificant impact at the service company. Trainees were equally likely to exit the company as nontrainees. We also find that the training had a positive association with the incidence of job bids, upgrades, performance awards, and job attendance.

This article investigates the consequences of labor market search for the theory of hedonic wages. We find that the introduction of search has surprising consequences for the theory of hedonic wages. In particular, we demonstrate that the equilibrium distribution of wage and nonwage amenity bundles generally bears little resemblance to workers' underlying preferences. A consequence of this analysis is that estimates of workers' marginal willingness to pay, derived from the conventional hedonic wage methodology, are biased. In addition, we demonstrate that search generates differences between firm‐level and employee‐level data that can cause substantial deviations in the estimates of hedonic wage equations.

Data from the National Longitudinal Survey of Youth indicate that the employer often pays the explicit costs of not only on‐site training but also off‐site general training. Although few of these costs appear to be passed on to workers in the form of a lower wage while in training, completed spells of general training paid for by previous employers have a larger wage effect than completed spells of general training paid for by the current employer. A model where contract enforcement considerations cause employers to share the costs and returns to purely general training can explain these findings.

Using multinomial probit estimates of the probability of job‐to‐job and job‐to‐nonemployment turnover, I find that differences between women's and men's turnover are due to the behavior of less educated women. Both the job‐to‐job and job‐to‐nonemployment turnover of less educated women are significantly different from that of more educated women as well as both groups of men. I also find that distinguishing between types of turnover—job‐to‐job versus job‐to‐nonemployment—is quite important, particularly in understanding the turnover patterns of women.

This article analyzes the dynamics of joint labor force behavior of older couples in the United States. Using the Retirement History Survey (RHS) I analyze the determinants of joint retirement and the effect of one spouse's labor force status on the labor force transitions of the other spouse. The results reveal strong associations between the labor force transition probabilities of one spouse and the labor force status of the other spouse. These result from structural differences in exit and entry behavior by the spouse's status. Several lagged endogenous variables have substantial effects on behavior even after controlling for unobserved heterogeneity.

Recent advances in incentive theory stress the multidimensional nature of agent effort and specifically cases where workers affect one anothers' performance through “helping” efforts. This article models helping efforts as determined by the compensation package and task allocation. The model is tested with Australian evidence on reported helping efforts within work groups. The evidence consistently supports the hypothesis that helping efforts are reduced, while individual efforts are increased, when promotion incentives are strong. Piece rates and profit‐sharing appear to have little effect on helping efforts, while task variety and helping efforts are positively correlated.