Knowledge that Transforms

A model of the “new growth theory” type is applied to the persistence of racial income differentials in the presence of community segregation. When community human capital affects human capital accumulation by individuals, differences between groups can persist indefinitely, even in the absence of current discrimination. Intercommunity mobility can benefit advantaged minority workers, who leave behind an impoverished ghetto. Workplace integration without community integration may not lead to equality even in the long run. We examine various policies and show that a large, temporary intervention may be successful in achieving racial equality while a smaller permanent one fails.

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The proportion of women in state government jobs and applicant pools is well explained by a model emphasizing supply‐side factors. Relative to men, women's supply is least sensitive to wages in predominantly male jobs and most sensitive to wages in predominantly female jobs. These results suggest that comparable worth policies that shift relative pay toward traditionally female jobs and away from traditionally male jobs will increase the proportion of females in male‐dominated, female‐dominated, and total state government jobs. The implication is that supply side responses need not prevent comparable worth pay adjustments from raising total female compensation.

Over the years there have been frequent changes in unemployment insurance (UI) benefits. Such changes could influence spells in progress as well as future spells. If individuals anticipate changes, they are likely to adjust their behavior. The effect of changes in benefits on unemployment duration, therefore, will be difficult to predict accurately without accounting for individual expectations. This article investigates the extent to which individuals anticipate changes in UI entitlement. The results suggest that individuals have significant, although not perfect, foresight about changes in UI provisions. Assuming perfect foresight might represent actual expectations more closely than assuming no foresight.

Prior to trade liberalization in the 1980s, New Zealand heavily protected low‐wage industries. Consequently, trade liberalization was desirable from the perspective of both traditional and new trade theories. While liberalization decreased employment in protected industries somewhat, it also significantly affected wages, noticeably diminishing the effect of liberalization on employment in previously protected industries and thus reducing the postliberalization shift in the industrial composition of employment. The small effect of liberalization on the composition of employment suggests that the effect of tariffs on wages and firms' monopoly power substantially eliminated any effect of protection on the distribution of employment.

We use a unique data set to investigate whether a matching model can describe turnover in an accounting firm. The main focus of the article is to determine whether the probability of separation from employment varies in the way described by Jovanovic. The evidence suggests that as tenure increases both terminations and quits follow the predicted pattern.

The theory of compensating differentials predicts a negative relationship between wages and good working conditions, while the theory of segmentation predicts a positive one. Combining the hedonic wage model and the wages‐employment collective bargaining model, we show the relevance of a further factor: a union power effect. Then we test the validity of this effect with French cross‐section data. Empirical results confirm the predictions of the model, that is, the coexistence of a negative relationship between wages and good working conditions for the whole sample (market effect) and a positive relationship in highly unionized sectors (union power effect).

This article explores human capital acquisition decisions when job placement helps determine competition for a worker. With asymmetric information, workers may invest in firm‐specific capital without long‐term contracts. Specific investment increases promotion chances (and hence wage competition), shifting competition back to a time when firms are symmetrically uninformed. If general human capital is the efficient (output‐maximizing) investment, then an equivalent firm‐specific investment maximizes expected career wages. This is a general result for sellers in second‐price auctions: sellers (of labor) invest to maximize the expected second‐highest bidder valuation (wage), not the winner's expected valuation.