Knowledge that Transforms

A longitudinal establishment data set is used to assess the effect of changes in workers' compensation benefits on the incidence of lost-workday injury and illness cases in manufacturing for the years 1979-84. Higher benefits are found generally to increase lost-workday cases. However, consistent with theory, the benefit effect is smaller in larger, more highly experience-rated establishments. After initial estimates are obtained using ordinary and weighted least squares, several count data models are explored that are more appropriate for the integer injury and illness counts in the data. The results are consistent across the specifications.

Separability between parents' and children's consumption is a necessary assumption in any attempt to impute the intrafamily allocation of goods. This assumption implies an estimation procedure where the observed effect of demographic variables on the marginal propensity to consume adult goods is used as a key for identifying the rule governing the distribution between children's and parents' consumption. Using the U.S. 1972 Consumption Expenditure Survey, I found that white and black families tend to allocate three-quarters of their consumption to parents and one-quarter to children. Tests for robustness, for selectivity bias, and of the separability assumption itself uphold these findings.

The influence of birth order and childhood family size on future achievement is discussed. Two major empirical findings are presented by the author. "First, neither birth order nor childhood family size significantly influences the level or growth rate of wages, a result that is consistent with previous research. Second, family size is both a statistically and economically significant determinant of women's employment status: women from small families work less than women from large families when they are young and more than women from large families when they are more mature." The geographical focus is on the United States.

The authors present survey data challenging the assumption implicit in analyses of labor supply that, all else being equal, workers prefer declining over increasing wage profiles. The authors test several explanations for their results, including that (1) there is something special about wages (e.g., their association with productivity), as opposed to other types of payments, that induces the preference for increasing wages; (2) utility depends not only on absolute levels of consumption, but also on changes in consumption over time; and (3) respondents who prefer increasing wage profiles are irrational and would change their behavior if the rationale for preferring declining wages were explained. Copyright 1991 by University of Chicago Press.

This article is concerned with the determinants of English-language fluency among immigrants and the effects of fluency on earnings. Using special survey data on a sample of over eight hundred aliens, the analysis shows the importance of certain variables not previously available, speaking fluency at migration and English reading fluency. English speaking and reading fluency both increase with duration in the United States, and the increase with duration is greater for those with more schooling and who are not Hispanic. The article shows that reading fluency is more important than speaking fluency as a determinant of earnings. Copyright 1991 by University of Chicago Press.

This article examines the properties and prevalence of measurement error in longitudinal earnings data. The analysis compares matched Current Population Survey data to administrative Social Security payroll tax records. In contrast to typically assumed properties of measurement error, the results indicate that errors are serially correlated over two years and negatively correlated with true earnings (i.e., mean reverting). In a cross section, the ratio of the variance of the signal to the total variance is 0.82 for men and 0.92 for women. These ratios fall to 0.65 and 0.81 when the data are specified in first differences. Longitudinal earnings data may be more reliable than previously believed. Copyright 1991 by University of Chicago Press.

We provide theoretical and empirical analyses of an asymmetric-information model of layoffs. When firms have discretion with respect to whom to lay off, the market infers that laid-off workers are of low ability. Assuming that no such negative inference is warranted if workers are displaced in a plant closing, postdisplacement wages should be lower and postdisplacement unemployment spells should be longer for those displaced by layoffs than for those displaced by plant closings, but predisplacement wages should not differ by cause of displacement. Evidence on displaced workers from Current Population Surveys supports all three of our model's predictions.

ECONOMIC DEVELOPMENT is a field in search of itself. Within the last few years several surveys have appeared, ranging from article length to the definitive two volume Handbook of Economic Development with its 33 chapters and 1700 pages., 2 Even the World Bank's 1991 World Developmnent Report is devoted for the first time to a review of the fundamentals of the subject, rather than its customary analysis of specific problems like human resources, agriculture, industry, etc. This industry of self-reflection thrives from a conjunction of two circumstances. One is the disturbing reality of the lost decade of the 1980s which saw negative per capita economic growth for the countries of Africa and Latin America, even while positive results were being realized in most parts of Asia. for the first time in the postwar period, the presumption of continual