Knowledge that Transforms

Econometric analyses of treatment response commonly use instrumental variable (IV) assumptions to identify treatment effects. Yet the credibility of IV assumptions is often a matter of considerable disagreement. There is therefore good reason to consider weaker but more credible assumptions. To this end, we introduce monotone instrumental variable (MIV) assumptions and the important special case of monotone treatment selection (MTS). We study the identifying power of MIV assumptions alone and combined with the assumption of monotone treatment response (MTR). We present an empirical application using the MTS and MTR assumptions to place upper bounds on the returns to schooling

We utilize a large employer‐level panel dataset to explore the links between gross job flows and gross worker flows. Our findings have relevance for models of job creation and job destruction, and labor reallocation. We find churning flows (the difference between worker and job flows at the level of the employer) to be high, pervasive, and highly persistent within employers, suggesting that they arise as a correlate of an equilibrium personnel policy. We find the dynamic relationship between job and worker flows to be quite complex: lagged job flows raise churning flows, and lagged churning flows reduce employment growth.

The national origin of an individual's human capital is a crucial determinant of its value. Education and labor market experience acquired abroad are significantly less valued than human capital obtained domestically. This difference can fully explain the earnings disadvantage of immigrants relative to comparable natives in Israel. Variation in the return to foreign schooling across origin countries may reflect differences in its quality and compatibility with the host labor market. The return to foreign experience is generally insignificant. Acquiring additional education following immigration appears to confer a compound benefit by raising the return to education acquired abroad. Copyright 2000 by University of Chicago Press.

A general equilibrium model of a dual economy is constructed with workers and managers and hierarchical production. Ability is continuous, and there is perfect competition in the product market. Higher quality of education is treated as a form of technical progress. An equilibrium wage profile is derived. Different kinds of technical and productivity changes yield different gainers and losers. Declines in the quality of education generally lead to an increase in inequality. Surprisingly, groups suffering from declines in quality of education often benefit at the cost of others. Parallels are drawn with recent experience.

Employment relationships are governed by short‐term incomplete contracts and typically involve on‐the-job screening and firm‐specific training. This article studies a dynamic employment relationship with these features and identifies a potential conflict between the employer's twin objectives to screen and train the worker: when the training technology is quite productive, the employer may have to sacrifice from worker performance during the screening process. The article thus offers an explanation for why firms may invest suboptimally on training, which complements the standard “inappropriable rents” explanation based on ex post mobility of young employees.

Compared to older women, young female job seekers are more than three times as likely to report that their ability to find a good new job is compromised by their gender. This phenomenon cannot be statistically attributed to observed personal or job characteristics, or to any “objective” measure of discrimination. Further, women's reports of gender‐induced advantage, and men's reports of gender‐induced harm, are also more prevalent among the young. A possible interpretation of all these patterns is that young people are more likely to interpret a given departure from gender‐neutral treatment as causally affected by their gender.

This article offers an explanation of the postinjury employment, wage, and accommodation patterns of permanently impaired workers. In particular, it argues that the observed tendency of time‐ofaccident employers to rehire at the preinjury wage, accommodate, and then, perhaps, quickly terminate the impaired worker, is a manifestation of the worker's preferred contract. That contract is characterized by wage inflexibility. By removing the opportunity for the postinjury employer to underreport productivity, this contract creates an incentive for the worker to attempt to functionally adapt to the impairment, thereby increasing expected lifetime utility.

Workers with limited English skills may suffer adverse effects when states declare English the official language. If employers believe official English laws allow or require them to adopt workplace English‐only rules that lower the demand for limited-English‐proficient workers, such laws may harm individuals who do not speak English well. Using data from the 1980 and 1990 censuses, I estimate whether the earnings of limited-English‐proficient workers who live in states that adopted official English laws declined relative to other workers. The results suggest a substantial decline in the annual earnings of men with limited English proficiency.