Knowledge that Transforms

This article reviews research from the five income-maintenance experiments in Canada and the United States. After sketching the historical and political context of the experiments, we compare their designs and discuss some important analytic difficulties. Our primary focus is the work-incentive issue, both nonstructural estimates of the experimental effects and elasticity estimates of structural labor-supply functions. We provide initial estimates of nonstructural and structural models for the Canadian experiment. We discuss more briefly some non-work-response findings associated with a guaranteed annual income and offer some personal comments on social experimentation and the policy process.

This article analyzes the intergenerational mobility of immigrants. Using the 1940-70 censuses, the study reveals an important link between the earnings of immigrants and the earnings of their American-born children. Although there is some regression toward the mean, the earnings of second-generation Americans are strongly affected by variables describing economic conditions in the source countries of their parents. Current immigration policy, therefore, not only determines how immigrants perform in the labor market but also determines tomorrow's differences in the labor market experiences of American-born ethnic groups.

This article uses very detailed information on graduates of the University of Michigan Law School to examine male-female pay differences in that population. Men and women in this population have virtually identical human capital on graduation from law school, allowing us to examine carefully the different impact of children and work history on men's and women's careers and earnings. Taking time from work in order to care for children reduces wages significantly, but a rich set of controls, including childcare, work history, school performance, and job setting measures, still leave one-fourth to one-third of the earnings gap unexplained.

This article treats education as a sequential choice that is made under uncertainty. A simple model is used to explore the effects of ability, high school preparation, preferences for schooling, the borrowing rate, and ex post payoffs to college on the probability of various post-secondary college outcomes and the ex ante return to starting college. The model motivates an empirical method of accounting for uncertainty about educational outcomes and for nonlinearity in the relationship between years of education and earnings when estimating the expected return to the first year of college.

Since 1976 the gender gap in wages on average declined by about 1% per year. This article focuses on identifying the factors underlying this trend. Three data sets are analyzed-the Current Population Survey, the Panel Study of Income Dynamics, and the National Longitudinal Survey. We find that convergence in measurable work-related characteristics (schooling and work experience) explains one-third to one-half the narrowing. The remainder is attributable to a relative increase in women's returns to experience as well as to declining wages in blue-collar work and other factors.

This article analyzes the causes and consequences of the growing proportion of high-school-certified persons who achieve that status by exam certification rather than through high school graduation. Exam-certified high school equivalents are statistically indistinguishable from high school dropouts. Whatever differences are found among exam-certified equivalents, high school dropouts and high school graduates are accounted for by their years of schooling completed. There is no cheap substitute for schooling. The only payoff to exam certification arises from its value in opening postsecondary schooling and training opportunities, but completion rates for exam-certified graduates are much lower in these activities than they are for ordinary graduates. Copyright 1993 by University of Chicago Press.

Tournament mechanisms suggest the need for ever larger rewards to motivate those at the highest organizational levels. But arguments for the efficiency of executive pay compression have also been made. This study reports the results of an empirical investigation of executive compensation using over two-hundred firms and in excess of two thousand executives per year over a five-year period. Results are consistent with the operation of tournaments but fail to find support for the empirical importance of considerations of pay equity at the top of corporations. Copyright 1993 by University of Chicago Press.