Knowledge that Transforms

This article provides new evidence about the impact of Social Security Disability Insurance on male labor force participation decisions based on estimates from a structural model of applications, awards, and state‐contingent lifetime income flows. The lifetime framework makes it possible to consider long‐term opportunity costs associated with early labor force withdrawal and the disincentive to applications resulting from the statutory waiting period before benefits may be received. Estimation techniques account for the self‐selected nature of the pool of applicants when predicting the individual‐specific probability of acceptance and the opportunity costs of applying.

The pattern of effort and wages is derived in a multisector efficiency wage model. Firms choose effort endogenously. Easily monitored or low‐turnover jobs have high effort and may have low wages in equilibrium. Empirical wage differentials from a measure of supervision are smaller than observed industry differentials that have been attributed to efficiency wage models and are closer to those predicted by the model. Workers can search for and avail of on‐the‐job offers. If sectors grow at different rates or the unemployment rate changes, the pattern of wage differentials is unaffected.

We use microlevel data on employers and employees from a sample of establishments in four major metropolitan areas in the United States to investigate whether Affirmative Action leads to the hiring of minority or female employees who are less qualified. Our measures of qualifications include the educational attainment of the workers hired and a variety of outcome measures related to worker performance on the job. We find evidence of lower educational qualifications among women and minorities hired under Affirmative Action. However, we do not find evidence of weaker job performance among most groups of minority and female Affirmative Action hires.

Data and measurement problems have complicated the debate over trends in job instability in the United States. We compare two cohorts of young white men from the National Longitudinal Surveys (NLS), construct a rigorous measure of job change, and confirm earlier findings of a significant increase in job instability. We then benchmark the NLS against other main data sets in the field and conduct a thorough attrition analysis. Extending the analysis to wages, we find that the wage returns to job changing have both declined and become more unequal for young adults, mirroring trends in their long‐term wage growth.

Using data on union certification elections, we estimate the impact of unionization on firms' investment behavior. Employing both a standard q model and an “investment surprises” technique, we find that union certification significantly reduces investment in the year following the election. We find that a winning certification election has, on average, about the same effect on investment in the year following the event as would—given the elasticity measures taken from the public finance literature—a 33 percentage‐point increase in the corporate tax. The magnitude of the response in years further away from the election is less certain.

This article estimates the effects of changes in pension plans and social security in the 1970s and 1980s on the steady state retirement of men. Work incentives associated with pension coverage and plan characteristics are calculated primarily from the 1969–79 Retirement History Study and the 1983 and 1989 Surveys of Consumer Finances. Simulations with a structural retirement model suggest that the long‐run effects of changes in pension plans and social security account for about a quarter of the reduction in full‐time work by men in their early sixties but cannot explain the reduction by those age 65.

We examine the (sequential) introduction of early retirement provisions to Canada's two public pension plans. These reforms provide a unique opportunity to assess the effect of public pension plan parameters on labor supply behavior, free of the biases that potentially affect the simple time‐series or cross‐section inference presented in many previous studies. We find that the reforms led to an increase in pension receipt but had little immediate effect on labor market behavior. This is due to the fact that men who initially took advantage of the early retirement provisions would otherwise have had limited labor market participation.

This article considers whether two commonly used sources of information on employer tenure, the Panel Study of Income Dynamics and the Current Population Survey, yield systematically different trends in employer tenure. Little evidence of a discrepancy between the data sets in the 1980s or 1990s is found when comparable samples, variable definitions, and time frames are used. Neither data set shows a significant trend in the share of workers with 1 year or less of tenure, while both data sets show an increase in the fraction of men with less than 10 years of tenure starting in the late 1980s.

I study workers' incentives to invest in general human capital (education) in the presence of search‐induced unemployment. Workers queue for jobs, and firms prefer to hire the most productive applicants because of rent sharing. As a result, an unemployed worker's ranking relative to other job seekers will influence his job‐finding rate. This creates a “rat race,” where workers invest in education partly in order to achieve a better ranking. In equilibrium, identical workers may have incentives to diversify in terms of education, and the investments in education may exceed the socially optimal level.

This article provides evidence on changes in short‐term job instability and insecurity using the Survey of Income and Program Participation. Monthly measures from this data set are contrasted with annual measures from the Survey of Income and Program Participation and the Panel Study of Income Dynamics. Neither data set shows an increase in job turnover during the 1980s and 1990s. We also examine indicators of increased insecurity. These include the probability that a job ends involuntarily, is followed by a spell of nonemployment, or that the subsequent job has lower wages. These indicators of insecurity also show no upward trend.