We investigate whether a market‐clearing model is consistent with industry employment and wage patterns related to the cyclical upgrading of labor. We demonstrate that Roy's (1951) market‐clearing model of self‐selection would account for cyclical upgrading if industries were characterized by positive selection. Wage comparisons of industry movers and stayers in panel data do reveal widespread positive selection. Also consistent with the Roy model, composition‐corrected industry wages are more cyclical in high‐wage cyclical industries. The Roy model does fail to explain predictable patterns in the wage changes of industry movers, so we consider several market‐clearing and queuing extensions.
We construct a search equilibrium model for a city with central and suburban labor markets that is consistent with the set of empirical regularities commonly associated with the spatial mismatch hypothesis: a higher rate of unemployment for central city residents than suburban residents, a higher job vacancy rate for suburban firms, and reverse commuting and higher suburban wages. The effectiveness and welfare implications of public policy programs that might be used to remedy the underlying mismatch are examined.
Students often accumulate substantial work experience before leaving school. Because conventional earnings functions do not control for in‐school work experience, their estimates of the return to schooling include the benefit of work experience gained along the way. Using data from the National Longitudinal Survey of Youth, I estimate wage models with and without controls for in‐school work experience. The estimated schooling coefficients are 25%–44% higher (depending on how I control for ability bias) when in‐school work experience is omitted than when it is included. These findings indicate that conventional models significantly overstate the wage effects of “school only.”
The labor supply decisions of certified elementary and high school teachers are examined using data from a general longitudinal survey. A significant decrease in the teaching participation rate takes place over time after teacher certification. Previously unavailable marital and fertility variables provide new insight into reasons for this decrease. Descriptive statistics indicate that high‐ability teachers choose to teach a smaller proportion of time than other teachers. A dynamic, discrete‐choice model, which accommodates Serial Correlation in the wage process for teachers, is used to analyze responsiveness of the overall sample and different types of teachers to two potential types of wage increases.
This study examines aspects of pay and promotion in corporate hierarchies in the context of tournament theory. Evidence supports the tournament perspective in that most positions are filled through promotion and pay rises strongly with hierarchical level. Furthermore, the winner's prize in the CEO tournament increases with the number of competitors for the CEO position. Not all evidence is supportive: the square of the number of competitors is negatively associated with the CEO prize. Additionally, firms do not appear to maintain short-term promotion incentives, as lengthier time in position prior to a promotion reduces the pay increase from the promotion.
Most research on the relationship between teacher characteristics and pupil achievement focuses on salaries, experience, and education. The effect of in‐service training has received less attention. We estimate the effect of in‐service teacher training on achievement in Jerusalem elementary schools using a matched‐comparison design. Differences‐in‐differences, regression, and matching estimates suggest training in secular schools led to an improvement in test scores. The estimates for religious schools are not clear cut, perhaps because training in religious schools started later and was implemented on a smaller scale. Estimates for secular schools suggest teacher training provided a cost‐effective means of increasing test scores.
Studies have suggested that urban agglomeration enhances productivity by facilitating the firm‐worker matching process. This article develops a model that formalizes this notion and demonstrates that, when firm capital and worker skill are complementary in production, urban agglomeration will tend to generate more efficient, yet segregated matches. As a result, not only will local market size be positively associated with average productivity, it will also generate greater between‐skill‐group wage inequality and a higher expected return to skill acquisition. Recent data from the counties and metropolitan areas of the United States is consistent with each of these implications.
Although much research has focused on recent increases in annual earnings inequality in the United States, the increases could have come from either of two sources: the distribution of lifetime earnings could have become more unequal or the receipt of lifetime earnings could have become more unstable. Based on an analysis of the 1968–92 Panel Study of Income Dynamics, we find that lifetime earnings inequality increased during the early 1980s and that earnings instability increased during the 1970s. We also examine how these trends are related to changes in the distribution of wages and hours and the returns to education.
In February 1995 Continental Airlines introduced an incentive scheme that promised monthly bonuses to all 35,000 hourly employees if the company achieved a firm-wide performance goal. Conventional wisdom suggests that free riding will render such schemes ineffective. We present evidence indicating that the incentive scheme raised employee performance despite the apparent threat of free riding. To explain why the scheme may have been effective we argue that the organization of employees into autonomous work groups enabled Continental to induce mutual monitoring among employees within each work group.
This article uses data from the Health and Retirement Study to examine the employment patterns of workers aged 50 and above who have experienced an involuntary job loss. Hazard models for returning to work and for exiting postdisplacement employment are estimated and used to examine work patterns for 10 years following a job loss. Our findings show that a job loss results in large and lasting effects on future employment probabilities. Four years after job losses at age 55, the employment rate of displaced workers remains 20 percentage points below the employment rate of similar nondisplaced workers.