This article develops a framework for analyzing the impact of taxes and transfers on the length of time a person waits to accept a job while receiving transfer payments. It considers the impact of changes in the parameters of a generic tax-transfer system characterized by a guarantee and a tax rate on the costs and benefits of search. The analytical results indicate that increases in guarantees need not increase duration of unemployment-the results for unemployment insurance are a special case of the more general formulation developed in this article. In fact, increases in guarantees and increases in tax rates may shorten the duration of unemployment while decreasing the labor supply of transfer recipients.

This paper presents a new method to correct for measurement error in wage data and applies this method to address an old question: How much downward wage flexibility is there in the United States? We apply standard methods developed by Bai and Perron to identify structural breaks in time series data. Applying these methods to wage histories allows us to identify when each person experiences a change in nominal wages. The length of the period of constant nominal wages is left unrestricted and is allowed to differ across individuals, as are the size and direction of the nominal-wage change. We apply these methods to data from the Survey of Income and Program Participation. The evidence we provide indicates that the probability of a cut in nominal wages is substantially overstated in data that are not corrected for measurement error.

William Julius Wilson's influential book The Truly Disadvantaged (1987) has sparked a vigorous debate about the existence and causes of an urban underclass. While there is still no clear agreement about definitions, the growing literature on the underclass focuses both on traits of the current generation and the traits of their parents. If an underclass exists, its current members are assumed to live in deteriorating inner cities, to experience long spells of joblessness or welfare dependency, and/or to engage in illegal and antisocial activities. Furthermore, these traits are assumed to be correlated across generations, leading to a cycle of deprivation. In this paper, I focus on one such link across generations by examining the correlation in welfare participation of daughters and their parents. I first present the state of knowledge about the extent to which children of parents who received Aid to Families with Dependent Children (AFDC) are themselves more likely to participate in this welfare program. Second, I discuss the remaining gaps in our understanding and give several contrasting altemative explanations for the observed correlation, each with a different policy implication.

This article explores the claim that college‐educated workers are increasingly likely to be in “noncollege” occupations. We provide a conceptual framework that gives analytical content to the previously vague distinction between “college” and noncollege jobs. We show that, when there is heterogeneity in preferences, equally productive college workers can be in college and noncollege jobs. This framework is also used to show that skill‐biased technological change will lead to a decline in the proportion of college workers in noncollege jobs. This prediction is supported by the data.

This article develops analytic links between cohort composition and human capital accumulation across generations. By focusing on cohort composition rather than cohort size, it offers new links between demographic change and economic outcomes. The model shows that changes in the educational attainment of parents and changes in relative fertility rates between educational classes affect human capital accumulation of the next generation. The main prediction of the model, of a negative behavioral feedback, is shown to be consistent with data on the probability of attending college for men born between 1927 and 1962.