Knowledge that Transforms

We estimate short‐run, medium‐run, and long‐run individual labor market effects of training programs for the unemployed by following program participation on a monthly basis over a 10‐year period. Since analyzing the effectiveness of training over such a long period is impossible with experimental data, we use an administrative database compiled for evaluating German training programs. Based on matching estimation adapted to address the various issues that arise in this particular context, we find a clear positive relation between the effectiveness of the programs and the unemployment rate over time.

Contrary to the original intention of no‐fault workers’ compensation laws, employers deny liability for a substantial fraction of on‐the‐job injuries. We develop and estimate a simple structural model that explains the high rate of litigation as a consequence of asymmetric information. We estimate the model using data for a large sample of back injuries in Minnesota. Simulations under the counterfactual assumption that all denied workers pursue their claims suggest that the strategic incentive accounts for 30%–40% of observed liability disputes.

This paper reexamines an old question: what is work and why do we do it? A straightforward ’economic ’ answer is that work is any time activity for which we receive a positive wage, but this begs the question which activities command a positive wage. Now the answer depends on market level considerations such

Even in countries with high average job security, workers with low tenure typically enjoy very limited job protection. This study analyzes the impact of such a feature on job duration. It uses a 1999 British reform that increased job security for workers with 1–2 years of tenure. The firing hazard for these workers decreased by 26% relative to the hazard for workers with 2–4 years of tenure. The firing hazard for workers with 0–1 year of tenure also decreased by 19%, which is consistent with better recruitment practices and hence improved match quality.

What can account for the differences in marriage and employment decisions across blacks and whites? To answer this question, I develop a dynamic, equilibrium model of marriage. Two explanations for the racial differences in behavior are considered: differences in population supplies and wages. Black‐white differences in population supplies explain one‐fifth of the difference in marriage rates and between one‐fifth and one‐third of the differences in employment rates across race. Removing the racial gap in wages eliminates the differences in employment but increases the differences in marriage rates.

Spousal education is correlated with earnings for two reasons: cross‐productivity between couples and assortative mating. This article empirically disentangles the two effects by using Chinese twins data. We have two innovations: using twins data to control for the unobserved mating effect in our estimations and estimating both current and wedding‐time earnings equations. We find that both crossproductivity and mating are important in explaining the current earnings. Although the mating effect exists for both husbands and wives, the cross‐productivity effect mainly runs from Chinese husbands to wives. Our findings shed light on the theories of human capital, marriage, and the family.

France’s 1998 implementation of the 35‐hour workweek has been one of the greatest regulatory shocks on labor markets. Few studies evaluate the impact of this regulation because of a lack of identification strategies. For historical reasons due to the way Alsace‐Moselle was returned to France in 1918, the implementation of France’s 35‐hour workweek was less stringent in that region than in the rest of the country, which is confirmed by double and triple differences. Yet it shows no significant difference in employment with the rest of France, which casts doubt on the effectiveness of this regulation.

Economists generally assume, implicitly, that “the return to schooling” is invariant across local labor markets. We demonstrate that this outcome pertains if and only if preferences are homothetic—a special case that seems unlikely. Our theory predicts that returns to education will instead be relatively low in expensive high‐amenity locations. Our analysis of U.S. data provides support for this contention; returns to college are especially low in such cities as San Francisco and Seattle. Our findings call into question standard empirical exercises in labor economics that treat the returns to education as a single parameter.

Using a unique data set on teachers’ union election certifications from Iowa, Indiana, and Minnesota, I estimate the effect of teachers’ unions on school district resources and on student educational attainment. My empirical strategy allows for nonparametric leads and lags of union age. I find no impact on teacher pay or per student district expenditures but that unions increase teacher employment by 5%. I find no class size effect because of enrollment increases in unionized districts, and I estimate that unions have no net effect on high school dropout rates. These findings highlight the importance of correctly measuring unionization status.

I present the fact that wage gaps due to firm size increase with job responsibility. I use Swedish data to determine whether wage gaps increase with a direct measure of job responsibility, to compare the age patterns of the wage gaps for blue‐ and white‐collar workers, and to compare wages by job responsibility and spans of control. With U.S. data, I compare supervisory to nonsupervisory occupations and find that wage gaps increase with job responsibility for most occupational ladders. This fact is consistent with hierarchical matching models in which the larger number of subordinates amplifies managerial talent.