Knowledge that Transforms

This article utilizes a rich data set on workers and their employers in the United States and Japan to test several predictions of human capital theory. The data set incorporates both prospective and retrospective measures of turnover, includes multiple measures of training, and provides a basis for calculating plant-specific returns to tenure. Contrary to human capital theory, there is no evidence that establishments with high levels of training have either high returns to tenure or low levels of turnover. Surprisingly, establishments with high returns to tenure do not have low levels of turnover.

After describing the development and dimensions of the American welfare system, this paper explores the relationship of illegitimacy to welfare. Alternative measures of illegitimacy are discussed. The relationship of the welfare package and the illegitimacy ratio is examined over time and across states, by race. A bivariate relationship of welfare and illegitimacy exists among whites, but not among blacks. Among blacks, a strong cross-state relationship exists between density of the black population and the illegitimacy ratio. The relationship is robust, persisting after controlling for a variety of demographic and economic variables, and persisting across time.

This article examines wage determination among union and nonunion truck drivers using the 96 monthly Current Population Surveys for 1983-90. Union density in the previously regulated for-hire sector of the trucking industry fell from about 60% during the regulatory period of the 1970s to about 25% by 1990. Union log wage premiums fell from 0.40 in the 1970s to 0.30 or below in the 1980s. Longitudinal estimates from multiple panels for 1983-84 through 1989-90 suggest far smaller union premiums, supporting the thesis that part of the wage differential following deregulation is a compensating premium for driver quality.

This article provides an overview of the Canadian Unemployment Insurance (UI) program, including its evolution, salient features, relative size, and knowledge about its labor market impacts. Understanding of these impacts is limited, and we conclude that an "event-study" approach is a promising way to further this knowledge. We examine the effects of the 1976 UI disentitlement of the elderly on their labor force behavior and find evidence of significant adverse selection effects. Interactions with the public pension system suggest that poverty among the elderly could be best addressed through changes in programs other than UI.

This article analyzes the relationship between hours of work and labor force participation (LFP) in Heckman's model, Cogan's fixed-cost model, Moffitt's minimum hours constraint model, and a generalized version of Heckman's model. First, the parameter restrictions between the LFP and reduced-form hours-of-work equations are compared. The models are then estimated, and the results support the weakening of the link between the LFP and hours-of-work decisions. One implication of the analysis is that Heckman's model overstates the standard labor supply elasticities because it confounds the direct effect on labor supply with the participation effect.

The General Social Surveys Cumulative Data File is used to analyze the schooling, occupational status, and earnings of American Jews. Jews are identified by a question on religion at age 16. The analysis focuses on trends within the survey period and intergenerational changes from the father to the respondent. Ceteris paribus, Jews have significantly higher levels of schooling, occupational status, and earnings than other whites, and within the survey period there is no trend in the differential. The Jewish fathers also had higher levels of achievement than other fathers, but the differentials increased from the father's to the respondent's generation.

An analysis of the economic impact of divorce settlements in the United States is presented using data for a white cohort taken from the National Longitudinal Study of the High School Class of 1972. "The effects of spouses' incomes on the divorce transfer are estimated and used to simulate the welfare effects of divorce on husbands, wives, and children under alternative assumptions about marriage contracts and the ability of a couple to continue coordinating resources in the aftermath of divorce. We find a positive (negative) relationship between divorce transfers and the growth of husband's (wife's) earnings during marriage. The estimated expenditure on children in the divorce state is only half the accustomed level during marriage."

This article presents estimates of the elasticity of supply of labor to child care. This parameter is an important determinant of the effects of child care subsidies and regulations on the cost of child care. Using data from the Current Population Survey, there is evidence of an elasticity in the range of 1.2-1.9. This implies that the majority of the benefits of child care subsidies accrue to consumers of child care. It is also consistent with the fact that child care workers' wages remained flat in real terms in recent years, despite rapid growth in the demand for child care.

This article analyzes the effect of labor unions on overtime compensation and overtime hours. Estimates from May 1985 Current Population Survey data indicate that unionization increases the prevalence of premium pay for overtime and reduces the incidence and extent of overtime hours. Along with the finding of previous research that unionized workers are more susceptible to temporary layoffs, these results are consistent with a model in which unions use overtime pay to stabilize working hours and expand membership.

We develop a partial equilibrium matching model of the labor market in order to examine whether adoption of a reemployment bonus would displace workers not offered the bonus. We examine the displacement effect for (a) unemployment insurance (UI)-eligible workers who are offered but do not find a job in time to qualify for a bonus and (b) UI-ineligible workers who are never offered a bonus. The model predicts minimal displacement of the former group. But for the latter group, the model predicts an increase in unemployment duration of .2-.4 week and an increase in unemployment of up to 2 per thousand.