Knowledge that Transforms

In the United States and Britain, there is a "family gap" between the wages of mothers and other women. Differential returns to marital and parental status explain 40%–50% of the gender gap. Another 30%–40% is explained by women's lower levels of work experience and lower returns to experience. Taking advantage of "quasi experiments" in job‐protected maternity leave in the United States and Britain, this article finds that women who had leave coverage and returned to work after childbirth received a wage premium that offset the negative wage effects of children.

This article uses various micro data sets to study entrepreneurship. Consistent with the existence of capital constraints on potential entrepreneurs, the estimates imply that the probability of self-employment depends positively upon whether the individual ever received an inheritance or gift. When directly questioned in interview surveys, potential entrepreneurs say that raising capital is their principal problem. Consistent with our theoretical model's predictions, the self-employed report higher levels of job and life satisfaction than employees. Childhood psychological test scores, however, are not strongly correlated with later self-employment.

Individuals involved in basic research, like other workers, respond to incentives. Funding agencies provide implicit incentives when they specify the rules by which awards are made. The following analysis is an exercise in understanding incentives at an applied level. Specific rules are examined. What is the effect of rewarding past effort? What happens when a few large awards are replaced by many small awards? How does the timing of an award affect effort? How does an agency choose which topics to fund? Socially optimal rules are derived.

What are the fundamental driving forces of macroeconomic fluctuations? In particular, why do people spend more time working in booms and less in recessions? These are basic questions of macroeconomics. Recent thinking has emphasized technology shifts, preference shifts, and changes in government purchases as likely driving forces. It is useful to distinguish atemporal and intertemporal effects of the driving forces. Under standard assumptions, the technology shift has no effect through atemporal channels because income and substitution effects exactly offset. A straightforward decomposition of movements of employment attributes most of them to the atemporal effects of preference shifts.

Divergent trends in the real value of the minimum wage in Mexico and Colombia in the 1980s provide an opportunity for evaluating the impact of minimum wages on developing economies. Using panel data for each country, substantial disemployment effects of minimum wages are found in Colombia, where the impact is estimated at roughly 2%–12% over the 1981–87 period. In Mexico, minimum wages have had no effect on wages or employment in the formal sector. The key explanation for the different impact is that the minimum wage is an effective wage in Colombia but not in Mexico.

We examine the impact of recent trade reforms. Although employment in the average private sector manufacturing firm was unaffected, there were significant employment losses to exporters and highly affected firms. Parastatals increased employment by hiring low‐paid temporary workers. Many firms did not adjust wages or employment. We examine two possible explanations. First, barriers to labor market mobility could have impeded adjustment. Second, we develop a model of labor demand which allows for imperfect competition and endogenous technological change. Our results suggest that although labor markets were flexible, many firms cut profit margins and raised productivity rather than reducing employment.

Volunteer activity is work performed without monetary recompense. This article shows that volunteering is a sizeable economic activity in the United States, that volunteers have high skills and opportunity costs of time, that standard labor supply explanations of volunteering account for only a minor part of volunteer behavior, and that many volunteer only when requested to do so. This suggests that volunteering is a "conscience good or activity"-something that people feel morally obligated to do when asked, but which they would just as soon let someone else do.

We use data on male employees from the U.K. Family Expenditure Survey for the years 1968-86 to investigate the behavior of wages over time and across cohorts. We find that differentials between manual workers and professional managerial ones are lower at labor market entry for younger cohorts but increasing faster with age in the 1980s than in the past. The returns to experience appear to be very low in the United Kingdom, particularly for manual and clerical workers, although the improved education of younger workers may partly explain this. Finally we show that individual wages in the United Kingdom are highly procyclical.

In recent years several models have been developed in an attempt to explain countercyclical movements of job turnover, the sum of gross job creation and destruction rates. However, only in the United States is a negative and statistically significant correlation between job turnover and employment growth actually observed. In the other countries studied, job turnover is either acyclical or mildly procyclical. Rather than being associated with the greater flexibility of the United States compared with the Western European labor markets, these asymmetries in the cyclical behavior of gross job flows can be attributed to statistical artifacts, namely, with the fact that U.S. job turnover statistics underrepresent the small business sector and with regression to the mean effects.

A major issue in the analysis of unemployment durations concerns distinguishing genuine duration dependence of the exit rate out of unemployment from unobserved heterogeneity. We present a method for the nonparametric estimation of both phenomena, designed to be applicable to time-series data on aggregate outflows from different duration classes. The model explicitly takes into account that individual exit rates are affected by the business cycle and by seasonal effects. The method is applied to U.S. data. We find diverging duration effects among black and white individuals. However, except for white males, duration dependence is dominated by unobserved heterogeneity.