Knowledge that Transforms

This article empirically examines married women's labor supply and child care expenditures. The article uses winter 1984-85 data from the Survey of Income and Program Participation to estimate a fully structural econometric model of labor supply and paid care utilization. Estimation results indicate that the cost of paid care has small negative effects on labor supply but stronger negative effects on paid care utilization. Consequently, subsidy programs such as the Child and Dependent Care Tax Credit appear to have few effects on married mothers' employment.

Three to 5 years after job displacements, workers receiving the advance notice mandated by current law earn approximately 10% more than their nonnotified counterparts. This differential is not the result of firms systematically notifying persons with favorable reemployment prospects-early warnings are disproportionately obtained by individuals expected to earn relatively low wages in subsequent employment. It is not clear, however, whether prenotification has a causal effect. The notification differential may occur because the advance notice is frequently provided by employers offering other kinds of adjustment assistance such as job counseling, skill retraining, supplemental unemployment benefits, or outplacement assistance.

World War II veterans earn more than nonveterans in their cohort. We test whether the World War II veteran premium reflects nonrandom selection into the military of men with higher earnings potential. The estimation is based on the fact that from 1942 to 1947 priority for conscription was determined by date of birth. Information on individuals' dates of birth may therefore be used to construct instrumental variables for veteran status. Empirical results from the 1960, 1970, and 1980 censuses, along with two other microdata sets, support a conclusion that World War II veterans earn no more than comparable nonveterans and may well earn less.

We use the Current Population Survey to describe what we believe are the most salient aspects of labor force behavior of older men and women during the last 2 decades. First, we show that early retirement has increased dramatically, and this trend continued through the 1980s. Second, we show that the factors that most sharply distinguish propensities toward early retirement are those usually associated with low wages. Third, we show that trends in reduced participation for older men parallel those for younger men, while a pattern of increasing female participation is to be expected given the behavior of younger cohorts.

A review of previous analyses of labor supply effects of Social Security Disability Insurance (DI) concludes that estimates of labor supply effects and net social costs are upward biased because they ignore interactions between DI and other insurances. A model of optimal insurance, postinjury accommodations, and labor supply shows that reduction in labor supply and increase in consumption when disabled do not necessarily imply moral hazard. Optimal postinjury accommodations vary inversely with firm size. The Americans with Disabilities Act will reduce wages and labor supply of healthy workers, particularly in small firms. Effects on labor supply of the disabled are ambiguous.

This article argues that the negative relationship between weekly hours worked and the gross hourly wage rate is due to the provision of fringe benefits. As the total weekly wage increases, employers and employees avoid taxation by substituting wages with nontaxable, nonwage benefits. I produce a wage that incorporates the benefit effects and estimate the corresponding labor-supply elasticities. An estimator is presented for the wage/hours market locus and the structural labor-supply function. An empirical application indicates that an estimated negative labor-supply elasticity associated with the observed gross wage is reversed when the adjusted wage is employed.

This article derives three dynamic models of worker effort determination, based on a shirking efficiency wage model, a compensating differentials model, and a union-firm bargaining model. It shows that all of these three models have the same long-run comparative statics but differ in their short-run dynamics. We use these different predictions about the dynamics as a basis for testing the models. Euler equations for each model are estimated using panel data on 486 U.K. companies. The evidence supports the shirking model in firms with low levels of unionization but the bargaining model in highly unionized industries.

This article investigates whether prenotification decreases postdisplacement joblessness. Reduced-form estimates indicate that lengthy written notice is associated with small increases in the probability of avoiding nonemployment but with no decline in average durations. Significant reductions are found, however, for household heads, women, nonwhites, and in local labor markets with high unemployment rates. A new method is developed to control for the endogeneity of voluntarily provided advance notice. This procedure suggests that previous research substantially overstates the degree to which prenotification reduces nonemployment and indicates that the actual decrease is between 2 and 5 working days.

This article presents an equilibrium model of a dual labor market. Firms are assumed to be identical ex ante, and dualism arises endogenously. The dual labor market outcome is supported by efficiency wage and search considerations. Firms choose wage/effort requirement packages optimally given optimal search and effort choice by workers, and vice versa. We prove existence and investigate the occurrence and nature of dual labor market equilibria.

This article studies the role of the family in determining the skill composition and labor market experiences of immigrants in the United States. Our theoretical framework, based on the assumption that family migration decisions maximize household income, shows that the family attenuates the selection characterizing the skills of the immigrant population. The empirical analysis uses the 1970 and 1980 Public Use Samples of the U.S. census and reveals that an immigrant's skills and labor market performance are greatly influenced by the composition of the household at the time of migration and by his placement in the immigration chain.