Knowledge that Transforms

Empirical studies of the relation between uncertainty and the length of union‐firm contracts have focused on the effects of inflation, money‐supply, or industry‐specific uncertainty. This article describes two extensions of previous work. First, real, aggregate uncertainty arising from oil shocks is incorporated into a contract‐duration model. Oil shocks significantly affect contract length in seven of 21 U.S. manufacturing industries. Second, the model is used to test whether the duration of reopenable bargains is positively related to uncertainty associated with large shocks, as has been described in Danziger. The evidence indicates some qualified support for this proposition.

The article measures the impact of high school resources on women’s educational attainment and earnings. No link emerges between education and school resources—as measured by the pupil‐teacher ratio, spending per pupil, teachers’ starting salaries, or books per student. For white women, no significant connection between school resources and wages is found. But school inputs are in several cases significantly and positively related to black women’s wages. Wage elasticities with respect to school inputs are uniformly larger for black women. Finally, the impact of school resources on earnings remains constant or in some cases weakens as workers grow older.

This article studies the impact of raiding opportunities in a labor market in which worker abilities differ. Recruiting firms can either raid an elsewhere‐employed worker of known ability by bidding up his wage or go through costly search to find a good worker among the unemployed. In equilibrium, all types of workers experience unemployment, high‐ability workers involuntarily. The raiding opportunities give rise to involuntary unemployment without changing the basic properties of the competitive model and thus suggest new implications of various institutional parameters on unemployment, in particular, unemployment compensation, minimum wages, wage taxation, and search requirements.

In this article, we measure the impact of on‐site safety inspections on the frequency of work‐related injury and death in the Alberta construction sector, 1987–92. The data are disaggregated by subindustry allowing different risk levels to be associated with different work activities. In our sample, there is a dramatic decrease in inspection activity which alows us to assess the necessity for continuing with current levels of inspection effort. We find that on‐site safety inspections have no effect on the risk of accident and injury but do have a positive effect in reducing the number of work‐related fatalities.

We conduct an experimental analysis of final offer arbitration (FOA) with differentially informed players. Under FOA, the arbitrator must choose one of the two submitted offers. In our control, the uninformed player makes an offer to the informed player prior to the submission of offers to the arbitrator. The treatment allows negotiation after offers are submitted to the arbitrator. Because these offers are potentially binding, they may transmit privately held information and, thereby, lower the dispute rate. We find that allowing negotiation in the face of potentially binding offers lowers the dispute rate by 27 percentage points.

The assumption of constant returns in the matching function, embodied in most bilateral search models, is crucial to ensure the uniqueness of the unemployment rate along a steady‐state growth path. This article explores the empirical viability of this assumption by estimating individual reemployment probabilities on a sample of unemployment entrants. I apply hazard models to survey data on both completed and uncompleted unemployment durations. The hypothesis of constant returns to matching is not rejected, on the basis of the evidence that the job‐finding hazard depends only on local labor market tightness and is independent of its size.