Knowledge that Transforms

In this article, I provide both econometric and case study evidence on the labor market effects of the U.S. Supreme Court’s 1985 Garcia v. San Antonio Metropolitan Transit Authority decision that made 80% of state and local government workers eligible to receive compensation for overtime hours worked. Empirical evidence suggests that the behavior of public sector workers is consistent with a Coasian model in which overtime provisions are explicitly bargained for by the parties involved, likely making overtime legislation an ineffective tool for influencing the amount of overtime hours worked by public sector employees.

This article proposes a formal model of migration in which workers are heterogeneous and markets are stochastically correlated. We derive and characterize the optimal migration pattern of a family. We show that migration can take place even when migrants earn less abroad and, surprisingly, when earnings in the foreign country are riskier for every member of the family. Moreover, it may well be an optimal arrangement to have only dependents migrate, thus rationalizing the recent dependent‐oriented migration flows from places like Hong Kong and Taiwan. We provide some evidence in support of our theory.

This paper addresses three academic labor market issues; the declining salaries of faculty employed at public colleges and universities relative to their private institution counterparts, the growing dispersion of average faculty salaries across academic institutions within both the public and private sectors, and the impacts of the growing importance and costs of science on the academic labor market and universities.

This article examines employer demand for welfare recipients using new employer survey data. The results suggest that demand is high but sensitive to business cycle conditions. Factors including skill needs and industry affect prospective employer demand for recipients, while other characteristics that affect their relative supply to employers (e.g., establishment location) influence whether such demand is realized in actual hiring. The conditional demand for black and Hispanic welfare recipients lags behind their representation in the welfare population and seems affected by employers’ location and indicators of preferences. Thus, many demand‐side factors limit the employment options of welfare recipients, especially minorities.

Uncertainty in labor productivity (ULP) is affected by many factors, such as worker‐employer matching, technology, and macroeconomic conditions. Not surprisingly, ULP varies across firms, industries, and economies. How do variations in ULP affect specific human capital (SHC) investment, wage, and labor turnover? A fixed‐wage model is used to show that the answer depends critically on the initial level of ULP. The model is also used to show that wage and SHC are always positively correlated, but SHC investment and labor turnover do not have a monotonic relationship. These results have implications for empirical studies and public policies affecting ULP.

This article investigates the hypothesis that when measures of specific human capital (such as job tenure) are included in earnings functions, there may be a sample selection bias because of job‐matching effects—because workers with high unobserved match quality receive and accept high wage offers. We develop a model for wage offers in a labor market characterized by both specific human capital and job matching. The model provides a theoretical basis for empirical earnings functions containing specific capital, and it demonstrates that sample selection bias reduces the estimated return to specific human capital and tenure.

This article examines whether the Mortensen‐Pissarides matching model with productivity changes can explain the time pattern of wage inequality. The main finding is that the model produces counterfactual results. The main source of failure seems to be the exogenous matching function and/or the exogenous surplus share, neither of which allows firms to use wage policies to direct workers’ searches.