Knowledge that Transforms

Empirical models of local government unionization reveal substantial reductions in union membership due to right-to-work laws. Free riders, rather than underlying antiunion sentiments, are probably responsible because the unionization models include better measures of sentiments than right-to-work laws. Furthermore, these laws reduce the probability that bargaining unions form by more than they reduce the probability that nonbargaining associations form in three of five local government functions. These results also confirm the importance of free riders because union security clauses that prohibit free riders in states without right-to-work laws exist only in collective-bargaining contracts.

Time (hourly payoffs) and salary (the payoff does not vary with hours) account for the bulk of the payoffs on labor contracts. This article argues that the choice between time and salary centers on the presence (time) or absence (salary) of information about flows of effort or output per unit time. Without information about the flow of hourly effort or output, payoffs for time give the worker an incentive to supply hours without effort. Time can then become uninformative about output. In this situation, if the contract includes a fixed payoff, it is likely to be a salary rather than a payoff for time.

This article examines the effects of cocaine and marijuana use on the wages of young adults. The endogeneity of drug use in a wage equation is considered, and a two-stage least squares procedure is implemented. The results suggest that increased use of marijuana or cocaine is associated with higher wages. The positive relationship between drug use and the wage does not diminish with age. I also investigate whether systematic differences in the return to measures of human capital investments can explain the positive relationship between drug use and wages.

The free market may not lead to the efficient level of just-cause employment protection if workers are heterogeneous. Any firm that switches to just cause will attract a disproportionate share of workers that provide low effort yet are difficult to dismiss with cause. Thus, there is an externality concerning each firm's just-cause policy. If all firms had just-cause policies, then the efficiency gains of just cause might outweigh the burden of the undesirable workers. Nevertheless, no single firm may find it in its interest to switch to just cause. It is possible for laws that require just cause to increase efficiency.

A longitudinal establishment data set is used to assess the effect of changes in workers' compensation benefits on the incidence of lost-workday injury and illness cases in manufacturing for the years 1979-84. Higher benefits are found generally to increase lost-workday cases. However, consistent with theory, the benefit effect is smaller in larger, more highly experience-rated establishments. After initial estimates are obtained using ordinary and weighted least squares, several count data models are explored that are more appropriate for the integer injury and illness counts in the data. The results are consistent across the specifications.

Separability between parents' and children's consumption is a necessary assumption in any attempt to impute the intrafamily allocation of goods. This assumption implies an estimation procedure where the observed effect of demographic variables on the marginal propensity to consume adult goods is used as a key for identifying the rule governing the distribution between children's and parents' consumption. Using the U.S. 1972 Consumption Expenditure Survey, I found that white and black families tend to allocate three-quarters of their consumption to parents and one-quarter to children. Tests for robustness, for selectivity bias, and of the separability assumption itself uphold these findings.

The influence of birth order and childhood family size on future achievement is discussed. Two major empirical findings are presented by the author. "First, neither birth order nor childhood family size significantly influences the level or growth rate of wages, a result that is consistent with previous research. Second, family size is both a statistically and economically significant determinant of women's employment status: women from small families work less than women from large families when they are young and more than women from large families when they are more mature." The geographical focus is on the United States.

The authors present survey data challenging the assumption implicit in analyses of labor supply that, all else being equal, workers prefer declining over increasing wage profiles. The authors test several explanations for their results, including that (1) there is something special about wages (e.g., their association with productivity), as opposed to other types of payments, that induces the preference for increasing wages; (2) utility depends not only on absolute levels of consumption, but also on changes in consumption over time; and (3) respondents who prefer increasing wage profiles are irrational and would change their behavior if the rationale for preferring declining wages were explained. Copyright 1991 by University of Chicago Press.

This article is concerned with the determinants of English-language fluency among immigrants and the effects of fluency on earnings. Using special survey data on a sample of over eight hundred aliens, the analysis shows the importance of certain variables not previously available, speaking fluency at migration and English reading fluency. English speaking and reading fluency both increase with duration in the United States, and the increase with duration is greater for those with more schooling and who are not Hispanic. The article shows that reading fluency is more important than speaking fluency as a determinant of earnings. Copyright 1991 by University of Chicago Press.

This article examines the properties and prevalence of measurement error in longitudinal earnings data. The analysis compares matched Current Population Survey data to administrative Social Security payroll tax records. In contrast to typically assumed properties of measurement error, the results indicate that errors are serially correlated over two years and negatively correlated with true earnings (i.e., mean reverting). In a cross section, the ratio of the variance of the signal to the total variance is 0.82 for men and 0.92 for women. These ratios fall to 0.65 and 0.81 when the data are specified in first differences. Longitudinal earnings data may be more reliable than previously believed. Copyright 1991 by University of Chicago Press.