Knowledge that Transforms

This article builds a simple model of worker sorting and matchspecific productivity to explain interindustry wage differentials. High‐skilled workers sort themselves into the industries offering more jobs that are better matched to them, and those industries pay higher wages (on average). In job transition following an exogenous job separation, the likelihood of industry switching is higher among marginal workers—low‐(high‐) skilled workers in high‐(low‐) wage industry. Empirical findings from a sample of exogenous job separations created from the Displaced Worker Surveys are generally consistent with the implications of the model.

Technological innovation has reduced the effect of diabetes. Diabetic behavioral modification in the face and expectation of medical improvement should lead to improved labor market outcomes. This article uses three cross‐sectional data sets, from 1976, 1989, and 1992, to document improvements in diabetic labor market performance. Women diabetics have significantly increased their labor force participation while male diabetics have slightly reduced their participation relative to nondiabetics.

This study quantifies the roles of national, region‐specific, and industry‐specific shocks in aggregate employment fluctuations in U.S. regions and industries. Variation among the growth rates of major regions and industries is decomposed into unobserved national, region‐, and industry‐specific components. The results reject the view that any heterogeneity in regional fluctuations is attributable to differences in industry composition. After controlling for industry mix effects, roughly 40% of the variance of the cyclical innovation in any region's growth rate is particular to that region. In addition, region‐specific shocks appear to propagate across regions over time.

Using Italian Social Security records for male workers from a sample of firms in Turin from 1981 to 1983, we show that conditional on the worker's own wage the average wage in the establishment for similar workers is negatively related to quits. We also find that this variable predicts future wage growth. This is consistent with an economic model in which workers compare the longrun value of employment opportunities when making quit decisions.

We attempt to further characterize the search strategies of the employer. In the article, we discuss how characteristics of the employer or conditions that the employer faces affect the optimal search strategies and the probability of filling a vacancy in each period. Semiparametric and parametric methods are used to estimate hazard rates of filling vacancies. The results suggest that for the given sample of vacancies, the general form of the hazard function is nonmonotonic. Additionally, the results suggest that those employers who have advance notice of the vacancy may search longer than those employers who do not.

This article reexamines the negative seniority‐earnings relationship for academic economists. The empirical results show that the anomalous negative seniority effect found in earlier academic market studies holds in the absence of direct measures of research productivity. The negative effect, however, eventually disappears as more comprehensive measures of publishing, citations, and other productivity measures are included in the wage equation to control for the quantity and quality of faculty productivity. Faculty with greater seniority appear to be rewarded relatively less simply because many have been relatively less productive than their colleagues with less seniority at similar stages in their careers.

This article studies interfirm racial segregation in two newly developed firm‐level databases. We find that the interfirm distribution of black and white workers is close to what would be implied by random assignment. We also find that black workers are clustered in employers where managers, owners, and customers are also black. These findings may be reconciled by the facts that (a) there are not enough black employers to generate much segregation and that (b) other forces may systematically integrate black and white workers. Finally, we find that the black/white wage gap is primarily a within‐firm phenomenon.

Since technological change influences the rate at which human capital obsolesces and also increases the uncertainty associated with human capital investments, training may increase or decrease at higher rates of technological change. Using the National Longitudinal Survey of Youth, we find that production workers in manufacturing industries with higher rates of technological change are more likely to receive formal company training. At higher rates of technological change, the training gap between the more and less educated narrows, low‐skilled nonproduction workers receive significantly more training than higher‐skilled nonproduction workers, and the proportion of individuals receiving training increases.

"This article utilizes an exact match file between the 1978 March [U.S.] Current Population Survey and administrative records from the Social Security Administration to analyze errors in the reporting of annual income using nonparametric methodology.... Three new findings are of interest: there is higher measurement error in cross-sectional samples than in panels. The negative relationship between measurement error and earnings is driven largely by overreporting among low earners. Median response errors are not related to earnings."

This article considers the estimation of the structure of wages in union and nonunion sectors. It proposes an estimator that extends standard panel data techniques to the case in which the return to the permanent component of the error term is differently rewarded in the two sectors. The econometric model is used to estimate the effect of unions on both the level and the variance of wages in Canada. The findings indicate that unions increase the average wage of workers and compress the returns to observable measures of skill and to a time‐invariant unobservable measure of skill.