Using Current Population Survey data for 1983-93, this article analyzes whether there is a union membership wage premium among full-time, private sector employees covered by union contracts. Ordinary least squares estimates of the membership wage premium are 12%-14%, and allowing membership to be endogenous yields larger estimates. Differences in job tenure, unobservable characteristics, and measurement error cannot fully explain the estimated premium. Significant differences in this premium, as well as in membership rates conditional upon coverage, across various demographic subgroups are also documented. In general, "free riders" do not appear to be free riding. Copyright 2000 by University of Chicago Press.

This article provides an overview of the Canadian Unemployment Insurance (UI) program, including its evolution, salient features, relative size, and knowledge about its labor market impacts. Understanding of these impacts is limited, and we conclude that an "event-study" approach is a promising way to further this knowledge. We examine the effects of the 1976 UI disentitlement of the elderly on their labor force behavior and find evidence of significant adverse selection effects. Interactions with the public pension system suggest that poverty among the elderly could be best addressed through changes in programs other than UI.

Unionization affects cost of production through compensation premia, technology shifts, and deviations from the least-cost combination of inputs. The first two are familiar, but the last is not. This article distinguishes the three effects, illustrates the factor-use effect, and suggests that it may resolve several apparent inconsistencies: union-induced cost effects appear larger than those implied by union compensation and productivity differentials; union compensation and productivity differentials suggest a larger effect on labor intensity of output than is observed; and employers complain that union work rules reduce productivity when there is little evidence that this is so.

This paper has two parts. The first part concentrates on modeling transitions out of unemployment using aggregated gross flow data. Models are estimated using monthly transition probabilities for March-April 1984. This analysis produces evidence consistent with negative duration dependence but sheds no light on the role of macroeconomic factors. The second part focuses on this issue. A time-series analysis of the proportion of long-term unemployment using data for four age and sex groups provides evidence that a proportionately greater increase in long-term unemployment in Australia in the 1970s has been associated with reduction in job availability and the effect of certain supply shocks.

The traditional model of collective bargaining confines unions to settlements constrained by the employer's labor demand curve, but an alternative model places wage-employment outcomes on a contract curve that extends beyond the labor demand curve. This paper derives a multidimensional (hedonic) contract-curve model in which employment-security provisions are used to maintain efficient bargains outside the employer's demand curve and distinguishes empirically between the contract-curve and demand-constraint models using data for public school teachers in New York State. Estimates clearly support the contract-curve model over the demand-constraint model by linking the gap between compensation and the value of the marginal product to the strength of employment-security provisions.

Expert performance is often evaluated assuming that good experts have good outcomes. We examine expertise in medicine and develop a model that allows for two dimensions of physician performance: decision making and procedural skill. Better procedural skill increases the use of intensive procedures for everyone, while better decision making results in a reallocation of procedures from fewer low-risk to high-risk cases. We show that poor diagnosticians can be identified using administrative data and that improving decision making improves birth outcomes by reducing C-section rates at the bottom of the risk distribution and increasing them at the top of the distribution.

This article investigates the consequences of labor market search for the theory of hedonic wages. We find that the introduction of search has surprising consequences for the theory of hedonic wages. In particular, we demonstrate that the equilibrium distribution of wage and nonwage amenity bundles generally bears little resemblance to workers' underlying preferences. A consequence of this analysis is that estimates of workers' marginal willingness to pay, derived from the conventional hedonic wage methodology, are biased. In addition, we demonstrate that search generates differences between firm‐level and employee‐level data that can cause substantial deviations in the estimates of hedonic wage equations.

Workers paid by the piece should be happy to introduce new techniques that increase output, but firms always seem to reduce the piece rate when workers start earning too much money. Workers respond by restricting output and keeping good new ideas to themselves. We show that this outcome is inevitable in a competitive environment. However, there are noncompetitive situations where firms can use piece rates to get cooperation from their workers. These predictions are consistent with case history evidence from the cotton spinning industry in England in the nineteenth century and the Lincoln Electric Company in the United States even today. Copyright 2000 by University of Chicago Press.

This article examines the effects of unemployment compensation finance in a labor market in which firms pay efficiency wages. Two self‐financing unemployment compensation systems are compared: one in which benefits are financed by a proportional payroll tax and another in which experience rating is introduced by taxing firms in proportion to their separations. We find that experience rating leads to less unemployment, less shirking, and higher output.

This study is concerned with the determinants of dominant language fluency, its effects on earnings, and its endogeneity with earnings among immigrants. Dominant language fluency is hypothesized to be a function of three fundamental variables: exposure to the language, efficiency in second language acquisition, and economic benefits from language fluency. Conceptual variables with empirical counterparts are developed. Earnings are hypothesized to be a function of language skills, among other variables. Ordinary least squares, instrumental variables, and sample selection bias techniques are used to estimate the equations for Australia. Comparisons are made with analyses for the United States, Canada, and Israel. Copyright 1995 by University of Chicago Press.