Knowledge that Transforms

The dramatic decline in unionization over the last decade is investigated in the context of a supply/demand model of union status determination using data from surveys of workers conducted in 1977 and 1984 along with data from the National Labor Relations Board on representation elections. It is concluded that the decline in unionization since 1977 is accounted for largely by (1) an increase in employer resistance to unionization, probably due to increased product market competitiveness and (2) a decrease in demand for union representation by nonunion workers due to an increase in the satisfaction of nonunion workers with their jobs and a decline in nonunion workers' beliefs that unions are able to improve wages and working conditions.

This article presents evidence that turnover is negatively selective on a worker's job performance. At establishments with about seventeen employees, workers who are one standard deviation (21 percent) less productive than average during the first few months on the job are 11 percentage points more likely to be laid off or fired and 7 percentage points more likely to quit during the succeeding year. At large nonunion establishments and in small labor markets, productivity has large effects on involuntary separations, but almost no effect on quits. Productivity appears to be positively related to layoffs and quits at unionized establishments. Copyright 1990 by University of Chicago Press.

Trends in wages and employment of black men are contradictory. Wages are rising and employment is falling. The article first describes employment trends using data from the five decennial censuses, 1940-80, noting that education is becoming a more important determinant of participation. Next, it is shown that ratios of average wages have not been severely biased by falling participation of those who would earn the least if they worked. The final question asks whether falling participation of black men results from deteriorating job opportunities or from falling labor supply; falling supply appears to dominate.

The federal-private wage differential is reexamined with recent data. Using specifications similar to those used in three previous studies, I find that the federal-private wage differential has narrowed since the 1974-79 period analyzed in those studies. In addition, I discover that wage differentials based on specifications used in the literature are biased upward because the previous studies did not control for detailed occupational and locational characteristics of workers. Corrected point estimates of the wage gap are much smaller than previous estimates in the literature. Differences in the gap across demographic groups, occupations, and locations are also discussed.

A formal model of occupational choice is developed that shows the extent to which the compensation for increased duration exceeds that for increased risk. Using the Panel Study of Income Dynamics linked to industry data on injuries and unemployment, we find nearly all the compensating wage differential for losses due to workplace injuries is for increases in the duration of loss and similarly for losses due to cyclical unemployment. The compensating differentials for risk of injury are larger for union than for nonunion workers, while those for cyclical unemployment are smaller for union workers.

This study investigates the impact of union organization on the wages and labor practices of establishments newly organized in the 1980s. It uses a research design in which establishments are "paired" with their closest nonunion competitor. It finds that, unionism had only a modest effect on wages in the newly organized plants, which contrasts sharply with the huge union wage impact found in cross-section comparisons of union and nonunion individuals, but unionism substantially alters several personnel practices, creating grievance systems, greater seniority protection, and job bidding and posting. That newly organized establishments adopt union working conditions but grant only modest wage increases suggests that "collective voice" rather than monopoly wage gains is the key to understanding new unionism.

Comparative advantage and the division of labor make geographic concentration of production within a nation profitable and cause many cities to be specialized in one or a few main industries. Specialized cities, however, suffer greater unemployment risk. The theory of compensating wage differentials predicts that individuals living in more specialized cities will be compensated in the form of higher wage rates. We study the effects of specialization on wages and unemployment in the United States. We find evidence of compensating wage differentials. That firms choose to locate in more specialized, higher-wage cities is indirect evidence of the gains to specialization.

This article formulates and estimates alternative equilibrium models of industrial wage determination and self-selection. In explaining industrial wage differentials, we find that it is important to account for heterogeneous sector-specific skills and self-selection decisions by agents concerning their sector of employment. The classical Roy model is rejected. So is an efficiency units model of the labor market. A revised Roy model that accounts for comparative advantage in the choice of industrial sectors and choice between market and nonmarket work is much more successful in explaining cross-section wage distributions and their evolution over time.

This article investigates wage differentials for employees of different size firms utilizing an econometric methodology that allows the size of employer to be treated as endogenous in the context of discrete, ordered employer-size data. As a result we are able to estimate (i) employer-size wage gaps, which are corrected for selectivity bias, and (ii) the magnitude and direction of the selection bias. Decompositions of the resulting wage differentials are computed, with comparisons of the conditional (on sorting across employer size) and unconditional wage gaps.

This article reports nonparametric estimates of the effect of labor-supply behavior on the payments to families enrolled in the Seattle/Denver Income Maintenance Experiment. The randomized assignment of families to the treatment groups in this experiment was designed to permit the calculation of these nonparametric estimates. However, the nonparametric estimates have never been reported, even though they are easy to construct using a simple weighting procedure. Unfortunately, responses to the data collection instrument (which depended on costly surveys) were not random, and this opens up some ambiguity in the results.