Knowledge that Transforms

In West Germany during the 1980s, law changes cut the level of unemployment compensation for the unemployed without children and extended the duration of unemployment insurance for unemployed aged over 41. Analysis of these changes using the German Socioeconomic Panel shows that transitions from unemployment for those under 49 were particularly responsive to extensions of unemployment insurance. The implied elasticity for escapes of men to employment is similar to estimates for men in the United States, suggesting that differences in the potential duration of unemployment insurance only partially explain the difference in spell lengths between Germany and the United States.

This article shows that college performance and selectivity have significant effects on earnings. It suggests that work that does not include college performance overstates the effect of college selectivity for Whites and understates it for Blacks. While the size of the effect of college selectivity for Blacks is larger than for Whites, the large Black earnings gain is offset for students whose own Scholastic Aptitude Test scores are significantly below the median of the college they attend. This results from the lower probability of graduation for "mismatched" Blacks and the subsequently lower earnings for those who fail to complete college.

I construct an equilibrium search model where some employers have a distaste for hiring minority workers and show that this bias results in economic discrimination against minority workers. Although only unprejudiced firms hire minority workers, minority workers receive lower wages than workers not facing discrimination whenever any employers in the market have a distaste for minority workers. One implication of the model is that gender or racial wage differentials understate the utility loss from discrimination. In addition, the wages of minority workers increase when their proportion increases in the labor market.

Occupational sex segregation and its relationship with wages during 1973-93 are examined. Wage level and wage change models are estimated using Current Population Survey data matched with measures of occupational skills and job disamenities. Standard analysis confirms that wage levels are substantially lower in predominantly female occupations. Gender composition effects are reduced by about a quarter for women and by over one-half for men following control for skill-related occupational characteristics. Longitudinal analysis indicates that two-thirds or more of the standard gender composition effect is accounted for by occupational characteristics and unmeasured worker skill or taste differences. Copyright 1995 by University of Chicago Press.

"This article uses the 1970, 1980, and 1990 Public Use Samples of the U.S. census to document what happened to immigrant earnings in the 1980s and to determine if pre-1980 immigrant flows reached earnings parity with natives. The relative entry wage of successive immigrant cohorts declined by 9% in the 1970s and by an additional 6% in the 1980s. Although the relative wage of immigrants grows by 10% during the first 2 decades after arrival, recent immigrants will earn 15%-20% less than natives throughout much of their working lives."

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.

Results from the Displaced Worker Surveys show that the wage cost of switching industries following displacement is strongly correlated with predisplacement measures of both work experience and tenure. Workers apparently receive compensation for some skills that are neither completely general nor firm-specific but rather specific to their industry or line of work. Further, among displaced workers who find new jobs in their predisplacement industry, postdisplacement returns to predisplacement job tenure resemble cross-section estimates of the returns to current seniority. This suggests that firm-specific factors may contribute little to the observed slope of wage-tenure profiles. Copyright 1995 by University of Chicago Press.