Two quasi‐experiments are used to estimate the impact of parental divorce on the adult labor market and marital/fertility outcomes of adolescents. These involve individuals experiencing the death of a parent and legislative changes to the Canadian divorce law. Parental loss by death is assumed to be exogenous, the experiences of children with a bereaved background offering a benchmark to assess the endogeneity of parental loss through divorce. Adolescents whose parents divorced put off marriage and, once married, suffer a greater likelihood of marital instability, but their earnings and incomes are not on average much different from others.
This article provides new estimates of the nonprofit/for‐profit wage differential in the U.S. economy. Using observations on 4.1 million private‐sector employees from the 1990 census, I find either zero or slightly positive economy‐wide wage differences between nonprofit and for‐profit employees in a standard earnings equation format. Significant wage differentials are found at the disaggregated occupation and industry level and provide a basis for testing hypotheses explaining nonprofit/for‐profit wage differences.
Should unemployment benefits be paid indefinitely at a fixed rate or should the rate decline (or increase) over a worker’s unemployment spell? We examine these issues using an equilibrium model of search unemployment. The model features worker‐firm bargaining over wages, free entry of new jobs, and endogenous search effort among the unemployed. The main result is that an optimal insurance program implies a declining benefit sequence over the spell of unemployment. Numerical calibrations of the model suggest that there may be nontrivial welfare gains associated with switching from an optimal uniform benefit structure to an optimally differentiated system.
We investigate whether a market‐clearing model is consistent with industry employment and wage patterns related to the cyclical upgrading of labor. We demonstrate that Roy's (1951) market‐clearing model of self‐selection would account for cyclical upgrading if industries were characterized by positive selection. Wage comparisons of industry movers and stayers in panel data do reveal widespread positive selection. Also consistent with the Roy model, composition‐corrected industry wages are more cyclical in high‐wage cyclical industries. The Roy model does fail to explain predictable patterns in the wage changes of industry movers, so we consider several market‐clearing and queuing extensions.
We construct a search equilibrium model for a city with central and suburban labor markets that is consistent with the set of empirical regularities commonly associated with the spatial mismatch hypothesis: a higher rate of unemployment for central city residents than suburban residents, a higher job vacancy rate for suburban firms, and reverse commuting and higher suburban wages. The effectiveness and welfare implications of public policy programs that might be used to remedy the underlying mismatch are examined.
Students often accumulate substantial work experience before leaving school. Because conventional earnings functions do not control for in‐school work experience, their estimates of the return to schooling include the benefit of work experience gained along the way. Using data from the National Longitudinal Survey of Youth, I estimate wage models with and without controls for in‐school work experience. The estimated schooling coefficients are 25%–44% higher (depending on how I control for ability bias) when in‐school work experience is omitted than when it is included. These findings indicate that conventional models significantly overstate the wage effects of “school only.”
The labor supply decisions of certified elementary and high school teachers are examined using data from a general longitudinal survey. A significant decrease in the teaching participation rate takes place over time after teacher certification. Previously unavailable marital and fertility variables provide new insight into reasons for this decrease. Descriptive statistics indicate that high‐ability teachers choose to teach a smaller proportion of time than other teachers. A dynamic, discrete‐choice model, which accommodates Serial Correlation in the wage process for teachers, is used to analyze responsiveness of the overall sample and different types of teachers to two potential types of wage increases.
This study examines aspects of pay and promotion in corporate hierarchies in the context of tournament theory. Evidence supports the tournament perspective in that most positions are filled through promotion and pay rises strongly with hierarchical level. Furthermore, the winner's prize in the CEO tournament increases with the number of competitors for the CEO position. Not all evidence is supportive: the square of the number of competitors is negatively associated with the CEO prize. Additionally, firms do not appear to maintain short-term promotion incentives, as lengthier time in position prior to a promotion reduces the pay increase from the promotion. Copyright 2001 by University of Chicago Press.
Most research on the relationship between teacher characteristics and pupil achievement focuses on salaries, experience, and education. The effect of in‐service training has received less attention. We estimate the effect of in‐service teacher training on achievement in Jerusalem elementary schools using a matched‐comparison design. Differences‐in‐differences, regression, and matching estimates suggest training in secular schools led to an improvement in test scores. The estimates for religious schools are not clear cut, perhaps because training in religious schools started later and was implemented on a smaller scale. Estimates for secular schools suggest teacher training provided a cost‐effective means of increasing test scores.
Studies have suggested that urban agglomeration enhances productivity by facilitating the firm‐worker matching process. This article develops a model that formalizes this notion and demonstrates that, when firm capital and worker skill are complementary in production, urban agglomeration will tend to generate more efficient, yet segregated matches. As a result, not only will local market size be positively associated with average productivity, it will also generate greater between‐skill‐group wage inequality and a higher expected return to skill acquisition. Recent data from the counties and metropolitan areas of the United States is consistent with each of these implications.