We use unique data to analyze employer tax compliance with Unemployment Insurance (UI) provisions. The data indicate that employers may have underreported $728 million of UI taxes nationally in 1987 alone. To formally examine this noncompliance, a theoretical model of payroll tax evasion is developed showing that increasing payroll tax rates, among other things, likely increases noncompliance by risk-neutral firms. This prediction is empirically verified. The finding that UI tax evasion is systematically related to various firm characteristics suggests that UI audits may be effectively targeted by statistical profiles derived from our model, thereby improving compliance.

This article reports on an empirical analysis of the relationships between alcoholism and income and working. We show that the relationships between alcoholism and labor market success have important age or life-cycle dimensions. We present evidence that alcoholism may affect income more by restricting labor market participation than by affecting the wages of workers. Finally, we demonstrate that the effects of alcoholism on earnings depend on the extent to which one controls for other covariates associated with alcoholism; as such, we suggest that there may be important indirect as well as direct effects of alcoholism on labor market success.

Over the 1980s, there were sharp increases in the return to schooling estimated with conventional wage regressions. The authors explore whether the relationship between ability and schooling changed over this period in ways that would have increased the schooling coefficient in these regressions. Their empirical results reject the hypothesis that an increase in the bias of the schooling coefficient, due to a change in the relationship between ability and schooling, has contributed to observed increases in the return to schooling. The authors also find that the increase in the schooling return has occurred for workers with relatively high levels of academic ability. Copyright 1993 by University of Chicago Press.

Since 1991 more than two dozen states have adopted merit-based student financial aid programs, intended at least in part to increase the stock of human capital by improving the knowledge and skills of the state’s workforce. At the same time, there has been growing concern that the United States is producing too few college graduates in science, technology, engineering, and mathematics (STEM) fields. Using microdata from the American Community Survey, this paper examines whether recently adopted state merit aid programs have affected college major decisions, with a focus on STEM fields. We find consistent evidence that state merit programs did in fact reduce the likelihood that a young person in the state will earn a STEM degree.

In the context of certain models, it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage. We use this strategy to estimate the elasticity of labor supply for men and women workers at a chain of grocery stores, identifying separation elasticities from differences in wages and separation rates across different job titles within the firm. We estimate that women have lower elasticities, so a Robinson‐style monopsony model can explain reasonably well the lower relative pay of women in the retail grocery industry.

Making use of performance data for baseball players, this article provides empirical evidence in support of Lazear’s (1998) theoretical predictions that (1) risky workers will earn a premium for their upside potential, (2) this risk premium will be higher the longer a worker’s work life, and (3) firms must enjoy some comparative advantage in the labor market to be willing to pay a premium to risky workers. The validity of Lazear’s predictions carries implications for wage differentials between young and old workers and between men and women.

This article investigates error properties of survey reports of labor market variables. We use the Panel Study of Income Dynamics (PSID) Validation Study, a two-wave panel survey of workers employed by a large firm that shared its detailed payroll records. Individuals' reports of annual earnings are fairly accurate. Errors are negatively related to true earnings, reducing bias due to measurement error when earnings are used as an Independent variable. Biases are moderately larger for changes in earnings. Earnings per hour are less reliably reported than annual earnings. Biases in estimating earnings functions are relatively small, but those in labor supply functions may be important. Copyright 1994 by University of Chicago Press.

Worker incentive schemes are invariably assumed to be administered by an owner-entrepreneur who has an incentive to understate worker performance after the event. While tournaments can overcome this problem, they discourage cooperation between workers. We show that a professional manager concerned with equality between workers and with avoiding bankruptcy rather than maximizing shareholder wealth will conduct a tournament that preserves individual effort incentives while promoting cooperation between workers. The theory predicts lower debt levels and more compressed pay scales as cooperation becomes more important. In the limit this becomes a group bonus scheme, supported by "blue-chip" debt.

Using 1979–2012 CPS data for the United States and 1975–2012 NES data for Great Britain, we study wage behavior in both countries, with particular attention to the Great Recession. Real wages are procyclical in both countries, but the procyclicality of real wages varies across recessions, and does so differently between the two countries, in ways that defy simple explanations. We devote particular attention to the hypothesis that downward nominal wage rigidity plays an important role in cyclical employment and unemployment fluctuations. We conclude that downward wage rigidity may be less binding and have lesser allocative consequences than is often supposed.

The negative effect of quits on the willingness of firms to provide on‐the‐job training is well documented in the theoretical literature. Here we explore the strength of this effect by solving a firm’s dynamic optimization problem where there is uncertainty about future productivity and nonzero firing costs. We find that the degree to which quit rates affect hiring depends on the ratio of firing to hiring costs. As this ratio rises, the negative effect of quits becomes less important, eventually reversing itself. We also describe how quit rates affect the firing decision. We highlight some testable implications of our analysis.