This article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions. The empirical evidence then shows that the most frequently used search methods (i.e., friends and relatives and direct applications without referral) are also the most productive in generating offers and acceptances. The number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs. Specific methods are chosen in a manner that generates positive average effects on outcomes for those using them.

Immigrant workers will be evaluated by their ability to speak English as well as by their other skills. The empirical work in this article add resses the hypothesis that there is an economic cost to English langu age deficiency both in occupation-specific earnings and in (cross-sec tional) occupational mobility. This analysis suggests that it is cost ly to be deficient in English, but the cost is ethnically and occupat ionally specific. Hispanics have a higher cost for English language d eficiency than Asians at every skill level

A general selection model is estimated in which workers select across four labor markets-private/nonunion, privat e/union, public/nonunion, and public/union. Evidence is found of posi tive selection bias in the private/nonunion sector and of negative se lection bias in the public/union sector. Union wage differentials in the public and private sectors as well as public/private wage differe ntials are contrasted. The authors discuss when it is appropriate to use each type of differential.

A bilateral moral-hazard problem provides a rationale for "up-or-out" employment contracts. The employer sets a wage higher than opportunity cost to induce the worker to invest in firm-specific capital. If the individual does not make the grade, it is in the firm's interest ex post to fire him. Had the initial arrangement not included provisions for firing individuals, the firm would underreport the value of the employee, wrecking the incentive scheme. The basic model permits both firm and worker to be risk neutral. Therefore, it admits a straightforward multiperiod extension, which we also investigate.

This article investigates racial differences in 1985-86 salaries of individual professional basketball players. White and black players earn similar mean compensation; however, controlling for a variety of productivity and market-related variables and for the endogeneity of player draft position, we find a significant ceteris paribus black compensation shortfall of about 20%. Further, we find that all else equal, including team performance and market factors, replacing one black player with an identical white player raises home attendance by 8,000 to 13,000 fans per season. The compensation and attendance results together are consistent with the idea of customer discrimination.

Previous studies of optimal unemployment insurance (UI) design ignore the impact of UI on human capital investment decisions. We show that fully experience-rated UI increases investment in human capital when future employment opportunities are not known with certainty. In the presence of wage taxation, the optimal level of UI trades off full insurance and the impact, through human capital, of UI on the wage tax base. This trade-off, in turn, depends on the extent to which human capital accumulation reallocates labor between market and untaxed nonmarket activities. Taxation of UI benefits increases the optimal level of UI provision.

This article develops and tests an implication of risk-shifting in labor market implicit contracts. A 2-period implicit contract model is presented. The optimal contract, in the face of bankruptcy constraints, calls for a real wage that responds asymmetrically to permanent and temporary shocks to the firm's revenue function. In particular, the real wage responds more to a permanent shock than to a temporary shock of the same size. This implication is tested on 12 4-digit Standard Industrial Classification (SIC) code industries. Eleven of the 12 industries sampled show evidence that supports the asymmetric wage response implication.

This article presents an empirical study of strike activity in a panel of contract negotiations for some 250 firm-and-union pairs. Evidence is presented on two sources of variation in dispute rates: changes in the characteristics of the collective bargaining agreement that affect subsequent strike outcomes and the effects of lagged strikes on the incidence and duration of subsequent disputes. Strike probabilities are significantly affected by the duration and expiration month of the previous agreement. Dispute rates are also increased by the occurrence of a short strike during the previous negotiations and reduced by the occurrence of a long strike.

This article evaluates the quality of workers' information regarding pension offerings using both administrative records and worker reports of pension provisions. Missing and incorrect information is wide-spread. Unionized employees, higher income workers, better educated workers, and those with seniority are better informed about their pensions. There are also demographic differences: minorities have less pension knowledge than whites, but women are better informed than men along several pension dimensions. Myopia about pension incentive structures is troubling since workers may save or consume suboptimally, change jobs, or retire earlier than they would have if equipped with better pension information.

A model of wage determination in unionized oligopolistic industries is developed and used to compare the outcome of collective bargaining under two different bargaining structures-one in which the workers of each firm are represented by separate and independent unions (local bargaining) and one in which a national union represents all workers in the industry. In both cases, the bargaining problem has a unique outcome with industrywide bargaining resulting in higher wages. In addition, industrywide unions are inherently stable in that there are no incentives for independent unions to attempt to cheat on the collusive agreement.