We develop a model in which it is predicted that more resources will be devoted to safety in a workers' compensation system with experience-rated premiums than in one with flat-rated premiums. We test this model by observing the effect on fatality rates of the move from flat rating to experience rating in the forestry and construction industries of Ontario, Canada. The evidence provides strong confirmation of the theory.

This paper analyzes a new explanation of the “ripple effect” of minimum wages based on how minimum wages affect hedonic compensation. Minimum wage hikes lower compensating differentials at low-skill undesirable jobs because they raise wages at the most desirable low-skill job, the minimum wage job. This change in hedonic compensation may cause some individuals to optimally leave low-wage undesirable jobs and seek more desirable employment. If labor supply falls at low-wage undesirable jobs, employers would raise wages, consistent with the ripple effect. Empirically, I provide evidence that hedonic-based labor supply substitution is taking place and contributing to the ripple effect.

This article develops a model in which quit rates, and thus the income distribution, depend on employee perceptions of the accuracy of employer assessments of individual productivity because these latter assessments affect wages. When employees believe that these assessments are accurate, income inequality tends to be high. The model can account for the negative correlation across some countries of inequality and the extent to which inequality is deemed to be excessive. It also fits the contrast in U.S. and French experiences concerning the tenure of highly educated workers with high wages relative to the tenure of lower‐paid workers.

Although much research has focused on recent increases in annual earnings inequality in the United States, the increases could have come from either of two sources: the distribution of lifetime earnings could have become more unequal or the receipt of lifetime earnings could have become more unstable. Based on an analysis of the 1968–92 Panel Study of Income Dynamics, we find that lifetime earnings inequality increased during the early 1980s and that earnings instability increased during the 1970s. We also examine how these trends are related to changes in the distribution of wages and hours and the returns to education.

Conventional models predict that workers consider employment opportunities and monetary rewards expected over their lifetimes when making current period decisions such as whether to quit a job. This article tests the hypothesis that later career opportunities affect quit decisions by examining the relationship between teaching and school administration. Evidence on the extent to which administrative positions are available to teachers, and the salary premia associated with them, is presented. Discrete time logit-hazard models of teacher quits, estimated using data from New York State, provide some support for the hypothesis, though the magnitudes of the estimated effects are small.

This article considers the implications of allowing a manager discretion over task assignment. If employees earn rents from carrying out tasks, and the manager cannot "sell" the jobs to her subordinates, she has an incentive to take on more tasks than is optimal and delegate too few to a subordinate. I show that although firms can alleviate this incentive by offering output-contingent contracts, even with the optimal contract, (i) the manager carries out too many tasks, (ii) she exerts too much effort on her own tasks, and (iii) her subordinate exerts too little effort on his tasks.

This article characterizes labor markets in which the heterogeneity of workers and firms results in thin markets and rents. Neoclassical marginal analysis and matching are blended into a computable general equilibrium model of trade in efficiency units of labor. Although workers' bargaining problems are interrelated, a simple wage contract generates wage flexibility and efficient matching in the model's equilibrium. Equilibrium wages are predicted to vary with the diversity of firms, the scarcity of skills, and the costliness of search. The model is applied to superstar markets, union bargaining in sports, interindustry wage differentials, and the relationship between pay and profit.

One method of estimating losses resulting from work stoppages is to multiply the total number of man-days lost during disputes by the average product of workers. This statistic can be easily calculated using information typically available from government agencies but has obvious flaws. For example, the behavior of other firms not involved in disputes is ignored. Moreover, when output is durable, the impact on consumption is unknown since inventories can be used as buffers. To assess the importance of these and other considerations, I develop an alternative empirical framework and implement it using data from the British Columbian lumber industry.

An efficient matching model of quits and layoffs is developed to account for several empirical regularities. Differences between quits and layoffs over the life and business cycles and across demographic groups are generated by differential rates of general productivity growth. The standard approach to quits and layoffs, based on wage rigidity, is shown to be incapable of accounting for many of the empirical regularities. Although a formal test rejects a structural prediction of the efficient turnover model, the specification does well in predicting both the level of and time-series variation in the fraction of separations labeled quits.