We provide an explanation for peer pressure in teams based on inequity aversion. Analyzing a two‐period model with two agents, we find that the effect of inequity aversion strongly depends on the information structure. When contributions are unobservable, agents act as though they were purely selfish. However, when contributions are made transparent at an interim stage, agents exert higher efforts in the first period and adjust their efforts according to the interim information in the second period. This form of peer pressure reduces free riding, and thus more efficient outcomes are attained. The results are confirmed in a real effort experiment.
Consumption expenditure declines sharply at the time of retirement for many households, but the majority maintain a smooth consumption path. A simple life cycle model with uncertainty about the time of retirement can account for this pattern. A richer version of the model is calibrated to data from the Health and Retirement Study (HRS). The median change in consumption expenditure at retirement generated by the model is zero, while the mean is negative, matching the HRS data. However, the magnitude of the drop in consumption among households that experience a decline is too small in the model compared to the data.
The famous events of May 1968, starting with student riots, threw France into a state of turmoil. As a result, normal examination procedures were abandoned, and the pass rate for various qualifications increased enormously. The lowering of thresholds at critical stages of the education system enabled a proportion of students to pursue more years of higher education than would otherwise have been possible. For those on the margin of passing their examinations, additional years of higher education increased future wages and occupational levels. Interestingly, the effect is also transmitted across generations and is reflected in the educational performance of children.
This article seeks to explain the substantial increases in older men’s labor force participation rates observed since the mid‐1990s. Using data from the United States, Canada, and the United Kingdom, I exploit the cohort effects driving recent increases in older women’s participation rates to identify the effect of a wife’s participation decision on her husband’s participation decision. I then decompose the changes in older married men’s participation rates, demonstrating that husbands’ responses to increases in wives’ participation in the labor force can explain one‐fourth, one‐half, and one‐third of the increase in the United States, Canada, and the United Kingdom, respectively.
I revisit the intertemporal labor supply framework, using exogenous variations in daily weather to see how time at work varies with rain. In my model, a rainy day is associated with a lower enjoyment of leisure, effectively increasing wages and bringing more hours at work. I test the model using data from the American Time Use Survey, supplemented with daily weather. I find that, on rainy days, men shift on average 30 minutes from leisure to work. Computations give a rough estimate of the intertemporal elasticity of labor supply of around 0.01, in line with the rest of the literature.
According to U.S. Census and Current Population Survey (CPS) data, employed U.S. men are more likely to work more than 48 hours per week today than 25 years ago. Using 1979–2006 CPS data, we show that this increase was greatest in the 1980s, among highly educated, highly paid, and older men, and among workers paid on a salaried basis. We examine some possible explanations for these changes, including composition effects. Among salaried men, increases in long work hours were greatest in detailed occupations and industries with larger increases in residual wage inequality and slowly growing real compensation at “standard” (40) hours.
We examine the impact of maternity leaves on the period mothers are away from work postbirth and the likelihood they return to their prebirth employer. We use the introduction and expansion of statutory job-protected maternity leave entitlements in Canada to identify these effects. We find that modest leave entitlements of 17-18 weeks do not change the amount of time mothers spend away from work. In contrast, longer leaves do have a substantive impact on behavior, leading to more time spent at home. We also find that all entitlements we examined increase job continuity with the prebirth employer. (c) 2008 by The University of Chicago.
Measures of four basic skills, constructed from the Dictionary of Occupational Titles, are used to examine the source of human capital specificity. The measures are used to characterize the skill portfolio of each job and to construct distance measures between jobs. Wage losses in the Displaced Worker Surveys are shown to be more closely associated with switching skill portfolios than switching industry or occupation code per se. These switches represent large decreases in the skill portfolio in the postdisplacement job. The recent evidence for industry‐specific capital is reexamined. The results suggest a difference between fluid and crystallized skills.
This paper uses variation induced by firm closures to explore the intergenerational effects of worker displacement. Using a Canadian panel of administrative data that follows almost 60,000 father-child pairs from 1978 to 1999 and includes detailed information about the firms at which the father worked, we construct narrow treatment and control groups whose fathers had the same level of permanent income prior to 1982 when some of the fathers were displaced. We demonstrate that job loss leads to large permanent reductions in family income and small increases in mobility and divorce. Comparing outcomes among individuals whose fathers experienced an employment shock to outcomes among individuals whose fathers did not, we find that children whose fathers were displaced have annual earnings about 9% lower than similar children whose fathers did not experience an employment shock. They are also more likely to receive unemployment insurance and social assistance. The estimates are driven by the experiences of children whose family income was at the bottom of the income distribution, and are robust to a number of specification checks. This work was completed while Oreopoulos was a Statistics Canada Research Fellow and member of the Family and Labour Studies Division of Statistics Canada. The financial support of the National Science Foundation is gratefully acknowledged. We also wish to thank Miles Corak, and seminar participants at Brown University, MIT, Princeton University, Stanford University, Yale University, the University of California Berkeley, UCLA, the University of Toronto and the NBER summer institute for their helpful comments.
In 1997, the provincial government of Québec, the second most populous province in Canada, initiated a new child‐care policy. Licensed child‐care service providers began offering day‐care spaces at the reduced fee of $5.00 per day per child for children aged 4. By 2000, the policy applied to all children not in kindergarten. Using annual data (1993–2002) drawn from Statistics Canada's Survey of Labour and Income Dynamics, the results show that the policy had a large and statistically significant impact on the labor supply of mothers with preschool children.