Knowledge that Transforms

This article attempts to determine whether wage records reported by employers to state unemployment insurance (UI) agencies provide a valid alternative to more costly retrospective sample surveys of individuals as the basis for measuring the impacts of employment and training programs for low‐income persons. We analyze UI data and survey data for a sample of low‐income adults and youths from 12 sites in the National Job Training Partnership Act (JTPA) study. Our comparison indicates that impact estimates based on UI data and survey data were usually comparable. However, average surveyreported earnings were higher than average UI‐reported earnings.

This article defines and analyzes job security in the context of implicit contracts designed to overcome incentive problems in the employment relationship. Contracts of this nature generate predictions concerning the relationship between job security parameters—such as worker seniority and sectoral economic conditions—and the probability of separations. To test these predictions, I estimate binomial and multinomial models of job separations using Panel Study of Income Dynamics (PSID) data for the years 1976‐93. The results are consistent with a decline over time in the incentives to maintain existing employment relationships for male workers and for skilled white‐collar women.

We estimate interindustry wage differentials using new French longitudinal data that allow a tracking of workers and their firms over time. We find that, when measured on a cross‐sectional basis, they primarily reflect the interindustry variations in unmeasured labor quality. However, interindustry wage differentials are only a minor component of interfirm wage differentials. The average differential in wages paid to the same workers by different firms is about 20%–30%. In a given industry, wage policies are more favorable to workers in large, capital‐intensive firms.

In recent years, Federal Reserve Chairman Alan Greenspan, former U.S. Secretary of Labor Robert Reich, and many journalists have argued that workers are more anxious about losing their jobs than they were in the past. I use the 1977‐96 General Social Survey to document trends in workers' beliefs about their own job security. During the 1990s, workers have been more pessimistic about losing their jobs in the next 12 months than workers were during the 1980s. Workers have also been more concerned about suffering future job loss that would have resulted in a decline in earnings or a spell of unemployment.

This article compares immigrant and native‐born male occupational distributions in Canada in the 1980s. Three questions are addressed: (1) How do immigrant and native‐born occupational distributions differ? (2) Are immigrants more occupationally mobile? and (3) How do immigrant occupations and mobility relate to characteristics used in immigrant selection? Results indicate that immigrants are more skilled, but this declines across successive cohorts. Immigrants are more occupationally mobile even long after arrival, indicating immigration may contribute to a more flexible labor force. Immigrants who are not assessed on their skills or are not fluent at arrival are less occupationally mobile.

Jobs with performance-related pay (PRP) attract workers of higher ability and induce workers to provide greater effort. The authors construct an integrated model of effort and sorting that clarifies the distinction between observable and unobservable ability and the relationship between earnings and productivity. Predictions are tested against data from the British Household Panel Survey. The PRP raises wages by 9 percent for men and 6 percent for women. Theoretical calculations show that these estimated earnings differentials represent average productivity differentials net of monitoring costs at the marginal firm using PRP but not of the disutility of additional effort expended by workers. Copyright 1999 by University of Chicago Press.

In 1987, the Journal of Labor Economics published an issue on the economics of personnel. Since then, personnel economics, defined as the application of labor economics principles to business issues, has become a major part of labor economics, now accounting for a substantial proportion of papers in this and other journals. Much of the work in personnel economics has been theoretical, in large part because the data needed to test these theories have not been available. In recent years, a number of firm‐based data sets have surfaced that allow personnel economics to be tested. Using two such data sets, I give support to the implications of theories that relate to life‐cycle incentives, tournaments, piecework incentives, pay compression, and peer pressure. I conclude that personnel economics is real. It is far more than a set of clever theories. It has relevance to the real world. Additionally, firm‐based data make asking and answering new kinds of questions feasible. The value of research in this area is high because so little is known compared with other fields in labor economics. Questions about the importance of a worker's relative position in a firm, about intrafirm mobility, about the effect of the firm's business environment on worker welfare, and about the significance of first impressions can be answered using the new data. Finally, I argue that the importance of personnel economics in undergraduate as well as business school curricula will continue to grow.

We examine the effects of minimum wage legislation in Canada over the period 1975–93. For teenagers we find that a 10% increase in the minimum wage is associated with roughly a 2.5% decrease in employment. We also find that this result is driven by low frequency variation in the data. At high frequencies the elasticity is positive and insignificant. The difference in the elasticity across the bandwidth has implications for the interpretation of employment dynamics as a result of minimum wage policy and experimental design in minimum wage studies. It also provides a simple reconciliation of the “new minimum wage research,” which reports very small negative, or positive, elasticities.

The model of job search involves both employer matches and career matches. Workers may change employers without changing careers but cannot search over possible lines of work while working for one employer. The optimal policy implies a two‐stage search strategy in which workers search over types of work first. The patterns of job changes observed in the National Longitudinal Survey of Youth support this two‐stage search policy. Among male workers who are changing jobs, those who have previously changed employers while working in their current career are much less likely to change careers during the current job change.

We use a unique new data set that combines data on individual workers and their employers to estimate marginal productivity differentials among different types of workers. We then compare these to estimated relative wages, leading to new evidence on productivity‐based and nonproductivity‐based explanations of the determination of wages. Among our findings are (1) the higher pay of prime‐aged workers (aged 35–54) and older workers (aged 55+) is reflected in higher point estimates of their relative marginal products, and (2) for the most part, the lower relative earnings of women are not reflected in lower relative marginal products.