Knowledge that Transforms

A simple search model that includes the possibility of recall provides predictions as to the changing effects of recall expectations, a bonus offer, and job counseling on new job finding rates over time. Using data from the New Jersey Unemployment Insurance Reemployment Demonstration Project (NJUIRDP), I find evidence for an initial positive effect of the bonus offer, which diminishes over time. New job-finding rates are found to be negatively affected by higher initial recall expectations. This effect also diminishes over time, and evidence suggests that job counseling is successful in speeding up this process.

This article investigates whether prenotification decreases postdisplacement joblessness. Reduced-form estimates indicate that lengthy written notice is associated with small increases in the probability of avoiding nonemployment but with no decline in average durations. Significant reductions are found, however, for household heads, women, nonwhites, and in local labor markets with high unemployment rates. A new method is developed to control for the endogeneity of voluntarily provided advance notice. This procedure suggests that previous research substantially overstates the degree to which prenotification reduces nonemployment and indicates that the actual decrease is between 2 and 5 working days.

This article presents an equilibrium model of a dual labor market. Firms are assumed to be identical ex ante, and dualism arises endogenously. The dual labor market outcome is supported by efficiency wage and search considerations. Firms choose wage/effort requirement packages optimally given optimal search and effort choice by workers, and vice versa. We prove existence and investigate the occurrence and nature of dual labor market equilibria.

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.

We argue that lawyers' sons follow in their parents' footsteps because the occupation lends itself to low-cost transfer of relevant skills and knowledge from one generation to the next, especially in the context of the family law practice. Analysis of Project Talent data reveals that knowledge about the law is transmitted from lawyers to their children and that this transmitted knowledge is a significant factor in a son's decision to follow in his father's legal footsteps. Second-generation lawyers who receive these human capital transfers experience greater earnings than lawyers who have not received such transfers.

Workers in a long-term relationship often have an incentive to hide their ability early in the relationship to avoid having the firm increase the level of output expected from them in the future. We show that competition for older workers will permit the implementation of efficient piece-rate contracts. When the difficulty of the job is unobserved by the firm, Gibbons (1987) has shown that all piece-rate contracts will be inefficient. Together, these results may explain why piece rates are common in some jobs, such as agricultural work and sales, and not as popular for many manufacturing jobs.

The observed differences in wages across industries may arise from a lack of worker mobility, particularly among experienced workers, allowing the effects of industry shocks to persist for some time. Although young workers arbitrage wage shocks, they will have little effect on the dispersion of experienced workers' wages if young and old workers are poor substitutes in production. This explanation is investigated using the five Censuses of Population between 1940 and 1980. The evidence strongly suggests that differences in pay are not temporary phenomena. The data provide some support for the role of human capital and ability.

Using National Longitudinal Survey data, the authors estimate proportional hazard models in order to learn whether it is more difficult for employers to identify female nonquitters than male nonquitters. They find that women may be a higher risk than men in the overall sample because they are more likely to be "movers" for unobserved reasons. When the authors focus on a relatively recent birth cohort, however, they find that it is no longer difficult to identify female nonquitters. Unobserved heterogeneity becomes an insignificant factor among women and virtually all determinants of turnover are observable at the time of hire.

This research utilizes new data to track the earnings effect of the National Supported Work experiment (NSW) on the youth and Aid to Families with Dependent Children (AFDC) target groups for 8 years following training. The research indicates that the NSW's effect on the AFDC recipients ranged from $375 to $525 in 1978 dollars during the years 1982-86. The sum of the estimated earnings effects for the AFDC treatments over the observed posttraining period more than offset the costs of the training program. The NSW was found to have no discernible effect on the earnings of the youth target group.

Labor turnover costs may or may not decrease average employment in a partial equilibrium model of labor demand, depending on the form of the revenue function, on the rates of discount and of labor attrition, and on the relative size of hiring and firing costs. If discount and attrition rates are strictly positive, firing costs may well increase average employment even when hiring costs reduce it.