Knowledge that Transforms

We analyze the organization of employment in nonsimultaneous shifts, considering the shift composition of manufacturing employment, both in the business cycle frequency and in the long run. With regard to the short run, we argue that shiftwork would be procyclical and that this, combined with the inherent lumpiness of shifts, may help resolve the puzzle of the procyclicality of labor productivity. With regard to the long run, we identify channels that may account for the increase in shiftwork in the past half-century and for the nonnegative cross-country correlation between shiftwork and the level of income.

What are the fundamental driving forces of macroeconomic fluctuations? In particular, why do people spend more time working in booms and less in recessions? These are basic questions of macroeconomics. Recent thinking has emphasized technology shifts, preference shifts, and changes in government purchases as likely driving forces. It is useful to distinguish atemporal and intertemporal effects of the driving forces. Under standard assumptions, the technology shift has no effect through atemporal channels because income and substitution effects exactly offset. A straightforward decomposition of movements of employment attributes most of them to the atemporal effects of preference shifts.

The decomposition of wage residuals into standard deviation and percentile ranks can be misleading because the two measures are not necessarily independent. With rising wage inequality, the mean percentile rank of low‐wage groups will rise simply because more dispersed distributions have thicker tails. This interpretation is consistent with the observed stability of gender and racial wage gaps. In contrast, the unmeasured skill interpretation of wage residuals would predict widening wage gaps in the face of rising wage inequality, unless one posits an increase in the level of unobserved skill for women and blacks.

Intersectoral shocks require resource reallocation across sectors while intrasectoral shocks require resource reallocation within sectors. A crucial difference between these shocks is that the former require much higher adjustment costs than the latter. Using accounting data to calculate returns on capital in manufacturing industries, I generate proxies for these shocks. I find that the magnitude of intrasectoral shocks is much greater than that of intersectoral shocks but intersectoral shocks explain the aggregate unemployment rate better than intrasectoral shocks. I also find that intersectoral shocks are more closely related to the unemployment rate in the later part of the sample considered.

Divergent trends in the real value of the minimum wage in Mexico and Colombia in the 1980s provide an opportunity for evaluating the impact of minimum wages on developing economies. Using panel data for each country, substantial disemployment effects of minimum wages are found in Colombia, where the impact is estimated at roughly 2%–12% over the 1981–87 period. In Mexico, minimum wages have had no effect on wages or employment in the formal sector. The key explanation for the different impact is that the minimum wage is an effective wage in Colombia but not in Mexico.

This article explores the determinants of full‐time and part‐time reemployment following job displacement in Canada. Among those who lose full‐time jobs, women are found to have both longer median joblessness durations and higher probabilities of part‐time reemployment than men with little of this difference explained by gender differences in worker characteristics. Unemployment insurance receipt is associated with longer median joblesness durations and, among those who find a job within 1 year of displacement, an increased probability of part‐time reemployment for both men and women.

A model where choice of occupation is sequential is applied to college graduates from the National Longitudinal Study of the High School Class of 1972 to investigate how higher moments of occupational earnings distributions influence initial field of work. Individual specific life‐cycle earnings projections that incorporate option values of occupational mobility are generated, and the relationship between these pay measures and choice of initial occupation is explored within a multinomial logit framework. The findings indicate a strong positive relationship between these earnings predictions and the likelihood that college graduates enter an occupation.