This paper examines when and to what extent an individual's relative wage depends on his/her productivity relative to others doing the same job. Starting wages were influenced by background characteristics and training cost realizations but not by relative productivity. Wages one year later were influenced by productivity but the effects were small. The wage elasticity was .2 at small establishments and 0 at establishments with over 400 employees. The wage response to relative productivity and training costs was weaker in small labor markets, suggesting that wages do not fully respond to performance because of the firm specificity of job performance differentials.

This article presents evidence that turnover is negatively selective on a worker's job performance. At establishments with about seventeen employees, workers who are one standard deviation (21 percent) less productive than average during the first few months on the job are 11 percentage points more likely to be laid off or fired and 7 percentage points more likely to quit during the succeeding year. At large nonunion establishments and in small labor markets, productivity has large effects on involuntary separations, but almost no effect on quits. Productivity appears to be positively related to layoffs and quits at unionized establishments.

Our review of the evidence suggests that the claims of the advocates of standards and examination based reform of American secondary education may be right. The countries and Canadian provinces with such systems outperform other countries at comparable levels of development. In addition, New York State, the only state with a CBEEE, does remarkably well on the SAT test when student demography is held constant (Bishop 1996). CBEEEs are not, however, the most important determinant of achievement levels. CBEEEs are common in developing nations where achievement levels are often quite low [eg. Columbia and Iran]. Belgium, by contrast, has a top quality education system without having a CBEEE. More research on the effects of CBEEEs is clearly in order.

The test score decline between 1967 and 1980 was large (about 1.25 grade-level equivalents) and historically unprecedented. New estimates of trends in academic achievement, of the effect of academic achievement on productivity and of trends in the quality of the work force are developed. They imply that if test scores had continued to grow after 1967 at the rate that prevailed in the previous quarter century, labor quality would now be 2.9 percent higher and 1987 GNP $86 billion higher.

The purpose of this paper is to present new evidence on employer search to fill a position. The study is based on data for recent hires collected in the 1980 Employer Opportunity Pilot Project (EOPP) survey of employers. The paper investigates the effect of factors such as training, employer size, and labor market conditions on employer search. Employer search is measured by the number of applicants interviewed prior to an employment offer and the average number of hours spent by an employer recruiting, screening, and interviewing per applicant interviewed. The paper also documents the relationship between employer search and wages.

John A. Bishop, John P. Formby, Paul D. Thistle, Convergence and Divergence of Regional Income Distributions and Welfare, The Review of Economics and Statistics, Vol. 76, No. 2 (May, 1994), pp. 228-235