Research in Labor Economics: Volume 19

We explore the response of employment (unemployment) skill differentials to skill-biased shifts in demand touched off by the new and spreading technologies. We find that skill differentials in unemployment follow at least in part the same pattern as skill differentials in wages; they widen initially but decline after a roughly 5-year lag, allowing time for training and learning to handle the new technologies.

In the micro (PSID) cross-section the differentials show up as sectoral differences defined by technology. In the aggregate time series relative unemployment is defined by educational unemployment differentials. We find that the pace and turnaround in the 'unemployment gap' is twice as fast as in the 'wage gap'. Apparently, the hiring and training response is quicker than the wage response.

We also observe in time series that the pace of technology has unclear effects on aggregate unemployment in the short run, but appears to reduce it in the longer run. In addition to technology, maturing of the workforce, and growth of international trade reduce unemployment in the longer run. The same variables also significantly reduce inflation in both the short and long run.

Given the actual changes in these factors in the early 90s we are able to predict a little over a half of the decline in unemployment and about 70% of the reduction in inflation in the latter half of the last decade.

Data from the Current Population Survey (for the U.S.) and from the 1986 Hong Kong By-census and the 1991 Hong Kong Census were used to study the following issues: (1) What is the incidence of adequate schooling, overschooling and underschooling in the two countries, and has it changed between 1986 and 1991? (2) What are the wage consequences of adequate schooling, overschooling and underschooling, and have they changed over time? Also, are the results influenced by labor market experience?

Economists have been reluctant to interpret as purely causal the relationship between educational attainment and earnings. In an influential paper in which they use quarter of birth as an instrument for educational attainment in wage equations, Angrist and Krueger interpret their estimates as the causal impact of education on earnings. To support this interpretation, they argue that compulsory school attendance laws alone account for the association between quarter of birth and earnings. In this work we present new evidence suggesting that this interpretation may not be well-founded. We document an association between quarter of birth and earnings in cohorts that were not bound by compulsory school attendance laws. Moreover, we find that the association between quarter of birth and educational attainment was weaker in more recently-born cohorts while no similar pattern existed in the association between quarter of birth and earnings. Our results call into question the validity of any causal inferences based on Angrist and Krueger's estimates regarding the effect of education on earnings.

Recent evidence indicates that dual-earner families are increasing and that spouses' roles may be changing. In light of these changes, this study asks the following question: how might career hierarchy in the family, that is, one spouse's job or career taking precedence over the other's, affect wage outcomes? Previous research by social scientists has considered related topics, but not the relationship between career hierarchy and wages per se. Using information on spouses' earnings and family attitudes about career roles from the National Survey of Families and Households, this study: (1) describes the likely pattern of career hierarchy among full-time, full-year, dual-earner couples, and (2) takes a first step toward assessing the effect of career hierarchy on wage outcomes. The results provide some evidence that wives who have the secondary career in their family tend to have lower wages than those who have the primary career. Results for husbands are inconclusive.

This chapter examines gender differences in intra-firm and inter-firm job changes, including worker-initiated and firm-initiated separations, for white full-time British workers over the period 1991-96. We document four main findings. First, job mobility is high for both men and women, with more than one quarter of the sample changing job each year. Second, the distinction between promotions, quits and layoffs is important, suggesting that studies that either aggregate worker-initiated and firm-initiated separations or neglect within-firm mobility may provide an inappropriate picture of career mobility. Third, we find that the average male and female quit and promotion probabilities are remarkably similar, but there are significant gender differences in layoff probabilities. Fourth, we find significant gender differences in the impact of variables such as union coverage, occupation and presence of young children.

We discuss specification of regression models for using migration data to infer the living standards of different regions, and for observing how much of the standard of living is determined by income opportunities versus non-pecuniary amenities. We estimate a regression using Canadian data from 1976-95, which results in rankings of the provinces with respect to overall living standards and amenities, with different rankings for different age groups. We also uncovers some interesting evidence as to the accuracy of the assumption of equilibrium.

This chapter discusses several testable implications of Lazear's (1979) model of mandatory retirement and tests whether they are consistent with the data, using a sample from the National Longitudinal Survey of Mature Men. Empirical evidence on the close association between firm pension programs and mandatory retirement programs can be interpreted to lend support to Lazear's model. However, estimates from an econometric model of retirement behavior reject an important implication of the model concerning the relationship between mandatory retirement and the propensity to retire early.

We analyze the effectiveness of public works programs (PWP, Arbeits-beschaffungsmaßnahmen) in Eastern Germany as measured by their effects on individual future re-employment probabilities in regular jobs. These are estimated by discrete hazard rate models on the basis of individual-level panel data. We account for unobserved individual heterogeneity in both the PWP participation and in the outcome equations. We also test for selection on unobservables.

We find that public works programs seem to have no special targeting focus on disadvantaged groups in the labor market and that participants are, on average, worse off concerning their re-employment prospects in regular jobs than unemployed people who do not join such a program. A possible explanation for this result is that PWP participants search less intensively for a regular job while on such a program than unemployed non-participants.

This study uses micro-data to analyze wage formation in the Nordic countries at the regional level. Our results deviate systematically from the main conclusions drawn by Blanchflower and Oswald (1994). We do find a significant negative long-run relationship between unemployment and real wages at the regional level. However, we find no stable negative relation between wages and unemployment across regions in the Nordic labor markets once regional fixed effects are accounted for. Wage formation at the regional level is characterized by considerable persistence, but unemployment exerts no immediate influence on wages at the regional level. There is no evidence of a transitory wage curve, nor of a Phillips curve, at the regional level in the Nordic countries. The results are consistent with a theoretical model where central bargaining agents