Worker Wellbeing in a Changing Labor Market: Volume 20

Our research provides new econometric evidence concerning partial economic risk sharing between a frail elderly parent and an adult child. We estimate a jointly determined limited dependent variables system explaining the parent's entry into a nursing home, the adult child's visits to the parent, and the adult child's labor supplied. The time allocation of adult sons is unaffected by a parent's frail health. Adult daughters who visit a frail elderly parent daily decrease their annual labor supplied by about 1000 hours annually, largely through labor force non-participation. The implied welfare loss to the daughter from a frail elderly parent in need of frequent visits is about $180,000. Our results run counter to the moral hazard argument against long-term care insurance and clarify the two sides' positions in the policy debate over the degree of generosity of recently proposed tax credits for adult children who help care for sick aged parents.

This paper reexamines the effect of health on the labor force behavior of older men using data from the Health and Retirement Study. Multiple measures of health are included in models of labor force behavior in order to estimate the impact of alternative combinations of self-reported status and diagnosed conditions. Models of annual rates of transition among labor force states are estimated. The transitions are changing jobs, exiting employment, and entering employment. A semiparametric random effects estimator is used to model the endogeneity of health, and the sensitivity of the effects of health to controls for unobserved heterogeneity are examined.

The link between abuse and five labor-market outcomes is analyzed for a large sample of poor women from Washington State. Women abused as adults earned at least 25% less than unabused women in outside employment. Separating earnings into components, women who experienced abuse as children or adults fared significantly worse than unabused women in terms of the probability of work, the average number of months worked per year, and the wage. Sexual abuse was associated with the worst outcomes. Abuse was also associated with worse self-employment outcomes, especially among women sexually abused as adults.

This study uses data from the British National Child Development Survey (NCDS) to examine interactions between socio-economic status (SES), children's test scores, and future wages and employment. We find that children of lower SES have both lower age 16 test scores and higher returns to these test scores in terms of age 33 wages and employment probabilities than high-SES children.

We then examine determinants of age 16 scores. Conditional on having had the same age 7 mathematics scores, high-SES children go on to achieve higher age 16 mathematics scores than children of low or middle-SES. They are also much more likely to pass O-levels in English and Mathematics. These differences are either eliminated or greatly reduced when observable measures of school quality are added to the model, suggesting that high-SES children get better age 16 test scores at least in part because they attended better schools.

On the other hand, conditional on age 7 scores, low-SES children achieve higher age 16 reading scores than high-SES children and the estimated relationship between the two is not affected by the addition of school quality variables. This observation provides evidence consistent with the conjecture that success in reading may be less dependent on school quality than success in mathematics.

This paper utilizes the self-employed to analyze the observed increase in the educational earnings premium in the 1980s. The paper compares the predictions of the signaling and human capital models in response to an exogenous demand shock such as a skill-biased technological change. Since the self-employed have no incentive to invest in a costly signal to show to employers their productivity, a change in the schooling equilibrium should not affect their earnings. Four testable hypotheses are derived. The findings suggest that the signaling model may indeed predict the observed changes in the schooling premium that are not consistent with the predictions of the human capital model.

This study estimates earnings function parameters across alternative occupational paths, with an emphasis on identifying rates of return to post-school human capital investment. Based on cross-sectional and synthetic cohort analysis using the 1973–2000 Current Population Surveys, estimates are obtained for men and women on the returns to schooling and the investment intensity, length, and returns from post-school training. Although the shapes of wage-experience profiles differ substantially across occupations and skill groups, evidence supports the theoretical prediction that rates of return are equivalent across alternative investment paths. Little evidence is found for an increase in returns to post-school training over time. By the 1990s, returns to schooling had risen to a level similar to the returns from post-school training.

Using the 1964–1995 March Current Population Surveys and the 1940–1990 Census, this paper examines the relationship between female employment growth and changes in labor demand. Specifically, we examine whether industrial change and changes in labor demand can account for both the acceleration and deceleration of female employment growth across the decades as well as the pattern of biased growth in favor of more skilled women. We find that labor demand proxies are successful in accounting for the pattern of biased growth but are less successful in accounting for the overall acceleration of female employment, particularly in the 1970s.

This study extends previous works by Sandell and Shapiro (1980) and Shaw and Shapiro (1987), and considers the impact that women's prior plans about future market work have on their earnings and their labor force participation probabilities later in life. Results indicate that consistent prior plans of work increase labor force participation probability. They also increase earnings, with part of the latter effect operating through steeper experience-earnings profiles. Hausman tests fail to reject the exogeneity of prior work plans to current earnings levels. Further analysis reveals that parental family structure, a working mother as a role model, encouragement from parents and teachers, encouragement of reading in the parental home, peer group effects, age, current marital status, health, local unemployment rates, and personal labor market experiences all play important roles in influencing those work plans.

Using data from the National Longitudinal Survey of Youth, this paper examines the role of gender in the promotion process and the importance of promotions in the relative labor market outcomes of young men and women in their early careers. Specifically, how do the factors related to promotion differ for men and women? How do gender differences in promotion translate into differences in subsequent wage growth? To what extent does the promotions gap contribute to the gender wage gap? In answering these questions, alternative definitions of “promotion” will be considered.

Getting ahead matters — particularly for women. The results indicate that women are less likely to be promoted. This gender gap in promotions — the magnitude of which depends on the measure of promotion considered — is explained by differences in the returns to characteristics. Had men and women in our sample faced the same promotion standard, promotion rates would have been higher for women than for men. Furthermore, the share of overall wage growth attributable to promotion is much larger for women than for men reflecting a bifurcation in outcomes between women who get ahead and women who get left behind. Eliminating gender differences in the determinants of and wage payoffs to promotion would contribute to a narrowing of the gender wage gap.

The evaluation of the gender wage gap centers on the consistent estimation of the parameters of interest in a human capital wage regression model. In previous studies, the consistency of the parameter estimates often depends on the restrictive assumptions of strict exogeneity and mean stationarity of corresponding explanatory variables in the model. This applies, particularly, to the work history variables, that is the work experience and the time out of work variable. In this paper, we specify a wage model that allows these variables to be predetermined and discuss consistent estimation by generalised method of moments estimators. For estimation, we use a new longitudinal administrative data set with particularly advantageous features to measure the main variables, i.e. wages and human capital. Our results show that wage models estimated in levels and using first differences of the endogenous regressors as instruments are not valid.

The declining economic position over the past two decades of those workers with less skill increases the importance of the unemployment insurance (UI) system in providing a safety net during periods of unemployment. Recent welfare reform legislation, designed to encourage labor market entry of typically very low-skilled workers who are likely to have unstable work patterns at best, potentially makes the UI system an even more critical component of the safety net. This paper seeks to determine how less-skilled workers typically fare in the UI system, estimating their likelihood of becoming eligible for and collecting benefits. We find that all workers who separate from a job, and particularly those with lower levels of skill, are not likely to be compensated by the UI system. Although minimum earnings requirements keep some less-skilled job losers from receiving UI, it is the provision mandating that separations be “involuntary” that prevents most workers from gaining UI eligibility. These findings suggest that the UI system will provide little additional support to the safety net following welfare reform.