learning and wage dynamics we develop a dynamic model of learning about worker ability in a competitive labor market the model produces three testable implications regarding wage dynamics 1 although the role of schooling in the labor market s inference process declines as performance observations accumulate the estimated effect of schooling on the level of wages is independent of labor market experience 2 timeinvariant variables correlated with ability but unobserved by employers such as certain test scores are increasingly correlated with wages as experience increases and 3 wage residuals are a martingale we present evidence from the nlsy that is broadly consistent with the model s predictions

statistical discrimination and the early career evolution of the black white wage gap this article develops and tests a simple dynamic model of statistical discrimination the model improves on earlier static models both by allowing ex ante uncertainty about worker productivity to be resolved as on the job performance is observed and by generating several testable empirical implications these predictions are tested using a sample of young men from the national longitudinal survey of youth producing mixed evidence for the model the main empirical result is that no black white wage gap exists at labor force entry but that one develops as experience accumulates mainly because blacks reap smaller gains from job mobility

the determinants of australian trade union membership summary this paper investigates the determinants of trade union membership in australia using the engle and granger 1987 theory of co integrated economic variables applying the theory of co integration yields a model of union membership which can be interpreted as distinguishing between long run and business cycle determinants of union membership the principal long run determinant of union membership is found to be the level of employment disaggregated by industry classification business cycle variables the real wage and the change in unemployment are also shown to influence movements in union density these findings are consistent with recent studies which have attributed the decline in union membership in australia since the early 1980s to the changing composition of employment and movements in the rate of unemployment

taxes redistribution and the minimum wage a theoretical analysis this paper considers a simple general equilibrium model that contains two types of workers with differing levels of ability and a social welfare maximizing government the paper shows that social welfare can sometimes be increased by supplementing an optimal linear income tax with a minimum wage but that social welfare can never be increased by supplementing an optimal nonlinear income tax with a minimum wage

belief flipping in a dynamic model of statistical discrimination abstract the literature on statistical discrimination shows that ex ante identical groups may be differentially treated in discriminatory equilibria this paper constructs a dynamic model of statistical discrimination and explores what happens to the individuals who nonetheless overcome the initial discrimination if an employer discriminates against a group of workers in her initial hiring she may actually favor the successful members of that group when she promotes from within the firm the worker s welfare implications i e who benefits from an employer s discriminatory hiring practices are unclear even though agents face discrimination initially some may be better off because of it

beauty and the labor market the authors examine the impact of looks on earnings using interviewers ratings of respondents physical appearance plain people earn less than average looking people who earn less than the good looking the plainness penalty is 5 to 10 percent slightly larger than the beauty premium effects for men are at least as great as for women unattractive women have lower labor force participation rates and marry men with less human capital better looking people sort into occupations where beauty may be more productive but the impact of individuals looks is mostly independent of occupation suggesting the existence of pure employer discrimination copyright 1994 by american economic association

tests for parameter instability in regressions with i 1 processes this article derives the large sample distributions of lagrange multiplier lm tests for parameter instability against several alternatives of interest in the context of cointegrated regression models the fully modified estimator of phillips and hansen is extended to cover general models with stochastic and deterministic trends the test statistics considered include the supf test of quandt as well as the lm tests of nyblom and of nabeya and tanaka it is found that the asymptotic distributions depend on the nature of the regressor processes that is if the regressors are stochastic or deterministic trends the distributions are noticeably different from the distributions when the data are weakly dependent it is also found that the lack of cointegration is a special case of the alternative hypothesis considered an unstable intercept so the tests proposed here may also be viewed as a test of the null of cointegration against the alternative of no cointegration the tests are applied to three data se

l investissement francais dans les colonies 1876 1940 une autre analyse de l enquete de gouvernement de vichy 1943 this paper presents an econometric model of trade union membership in the united kingdom the empirical model utilizes cyclical variables in the explanation of membership changes and separates the short and long run dynamics explicitly it proves to be a superior specification to previous business cycle models estimated for the united kingdom and predicts satisfatorily the recent decline in membership the inclusion of a dummy variable reflecting the political complexion of the government is the only secular variable which significantly improves equation performance but the composition of changes in employment plays no part in explaining the recent decline in membership copyright 1988 by the london school of economics and political science

union organizing costs and benefits this paper examines the costs and benefits to current union members in manufacturing of programs to organize the unorganized the marginal cost of organizing an additional employee in constant dollars is estimated for a sample of unions between 1964 and 1977 the primary benefit of organizing that is quantifiable is the extent to which the maintenance or extension of union coverage permits the maintenance of or increase in the union wage estimates of this benefit are derived from previous econometric research linking the union wage to the percentage of the industry organized this single benefit is found to be larger than the estimated marginal cost of extending union coverage in 19 of 20 manufacturing industries

stature and the standard of living research on the standard of living now emphasizes alternatives or supplements to the national income accounts this paper reviews the results of two decades of research using stature as a measure of health aspects of human welfare after comparing and contrasting stature with per capita income i consider height patterns discovered by economic historians that challenge traditional beliefs about the past including long term trends cycles in heights and the dreadfully small stature of slave children that was followed by catch up growth the paper concludes with comparisons to work in development economics and suggestions for research

the increasing complementarity between cognitive and social skills abstract data linking 1972 and 1992 adolescent skill endowments to adult outcomes reveal increasing complementarity between cognitive and social skills in fact previously noted growth in demand for cognitive skills affected only individuals with strong endowments of both social and cognitive skills these findings are corroborated using census and cps data matched with dictionary of occupational titles dot job task measures employment in and earnings premia to occupations requiring high levels of both cognitive and social skill grew substantially compared with occupations that require only one or neither type of skill and this emerging feature of the labor market has persisted into the new millennium

education returns across quantiles of the wage function alternative explanations for returns to education by race in south america private wage returns to schooling in south africa in 1993 are twice as high for nonwhites as for whites and substantially higher at advanced levels of schooling for both races to explore how these returns might be expected to change as the proportion of africans with secondary and higher education increases quantile regressions for the wage function are estimated for african males and white males if the residuals based on a standard wage function specification are interpreted as omitted ability and it is assumed that ability increases decreases returns to schooling then we expect quantile returns to increase decrease at higher quantiles this is not observed for africans at the higher and secondary school level but is evident among whites at higher educational levels the opposite pattern of differential returns favoring the least able i e lowest deciles is reported for the lower tail of the educational distribution that is for africans at the level of primary school and for whites at secondary school authors

health and productivity in a heterogeneous urban labour market the effects of changes in various health indicators on hourly earnings in different sectors of the labour market are examined using survey data from conakry guinea greater height which is associated with greater strength raises earnings of men both in self employment and the private wage sector where work is likely to involve physical labour height does not matter for women s earnings which likely reflects the less physically strenuous nature of most women s activities body mass index treated as an endogenous variable appears to raise earnings of men in self and private wage employment and of women in self employment no impacts are found for household per capita calorie and protein availability also treated as endogenous overall the results suggest that health matters for productivity in poor urban environments with these effects depending on gender and the sector of employment or type of work

the influence of management consultants on the outcome of union certification elections this study examines the effect of management consultants on the probability of union victory in representation elections an analysis of data on 130 elections in retail grocery outlets shows that c

will affirmative action policies eliminate negative stereotypes a key question concerning affirmative action is whether the labor market gains it brings to minorities can continue without it becoming a permanent fixture in the labor market the authors argue that this depends on how the policy affects employers beliefs about the productivity of minority workers they study the joint determination of employer beliefs and worker productivity in a model of statistical discrimination in job assignments the authors prove that even when identifiable groups are equally endowed ex ante affirmative action can bring about a situation in which employers correctly perceive the groups to be unequally productive ex post copyright 1993 by american economic association

optimal minimum wage policy in competitive labor markets this paper provides a theoretical analysis of optimal minimum wage policy in a perfectly competitive labor market and obtains two key results first we show that a binding minimum wage while leading to unemployment is nevertheless desirable if the government values redistribution toward low wage workers and if unemployment induced by the minimum wage hits the lowest surplus workers first importantly this result remains true in the presence of optimal nonlinear taxes and transfers in that context a binding minimum wage enhances the effectiveness of transfers to low skilled workers as it prevents low skilled wages from falling through incidence effects second when labor supply re sponses are along the extensive margin only the co existence of a minimum wage with a positive tax rate on low skilled work is always second best pareto ineffcient a pareto improving policy consists of reducing the pre tax minimum wage while keeping constant the post tax minimum wage by increasing transfers to low skilled workers and financing this reform by increasing taxes on higher paid workers overall our results imply that the minimum wage and subsidies for low skilled workers are complementary policies pa

making sense of the labor market height premium evidence from the british household panel survey we use data from the british household panel survey to examine the labor market premium in height most of the premium is explained by higher average educational attainment and sorting into higher status occupations and industries by those who are taller

self selection and the earnings of immigrants comment in a recent article in this review borias 1987 george borjas uses a standard model of self selection to demonstrate that immigrants in the united states may not necessarily be positively selected as is commonly assumed borjas empirical results based on u s census micro data merged with country of origin characteristics for 41 sending countries however do not provide clear or consistent results with respect to the immigration selection issue although they do confirm earlier findings that the characteristics of the countries of origin of u s immigrants explain a substantial proportion of the differences in their economic status jasso and rosenzweig 1986b the purpose of this note is to show that borjas results are themselves subject to biases due to additional processes of self selection in particular his inconclusive findings with respect to immigration selectivity arise from the use of a choice based sample enlargement of his highly selective sample of countries based on the number of foreign born in the united states yields results that appear to conform much more closely and consistently to conventional wisdom namely that the united states appears to attract those persons with above average skills we also provide evidence that changes in the earnings of aggregate immigrant entry cohorts used by borjas to measure the assimilation of immigrants reflect another evidently important selection process namely selective emigration the effects of country characteristics on the wages of the foreign born at entry immigration selectivity are thus not comparable to the effects of such variables on the changes in the characteristics of an immigrant cohort over time emigration selectivity the effects via immigration self selection of country of origin characteristics on the quality q of immigrants who migrate to a destination country is neatly summarized by borjas in his equation 12 with unobservables determining earnings normally distributed the expected quality of immigrants in the united states is given by

a case for maximum wage in this paper we demonstrate that supplementing the optimal non linear income tax system with a binding maximum wage rule attains a pareto improvement by serving to mitigate the mimicking incentives of the high skill individuals without entailing distortions

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

health nutrition and economic development the relationship between health and economic development is explored focusing on nutrition based health indicators the spotlight is placed on the inter related feedbacks between the influence of health on productivity on one hand and the influence of income on health status on the other disentangling causality in these relationships has preoccupied much of the literature we evaluate different empirical strategies that have been adopted and assess the results there is now a body of evidence based on careful empirical studies that demonstrates a causal relationship between health and labor productivity there is also evidence that at least among the very poor additional income is spent on improved nutrition there are two issues that have received little attention although we argue they are likely to be very important first measurement of health is discussed in detail evidence is presented on how taking into account differences in the extent of measurement error is critical for interpreting the impact of health on wages the same theme emerges in studies of the effect of income on health specifically calorie intake the key role of non linearities in these relationships is highlighted and we demonstrate that a good deal of the variation in estimates of income elasticities of demand for calories can be ascribed to the role of measurement and functional form authors

information learning and wage rates in low income rural areas in this essay we present evidence that employers in rural areas of developing countries have imperfect information with regard to the productivity of heterogeneous workers in addition to obtaining direct measures of the completeness of employer information we consider the implications of information asymmetries for the structure of casual labor markets we then evaluate the extent to which casual labor markets do in fact exhibit these attributes we find that 1 there is adverse selection out of the time rate labor market 2 employers discriminate statistically given two workers with different observed characteristics but the same actual productivity the worker from the group with the higher average productivity will have a higher wage 3 employers exhibit learning over time the extent of employer ignorance is negatively related to labor market exposure on the part of the workers and 4 calorie consumption affects productivity but is not rewarded in the time rate labor market in concluding we argue that an analysis of wage and employment patterns and the implications of these patterns for human capital investment in rural areas of developing countries that ignored the role of information problems could yield misleading conclusions

anti discrimination rules versus income taxation in the pursuit of horizontal equity abstract we consider a model of prejudice driven discrimination where the advantaged tall discriminate against the disadvantaged short we employ an egalitarian social welfare function to compare anti discrimination legal rules with a non discriminatory height blind income tax

contraction and expansion the divergence of private sector and public sector unionism in the united states the institutional structure of the american labor market changed remarkably from the 1950s and 1960s to the 1980s in the 50s and 60s trade unions seemed permanently established in the private sector of the economy a third of nonagricultur al wage and salary workers and over half of blue collar workers were union members hundreds of thousands of workers voted annually in national labor relations board nlrb representation elections to join unions most large firms sought stable collective bargaining relations with their unions by contrast in the public sector only 10 12 percent of workers were union members fewer were covered by collective bargaining contracts and most experts regarded public employees as intrinsically nonorganizable according to afl cio president george meany it was impossible to bargain collectively with the government kramer 1962 p 14 the massive contraction of unionism in the private sector and expansion in the public sector in the 1970s and 1980s see exhibit 1 has produced an utterly different situation today in the private sector the proportion of wage and salary workers in unions plummeted to 14 percent in 1986 a level comparable to that in the great depression only a minuscule number of workers joined unions through nlrb elections and national companies openly proclaimed their intent to establish a union free environment by contrast in the public sector over a third of the work force was unionized some 40 percent were covered by collective contracts 1 and 1 estimates of organization in the public sector differ somewhat among sources though all data show greater organization than in the private sector see freeman ichniowski and zax forthcoming for a detailed analysis of the various statistics

the decline of unionization in the united states what can be learned from recent experience the dramatic decline in unionization over the last decade is investigated in the context of a supply demand model of union status determination using data from surveys of workers conducted in 1977 and 1984 along with data from the national labor relations board on representation elections it is concluded that the decline in unionization since 1977 is accounted for largely by 1 an increase in employer resistance to unionization probably due to increased product market competitiveness and 2 a decrease in demand for union representation by nonunion workers due to an increase in the satisfaction of nonunion workers with their jobs and a decline in nonunion workers beliefs that unions are able to improve wages and working conditions

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

horizontal equity income taxation and self selection with an application to income tax credits abstract this paper investigates the relationship between utilitarianism and horizontal equity in models of income taxation in particular and self selection in general an example involving well behaved individual preferences is constructed in which a maximization of a utilitarian social welfare function leads via income taxation to horizontal inequities sufficient conditions for utilitarianism to bring horizontal equity are derived the results are applied to the question of whether income tax credits are an appropriate way to treat differences in family size

the effect of adolescent experience on labor market outcomes the case of height taller workers receive a wage premium net of differences in family background the disparity is similar in magnitude to the race and gender gaps we exploit variation in an individual s height over time to explore how height affects wages controlling for teen height essentially eliminates the effect of adult height on wages for white men the teen height premium is not explained by differences in resources or endowments the teen height premium is partially mediated through participation in high school sports and clubs we estimate the monetary benefits of a medical treatment for children that increases height

statistical discrimination productivity and the height of immigrants building on the economic research that demonstrates a positive relationship between height and worker ability the author compares wage returns to height for immigrants and for natives to explore possible explanations for the positive wage height gradient using multiple data sets the article presents a robust empirical finding that the wage gains associated with height are almost twice as large for immigrants as for native born individuals this wage relationship occurs because the productivity gap between tall and short immigrants is greater than the productivity gap between tall and short native born workers the author next tests for the possibility that in the relative absence of other sources of information about immigrants employers place more importance on height for immigrants than for native born individuals the evidence does not support the hypothesis of statistical discrimination based on height

is the new immigration really so bad this article reviews the recent evidence on us immigration focusing on two key questions 1 does immigration reduce the labour market opportunities of less skilled natives 2 have immigrants who arrived after the 1965 immigration reform act been successfully assimilated overall evidence that immigrants have harmed the opportunities of less educated natives is scant on the question of assimilation the success of the us born children of immigrants is a key yardstick by this metric post 1965 immigrants are doing reasonably well even children of the least educated immigrant origin groups have closed most of the education gap with the children of natives

where have all the union members gone this paper examines trends in union membership during the twentieth century the hypothesis is advanced that the provision of certain social welfare benefits by government substitutes for the private provision by unions thereby reducing the attractiveness of union membership the empirical implications of this hypothesis are examined using time series data on aggregate union membership for the period 1904 80 and using pooled state data for the period 1964 80 these latter data are used to examine the effect of departures from the traditional doctrine of employment at will both the time series and the cross section evidence suggest that government supply of union like services reduces union membership

an economic model of the brain drain asymmetric information in the labor market is discussed as a major cause of the exodus of foreign trained students from developing countries the authors suggest that employers in the country in which the students have been trained have a more accurate judgment of the true productivity of students than have employers in the students native country an illustrative numerical model is developed and its implications are analyzed annotation

education and labor market discrimination using a model of statistical discrimination and educational sorting we explain why blacks get more education than whites of similar cognitive ability and we explore how the armed forces qualification test afqt wages and education are related the model suggests that one should control for both afqt and education when compar ing the earnings of blacks and whites in which case a substantial black white wage differential emerges we reject the hypothesis that differences in school quality between blacks and whites explain the wage and education differentials our findings support the view that some of the black white wage differential reflects the operation of the

height health and inequality the distribution of adult heights in india this paper explores the relationship between adult heights and the distribution of income across populations of individuals there is a long literature that examines the relationship between mean adult heights and living standards if adult height is set by the balance between food intake and charges to disease in early childhood it is informative about economic and epidemiological conditions in childhood because taller populations are better off more productive and live longer the relationship between childhood conditions and adult height has become an important focus in the study of the relationship between health and wealth here i follow one of the tributaries of this main stream a relationship between income and height at the individual level has implications for the effects of income inequality on the distribution of heights these relationships parallel but are somewhat more concrete than the various relationships between income inequality and health that have been debated in the economic and epidemiological literatures richard g wilkinson 1996 angus deaton 2003 if height is an increasing but concave function of income average height will be negatively related to income inequality richard steckel 1995 income inequality will also have implications for the dispersion of height so that inequality in height might serve as an indicator of inequality of income in the absence of data on the latter just as mean height might serve as an indicator of mean income aravinda m guntupalli and joerg baten 2006 and alexander moradi and baten 2005 differences in height between subpopulations such as lords and vassals or highlanders and lowlanders may also provide information on the distribution of resources between such subpopulations carles boix and frances rosenbluth 2006 in section 2 below i present a theoretical discussion of what to expect in section 3 i provide an analysis of adult heights in india where i can look at the relationship across states between a mean heights and expenditure inequality b inequality in height and expenditure inequality c men s and women s heights the difference in heights between men and women is of considerable importance in its own right india has one of the highest rates of child malnutrition in the world with around 55 percent of young children stunted a leading explanation for this is health discrimination against women vulimiri ramalingaswami urban jonsson and jon rohde 1996 if discrimination starts in early childhood and since all evidence suggests that there are regional differences in the treatment of women there should be clear traces in spatial patterns of relative heights between men and women

self selection and pareto efficient taxation abstract this paper analyses the set of pareto efficient tax structures the formulation of the problem as one of self selection not only shows more clearly the similarity between this problem and a number of other problems such as the optimal pricing of a monopolist which have recently been the subject of extensive research but also allows the derivation of a number of new results we establish i under fairly weak conditions randomization of tax structures is desirable ii if different individuals are not perfect substitutes for one another in production then the general equilibrium effects until now largely ignored in the literature of changes in the tax structure may be dominant in determining the optimal tax structure in particular if the relative wage of high ability and low ability individuals depends on the relative supplies of labor the optimal tax structure entails a negative marginal tax rate on the high ability individuals and a positive marginal tax rate on the low ability individuals the marnitude of which depends on the elasticity of substitution iii if individuals differ in their preferences pareto efficient taxation may entail negative marginal tax rates for high incomes while iv if wage income is stochastic the marginal tax rate at the upper end may be 100 our analysis thus makes clear that the main qualitative properties of the optimal tax structure to which earlier studies called attention are not robust to these attempts to make the theory more realistic