heterogeneous wage effects of apprenticeship training the relatively small average wage effects of employer and occupation changes after apprenticeship training mask large differences between occupation groups and apprentices with different schooling backgrounds people who change employer and occupation within industrial occupations enjoy large wage advantages whereas apprentices in commerce and trading occupations as well as in construction and crafts occupations face wage losses from an occupation change the differences between the firms that provide the apprenticeship training are found to be small or insignificant in this paper we reconcile the differences between previous findings by comparing and replicating the empirical estimation strategies used this demonstrates that selectivity in occupations and changes unobserved heterogeneity between occupations and sample selection do matter

labor unemployment risk and corporate financing decisions this paper examines the impact of labor unemployment risk on corporate financing decisions theory suggests that firms choose conservative financial policies partly as a means of mitigating worker exposure to unemployment risk using changes in state unemployment insurance benefit laws as a source of variation in the costs borne by workers during layoff spells we explore the connection between unemployment risk and the corporate financing decisions of public firms in the united states we find that increases in legally mandated unemployment benefits lead to increases in corporate leverage the impact of reduced unemployment risk on financial policy is especially strong for firms that have greater layoff separation rates labor intensity and financing constraints the estimated premium required to compensate workers for unemployment risk due to financial distress is about 57 basis points of firm value for a bbb rated firm these findings suggest that labor market frictions have a significant impact on corporate financing decisions

occupational mobility occupation distance and specific human capital abstract distance and direction measures are constructed and used to contrast occupational mobility following involuntary job displacement and total occupational mobility displacement involves specific capital loss some voluntary occupational mobility for example promotions reflects augmented skills rather than specific human capital loss wage losses following displacement are strongly related to distance and direction this is reflected in a downward shift in the skill portfolio by contrast the skill portfolio change in total occupational mobility shows a neutral or modest upward pattern suggesting limited or no specific human capital loss from voluntary occupational mobility the mean distance in occupational mobility following displacement declined significantly in the 1980s and 1990s suggesting the labor market was more efficiently reemploying workers following displacement lowering displacement costs in that period

the returns to general experience job and occupational tenure a study using australian panel data this article uses australian panel data for the years 2001 2009 to estimate returns to general experience job and occupational tenure we pay particular attention to issues of unobserved heterogeneity bias in our estimations we find that both general experience and occupational tenure have statistically and numerically significant effects on wage outcomes even after controlling for unobserved heterogeneity job tenure on the other hand only seems to matter in ols regressions that do not control for heterogeneity biases once these biases are controlled for only a modest effect from job tenure remains the inclusion of occupational tenure in the estimating equation tends to negate even this modest job tenure effect the only exception to this is for workers in large organizations for these workers a small but statistically significant effect from job tenure remains even once we have controlled for heterogeneity and included occupational tenure in the estimating equation the results reported in this

task specific human capital since gary becker s 1964 seminal work the theoretical and empirical literature on human capital has focused almost exclusively on general purpose and firm specific human capital in this paper we discuss the implications of a third type of human capital which we call task specific and which we believe is potentially as commonplace and as important as the two classic types by task specific human capital we mean that some of the human capital an individual acquires on the job is specific to the tasks being performed as opposed to being specific to the firm in other words task specific human capital is the simple but plausible idea that much of the human capital accumulated on the job is due to task specific learning by doing the idea of task specific human capital is closely related to occupationand industryspecific human capital in each case human capital is specific to the nature of the work not specific to the firm hence when capital is accumulated multiple firms value the capital so most or even all of the value of the capital will be reflected in the worker s wage the main difference between the idea of task specific human capital and occupationand industryspecific human capital is in how the idea is applied we argue that task specific human capital has much wider applicability than suggested so far by the occupationand industry specific human capital literatures the specific issues we address are cohort effects job design and promotions another argument in the literature closely related to ours is the classic argument of adam smith 1776 in the wealth of nations concerning returns to specialization smith s argument was that due to learning by doing at the level of the task productivity can be enhanced by having each job entail fewer tasks we believe that smith was correct in focusing on learningby doing at the level of the task as an important idea for thinking about organizations the goal of our paper is to describe some of the other implications of this idea for the design and operation of organizations

renegotiation design with unverifiable information this paper considers a buyer seller relationship with observable but unverifiable investments and or random utility parameters in such situations it is known that contract renegotiation may prevent the implementation of first best outcomes in this paper we show however that efficient investments and optimal risk sharing can typically be achieved provided the initial contract is able to monitor the ex post renegotiation process specifically we focus on the following two features of renegotiation design first default options in case renegotiation breaks down second the allocation of all bargaining power to either contracting party moreover we show that these two features can be obtained in standard rubinstein bargaining games through contractual provisions such as specific performance clauses and penalties for delay or equivalently financial hostages refundable without interest

buy as you need nutrition and food storage imperfections abstract in this paper we investigate whether and how a more steady supply of foodgrain in local markets impacts the nutritional status measured with body mass indexes of both children and adults in a context characterized by large seasonal fluctuations in the price and availability of foodgrain taking advantage of the random scaling up of a program of food security granaries in burkina faso we reach three conclusions first especially in remote areas where local markets are thin the program considerably dampens nutritional stress the effect is strongest among children and young children in particular for whom deficient nutrition has devastating long term consequences second we argue that it is a change in the timing of food purchases translated into a change in the timing of consumption that drives the nutritional improvement a simple two period model shows that once we account for various forms of storage costs an increase in nutrition does not necessarily require larger quantity of food purchases or even consumption our last and unexpected conclusion is that the losses associated with foodgrain storage do not stem from physical losses in household granaries but rather from inefficient seasonal bodymass fluctuations one plausible mechanism behind this particular storage imperfection rests on the households urge to consume readily available foodgrain

firm specific human capital a skill weights approach the theory of human capital is agnostic on what constitutes firm specific skills the theory specifies that specific skills contribute to productivity only at the current firm a broader approach lets all skills be general but firms use them with different weights attached for example computer programming economics and accounting are general skills but there may be only one firm that wants workers trained in all three one implication is that wage profiles and the split of human capital costs depend on thickness of the market another is that firms pay for what appears to be general training

industry specific capital and the wage profile evidence from the national longitudinal survey of youth and the panel study of income dynamics using data from the national longitudinal survey of youth 1979 96 and the panel study of income dynamics 1981 91 i seek to determine whether there is any net positive return to tenure with the current employer once we control for industry specific capital including total experience in the industry as an additional explanatory variable i show that the return to seniority is markedly reduced using gls while it virtually disappears using iv gls at both the one digit and three digit levels therefore it seems that what matters most for the wage profile in terms of human capital is industry specificity not firm specificity

hiring molecules not atoms comobility and wages what role do social connections play in the labor market a vast influential literature has detailed the ways in which ties facilitate the flow of information about job opportunities to workers as well as endorsements or referrals of workers to firms we propose that this role is not constrained to an informational one alone rather relationships between workers can enable a collective job matching process that facilitates the transfer of shared human capital from one organization to another yet comobility has been studied only occasionally and among elite workers in particular industries this study delivers both fieldwork as well as large sample analysis among all nongovernmental workers in denmark finding a 5 5 wage premium for those who move jointly instead of independently both in the full sample as well as when applying strict matching or fixed effects for workers or firms co movers whose skills are related but not identical capture a higher premium and the wage gains associated with comob

participation constraints in the vickrey auction abstract economic agents are characterized by two privately observable parameters their willingness to pay for an item being auctioned and their reservation utility level which must be exceeded in expectation to induce them to participate in this auction this creates a situation in which the distribution of willingness to pay among the bidders is endogenous for the case in which the parameters are jointly uniformly distributed the existence of an equilibrium is proven and characterized

up or out contracts a signaling perspective a firm will typically gather information concerning its own workers that is not available to other potential employers while other firms will attempt to reduce this information asymmetry by observing the actions of the initial employer i argue that this process can be important in environments characterized by up or out contracts in that the retention decision can serve as a signal of productivity the article investigates this argument in an environment where up or out contracts are employed because they provide workers with an incentive to accumulate general human capital and where learning takes place in a diffuse fashion

disease and development evidence from hookworm eradication in the american south this study evaluates the economic consequences of the successful eradication of hookworm disease from the american south the hookworm eradication campaign c 1910 began soon after i the discovery that a variety of health problems among southerners could be attributed to the disease and ii the donation by john d rockefeller of a substantial sum to the effort the rockefeller sanitary commission rsc surveyed infection rates in the affected areas eleven southern states and found that an average of forty percent of school aged children were infected with hookworm the rsc then sponsored treatment and education campaigns across the region follow up studies indicate that this campaign substantially reduced hookworm disease almost immediately the sudden introduction of this treatment combines with the cross area differences in pre treatment infection rates to form the basis of the identification strategy areas with higher levels of hookworm infection prior to the rsc experienced greater increases in school enrollment attendance and literacy after the intervention this result is robust to controlling for a variety of alternative factors including differential trends across areas changing crop prices shifts in certain educational and health policies and the effect of malaria eradication no significant contemporaneous results are found for adults who should have benefited less from the intervention owing to their substantially lower prior infection rates a long term follow up of affected cohorts indicates a substantial gain in income that coincided with exposure to hookworm eradication i also find evidence that eradication increased the return to schooling

a formulation of the earnings function using the concept of occupational investment standard models of income determination specify income to be a function of two variables that measure postschool investment the years of labor market experience and the years of employer tenure this investigation develops a better proxy for general human capital investments by hypothesizing that the intensity of investment varies by occupation and that a proportion of the occupational skills are transferable with occupational change after developing exogenous measures of these features the occupational investment variable is calculated for the young men of the national longitudinal survey empirical work demonstrates that occupational investment is a strong determinant of income far superior to the experience variable

the importance of bundling in a gorman lancaster model of earnings the idea that the labor market of individuals can be decomposed into payments to separate productive attributes has an enduring appeal in economics assuming that demographic groups differ only in their endowments of productive characteristics it is possible to rationalize observed demographic earnings differentials without invoking the arguments that characteristics specific to a particular demographic group are direct objects of employer demand by aggregating skills over all demographic groups it is possible to produce a theory of the market determination of the prices of skills held in different amounts by different demographic groups this paper considers conditions under which characteristics are uniformly priced across sectors of a multisector economy the paper presents empirical evidence that rejects uniform pricing of characteristics as a description of the us labor market bundling may account for this evudence but other hypotheses do as well authors

why do firms train theory and evidence this paper offers a theory of training whereby workers do not pay for the general training they receive the superior information of the current employer regarding its employees abilities relative to other firms creates ex post monopsony power and encourages this employer to provide and pay for training even if these skills are general the model can lead to multiple equlibria in one equilibrium quits are endogenously high and as a result employers have limited monopsony power and provide little training while in another equilibrium quits are low and training is high using microdata on german apprentices we show that the predictions of our model receive some support from the data

public health investments and the infant mortality gap evidence from federal sanitation interventions on u s indian reservations abstract to what extent do differential levels of investment in public health inputs explain observed differences in health outcomes across socioeconomic and racial groups this study investigates the impact of 3700 projects that were part of a widespread federal initiative to improve sanitation infrastructure on u s indian reservations starting in 1960 sanitation investment substantially reduced the cost of clean water for households leading to sharp reductions in both waterborne gastrointestinal disease and infectious respiratory disease among native american infants the sanitation program was quite cost effective in part because improvements in the overall disease environment also reduced infectious respiratory disease among nearby white infants despite the health externalities federal sanitation interventions explain almost forty percent of the convergence in native american and white infant mortality rates in reservation counties since 1970

sorting multidimensional types theory and application this article studies multidimensional matching between workers and jobs workers differ in manual and cognitive skills and sort into jobs that demand different combinations of these two skills to study this multidimensional sorting problem i develop a theoretical framework that generalizes the unidimensional notion of assortative matching and sufficient conditions on the technology under which sorting obtains i derive the equilibrium in closed form and use this explicit solution to study biased technological change the main finding is that an increase in worker job complementarities in cognitive relative to manual inputs leads to more pronounced sorting and wage inequality across cognitive relative to manual skills this can trigger wage polarization and boost aggregate wage inequality i then estimate the model for the u s and identify sizable technology shifts during the last two decades worker job complementarities in cognitive inputs strongly increased whereas complementarities in manual inputs decreased in addition to this bias in complementarities there has been a cognitive skill bias in production counterfactual exercises suggest that these technology shifts as opposed to changes in skill supply and demand can account for observed changes in worker job sorting wage polarization and a significant part of the increase in u s wage dispersion

human capital investment under asymmetric information the pigovian conjecture revisited this article investigates how human capital investment labor turnover and wages are jointly determined when the current employer knows more about a worker s productivity than potential employers results derived are quite different from or unexplored by the standard human capital theory we show that the information asymmetry can cause an externality distortion in human capital investment because higher productivity due to the investment may not be recognized by the market the investment level increases in the degree of firm specificity of human capital the underinvestment problem is more severe when human capital is general than when it is firm specific

water for life the impact of the privatization of water services on child mortality while most countries are committed to increasing access to safe water and thereby reducing child mortality there is little consensus on how to actually improve water services one important proposal under discussion is whether to privatize water provision in the 1990s argentina embarked on one of the largest privatization campaigns in the world including the privatization of local water companies covering approximately 30 percent of the country s municipalities using the variation in ownership of water provision across time and space generated by the privatization process we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest 26 percent in the poorest areas we check the robustness of these estimates using cause specific mortality while privatization is associated with significant reductions in deaths from infectious and parasitic diseases it is uncorrelated with deaths from causes unrelated to water conditions

putting tasks to the test human capital job tasks and wages using original representative survey data we document that analytical routine and manual job tasks can be measured with high validity vary substantially within and between occupations are significantly related to workers characteristics and are robustly predictive of wage differences between occupations and among workers in the same occupation we offer a conceptual framework that makes explicit the causal links between human capital endowments occupational assignment job tasks and wages which motivate a roy model of the allocation of workers to occupations we offer two simple tests of the model s gross predictions for the relationship between tasks and wages both of which receive qualified empirical support

do wages rise with job seniority many previous studies have found a strong positive effect of job seniority tenure on wages this paper re examines the evidence using a simple instrumental variables scheme to deal with the fact that tenure is likely to be related to unobserved individual and job characteristics that affect the wage we use the variation of tenure over a given job match as the principal instrumental variable for tenure the variation in tenure over the job is uncorrelated by construction with the fixed individual and job match specific components of the error term of the wage equation our main finding is that the partial effect of tenure on wages is small and that general labour market experience and job shopping account for most wage growth over a career the strong cross section relationship between tenure and wages is due primarily to heterogeneity bias prior researchers see mincer and jovanovic 1981 bartel and borjas 1981 borjas 1981 cline 1979 and mellow 1981 and many others have established that job seniority has a strong positive relationship with wage rates in a cross section or a cross section time series of individuals in this paper we re evaluate the evidence concerning the partial effects on wages of job seniority tenure and total labour market experience the extent to which wages rise with tenure is important for several reasons first and foremost the wage tenure profile is a fundamental question about the structure of earnings over careers second the wage tenure profile is a key determinant of the extent to which the earnings power of individuals is tied to specific jobs and it is important for assessment of the losses suffered by displaced workers hamermesh 1984 third evidence that wages rise with job tenure has been used to explain the decline in quits with tenure since the wage growth on the current job lowers the probability that the worker will locate a superior alternative a growing theoretical literature surveyed in parsons 1984 has taken the evidence of a strong wage tenure profile at face value and sought to provide an explanation for the relationship the most prominent explanation is the theory of specific human capital oi 1962 becker 1962 mincer 1974 parsons 1972 kuratani 1973 and hashimoto 1980 in which the growth of wages with tenure holding experience constant is attributed to the worker s share of investments in firm specific skills more recently lazear 1981 has presented a supervision model of wage growth in which firms defer compensation as a means of inducing workers not to shirk freeman 1977 and harris and holmstrom 1982 provide an explanation for wage growth based on an insurance motive salop and salop 1976 nickell 1976 and guasch and weiss 1982 present adverse selection models of wage growth in which firms use a wage tenure profile as a

health externalities of india s expansion of coal plants evidence from a national panel of 40 000 households coal power generation is expanding rapidly in india and other developing countries in addition to consequences for climate change present day health externalities may also substantially increase the social cost of coal health consequences of air pollution have proven important in studies of developed countries but despite clear importance similarly well identified estimates are less available for developing countries and no estimates exist for the important case of coal in india we exploit panel data on indian households matched to local changes in exposure to coal plants increased exposure to coal plants is associated with worse respiratory health consistent with a causal mechanism the effect is specific no effect is seen on diarrhea or fever and no effect on respiratory health is seen of new non coal plants our result is not due to endogenous avoidance behavior or to differential trends in determinants of respiratory health either before the period studied or simultaneously

gender differences in displacement cost evidence and implications this paper uses a unique and newly available data set on displaced workers to estimate differences in the wage costs of displacement between women and men while predisplacement wages rise at about the same rate with tenure for women as men in this data set women lose more from displacement than men and the magnitude of this loss increases with tenure overall we interpret our results as not supportive of the specific capital hypothesis that women accumulate less firmspecific human capital than men and we suggest that future attempts to explain our result focus on gender differences in the process of search for a new job

the growing importance of social skills in the labor market the labor market increasingly rewards social skills between 1980 and 2012 jobs requiring high levels of social interaction grew by nearly 12 percentage points as a share of the u s labor force math intensive but less social jobs including many stem occupations shrank by 3 3 percentage points over the same period employment and wage growth were particularly strong for jobs requiring high levels of both math skill and social skills to understand these patterns i develop a model of team production where workers trade tasks to exploit their comparative advantage in the model social skills reduce coordination costs allowing workers to specialize and work together more efficiently the model generates predictions about sorting and the relative returns to skill across occupations which i investigate using data from the nlsy79 and the nlsy97 using a comparable set of skill measures and covariates across survey waves i find that the labor market return to social skills was much greater in the 2000s than in the mid 1980s and 1990s

health and hunger disease energy needs and the indian calorie consumption puzzle india s experience presents a puzzle at odds with a basic fact of household economics amidst unprecedented economic growth average per capita daily calorie consumption has declined in recent decades does an improving disease environment explain the calorie decline a diminished burden of infectious disease could lower energy needs by increasing absorption and effective use of calories we document a robust effect of disease exposure measured as infant mortality and as poor sanitation on calorie consumption similar effects are found using multiple datasets and empirical strategies disease can account for an important fraction one fifth or more of india s calorie decline

unions and efficient training the paper examines the optimal level of training investment when trained workers are mobile wage contracts are time consistent and training comprises both specific and general skills the firm has ex post monopsonistic power that drives trained workers wages below the social optimum the emergence of a trade union bargaining at the firm level can increase social welfare by counterbalancing the firm s ex post monopsonistic power in wage determination local union firm wage bargaining ensures that the post training wage is set sufficiently high to deter at least some quits so that the number of workers the firm trains is nearer the social optimum