can the human capital approach explain life cycle wage differentials between races and sexes i introduction the trends in gender and racial wage gaps have continued to receive the attention of researchers and policy makers due to their mounting social significance substantial literature concludes that after world war ii the black white pay gap shrank rapidly until the mid 1970s this trend was reversed in the 1980s card and dinardo 2002 couch and daly 2002 darity and myers 1998 o neill 1990 smith and welch 1989 1 in contrast the gender pay gap persisted for four decades after world war ii only in the 1980s did it start to narrow yet it showed only a little progress in the 1990s blau ferber and winkler 2002 goldin 1990 o neill 2003 although a large number of studies have been purported to investigate the sources of male female and black white pay gaps most have not addressed the issue of whether or not the individuals being observed have changed their economic status over their lifetimes the major problem is that longitudinal data are not available over a long enough period to determine the age earnings profiles 2 by using the national longitudinal survey of youth data 1979 cohort nlsy79 this paper examines gender and racial wage gaps among individuals of the same age in an effort to eliminate major life cycle differences while at the same time tracking the changes in the wage gaps over their life spans in particular we would like to provide answers to the following questions what factors can account for the narrowing widening gender wage gaps among blacks whites as they age can the observed life cycle wage gaps be attributed to different paths of postschool human capital accumulation since today s individuals regardless of race or sex have on average completed similar years of schooling among the youth cohort the observed disparity in wages between races and sexes may simply reflect the differences in the quality of schooling family background and postschool investment 3 given that school quality and family background are essentially fixed for an individual as he or she ages in order to address the questions above this paper attempts to further examine the differences in postschool human capital investment behavior among individuals past estimates of the structural parameters for the model of postschool human capital accumulation have however not been fruitful benporath 1970 brown 1976 haley 1976 heckman 1976a 1976b rosen 1976 the major reasons as heckman 1976b points out are that dynamic models are difficult to solve explicitly and that the proportion of time spent investing in on the job training cannot be measured directly moreover to fulfill the dynamic concepts of human capital accumulation longer period longitudinal data must be used to explore the life cycle view of individual wages 4 the lack of empirical investigation in relation to the continuous time dynamic model using panel data therefore leads us to develop an alternative empirical version for estimating the structural parameters of the wage function over a lifetime in other words the purpose of our study is to estimate a dynamic structural model based on the theory of optimal human capital accumulation in accordance with this theory of human capital the wage and its life path can be viewed as the outcome of an optimal path of human capital investment over an individual s life cycle instead of comparing the differences in the outcome of this optimization process i e wages we estimate the key parameters in determining the life cycle wage path as well as further empirically identifying the sources of the wage gap our empirical results first suggest that the male female wage gap mainly arises from gender difference in the marginal costs of human capital production as men in general spend more time in the labor market and gain more work experience than women they tend to have lower marginal costs in the process of human capital production

the effect of occupational segregation on the relative earnings of black males abstract an earnings model which incorporates racial differences in occupational attainment is employed to investigate sources of the earnings differential between black and white males our results suggest that occupational segregation of black men accounts for nearly half of the observed racial earnings differential

ethnicity neighborhoods and human capital externalities the socioeconomic performance of today s workers depends not only on parental skills but also on the average skills of the ethnic group in the parents generation or ethnic capital this paper investigates the link between the ethnic externality and ethnic neighborhoods the evidence indicates that residential segregation and the external effect of ethnicity are linked partly because ethnic capital summarizes the socioeconomic background of the neighborhood where the children were raised ethnicity has an external effect even among persons who grow up in the same neighborhood when children are exposed frequently to persons who share the same ethnic background copyright 1995 by american economic association

how the baby boomers retirement wave distorts model based output gap estimates hours per capita measures based on the private sector as usually included in the set of observables for estimating macroeconomic models are affected by low frequent demographic trends and sectoral shifts that cannot be explained by standard models further model based output gap estimates are closely linked to the observable hours per capita series hence hours per capita that are not measured in concordance with the model assumptions can distort output gap estimates this paper shows that sectoral shifts in hours and the changing share of prime age individuals in the working age population lead indeed to erroneous output gap dynamics regarding the aftermath of the global financial crisis model based output gaps estimated using standard hours per capita series are persistently negative for the us economy this is not caused by a permanently depressed economy but by the retirement wave of baby boomers which lowers aggregate hours per capita after adjusting hours for changes in the age composition to bring them in line with the model assumptions the estimated output gap gradually closes in the years following the global financial crisis

emigration and wages in source countries evidence from mexico abstract this paper examines empirically the effect of mexican emigration to the united states on wages in mexico using data from the mexican and us censuses from 1970 to 2000 the main result in the paper is that emigration has a strong and positive effect on mexican wages there is also evidence for increasing wage inequality in mexico due to emigration simple welfare calculations based on a labor demand supply framework suggest that the aggregate welfare loss to mexico due to emigration is small however there is a significant distributional impact between labor and other factors

how do sex ratios affect marriage and labor markets evidence from america s second generation sex ratios i e relative numbers of men and women can affect marriage prospects labor force participation and other social and economic variables but the observed association between sex ratios and social and economic conditions may be confounded by omitted variables and reverse causality this paper uses variation in immigrant flows as a natural experiment to study the effect of sex ratios on the children and grandchildren of immigrants the flow of immigrants affected the second generation marriage market because second generation marriages were mostly endogamous i e to members of the same ethnic group the empirical results suggest that high sex ratios had a large positive effect on the likelihood of female marriage and a large negative effect on female labor force participation perhaps surprisingly the marriage rates of second generation men appear to be a slightly increasing function of immigrant sex ratios higher sex ratios also appear to have raised male earnings and the incomes of parents with young children the empirical results are broadly consistent with theories where higher sex ratios increase female bargaining power in the marriage market

mechanism design with incomplete information a solution to the implementation problem the main result of this paper is that the multiple equilibrium problem in mechanism design can be avoided in private value models if agents do not use weakly dominated strategies in equilibrium we show that in such settings any incentive compatible allocation can be made the unique equilibrium outcome to a mechanism we derive a general necessary condition for unique implementation which implies that the positive result for private value models applies with considerably less generality to common value settings and to situations in which an agent s information does not index the agent s preferences

international migration and real wages is there any neo classical ambiguity abstract recent research has shown that while labor emigration increases the nominal wage rate the impact on the real wage rate remains quite ambiguous the present paper reexamines the issue under the standard two factor two commodity international trade model normally employed for this purpose the principal finding of this paper is that once the problem is correctly formulated and analyzed introducing utility maximizing consumers no such ambiguity exists indeed labor emigration always leads to an increase in the welfare real wage of labor in the source country

race and human capital while human capital has been used with some success to analyze recent changes in racial income differences scholars have repeatedly pointed to a major empirical problem that appears to severely limit the historical relevanlce and scope of skill based theories as applied to racial questions the challenge they raise is legitimate put simply if measured skill disparities between the races narrowed throughout the twentieth century why did income ratios first begin to converge in the 1960 s in this paper i address this question relying on some unexploited census data by race on education literacy occupations and income using these data that begin with the 1890 census i present new estimates of agespecific relative income positions of black men for all postslavery birth cohorts in addition to reconciling the apparently inconsistent skill and income series these income ratios offer a very different historical record than many economists believe to have been the case to cite a prominent example gunnar myrdal s classic work 1944 saw the economic position of his contemporary black america not only as dismal but made even more so by its sense of hopelessness given the absence of any hint of progress or change while myrdal s pessimism is understandable it appears that even in his day seeds had long been sown that were already permanently altering and improving the relative economic status of black men

schooling choices and demographic cycles this paper examines the effect of demographic cycles on schooling choices and the timing of school completion utilizing data from the u s national longitudinal surveys of labor market experience and from the panel study of income dynamics we find that men and women born during the upswing of a demographic cycle obtain more schooling and take longer to finish a year of schooling than comparable individuals born during the downswing of a demographic cycle the patterns that we document are more complex than would be predicted by any of the theoretical models of educational responses to demographic cycles that have been presented in the literature excerpt

on the importance of the participation margin for labor market fluctuations abstract conventional analyses of labor market fluctuations ascribe a minor role to labor force participation we show by contrast that flows based analyses imply that the participation margin accounts for around one third of unemployment fluctuations a novel stock flow apparatus establishes these facts delivering three further contributions first the role of the participation margin appears robust to adjustments for spurious transitions induced by reporting error second conventional stocks based analyses are subject to a stock flow fallacy neglecting offsetting forces of worker flows on the participation rate third increases in labor force attachment among the unemployed during recessions are a leading explanation for the role of the participation margin

white discrimination in provision of black education plantations and towns abstract we present a model of public provision of education for blacks in two discriminatory regimes white plantation controlled and white yeoman town controlled we show that the ability to migrate to a non discriminating district constrains the ability of both types of regimes to discriminate the model produces time series of educational outcomes for whites and blacks that mimic the behavior seen in post reconstruction south carolina to the onset of the civil rights act it also fits the post world war ii black white income differentials

the cyclicality of separation and job finding rates this paper uses cps gross flow data to analyze the business cycle dynamics of separation and job finding rates and to quantify their contributions to overall unemployment variability cyclical changes in the separation rate are negatively correlated with changes in productivity and move contemporaneously with them while the job finding rate is positively correlated with and tends to lag productivity contemporaneous fluctuations in the separation rate explain between 40 and 50 percent of fluctuations in unemployment depending on how the data are detrended this figure becomes larger when dynamic interactions between the separation and job finding rates are considered

racial segregation in the public schools and adult labor market outcomes the case of black americans residential segregation has played a central role in theories of minority entrepreneurship and in the diversification of the u s labor market racial diversity in public accommodations including schools has been an issue of continuous public policy debate at least since the u s supreme court s plessy versus ferguson decision 1896 this study applies theory from the literature on social capital to an examination of the role of racial segregation in the public schools of blacks during childhood on their adult likelihood to become self employed and their level of occupational status the model results indicate that after controlling for a number of individual household and metropolitan area factors lower rates of segregation during public schooling results in higher likelihood of wage salary employment and self employment among a cohort of black americans that attended public schools during the 1960s

intermarriage and the economic assimilation of immigrants this article investigates the assimilation role of intermarriage between immigrants and natives intermarried immigrants earn significantly higher incomes than endogamously married immigrants even after we take account of human capital endowments and endogeneity of intermarriage the premium does not appear to be a reward for unobservable individual characteristics natives who intermarry do not receive this premium nor do immigrants who intermarry into another ethnic group the premium is mainly attributable to a faster speed of assimilation rather than any difference in labor market quality between intermarried and nonintermarried immigrants at the point of arrival

initial conditions at emancipation the long run effect on black white wealth and earnings inequality abstract black white wealth inequality is much greater than black white earnings inequality in the united states the existing empirical literature has not been able to fully explain the wealth gap this paper investigates how much of current black white income and wealth inequality can be explained by initial conditions at emancipation and nearly 100 years of segregated schools a two sector model with group specific human capital accumulation and school expenditure differences can explain the path of black white convergence in earnings over the past 130 years the model also reproduces the fact that black white wealth ratios remain much lower than black white earnings ratios

cross country variation in the impact of international migration canada mexico and the united states using data drawn from the canadian mexican and u s censuses we find a numerically comparable and statistically significant inverse relation between immigrant induced shifts in labor supply and wages in each of the three countries a 10 labor supply shift is associated with a 3 4 opposite signed change in wages despite the similarity in the wage response theimpactofmigrationonthewagestructuredifferssignificantlyacrosscountries international migration narrowed wage inequality in canada increased it in the united states and reduced the relative wage of workers at the bottom of the skill distribution in mexico jel j31 j61

demographic and economic pressure on emigration out of africa two of the main forces driving european emigration in the late nineteenth century were real wage gaps between sending and receiving regions and demographic booms in the low wage sending regions our new estimates of net migration for the countries of sub saharan africa show that exactly the same forces driving african across border migration are at work today the results suggest that rapid growth in the cohort of potential young emigrants population pressure on the resource base and slow economic growth are likely to intensify the pressure for migration out of africa and into high wage oecd countries over the next two decades

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had

migration with endogenous moving costs we study a dynamic model of labor migration in which moving costs decrease with the number of migrants already settled in the destination this assumption is supported by sociological studies of migrant networks with endogenous moving costs migration occurs gradually over time once it starts it develops momentum and migratory flows may increase even as wage differentials narrow in addition migration tends to follow geographical channels and low moving cost individuals migrate first these patterns are consistent with historical evidence from the great black migration of 1915 1960 in the united states much of which cannot be reconciled with existing migration models excerpt

illegal immigration border enforcement and relative wages evidence from apprehensions at the u s mexico border we examine illegal immigration in the united states from mexico over the period 1976 1995 one challenge is that we do not observe the number of individuals that attempt to enter the united states illegally we only observe the number of individuals apprehended attempting to cross the u s mexico border illegally based on a simple migration model we postulate the existence of an apprehensions function which expresses apprehensions at the border as a function of illegal attempts to cross the border and u s border enforcement effort we find that a 10 decrease in the mexican real wage leads to a 7 5 to 8 8 increase in apprehensions at the border excerpt

slavery education and inequality abstract we investigate the effect of slavery on the current level of income inequality across us counties we find that a larger proportion of slaves over population in 1860 persistently increases inequality and in particular inequality across races we also show that a crucial channel of transmission from slavery to racial inequality is human capital accumulation i e current inequality is primarily influenced by slavery through the unequal educational attainment of blacks and whites finally we provide suggestive evidence that the underlying links run through the political exclusion of former slaves and the resulting negative influence on the local provision of education

regulating an oligopoly with unknown costs abstract we examine the problem of a planner who is regulating an oligopoly with unknown costs we provide a complete characterization of the optimal mechanism which takes the following simple form firm s which report low costs produce together the first best output corresponding to this low cost and firm s which report high costs produce nothing when all firms report high costs only the ex ante least efficient firm produces the entire output and all the other firms produce nothing we show that under mild conditions as the number of firms increases the planner attains the same welfare level as if he had complete information of low cost

black white earnings ratios the role of cohort size effects abstract while black white earning ratios have been rising over time across cohorts there is some evidence that they have been dropping over time within cohorts of recent entrants to the labor market this has coincided with the entry of the large baby boom cohorts into the labor market this paper examines the role of race differences in cohort size effects on black white earnings ratios for male high school graduates using current population survey data in larger cohorts the black white earnings ratio is lower at entry and falls as the cohort progresses through the career consistent with recent evidence

the intergenerational mobility of immigrants this article analyzes the intergenerational mobility of immigrants using the 1940 70 censuses the study reveals an important link between the earnings of immigrants and the earnings of their american born children although there is some regression toward the mean the earnings of second generation americans are strongly affected by variables describing economic conditions in the source countries of their parents current immigration policy therefore not only determines how immigrants perform in the labor market but also determines tomorrow s differences in the labor market experiences of american born ethnic groups

the human capital approach to black white earnings inequality some unsettled questions the persistence of earnings differences between blacks and whites in the united states has been a topic that has received a substantial amount of attention in both theoretical and empirical research in economics the differential in earnings typically is tied to racial differences in human capital accumulation this paper advances a systematic critique of the human capital approach to black white inequality inadequacies are identified in human capital theory as a general theory of inequality as well as a specific theory of racial inequality the critique suggests that a serious analysis of the black white earnings gap will require an entirely new approach to the study of racial income inequality

intermarriage and the labor market outcomes of asian women the impact of intermarriage with natives on labor market outcomes of immigrants is not homogeneous across ethnic groups wages of asian women are compared with non asians both ordinary least squares and instrumental variables estimates of the effects of intermarriage on the wages of asian women are negative and significant non asian women earn a wage premium that becomes insignificant when controls for selection into marriage are introduced one possible explanation for the intermarriage penalty for asians is an income effect of having a high earning native husband intermarriage penalties rise with husband s education assimilation patterns of intermarried asians indicate that they have lower initial wages market hours and employment but exhibit faster rates of growth over their years of stay the results are robust across asian subgroups and husband s ethnicity jel j16 j12 j31 j61

assimilation across the latino generations there is concern that hispanics have not mimicked the european immigrant experience of great generational advance jeffrey grogger and stephen trejo 2002 reasons for concern vary but a theme is that latino immigrants and their offspring are less committed to assimilation than europeans were discrimination adherence to spanish and frequent trips home due to proximity are said to be reasons i examine two aspects of generational mobility of hispanic and mexican men education and wages a major problem in studying this assimilation is ambiguity in defining generations and ethnicity across census and current population survey cps files generations are defined as follows 1st generation born outside the united states 2nd generation at least one parent born outside the united states 3rd generation or more both parents born in the united states while reference is made for convenience to the 3rd generation it includes all generations beyond the second since no distinction was made between the 2nd and subsequent generations in the 1980 and 1990 censuses or the march cps s until 1994 i use data from four decennial censuses between 1940 and 1970 four special cps supplements on language and immigration 1979 1983 1986 1988 to cover the 1980 s and four successive march cps s starting in 1994 to represent the 1990 s ethnicity is straightforward to define for the 1st and 2nd generation where place or birth or self reported ethnicity can be used to define hispanic ethnicity the problem is the 3rd generation where information available for hispanic descent and specific ethnicity differs across the censuses and cps s details of the rules adopted to define specific hispanic ethnicity are available in smith 2001

regulating a dominant firm unknown demand and industry structure in this article we study the optimal regulation of a dominant firm when an unregulated firm actively competes generally the existence of an active rival imposes new and binding constraints on regulatory problems we characterize optimal policies both when demands are known complete information and unknown incomplete information to the regulator optimal policies under complete information may set the price at the dominant firm above or below its marginal cost optimal policies under incomplete information may be either pooling or separating constant over a range of the prior distribution of the firm s private information and leave no information rent to the firm

network effects and the dynamics of migration and inequality theory and evidence from mexico international migration is costly and initially only the middle class of the wealth distribution may have both the means and incentives to migrate which can increase inequality in the sending community however the migration networks formed lower the costs for future migrants which can in turn lower inequality this paper shows both theoretically and empirically that wealth has a nonlinear effect on migration and then examines the empirical evidence for an inverse u shaped relationship between emigration and inequality in rural sending communities in mexico after instrumenting we find that the overall impact of migration is to reduce inequality across communities with relatively high levels of past migration we also find some suggestive evidence for an inverse u shaped relationship among communities with a wider range of migration experiences

international business cycles world region and country specific factors the paper investigates the common dynamic properties of business cycle fluctuations across countries regions and the world we employ a bayesian dynamic latent factor model to estimate common components in macroeconomic aggregates output consumption and investment in a 60 country sample covering seven regions of the world the results indicate that a common world factor is an important source of volatility for aggregates in most countries providing evidence for a world business cycle we find that region specific factors play only a minor role in explaining fluctuations in economic activity we also document similarities and differences across regions countries and aggregates jel f41 e32 c11 c32

migration networks and microenterprises in mexico are migration networks associated with lower capital costs or the alleviation of capital constraints we examine these questions with data measuring access to remittance flows among small scale entrepreneurs in mexico using a survey of more than 6000 self employed workers and small firm owners located in 44 urban areas of mexico we estimate the impact of attachment to migration networks on the level of capital investment the capital output ratio sales and profits of microenterprises the impact is identified from the geographic pattern of migration from mexico driven by the completion of rail lines in the early 1900s for the full sample of firms we find that migration is associated with higher investment levels and higher profits but not higher sales the strongest effects on investment are in the categories of automobiles tools and inventories when the sample is limited to firms in high capital sectors investment sales and profits all increase with attachment to the migration networks suggesting that attachment to the migration network alleviates capital constraints in those sectors

the decline in black teenage labor force participation in the south 1900 1970 the role of schooling between 1950 and 1970 the labor force participation rate of southern black males aged 16 19 declined by 27 percentage points this decline has been attributed to two demand side shocks the mechanization of cotton agriculture in the 1950s and extensions in the coverage of the federal minimum wage in the 1960s we show however that participation rates of southern black teens fell continuously between 1900 and 1950 the proximate causes of the pre 1950 decline in black teen participation were increases in school enrollment rates and decreases in labor force participation by teens enrolled in school because the underlying causes of both effects had not run their course by mid century we conclude that about half of the post 1950 decline in black teen participation in the south would have occurred even if cotton agriculture had not mechanized in the 1950s or coverage of the minimum wage had not been extended in the 1960s this abstract was borrowed from another version of this item

native internal migration and the labor market impact of immigration this paper presents a theoretical and empirical study of how immigration influences the joint determination of the wage structure and internal migration behavior for native born workers in local labor markets using data from the 1960 2000 decennial censuses the study shows that immigration is associated with lower in migration rates higher out migration rates and a decline in the growth rate of the native workforce the native migration response attenuates the measured impact of immigration on wages in a local labor market by 40 to 60 per cent depending on whether the labor market is defined at the state or metropolitan area level

separate and unequal in the labor market human capital and the jim crow wage gap competing explanations for the long standing gap between black and white earnings attribute different weight to wage discrimination and human capital differences using new data on local school quality we find that human capital played a predominant role in determining 1940 wage and occupational status gaps in the south despite entrenched racial discrimination in civic life and the lack of federal employment protections the resulting wage gap coincides with the higher end of the range of estimates from the post civil rights era we estimate that truly separate but equal schools would have reduced wage inequality by 29 48

employment and unemployment in the 1930s the great depression is to economics what the big bang is to physics as an event the depression is largely synonymous with the birth of modern macroeconomics and it continues to haunt successive generations of economists with respect to labor and labor markets these facts evidently include wage rigidity persistently high unemployment rates and long term joblessness traditionally aggregate time series have provided the econometric grist for distinguishing explanations of the great depression recent research on labor markets in the 1930s however has shifted attention from aggregate to disaggregate time series and towards microeconomic evidence this shift in focus is motivated by two factors first disaggregated data provide many more degrees of freedom than the decade or so of annual observations associated with the depression and thus may prove helpful in distinguishin g macroeconomic explanations second disaggregation has revealed aspects of economic behavior hidden in the time series that may be essential to their proper interpretation and in any case are worthy of study in their own right although the substantive findings of recent research are too new to judge their permanent significance i believe that the shift towards disaggregated analysis is an important contribution the paper begins by reviewing the conventional statistics of the united states labor market during the great depression and the paradigms to explain them it then turns to recent studies of employment and unemployment using disaggregated data of various types the paper concludes with discussions of

ethnic enclaves and the economic success of immigrants evidence from a natural experiment recent immigrants tend to locate in ethnic enclaves within metropolitan areas the economic consequence of living in such enclaves is still an unresolved issue we use an immigrant policy initiative in sweden when government authorities distributed refugee immigrants across locales in a way that may be considered exogenous this policy initiative provides a unique natural experiment which allows us to estimate the causal effect on labor market outcomes of living in enclaves we find substantive evidence of sorting across locations when sorting is taken into account living in enclaves improves labor market outcomes for instance the earnings gain associated with a standard deviation increase in ethnic concentration is in the order of four to five percent

the effect on black white wage differences of differences in the quantity and quality of education using data from the national longitudinal survey of youth for the years 1979 88 the author examines the extent to which black white differences in educational attainment educational quality and unmeasured individual ability can explain black white wage differences an analysis that corrects for both selectivity and ability biases inherent in estimating the education wage relationship shows that the main source of the black white wage differential is the racial difference in the quality rather than quantity of schooling in fact the author concludes closing the racial gap in the basic skills learned in school could reduce the wage differential by two thirds

ethnic capital and intergenerational mobility this paper analyzes the extent to which ethnic skill differentials are transmitted across generations i assume that ethnicity acts as an externality in the human capital accumulation process the skills of the next generation depend on parental inputs and on the quality of the ethnic environment in which parents make their investments or ethnic capital the empirical evidence reveals that the skills of today s generation depend not only on the skills of their parents but also on the average skills of the ethnic group in the parent s generation

the visible minority earnings gap across generations of canadians abstract to what extent the earnings gaps facing canada s visible minorities reflect discrimination is a question of tremendous policy interest this paper argues that failing to account for the limited canadian ancestry of visible minorities overestimates discrimination if immigrant assimilation is an intergenerational process using the 2001 and 2006 canadian censuses weekly earnings conditional on a rich set of worker and job characteristics are compared with child immigrant second and third and higher generation canadian men the results reveal a tendency for earnings to increase across subsequent generations of visible minority but not white men though the pattern is strongest between the first and second generation for black men it is also evident between the canadian born with and without a canadian born parent despite this progress for most visible minority groups earnings gaps are identified even among third and higher generation canadians

tracking intergenerational progress for immigrant groups the problem of ethnic attrition in tracking the later generation descendants of immigrants measurement biases can arise from ethnic attrition e g us born individuals who do not self identify as mexican despite having ancestors who immigrated from mexico we present evidence that such ethnic attrition is sizeable and selective for the third generation populations of key hispanic and asian immigrant groups in addition our results suggest that ethnic attrition generates biases that vary across national origin groups in direction as well as magnitude and that correcting for these biases will raise the socioeconomic standing of the us born descendants of most hispanic immigrants relative to their asian counterparts

regulation competition and asymmetric information abstract this article studies a model of regulation under asymmetric information when there exists a competitive fringe of unregulated alternative producers the correlation between the unknown cost parameters of the fringe and of the regulated firm allows the regulator to use the threat of entry by the fringe to reduce the informational cost of regulation the presence of the fringe is welfare enhancing the allocative distortions can be larger or smaller than those in the no fringe case and the optimal contract sometimes allows inefficient entry the optimal contract can exhibit non standard bunching phenomena and discontinuities

production of public safety are socioeconomic characteristics of local communities important factors this paper uses the translog cost function and cross section data from florida to investigate the importance of socioeconomic characteristics sec of local communities in the production of public safety the approach used is noteworthy in four respects 1 the underlying production function is specified as an agem production function 2 sec are treated as non purchased fixed inputs 3 two variables are used to proxy sec in estimation and 4 the paper test for the existence of endogenous quality differences in safety it is shown that exclusion of sec from the production cost function of safety leads to misspecification and hence they provide a misleading guide to policy

the southern wage gap human capital and the quality of education this suggests that school quality can play an important role in explaining the racial wage gap welch 28 and smith 19 both provide anecdotal evidence that relates the narrowing of school quality to the falling racial gap in earnings the rising rate of return for black workers on years of school documented by weiss and williamson 27 welch 28 and smith and welch 20 also is consistent with the improving quality of their education nevertheless school quality has not been incorporated into systematic statistical analysis of the racial wage gap this is the main focus of this paper i examine 15 southern states which had data on the segregated white and black school systems i have attempted to link the demonstrated lower quality of education during segregation in the south to the persistent southern wage gap in addition i have tried to

race and home ownership from the end of the civil war to the present we present new estimates of home ownership for black and white households from 1870 to 2007 black ownership increased by 46 percentage points whereas white ownership increased by 20 points remarkably 25 of the 26 point narrowing occurred between 1870 and 1910 part of this early convergence is accounted for by falling white ownership due to movement out of agriculture but most is accounted for by post emancipation gains among blacks after 1910 white and black households increased ownership but the racial gap barely changed we discuss the influence of residential segregation public policy and permanent income on the ownership gap

the impact of young workers on the aggregate labor market an increase in the share of youth in the working age population of one state or region relative to the rest of the united states causes a sharp reduction in that state s relative unemployment rate and a modest increase in its labor force participation rate this is inconsistent with many theories of the labor market but can be easily explained by a model of frictional unemployment with on the job search the theory makes strong predictions regarding the behavior of wages which are shown to be consistent with the data the paper also reconciles its findings with an existing body of apparently contradictory empirical evidence

race and human capital comment according to human capital theory changes in the racial schooling gap are a key factor in the historical evolution of blackwhite male income ratios in a recent paper in this review 1984 james smith points out a basic paradox in the human capital explanation race differences in years of schooling have diminished sharply and continuously for male cohorts born in the twentieth century black white male income ratios however rose only slightly in the aggregate before 1960 after 1960 the ratios increased appreciably smith resolves the paradox by constructing new estimates of the racial schooling gap for cohorts stretching back to the civil war based on retrospective educational attainment data from the 1940 and subsequent censuses race differences in years of schooling widened among males born from 1886 to 1910 additionally the quality of black schooling fell relative to the quality of white schooling since these cohorts dominate the census occupation and income statistics until 1960 smith claims the relative constancy of black white income ratios until 1960 is consistent with the human capital model this comment challenges one of smith s conclusions the increase in the racial schooling gap is shown to be spurious scholars often interpret census attainment data as a measure of years of schooling but the data refer to highest grade completed historically the average black pupil took longer than a single school year to complete a grade retention alone would not bias the census attainment data most blacks born in the late nineteenth century however were educated in ungraded schools for them census attainment data measure years of schooling not grades the shift from ungraded to graded schools took place throughout the period of educational retrogression identified by smith it is the change from years to grades that causes black schooling levels to appear to lag behind white schooling levels consistent data show a continuously decreasing racial schooling gap whatever the merit of smith s explanation it cannot rest on census attainment data beginning in 1890 the u s bureau of the census reported school attendance rates for narrow age groups for example ages 5 to 9 1 i use these data to construct new estimates of average years of schooling in the following manner let p j proportion of children of age j at school a e minimum age at entering school and a l maximum age at leaving school i assume that a e 5 and a l 20 since attendance rates before age 5 or after age 20 were negligible for the period because data are unavailable for single years of age i also assume the agespecific attendance rates are equal to the average attendance rate for the relevant age 2 j a l group the sum ej a e p j estimates average years of schooling 3 empirically the number of students who skip a grade is less than the number who fail the grade hence average years of schooling should exceed average highest grade completed table 1 presents the cohort specific estimates of years of schooling according to my calculations the racial schooling gap fell from 3 8 years among 1886 90 cohorts to 2 5 years among 1906 10 cohorts according

race and human capital reply to arrive at a tenable interpretation of black history it is important to resolve the conflict between my measure retrospective years of schooling completed and robert margo s measure prospective accumulation across ages of cohort specific attendance rates my series reconciled the apparent inconsistency between the stagnant pre 1940 black white income ratios and what scholars had previously thought was a steady narrowing of racial education differences margo s series not only would restore that incon

education achievement in segregated school systems the effects of separate but equal educational achievement in segregated school systems was considerably lower in the black schools than in the white schools economic historians have argued that the racial achievement gap reflected the discriminatory funding of the black schools this paper assesses counterfactually the historical effects of a separate but equal policy of educational finance using cross sectional data from 1930 and 1940 i estimate race specific educational production functions eliminating race differences in inputs supplied by school boards explains 40 50 percent of the racial achievement gap depending on how achievement is measured the remainder appears to reflect the impact of family background on achievement of which the most important effect was adult black illiteracy a legacy of slavery and educational backwardness in the late 19th century the paper also shows how school boards marginal valuation of black achievement can be recovered from the production function estimates compared to preferences that would have led them to voluntarily practice equality southern school boards judged black achievement to be worth roughly half the value they placed on white achievement this abstract was borrowed from another version of this item

what s driving mexico u s migration a theoretical empirical and policy analysis using data gathered in 25 mexican communities the authors link individual acts of migration to 41 theoretically defined individual household community and macroeconomic level predictors the indicators vary through time to yield a discrete time event history analysis over the past 25 years probabilities of first repeat and return migration have been linked more to the forces identified by social capital theory and the new economics of migration than to the cost benefit calculations assumed by the neoclassical model the authors find that mexico u s migration stems from three mutually reinforcing processes social capital formation human capital formation and market consolidation

coming out of the shadows learning about legal status and wages from the legalized population the 1986 immigration reform and control act irca granted amnesty to approximately 1 7 million long term unauthorized workers in an effort to bring them out of the shadows and improve their labor market opportunities an analysis of wages using panel data for a sample of legalized men provides evidence that wage determinants are structurally different after amnesty for them but not for the comparison group as measured during the same time periods the wage penalty for being unauthorized is estimated to range from 14 to 24 the wage benefit of legalization under irca was approximately 6

the earnings of mexican immigrants in the united states abstract this paper documents the trends in the earnings of mexican immigrants during the 1970 1990 period the empirical evidence indicates that there has been a decline in the relative wage of successive mexican immigrant waves in the past three decades and that little wage convergence occurs between the typical mexican immigrant and the typical native worker the data also suggest that the increasing importance of mexican immigration is partly responsible for the deterioration in relative skills observed in the aggregate immigrant population but that there has also been a decline in relative skills even among non mexican immigrants

marriage markets and assortative mating with household public goods theoretical results and empirical implications this paper analyzes marriage market equilibria when the gains from marriage result from joint consumption of household public goods assuming transferable utility within marriage the paper proves that marriage markets will be characterized by positive assortative mating on wealth when spouses differ only in endowments and the gains to marriage result only from public goods when spouses differ in wages and household public goods are produced at home the results imply offsetting effects with public good economies creating an incentive for positive assortative mating on wages and gains from specialization creating an incentive for negative assortative mating on wages the results help explain the persistent lack of empirical support for becker s prediction of negative assortative mating on wages and have implications for empirical analysis of all joint living arrangement decisions

human capital and interethnic marriage decisions common explanations for the generally negative relationship between education and ethnic endogamy include 1 education makes immigrants and their children better able to adapt to native culture thereby eliminating the need for a same ethnicity spouse and 2 education raises the likelihood of leaving ethnic enclaves thereby decreasing the probability of meeting potential same ethnicity spouses this paper considers a third option the role of assortative matching on education if education distributions differ by ethnicity then spouse searchers may trade similarities in ethnicity for similarities in education when choosing spouses u s census data on second generation immigrants provide strong support for the assortative matching mechanism

black men s relative earnings are the gains illusory this study investigates the hypothesis that the increase in the median earnings of black men relative to those of white men after 1964 in the united states largely reflects the labor force withdrawal of high proportions of low wage black men who availed themselves of government transfers analyzing current population survey and social security administration data through 1985 the author finds little empirical support for three direct implications of the sample censoring hypothesis of the total measured gain in relative earnings between 1964 and 1985 from 531 to 663 or 13 2 percentage points he finds that only 14 or 1 8 percentage points can be attributed to sample selection

explaining black white wage convergence 1940 1950 during the 1940s racial differences in wages narrowed at an unusually rapid pace using a decomposition technique different from that of previous studies the author shows that wage compression be

understanding black white wage differentials 1960 1990 understanding black white wage differentials 1960 1990 author s james j heckman thomas m lyons petra e todd source the american economic review vol 90 no 2 papers and proceedings of the one hundred twelfth annual meeting of the american economic association may 2000 pp 344 349 published by american economic association stable url http www jstor org stable 117248 accessed 16 08 2008 00 56

the role of human capital in earnings differences between black and white men d uring the past 50 years the earnings of black men have increased substantially both in absolute terms and relative to those of white men as shown in figure 1 in 1940 the black white weekly earnings ratio among men ages 25 34 was 49 percent by 1980 it had increased to 79 percent during the 1980s however the overall black white earnings gap did not narrow and at younger ages the gap actually widened although the 1980s is not the first decade since 1940 in which black men made little or no gains in relative earnings the 1950s was another the lack of progress in the 1980s is nevertheless puzzling and a source of concern this article examines the factors underlying the differential in earnings between black men and white men with a focus on the role of human capital since 1940 successive generations of black men entering the labor force have been increasingly more educated relative to white men both in terms of years of school completed and in the quality of schooling obtained as the education and income levels of black parents increased racial differences in the transmission of human capital in the home were also likely to have narrowed this convergence in educational differences combined with the migration of blacks out of the south contributed to the narrowing in the racial gap in earnings over the 1940 80 period particularly in the first half of the period but human capital factors education and migration were not the only source of convergence in black white differences in earnings the patterns of change in the earnings gap support the contention that declining labor market discrimination against blacks has also contributed to the rise in the black white earnings ratio moreover the acquisition of human capital itself has been strongly affected by societal and governmental discrimination since blacks were long provided with greatly inferior schooling resources

regulating a monopolist with unknown demand the authors analyze the optimal regulatory policy when the firm has better information about demand than the regulator from the outset of their relationship the firm s cost structure is common knowledge but monitoring of output is prohibitively costly the authors find that when marginal production costs increase with output the firm command s no rents from its private information and the efficient price is established for each realization of demand in contrast with declining marginal costs the same price is established by the regulator for all demand realizations and the firm s rents can be substantial overall major qualitative differences in the optimal regulatory policy arise when the firm s private information concerns demand rather than costs copyright 1988 by american economic association

understanding the evolution of world business cycles abstract this paper studies the changes in world business cycles during the period 1960 2003 we employ a bayesian dynamic latent factor model to estimate common and country specific components in the main macroeconomic aggregates output consumption and investment of the g 7 countries we then quantify the relative importance of the common and country components in explaining comovement in each observable aggregate over three distinct time periods the bretton woods bw period 1960 1 1972 2 the period of common shocks 1972 3 1986 2 and the globalization period 1986 3 2003 4 the results indicate that the common g 7 factor explains on average a larger fraction of output consumption and investment volatility in the globalization period than it does in the bw period

on the demographic adjustment of unemployment the unemployment rate is one of the most important business cycle indicators but its interpretation can be difficult because slow changes in the demographic composition of the labor force affect the level of unemployment and make comparisons across business cycles difficult to purge the unemployment rate from demographic factors labor force shares are routinely used to control for compositional changes this paper shows that this approach is ill defined because the labor force share of a demographic group is mechanically linked to that group s unemployment rate as both variables are driven by the same underlying worker flows we propose a new demographic adjustment procedure that uses a dynamic factor model for the worker flows to separate aggregate labor market forces and demographic specific trends using the u s labor market as an illustration our demographic adjusted unemployment rate indicates that the 2008 2009 recession was much more severe and generated substantially more slack than the early 1980s recession

networks in the modern economy mexican migrants in the u s labor market this paper attempts to identify job networks among mexican migrants in the u s labor market the empirical analysis uses data on migration patterns and labor market outcomes based on a sample of individuals belonging to multiple origin communities in mexico over a long period of time each community s network is measured by the proportion of the sampled individuals who are located at the destination the united states in any year we verify that the same individual is more likely to be employed and to hold a higher paying nonagricultural job when his network is exogenously larger by including individual fixed effects in the employment and occupation regressions and by using rainfall in the origin community as an instrument for the size of the network at the destination

school quality and black white relative earnings a direct assessment the wage differential between black and white men fell from 40 percent in 1960 to 25 percent in 1980 it has been argued that this convergence reflects improvements in the relative quality of black schools to test this hypothesis we assembled data on pupil teacher ratios annual teacher pay and term length for black and white schools in the eighteen segregated states from 1915 to 1966 these data are linked to estimated returns to education for southern born men from different cohorts and states in 1960 1970 and 1980 improvements in the relative quality of black schools explain 20 percent of the narrowing of the black white earnings gap between 1960 and 1980

is immigration enforcement shaping immigrant marriage patterns abstract this paper identifies intermarriage between non citizens and citizens as an important response mechanism to intensified immigration enforcement particularly among mexican non citizens exploiting the temporal and geographic variation in the implementation of interior immigration enforcement from 2005 to 2017 we find that a one standard deviation increase in enforcement raises mexican non citizens likelihood of marrying a u s citizen by 3 to 7 both police based and employment based enforcement contribute to this impact the analysis adds to a growing literature examining how immigrants respond to tightened enforcement and importantly sheds light on the recent growth of intermarriage among mexican immigrants

the great mexican emigration abstract in this paper we examine net emigration from mexico over the period 1960 to 2000 the data are consistent with labor supply shocks having made a substantial contribution to mexican emigration accounting for two fifths of mexican labor flows to the united states over the last two decades of the twentieth century net emigration rates by mexican state birth year cohort display a strong positive correlation with the initial size of the mexican cohort relative to the corresponding u s cohort in states with long histories of emigration the effects of cohort size on emigration are relatively strong consistent with the existence of preexisting networks

international migration self selection and the distribution of wages evidence from mexico and the united states we use the 1990 and 2000 mexican and u s population censuses to test borjas s negative selection hypothesis that the less skilled are those most likely to migrate from countries with high skill premia earnings inequality to countries with low skill premia earnings inequality we find that mexican immigrants in the united states are more educated than nonmigrants in mexico and were mexican immigrants to be paid according to current skill prices in mexico they would be concentrated in the middle of mexico s wage distribution these results are inconsistent with the negative selection hypothesis and instead suggest that there is intermediate selection of immigrants from mexico

undocumented mexico u s migration and the returns to households in rural mexico this paper presents estimates of net income gains to a sample of households in rural mexico from sending migrants illegally to the united states correcting for sample selectivity bias and it examines the role of expected income gains in driving illegal mexico u s migration there is no evidence that people who migrate illegally to the united states are above average contributors to household income either as workers in mexico or as mexico u s migrants however other things being equal villagers who are in the best position to contribute to household income as workers in mexico are positively selected not to migrate to the united states

discrimination human capital and black white unemployment evidence from cities neither human capital theory nor the declining discrimination hypothesis can account for the failure of the black white employment gap to fall along with the wage gap however the weakness of the labor market since 1970 suggests that sustained employment discrimination in the context of restrictions on compensatory wage discrimination can explain these trends this hypothesis is assessed with a cross sectional model employing 1980 census summary data on smsas the innovative feature of this model is the use of complaints of job discrimination received by the equal employment opportunity commission as proxies for actual discrimination results support the contention that the forms of discrimination have undergone a compositional shift and that employment discrimination reduces the probability of black employment