the relationship between participation and project outcomes evidence from rural water supply projects in india summary this study examines data collected at the household and village level in 45 villages in two water supply projects in india based upon the results of regression models capital cost contribution and household involvement in decision making are both found to be independently significant predictors of village level measures of household satisfaction equal access and time savings this suggests that projects should continue to encourage both contributions and household involvement in decision making from as many households within a village as possible neither form of participation is a significant predictor of whether households in a village pay tariff

regulatory discretion and the unofficial economy johnson kaufmann and shleifer 1997 find that the share of the unofficial economy in gdp is determined by the extent of control rights held by politicians and bureaucrats in post communist economies exploring in more detail the role of bribes and using a broader data set from the oecd latin america and transition economies we find that the unofficial economy accounts for a larger share of gdp when there is more corruption and when the rule of law is weaker while these findings are consistent with the earlier results for transition economies in the larger country sample we find it is not necessarily the case that more regulation or higher taxes directly increases the size of the unofficial economy the problem appears to be not regulation or taxation per se but whether the state administrative system can operate without corruption a high level of regulatory discretion helps create the potential for corruption and drive firms into the unofficial economy

public enforcement private monitoring evaluating a new approach to regulating the minimum wage this paper examines compliance with federal minimum wage laws in the u s apparel industry and analyzes the impact of new methods of intervention designed to improve regulatory performance drawing

from the fringe to the fore labor unions and employee compensation conventional wisdom suggests that labor unions raise worker wages while the newer empirical literature finds only negligible earnings effects i reconcile this apparent contradiction by arguing th

minimum wages and compliance the case of trinidad and tobago explores compliance to the national minimum wage in trinidad and tobago potential costs associated with the national minimum wage actual incidence of compliance in terms of employment and wage distribution nature of labor market this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from an this abstract was borrowed from another version of this item

using electoral cycles in police hiring to estimate the effect of police on crime comment previous empirical studies have uncovered little evidence that police reduce crime possibly due to simultaneity problems this paper uses the timing of mayoral and gubernatorial elections as an instrumental variable to identify a causal effect of police on crime increases in the size of police forces are shown to be disproportionately concentrated in mayoral and gubernatorial election years increases in police are shown to substantially reduce violent crime but have a smaller impact on property crime the null hypothesis that the marginal social benefit of reduced crime equals the costs of hiring additional police cannot be rejected

unions pension wealth and age compensation profiles this paper examines the effect of unions on both the magnitude and distribution of pension benefits an analysis of experience during 1973 79 under a sample of defined benefit plans shows that beneficiaries retire at an earlier age under collectively bargained plans than under other plans receive larger benefits when they retire and receive larger increases in their benefits after they retire also benefit differentials within and across cohorts of retirees are smaller among union than nonunion beneficiaries the average union nonunion differential is therefore greater in total compensation wages plus pension benefits than in wages alone because pension benefits grow more rapidly with years of service in the nonunion sector however the total compensation differential narrows with age more quickly than the wage differential

the joint determination of union status and union wage effects some tests of alternative models the problems of estimation and interpretation of union wage differentials are examined the properties of cross section and longitudinal estimators are compared estimates are presented and those in the literature summarized conflicting results are obtained longitudinal estimators typically produce results smaller than those of ols while cross section methods instrumental variables or inverse mills ratio raise the estimate the paper offers a reconciliation of these results it supports a more optimistic conclusion than that reached in reviews by freeman and lewis who argued that little has been learned from attempts to deal with the endogeneity issue comparisons between estimators are used to throw light on the process governing union status and to suggest interpretations of union differentials consistent with the current evidence

enforcement and compliance with labor regulations in argentina the author analyzes the effect of government enforcement on compliance with labor regulations in argentina a country where only half of the workforce receives all the benefits to which they are legally entitled constructing panel data for the period 1995 2002 across provinces and using the number of labor inspectors per capita as a proxy for enforcement he estimates the effect of enforcement on compliance with six employment and social security regulations minimum wage maximum hours paid vacation time annual extra monthly wage workers compensation insurance and health insurance because of potential simultaneity between enforcement and compliance the author explores instrumenting enforcement by electoral years two stage least squares estimates suggest enforcement increases compliance

are male female earnings differentials related to life expectancy caused pension cost differences this paper argues that employers using defined benefit pension plans are forced by competitive conditions to lower females earnings to account for more costly pension liabilities resulting from longer life expectancy a newly constructed data set containing employee salary histories and pension plan descriptions from five firms is used to calculate how much more it costs to employ a female vs a male worker identical except for life expectancy it is demonstrated that each dollar of increased pension liabilities results in a reduction in females salaries by fifty five cents implications of these findings for the 1983 supreme court ruling involving sex linked pension benefits are discussed

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

compliance and enforcement decisions under the national labor relations act this article analyzes the growth of regulatory litigation under the national labor relations act by modeling the compliance and enforcement decisions made by the employers unions and workers covered by the act an empirical analysis of the model on time series data for 1950 80 confirms the importance of compliance and enforcement incentives in explaining the growth of unfair labor practice charges while some actions of the national labor relations board the regulatory agency established by the act influence these incentives and the resulting regulatory litigation changes in some important incentives notably relative labor costs are beyond the board s influence

the gender gap in pensions and wages this study provides rationale for the underrepresentation of women in the pension sector and examines the consequences for the gender wage gap for a given set of observed characteristics a woman is 11 19 percent less likely than a man to have a pension of the unexplained portion of the gender wage gap 10 38 percent is due to unexplained differences in pension coverage finally consistent with a screening effect of pensions women are paid more equally in the pension sector copyright 1990 by mit press

pensions and wage premia i introduction despite the widespread acceptance of the theory of compensating differences empirical efforts to estimate the magnitude of these differences have met with only mixed success 1 with the exception of fatal risks economists have not been able to consistently find a significant relationship between wages and other job characteristics the failure to find consistent evidence on compensating differentials has been attributed to either poor measures of non wage characteristics or inadequate controls for worker productivity 2 studies by gunderson hyatt and pesando 1992 montgomery shaw and benedict 1992 and moore 1987 which have been able to explicitly address these issues have had greater success in finding significant compensating differentials in this paper we focus on an alternative explanation for the variation in estimated compensating differentials that the magnitude of the compensating differential varies systematically across different sectors in the labor market the theory of compensating differentials predicts that the implicit price or cost of providing a job attribute such as pensions will be a function of firm or industry technological differences and that the value attached to that attribute will also vary across workers depending on their tastes if workers and firms are not randomly assigned to sectors this will lead to systematic variations in the size of the estimated compensating differential across sectors or markets the result of this variation is that studies using different subsamples of the labor force will yield very different estimates of the size of the compensating differential the few studies that have addressed sources of heterogeneity in compensating differentials have concentrated on testing for individual differences in tastes for risk 3 in contrast our emphasis is on firm side differences in technologies or market power we estimate the compensating differential between annual pension accruals and wage rates and let this tradeoff vary by firm size and union status with corrections for selectivity bias the implicit cost of pensions and hence the size of the compensating differential may vary by finn size or union status for a number of reasons greater ability to spread fixed administrative costs across a large work force more difficulty monitoring worker effort or the presence of market power thus the cost of fringe benefits to the firm may be lower in large or unionized firms than in small nonunion firms we find empirical evidence supporting this view the estimated wage pension compensating differentials are smaller in unionized and large firms than in small nonunion firms the results from this paper are significant for several reasons 1 they provide evidence that compensating differentials vary across markets this evidence could account for some of the differences in estimates of tradeoffs across studies that have used different nonrandom samples 4 more importantly these sectoral differences serve as a reminder that the labor market is in fact a multitude of markets and that technological differences that vary across markets should be considered when addressing issues ranging from estimating the returns to human capital investment to the impact of the minimum wage 5 2 these results also deepen our knowledge of the relationship between pensions and wages a relationship that has important implications for the shape of workers wage earnings profiles or for the mechanisms for motivating workers and for the returns to human capital and for the distribution of income regarding the latter pensions are a large component of compensation and work by even and macpherson 1990 mccarthy and turner 1983 and moore 1987 suggests that coverage rates and returns are smaller for women and blacks our analysis suggests that an element of the differences could be sectoral choices

workers trust funds and the logic of wage profiles this paper defines a concept a worker s trust fund which is useful in analyzing optimal age earnings profiles the trust fund represents what a worker loses if dismissed from a job for shirking in considering whether to work or shirk a worker weighs the potential loss due to forfeiture of the trust fund if caught shirking against the benefits from reduced effort this concept is used to show that the implicit bonding in upward sloping age earnings profiles is not a perfect substitute for an explicit up front performance bond or employment fee it is also shown that the second best optimal earnings profile in the absence of an up front employment fee pays total compensation in excess of market clearing in a variety of stylized cases

the regulation of labor author s botero juan djankov simeon la porta rafael lopez de silanes florencio shleifer andrei abstract we investigate the regulation of labor markets through employment collective relations and social security laws in 85 countries we find that the political power of the left is associated with more stringent labor regulations and more generous social security systems and that socialist french and scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries however the effects of legal origins are larger and explain more of the variation in regulations than those of politics heavier regulation of labor is associated with lower labor force participation and higher unemployment especially of the young these results are most naturally consistent with legal theories according to which countries have pervasive regulaory styles inherited from the transplantation of legal systems

the endogeneity of union status an empirical test an unsettled issue in the literature relating to the relative wage effect of unions is the appropriate treatment of union status in a wage determination model in the context of a three equation model determining union membership and union and nonunion sector wage rates this paper presents an instrumental variables iv procedure for estimating the parameters of the wage equations and a test of the exogeneity of union status using the hausman specification test an advantage of our iv procedure in comparison to the widely used inverse mill s ratio procedure is that our procedure is a distribution free estimator whereas the inverse mill s ratio estimator hinges in the assumption that the error term of the choice equation is normally distributed using data for a sample of middle aged white workers we estimate the parameters of the union and nonunion wage equations with both procedures on the key question of the endogeneity of union status the hausman test decisively rejects the null hypothesis of exo

longitudinal analyses of the effects of trade unions but union members are different from nonmembers in unobserved ways biasing your estimates y ou should make a selectivity bias correction simultaneously determine union status and economic outcomes develop an unobservables model use longitudinal data archetypical comment on virtually any study of the economic effects of umomsm or suitably modified on any other empirical subject

corporate tournaments human capital acquisition and the firm size wage relation this paper provides a possible explanation for the empirically observed size wage effect and inter industry wage differences it develops a model in which incentives for workers to accumulate general human capital are provided by corporate tournaments where workers with the highest level of general human capital win promotions given that the prizes in such tournaments are determined by outside market conditions the investment and the equilibrium wages depend on firm and industry characteristics the model implies that workers in bigger firms and in more technology intensive and profitable firms and industries acquire more human capital and receive higher wages and benefits

wage pension trade offs in collective agreements analyzing 98 matched collective agreements and flat benefit pension plans in ontario in 1984 the authors find evidence of a significant trade off between wages and an actuarially constructed summary measure of the expected future pension costs for employers with respect to the separate components of the pension plans they find a significant trade off between wages and the main item that is bargained over the flat benefit rate but not between wages and most of the early and postponed retirement options these results obtain when the pension variables are specified as a proportion of wages to capture the assumption that the generosity of pension plans is reflected in replacement rates and when simultaneous equation procedures are used to account for the possible endogeneity of pensions the trade off disappears however when the pension variables are specified in dollar amounts

pensions bonding and lifetime jobs a well known if underappreciated finding in the mobility literature is that turnover is much lower in jobs covered by pensions than in other jobs this could result from capital losses for job changes created by most benefit formulas the tendency of turnover prone individuals to avoid jobs covered by pensions or higher overall compensation levels in such jobs a switching bivariate probit model of pension coverage and turnover is developed to estimate the effect of each of these factors the results show that capital losses are the main factor responsible for lower turnover in jobs covered by pensions but self selection and compensation levels also play an important role this is the first direct evidence that bonding is important for understanding long term employment relationships

heterogeneous firms and the organization of production firms in the same industry exhibit systematic differences in the organization of production and the structure of employment entrepreneurial ability is the specific scarce input that limits the size of a firm this input must be allocated to two activities coordinating production and monitoring workers able entrepreneurs can convert calendar time into larger supplies of coordinating effort that enable them to assemble large firms greater ability implies a higher shadow price of time which increases the implicit costs of monitoring a dispersion of entrepreneurial abilities generates an equilibrium size distribution of firms differences in monitoring costs affect the choice of worker productivities the design of products and the organization of production the monitoring cost hypothesis advanced in this paper goes a long way in explaining the equilibrium of an industry containing heterogeneous firms that differ in size and behavior

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

lurking in the shadows the informal sector and government policy abstract this paper develops a dynamic model that sheds light on the evolution of the informal sector we show how tax rates and enforcement policies influence the size of this sector and how the sector naturally declines as an economy transitions towards steady state we find small changes in the tax rate cause measurable changes in the size of informal employment but modest changes in enforcement have negligible effects these results suggest that while reductions in the tax rate combined with increased enforcement reduce the size of the informal sector tax rate reductions and penalties for evasion are the most effective

work related perks agency problems and optimal incentive contracts work related perks such as corporate jets nice offices and so forth improve the tradeoff between incentives and insurance that determines the optimal incentive contract we show that i such perks may be offered even if their direct consumption benefits are offset by their costs ii they will be offered for free iii agents in more uncertain production environments will receive more perks iv senior executives should receive more perks and v better corporate governance can lead to more perk consumption by ceos our analysis also offers insights into firms decisions about how much autonomy they should grant to their employees

encouraging long term tenure wage tilt or pensions the author analyzes data on 6 416 persons in 109 firms to determine whether the length of these workers tenure was positively related either to wage tilt the payment of below market wages in the early years of the worker s employment with a firm and above market wages in the later years or to the presence of defined benefit pension plans contrary to the popular but little tested hypothesis that wage tilt is important in inducing workers to make long term commitments to the firm the results show that wage tilt had no significant effect on tenure except indirectly through its effect on pension quit costs in contrast pensions increased tenure in the firm on average by more than 20

employer tax evasion in the unemployment insurance program we use unique data to analyze employer tax compliance with unemployment insurance ui provisions the data indicate that employers may have underreported 728 million of ui taxes nationally in 1987 alone to formally examine this noncompliance a theoretical model of payroll tax evasion is developed showing that increasing payroll tax rates among other things likely increases noncompliance by risk neutral firms this prediction is empirically verified the finding that ui tax evasion is systematically related to various firm characteristics suggests that ui audits may be effectively targeted by statistical profiles derived from our model thereby improving compliance