stayers as workers and savers the classic selection effect posits that deferred wages attract stayers the results in this paper suggest an alternative explanation deferred wage contracts attract savers all else constant savers are better workers than nonsavers a firm naturally works harder to retain better workers and thus is led to pay them higher wages thereby encouraging savers to remain in the firm s employ this process creates a confluence of deferred wages high levels of compensation and low quit propensities in this explanation staying is merely the result of a selection process and not the underlying factor that drives selection

economic determinants of free trade agreements abstract the purpose of this study is to provide the first systematic empirical analysis of the economic determinants of the formation of free trade agreements ftas and of the likelihood of ftas between pairs of countries using a qualitative choice model we develop this econometric model based upon a general equilibrium model of world trade with two factors of production two monopolistically competitive product markets and explicit intercontinental and intracontinental transportation costs among multiple countries on multiple continents the empirical model correctly predicts based solely upon economic characteristics 85 of the 286 ftas existing in 1996 among 1431 pairs of countries and 97 of the remaining 1145 pairs with no ftas

public sector wages and bureaucratic quality evidence from latin america the purpose of this paper is to present evidence on public private wage differential for a sample of latin american countries and to discuss the relationship between public private wage differentials and bureaucratic quality in the region the paper starts by estimating public private wage differentials for a sample of 17 latin american countries covering 88 percent of the population of the region next the paper looks at the relationship between bureaucratic quality and public private wage differentials and finds that while there is no correlation between average public sector wages and bureaucratic quality there is a positive correlation between bureaucratic quality and the degree

the usefulness of the wind up measure of pension liabilities a labor market perspective financial economists have long favored the use of a wind up measure of the firm s pension liabilities yet the pension liabilities of the firm also represent the pension wealth of its workers it is reasonable to presume that workers and shareholders have a common view of the pension contract if the wind up measure depicts the true pension liabilities of the firm then the wage concession granted by its workers must reflect the fact that the firm may choose to terminate the plan at any time data on the wageservice characteristics of the membership of a sample of final earnings plans in canada suggest contrary to the implications of the wind up measure that workers wages do not internalize accruing pension benefits on a year to year basis instead the data suggest that pension plans may be a vehicle through which a significant portion of the total compensation of individual employees is deferred until their later work years and that the wind up measure may well understate the pension liabilities of an on going firm the financial accounting standards board 4 or fasb recently proposed that net pension assets or liabilities appear on the corporate balance sheet in order to make operational the concept of the augmented balance sheet one must construct measures of both pension assets and pension liabilities the noncontroversial view at least among economists is that pension assets be valued at market the fasb endorses this view the measurement of pension liabilities on the other hand remains controversial financial economists such as sharpe 10 have traditionally advocated a market or wind up measure of the firm s pension liabilities the pensions due under the terms of the plan if it were to be immediately terminated are calculated and these pensions are then costed at current annuity rates the accrued benefit method without salary projection is the actuarial valuation method used in the calculation the wind up measure is the market value of the firm s pension liabilities since it identifies the precise amount that the firm would require to discharge its legal obligation if the plan were terminated 1 yet the fasb now rejects the use of this method of calculating the firm s

why federal workers don t quit quit rates in the federal government are abnormally low some economists and the federal government itself have taken this to mean that federal wages are too high this paper provides an alternative explanation it shows that the timing of compensation across a career as well as its level affect quit rates pensions in particular impose large penalties on workers who quit early and the portion of federal pay in the form of pensions is very high this feature of the federal pay structure may explain its abnormally low quit rate as a general proposition quit rates are poor indices for judging pay adequacy

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

a search interpretation of male female wage differentials a general equilibrium search framework is used to examine the role of gender differences in labor market behavior patterns e g quit rates for personal reasons in determining gender wage differentials for samples of high school and college graduates from the national longitudinal survey of youth nlsy these behavioral patterns are found to be significantly different across the sexes and account for 20 30 of the wage differentials in particular they play a key role in explaining the male female wage differential that remains after controlling for the gender composition across occupations

gender differences in wages and job turnover among continuously employed workers the purpose of this paper is to determine whether a significant number of u s women work continuously during their early careers which women are likely to do so and how these women compare to men in terms of their interfirm mobility and earnings the data are from the young men and young women cohorts of the national longitudinal surveys of labor market experience nls continuous employment is by no means the norm among young women but it appears to be a growing trend in comparing starting wages of men and women we find that the wage gap is less pronounced among continuously employed workers than among the full sample in almost every race cohort schooling group and the gap is narrowing far more rapidly among the continuously employed excerpt

bonding and nonbonding signals of product quality this article examines the essential role of bonding in most signaling models where quality is subject to moral hazard problems an advertising model in which advertising is a durable asset whose value is reduced by cheating illustrates how the bonding capacity of a signal determines its cost characteristics of the market that govern how well a signal is targeted to relevant consumers and how information about cheating is spread are critical to determining bonding capacity and hence to the choice among potential signals this bonding perspective explains the literature s widely divergent predictions about the conditions necessary for quality signals copyright 1990 by the university of chicago

pensions and wages an hedonic price theory approach this paper examines whether a trade off exists between the level of pension benefits and wages the 1983 survey of consumer finance is used to match detailed information on pension plans to worker characteristics for a random sample of the population the pension wage tradeoff is estimated using both a contractual model of the labor market and the spot market model used in previous studies the results indicate a large negative tradeoff in the contractual model but only a negligible tradeoff in the spot market model results from estimating the underlying structural equations for pensions are also presented copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the implicit pension contract developments and new directions pension economics has emerged as a separate literature over the past decade some of the early pension work was devoted to financial issues including implications of pensions for savings rates and portfolio allocation most new developments however have stemmed from research surrounding labor markets this research has led to an implicit contract theory of pensions a theory that has pensions playing a more complicated role in worker firm relation than heretofore realized the theory explains much of economic behavior in labor markets and bridges a gap between labor and financial literatures this essay describes the genesis for these ideas and traces some of the most important research results in the area an equal amount of spece is devoted to a consideration of likely directions for future research

early career work experience and gender wage differentials we estimate a wage model that includes an array of variables measuring the fraction of time worked during each year of the career this array fully characterizes past employment experience regardless of how sporadic it has been our model yields substantially higher estimated returns to experience and lower returns to tenure than do models that measure experience cumulatively and use the standard quadratic functional form we find that the data reject the standard model but fail to reject our model furthermore we find that 12 of the male female wage gap is due to differences in the timing of work experience

agency growth salaries and the protected bureaucrat agency growth salaries and the protected bureaucrat i introduction in recent years increased attention has been directed towards understanding bureaucratic behavior and its implications for economic performance a key element of this literature is the application of utility maximization for deriving implications about bureaucratic behavior representative is niskanen 1971 38 who argues that bureaucratic decisions are made rationally to maximize utility which is assumed to be a function of salary perquisites reputation power patronage and output implicit in the literature is an activist bureaucracy which engages in purposeful action to advance its interests an important part of some of the bureaucracy literature is the notion that government employees are a source of the documented growth of government it is commonly asserted that government employees acting in their own self interest will foster the growth of their organization growth of the organization is seen as a means for increasing salaries as well as the other arguments in the utility function the positive link between salaries and growth is emphasized by downs 1967 11 in his classic study of bureaucracy any organization experiencing rapid overall growth provides many more opportunities for promotion in any given time period than a static one additional references to the importance of agency growth for salaries include niskanen 1971 38 41 1975 619 tullock 1974 127 and heclo 1977 131 building on that theme other researchers such as bush and denzau 1977 borcherding bush and spann 1977 and bennett and orzechowski 1983 have argued that government employees will use their power to influence election outcomes to promote government growth and hence salaries despite the often critical nature of the salary growth relationship in recent discussions of bureaucratic behavior and the growth of government there is no direct empirical evidence of the asserted linkage related evidence provided for example by wolfinger and rosenstone 1980 97 101 that government employees have higher voter participation rates than do private employees is not conclusive support for the growth salary assertion voting results alone do not permit one to distinguish the underlying reasons for the higher participation rates and there are many more importantly for the federal government at least the assertion that salaries of government employees are significantly affected by agency growth seems inconsistent with the idea that the civil service system shields federal white collar employees from the uncertain fluctuations of political outcomes skepticism about the growth salary linkage due to the constraints of the civil service system is noted by wilson 1980 375 few officials need fear for their jobs and their salaries are determined by government wide laws and regulations rather than by the size rate of growth or success of the organization further while senior agency officials would be in the best positions to promote the growth of their agencies within the federal government the salaries of high gs general schedule level and senior executive service personnel are capped by law and may not exceed those paid to officials in executive level v the restriction limits the salaries of senior managers regardless of the growth of the agency one could however argue that managers promote growth to motivate their subordinates or that medium and lower level employees are the primary proponents of agency growth but as kaufman 1981 79 notes most officers and employees once they have attained career status could do nearly as well materially without pushing themselves as they could by working at capacity the absence of incentives and resulting inertia can contribute to the often cited tension between career bureaucrats and political appointees the above discussion points out a serious problem with the growth salary linkage often asserted in the bureaucracy literature

sex discrimination and competition in product and labour markets theoritical explanations for wage discrimination collapse in the long run because competition should drive discriminations firms out of the market in product markets with imperfect competition em

revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model this paper uses a gravity model to assess ex post regional trade agreements the model includes 130 countries and is estimated with panel data over the period 1962 1996 the introduction of the correct number of dummy variables allows for identification of vinerian trade creation and trade diversion effects while the estimation method takes into account the unobservable characteristics of each pairs of trade partner countries the endogeneity of some of the explanatory variables as well as a potential selection bias in contrast to previous estimates results show that regional agreements have generated a significant increase in trade between members often at the expense of the rest of the world

changes in the male female wage gap 1976 85 this study uses detailed information on work experience tenure and on the job training collected in the 1976 and 1985 questionnaires of the panel study of income dynamics to account for changes in wage differentials between white men and white women over these nine years decompositions of changes in the wage gap are used to illustrate the contribution of individual factors between 1976 and 1985 the wage gap between white men and women narrowed by approximately 4 percent this study finds that nearly 50 percent of this reduction was due to average changes in job tenure and other work history variables over this period

government employment and the provision of fringe benefits this study uses individual level data from the united states to examine the influence of government employment on the provision of five major fringe benefits four of the five benefits are more likely to be provided to government workers than to their private sector counterparts unlike wage comparisons which typically find substantial overpayment only for federal workers the findings suggest that past wage differentials underestimate the true compensation advantage enjoyed by government workers

worker effort decisions and efficient gender specific wage tenure profiles i introduction during the past thirty years women have increased their labor force participation female labor market intermittency has decreased and women s total labor market experience and years of tenure with the current employer have increased what these trends imply about the evolution of the gender gap in wages depends in part on gender differences in returns to tenure it is therefore surprising that economists have all but ignored the empirical finding that women have higher returns to tenure than do men over a significant portion of their working lives one reason why this finding has been ignored or treated as an anomaly may be the lack of theoretical constructs which predict an inverse gender gap in returns to tenure several labor market models predict that women should have lower returns to tenure than men human capital theory offers the most frequently cited explanation of flatter earnings profiles for female workers according to human capital theory gains from specialization and exchange lead to one household member specializing in home production and the other in market work since only women bear children historically the outcome of the exchange has been that women have specialized in home production indeed all surveys of time use indicate that women spend on average two to three times as long on housework as men as a consequence of this allocation women anticipate intermittent labor force participation and fewer years overall in the labor force than men this pattern too is borne out in national surveys which invariably find shorter average tenure and fewer total years of labor market experience for women than for men women typically have shorter completed job spells as well hall 1982 table 5 presents evidence that the gender gap in completed job duration is quite large he estimates that 63 8 percent of men but only 49 6 percent of women hold jobs with eventual tenure of at least five years with 37 3 and 15 1 percent of men and women respectively holding jobs with eventual tenure of at least twenty years because of the greater intermittency and shorter anticipated work history for women than men women will find it optimal to acquire less human capital than men 1 lesser quantities of general human capital tends to flatten both the observed earnings experience profile and the observed earnings tenure profile two factors contribute to this pattern first skills deteriorate during periods out of the labor market as in mincer and polachek 1974 which flattens the earnings experience profile for women relative to men second women anticipating discontinuous work histories select into occupations with flatter earnings profiles to minimize the penalty to labor force withdrawals as in polachek 1981 the effects of firm specific human capital on gender differences in wage tenure profiles vary across models for example kuhn 1993 constructs an elegant game theoretic model of gender differences in training and wages if women have a higher exogenous exit rate than men in equilibrium they will be placed in jobs with lower levels of firm specific training with a positive relation between training and productivity and a common share rate of the costs and benefits of specific training for men and women the wage tenure profiles of men will be steeper than those for women in contrast becker and lindsay 1994 argue that firm specific human capital leads to higher returns to tenure for women than men becker and lindsay assume that men and women have the same level of firm specific training however women have greater variance in their opportunity cost of remaining with a firm and so are more likely than men to separate inefficiently by giving women a greater share of both the costs and benefits of firm specific human capital through a steeper wage tenure profile firms reduce undesirable turnover although human capital arguments dominate the literature on gender differences in the labor market other models of wage growth predict flatter wage tenure profiles for women

pension reform personal pensions and gender differences in pension coverage abstract the personal pension scheme introduced in chile in 1981 has acquired a paradigmatic role for pension reform in less developed and developed countries in contrast to the significant gender gap in private pension coverage observed in developed countries in chile women s participation in the personal pension scheme is marginally higher than men s using cross section data the paper analyzes the determinants of personal pension plan contribution in chile and their effects it concludes that women s strong pension propensities and pension plan design explain in large part the absence of a gender gap in private pension coverage in chile

old industrial regions and employability inactivity has been growing across the developed world and is especially high in old industrial areas a general move towards more flexible labour markets and the restructuring in these regions ove

a study of wages and reliability this article studies the role of reliability on the wage rate reliability is defined in the sense of showing up for scheduled work over an extended period just as reliability is an important determinant of product prices a worker s reliability ought to be an important determinant of his or her wage moreover while workers are not conveniently packaged by brand name firms form expectations about reliability across identifiable groups of workers and thus effectively attach brand names to workers based on their observable characteristics a worker s wage depends on his own track record and the reputation for reliability of his identifiable group using robust measures of reliability i find that observed reliability and expected reliability substantially affect the wage rate and that about half of the gender wage gap can be explained by differences in expected reliability between men and women in the workforce

opportunistic behavior by firms in implicit pension contracts several studies have established that under the most common form of pension coverage benefits accrue disproportionately near the end of a worker s career such backloading establishes a penalty for early quitting but may also create an incentive for opportunistic firm behavior because benefits generally are a function of highest earnings when nominal earnings are expected to rise an employer can reduce pension liabilities by discharging workers prior to retirement this paper uses the national longitudinal survey of mature men to test whether such actions by employers are systematic we estimate that pension covered workers with mean losses are less likely to be discharged unexpected increases in pension losses due to increases in inflation however raise the risk of discharge we find no evidence that the minimum vesting standards of the employees retirement income security act reduces the likelihood of discharge for older workers who previously were not vested these results are consistent with an implicit pension contract under which employer compliance is enforced by reputation

the impact of the minimum wage if workers can adjust effort abstract in traditional models a binding minimum wage creates a excess supply of low skilled workers for minimum wage jobs employment falls and some jobs are reallocated from high to low rent workers this disequilibrium cannot persist competition to secure the property rights to now scarce jobs undoes most of the effects of the minimum wage workers who attach the highest value to the jobs are willing to work harder to keep them marginal workers are squeezed out of the market as high rent workers ratchet up effort level this process erodes the rent conferred by the minimum wage but also increases the value of marginal product which reduces the size of the employment effect the minimum wage confers more money income on low skilled workers and creates some distortion in the optimum combination of wage rate and effort level under plausible conditions the minimum wage has little effect on rent employment output and profits

labour flexibility and regional development the role of labour market intermediaries b enner c 2003 labour flexibility and regional development the role of labour market intermediaries reg studies 37 621 633 as contemporary labour markets have become more complex volatile and unpredictable labour market intermediaries lmis have played an increasingly prominent role in shaping labour flexibility and regional development existing theories of regional development however do not adequately account for this prominent role using silicon valley as a case study this paper contributes to developing a theory of intermediaries and regional development by highlighting the role lmis play in three important labour market functions reducing transactions costs building networks and managing risk in doing this intermediaries play a critical role in shaping the speed and character of labour market adjustment thus contributing directly to regional development with significant implications for regional development policy b enner c 2003 la flexibilite du travail et l ame nagement

the role of pensions in the labor market a survey of the literature because employer sponsored group pension plans entail agreements between workers and their employers explicitly linking future payment and employment they offer an unusual window into long term employment relationships this review of recent research on pensions explores how pensions influence employee compensation retirement turnover and other matters central to the determination of labor s price and quantity over time the authors also outline some unanswered questions and difficult to reconcile findings because the pension promise involves an explicit and relatively well documented set of statements regarding future contingent payment and employment an examination of the design and operation of employersponsored group pension plans can yield important insights into the long term employment relationship specifically pension research illuminates some important labor market questions in two ways it offers insight into an important element of compensation in its own right and it furthers our understanding of labor markets in which long term

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

the wage effects of cumulative job mobility this analysis of data from the national longitudinal survey of youth shows that cumulative job mobility had statistically significant effects on wages in the years 1979 88 the direction of the wage effects positive or negative and their magnitude varied depending on the type of cumulative mobility examined employee initiated versus employerinitiated separations economic versus family related quits layoffs versus discharges the results also indicate that although men and women had different mobility histories men for example had been discharged more often than women and women had quit for family related reasons more often than men the wage effects of each type of cumulative mobility economic quits family related quits layoffs and discharges were similar for men and women tn this paper we examine the impact of cumulative job mobility on the subsequent wages of young men and women most previous work on this subject has focused on the impact of specific mobility events such as quits or layoffs rather than on the impact of total job history on wages researchers looking at single mobility decisions have consistently reported evidence that a change in employers does affect a worker s subsequent wage therefore it is reasonable to ask whether the impact ofjob change is cumulative that is does a worker s current wage reflect the impact of all past mobility decisions quits layoffs and discharges also since most of the

fringe benefits and labor mobility interindustry factor mobility is a crucial determinant of the income distribution effects of exogenous changes in relative commodity prices this examination of interindustry variation in wages and profits using data from manufacturing industries from

works councils wages and job satisfaction we investigate the effects of works councils on employees wages and job satisfaction in general and for subgroups with respect to sex and occupational status making use of a german representative sample of employees we find that employees who move to a firm with a works council report increases in job satisfaction but do not receive particular wage increases especially the job satisfaction of female employees is affected by a change in works council status however we do not find support for the hypothesis that the introduction of a works council itself increases wages or job satisfaction for the employees staying at the firm

estimating the gravity model without gravity using panel data this article examines the effects of zero trade on the estimation of the gravity model using both simulated and real data with a panel structure which is different from the more conventional cross sectional structure we begin by showing that the usual log linear estimation method can result in highly deceptive inference when some observations are zero as an alternative approach we suggest using the poisson fixed effects estimator this approach eliminates the problems of zero trade controls for heterogeneity across countries and is shown to perform well in small samples

a reexamination of the federal private wage differential in the united states the federal private wage differential is reexamined with recent data using specifications similar to those used in three previous studies i find that the federal private wage differential has narrowed since the 1974 79 period analyzed in those studies in addition i discover that wage differentials based on specifications used in the literature are biased upward because the previous studies did not control for detailed occupational and locational characteristics of workers corrected point estimates of the wage gap are much smaller than previous estimates in the literature differences in the gap across demographic groups occupations and locations are also discussed

trade creation and diversion effects of regional trade agreements a product level analysis this paper examines the impacts of regional trade agreements rtas on trade flows at product level with a particular focus on trade creation and diversion based on estimation of the gravity equation dealing with the zero trade flows and endogeneity bias problems we analyse the impacts of various types of rtas involving 67 countries for 20 products during the 1980 2006 period we find that rtas among developing countries tend to cause trade diversion compared with rtas among developed countries taking the higher external tariff rates of developing countries compared with developed countries into consideration our results suggest trade diversion is likely to be caused by remaining high tariffs on imports from non members in addition we find the trade creation effect for many products in the cases of customs unions and plurilateral rtas these results imply that trade creation would be caused by various factors besides the reduction in tariff rates based on these results we draw a policy implication that external tariff rate reduction is an important factor in avoiding trade diversion in the formation of rtas in particular for rtas among developing countries while a large number of members and the common external tariff appear to be important for generating the trade creation effect

career interruptions following childbirth the aggregate probability of ending a career interruption that begins at childbirth is shown to diminish rapidly with the length of the interruption the empirical models estimated suggest that the decline can be explained by a combination of structural duration dependence unobserved heterogeneity and differences in observed characteristics the probability of returning to employment for a group of women with identical observed characteristics is found to have an l shaped distribution for the majority of the sample suggesting that many women have a very low probability of returning

the effects of the gstp on trade flow mission accomplished this paper investigates whether the global system of trade preferences among developing countries gstp achieves its intent to increase the trade of capital goods between member countries for this purpose trade data disaggregated by the degree of commodity differentiation and various gstp regional dummies are employed in a gravity equation estimation results say that the value of trade between gstp member countries has increased significantly since the formation of the gstp in 1989 and the trade of differentiated commodities has increased remarkably compared with other commodities therefore it can be asserted that the mission of the gstp has been accomplished successfully

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 labor contract and true economic pension liabilities most pension covered workers in the united states are covered solely or primarily by defined benefit plans in these plans workers are typically promised a pension that is proportional to their years of service in the firm and their final wage depending upon how workers pay for it the existence of a pension in the labor contract may play either an important role or no role at all in the worker firm relationship this paper addresses the issue how workers pay for the cumulating pension benefit over their tenure cycle in the firm and derives several economic implications for the worker firm contract while the theory itself has ambiguous implications the data confirm the longstanding presumption that pensions offer strong incentives for the worker to complete the normal tenure cycle in the firm not to quit early but if this intuitive notion is accepted it is shown that a perhaps less intuitive notion is also true firms make workers longterm bondholders in the firm the same flow of worker pension savings that tie workers to the firm are not accounted for in the pension trust fund pension plans are significantly underfunded in a true economic sense this is a peculiar characteristic of the labor contract which raises several unanswered questions the paper also shows that the nature of the pension contract can play an important role in determining the wage service profile and the capitalized value of the firm recent contributions to the literature pose an interesting and unconventional view of pensions one which leads to the conclusion that pensions play a relatively minor role in the worker firm contract the argument has been implicitly made by burt barnow and ronald ehrenberg 1979 and william sharpe 1976 but has recently been stated more directly by jeremy bulow 1982 2 in essence their views rest on a legal interpretation of pension liabilities namely since the firm can legally terminate its pension plan anytime the firm s pension liabilities cannot exceed the present value of the nominal pension promises it would owe workers if the firm terminated the plan immediately if workers believe the firm will exercise its legal right it is intuitively apparent and easy to show that workers will deposit only that amount of compensation into the pension plan that they expect to receive upon immediate termination using this interpretation of pension plan liabilities pensions have no influence on whether the worker leaves or remains in the firm moreover it will be shown that if the pension contract is written in nominal terms reflecting the legal view workers are not bondholders in the firm pension plans are excessively overfunded an alternative view is that the pension plan is an implicit contract between the worker and the firm see for example jack treynor 1977 an implicit contract theory implies that workers anticipating careers with a firm will consider the package of wage and pension benefits they expect to collect over their life cycle it is shown that these expectations lead quite directly to several implications that the pension contract is written in real terms that firms intend to meet their pension promises and that the firm will re u s department of labor s 4521 washington d c 20210 the views expressed in this paper are my own and do not necessarily represent the views of the department of labor the paper has substantially benefited from the comments of pauline ippolito and discussions with jeremy bulow i am also indebted to robert clark gary fields alan gustman olivia mitchell james pesando john turner michael ward and participants at the labor relations workshop at cornell university and the law and economics workshop at the university of chicago for comments see my 1985a book 2 the argument is also implicit in other related papers see for example martin feldstein and randall morck 1982

pension coverage and borrowing constraints using data from the 1983 survey of consumer finances and taking a measure of borrowing constraint status as an indication of a worker s discount rate we find evidence that borrowing constrained workers are less likely to be covered by a pension plan and that the borrowing constraint effect is significant only for defined benefit plans this paper examines the extent to which differences in workers rates of time preferences can explain pension coverage outcomes we argue that workers with a high rate of time preference will avoid jobs with pensions because pension saving cannot be costlessly borrowed against and they will be more reluctant to join a defined benefit than a defined contribution plan because defined benefit plans offer less flexibility in choosing a pension saving rate the existing empirical literature on pension coverage emphasizes the role of taxes incentives administrative costs and employee perceptions of default and nonportability risks 1 this study concentrates on how the ability to borrow against pension contributions affects worker pension demand

is mandatory retirement overrated evidence from the 1970s in this paper we argue that mandatory retirement is only one aspect of a much broader system that influences an individual s retirement decision we look at responses over time to variations in mandatory retirement rules faced by a sample of private sector workers aged 62 64 in 1973 this is done within a model that specifically includes the economic incentives present in social security and pension systems we find that the impact of a mandatory retirement rule on work is considerably smaller than a simple comparison of those with and without mandatory retirement would imply

the concept of employability the concept of employability plays a crucial role in informing labour market policy in the uk the eu and beyond this paper analyses current and previous applications of the term and discusses its value as an exploratory concept and a framework for policy analysis it then traces the development of the concept discusses its role in current labour market and training strategies with particular reference to the uk and seeks to identify an approach to defining employability that can better inform labour market policy by transcending explanations of employment and unemployment that focus solely on either supply side or demand side factors although the literature offers a range of definitions of employability many policy makers have recently used the term as shorthand for the individual s employability skills and attributes it is argued that this narrow usage can lead to a hollowing out of the concept of employability the paper concludes by presenting a broad framework for analysing employability built around individual factors personal circumstances and external factors which acknowledges the importance of both supply and demand side factors

pension portability and labor market efficiency a survey of the literature this paper reviews the theoretical and empirical literature evaluating the labor market effects of policies to enhance pension portability one perspective is that reducing the cost of job change w

employer size and labor turnover the role of pensions the well documented lower labor turnover in large firms than in smaller firms has been cited as evidence that large firms pay workers above their opportunity wage this study investigates whether t

government wage differentials a sample selection approach this paper uses the econometrics of sample selection to estimate the net wage differential between workers in the public and private sectors of the united states the results indicate workers self select by systematically locating in the sector which offers them the higher expected wage as a consequence previous research based on the assumption of random allocation between sectors is subject to serious specification bias the present estimation indicates government workers are slightly underpaid taking into account their observed characteristics and the selection process

delayed payment contracts and a firm s propensity to hire older workers there are jobs for which firms employ older workers but tend not to hire new older workers this may be attributable in part to implicit contracts that discourage worker shirking and malfeasance by shifting compensation to the end of the contract such delayed payment contracts can introduce a form of fixed costs into the employment relationship much as with hiring and training costs these fixed costs lead firms to hire primarily young long term workers while firms employ older workers workers who are serving out the last years of their contract they tend not to hire them this paper presents empirical evidence that is consistent with this argument

pensions and indenture premia the implicit pension contract has provided a theoretical basis for the observed relation between pensions less quitting and earlier retirement but it also has encountered difficulty explaining why wages seem too high in pension firms this anomaly has been taken by some to imply that efficiency wages not pension capital losses explain why quitting is abnormally low in defined benefit pensions in this paper i pursue an alternative explanation that the implicit contract model is oversimplified because it ignores supply conditions facing long tenure firms i show that once an allowance is made for compensation required by workers for entering long term labor contracts numerous anomalous empirical observations in the pension market are explicable

what works policies for employability in cities employability policies targeting urban job seekers have often had a work first focus on quick job entries neglecting sustainability and progression this article reviews evidence on what works drawing generic lessons from research on locally focused urban policy initiatives in great britain operationalised in the context of persistent worklessness in many cities the findings highlight the importance of employer engagement to open up job opportunities recognising the diverse needs of individuals the significance of personalised support for those furthest from the labour market and co ordination of local provision it is argued that providers need to ensure workless groups have the skills and support to access opportunities created by economic growth robust local policy analysis remains challenging but important in the context of limited budgets payment by results and a fragmented policy landscape

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

extending employability or solving employers recruitment problems demand led approaches as an instrument of labour market policy for years labour market policy in the uk has been dominated by activation measures that seek to increase employment levels among the unemployed this supply side focus emphasises individual charac

transition to entrepreneurship from the public sector predispositional and contextual effects studies of career dynamics implicitly claim that government employees are not entrepreneurial utilizing longitudinal data from the u s panel study for income dynamics we investigate the reasons for the low rate of entrepreneurship from the public sector we conjecture that it is due to labor market matching processes and the bureaucratic nature of public organizations and bureaucratization of individuals our life course analysis identifies labor market matching as a major determinant nonentrepreneurial types choose public sector employment we also uncover tenure and context effects which decrease and increase the hazard rate of entrepreneurial exit respectively whereas the former effect points toward adaptation and internal labor market sorting the latter draws attention to exits due to frustration

the effects of pension funds on markets performance a review the worldwide reforming process of pension systems triggered by the demographic transition and globalization has led several countries to implement multi pillar pension systems and enhance pension funds for this reason the studies on the effects that pension funds exert on markets performance have been flourishing in the last decades in this paper we provide an updated review of the empirical advances in this field of study with particular focus on the effects that pension funds produce on labour markets financial markets and economic growth

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