the role of aggregation in estimating the effects of private school competition on student achievement abstract this paper investigates possible reasons for the disparity in results in the private school competition literature in particular the focus is on the data set the grade range and level of aggregation of the competition variable and on the choice of ols or iv estimation strategies the results show that the size and significance of the competition variable depends on each of these attributes although the grade range of the competition variable has a slightly smaller impact than the others private school competition does not have a consistently positive significant effect on student achievement

trends in unemployment duration data a method of estimating the distribution of uninterrupted unemploymentspells from aggregate unemployment data is outlined the methodology does not i mpose constant individual hazard rates and allows for heterogeneity characteris tics of the distribution of unemployment spells are then considered including ha zard rates measures of inequality such as gini coefficients and the fraction o f total unemployment associated with s weeks of unemploy ment the relationship between these char acteristics and labor demand variables gnp and supply side variables transfer payments unemployment insurance is considered in or der to better understand the relative role of short and long run unemployment copyright 1986 by mit press

shirking and sorting in a political market with finite lived politicians this paper analyzes principal agent slack in the context of a political market composed of voters challengers and incumbents the introduction of a last period via finite livedness in combination with voters imperfect information about politicians preferences causes time varying shirking behavior on the part of politicians political markets eventually sort out those politicians with significantly deviant policy preferences potentially providing a solution to the last period problem and enabling politicians to make credible commitments in the extreme sorting can insure that it is not worthwhile for potential shirkers to run for office a systematic relationship between political shirking and number of terms in office may exist and depends on how quickly sorting takes place we show that evidence of little if any shirking is quite consistent with politicians having diverse and strongly held policy preferences in addition if sorting is a significant feature of political markets cross sectional studies will tend to oversample little and non shirking politicians compared to longitudinal studies reinterpretations of existing empirical work are also discussed

effort observability and worker productivity towards an explanation of economic dualism this paper suggests an explanation of the wage and productivity differentials between formal and informal sectors in developing countries this explanation is based on differences in the observability of effort that arise from technological differences such as size of operation the authors argue that observability of effort is lower in the formal sector and then show that under reasonable conditions this leads to higher wages and higher effort productivity this is because with lower observability the marginal cost of effort is lower when existing employees are induced to work harder than when more workers are hired explanations for intersectoral differences in factor intensities and sector specific unemployment rates also follow from the authors basic assumptions copyright 1989 by royal economic society

industry specific human capital occupation and firm size evidence from taiwan this paper investigates the importance of various types of human capital and highlights the role played by industry tenure in determining wages in taiwan it also aims to offer possible explanations as to why industry specific human capital is much less significant than it is in the united states empirically it is found that other things being equal accumulating industry tenure decreases earnings for both the least skilled workers and those employed in mid sized firms industry specific skills are not yet deeply implemented in most occupations and firms of all sizes this might also account for the remarkable level of labor reallocation among industries that is observed in taiwan furthermore the capital stock accumulated through education is found to be the most crucial in determining wages in all estimations and a factor considered the engine of growth during the miraculous development of taiwan s economy however the importance of other types of human capital on earnings namely general labor market experience and firm specific human capital varies substantially across groups

the two faces of governance responses to legal uncertainty in u s firms 1955 to 1985 recent neoinstitutional analyses have associated the rapid diffusion of due process governance mechanisms in the american workplace with government pressure for equal employment opportunity and affirmative action we carry the argument forward in three ways first we focus on grievance procedures and employment at will clauses to show that the legalization process produces both rights enhancing and rights negating rules second we focus on the private for profit economic sector to test more effectively the efficiency and labor control theories that have fared poorly in previous neoinstitutional studies third we explore the interactions among personnel professionals lawyers and the state in the adoption of legalistic governance mechanisms results sustain the neoinstitutional argument but also offer new support for efficiency and labor control hypotheses

an equilibrium politico economic model an equilibrium politico economic model i introduction recent empirical studies by alesina and sachs 1986 and haynes and stone 1987 have found that political elections have significant implications for the time paths of employment and inflation explnations of this phenomenon fall into two general categories political business cycle theories and partisan theories in political business cycle models it is assumed that the government has both the ability and desire to manipulate the economy for electoral purposes partisan theories suggest that if competing parties follow different policies it is the surprise of an election result that causes a response from the economy however partisan theories can only explain why different parties experience different levels of employment and output early in an electoral term here a partisan model is developed in which economic and political shocks before an election have asymmetric effects on inflation employment and voting behavior depending on which party is in power and which economic variables effect voting ii political structure and voting two political parties compete periodically for control of the government the parties are distinguished by their expected monetary growth rates denoted mu sup h high and mu sup l low the electorate consists of a continuum of voters distributed uniformly on the interval p p individuals located closer to p are more favorably pre disposed to party h let x sub t be an index of the relative popularity of the parties at time t if x sub t 0 party h has a plurality of support if x sub t in nonelection years the expected monetary growth rate will be the incumbents trend rate while in election years it will be the probabilistically weighted average of the two parties expected monetary growth rates iii economic structure the economy is described by a rational expectations macro model unemployment is determined by the surprise phillips curve u sub t eta sub 0 eta sub 1 sub t 1 pi sup e sub t pi sub t epsilon sub t where sub t 1 pi sup e sub t denotes expected inflation and epsilon sub t a real shock distributed epsilon sub t is approx n 0 sigma sup 2 sub epsilon independent over time eta sub 0 is greater than 0 and eta sub 1 is greater than 0 are constants eta sub 0 is the natural rate the rate of inflation is given by pi sub t mu sup s sub t mu sup d sub t where mu sup s sub t and mu sup d sub t are respectively the growth rates of the nominal money supply and demand for real beginning of period cash balances

the measurement of labor force dynamics with longitudinal data the labour market activity survey filter this article explores the measurement of labor force dynamics using longitudinal data focusing in particular on the canadian labour market activity survey lmas which represents a potential advance in longitudinal data collection because it measures aspects of dynamics not available in existing panel data such as the panel study of income dynamics and the national longitudinal survey we examine the implications of the lmas questionnaire structure the lmas filter for the study of labor market dynamics and undertake simulations to provide a quantitative assessment of the importance of this filter for labor force spells and transitions between labor force states

school expenditures and post schooling earnings evidence from high school and beyond studies based on inputs measured at the state level generally report that school expenditures have substantial effects on students adult wages whereas studies based on less aggregated measures report small effects the author uses wage data from high school and beyond to analyze this discrepancy and to estimate the effect of school expenditures on students post schooling earnings the author finds that the discrepancy in the literature stems mostly from two factors measurement error in district level expenditures and omitted state effects in the earnings regression the author also finds that the effect of school expenditures on earnings is significant but small a 10 increase in school spending would increase students adult wages by only 0 68 copyright 1996 by mit press

testing the satisficing version of the political business cycle 1905 1984 this paper develops a test of the satisficing version of the political business cycle previous tests have focused on maximizing models of political behavior and are not sufficiently general to test for satisficing behavior using annual u s data for the period 1905 to 1984 we find evidence supporting the satisficing version of the political business cycle model but we reject the maximizing version in accordance with the satisficing hypothesis we find that increasing inflation or unemployment and decreasing monetary base growth in the third year of a presidential term are followed typically by reversals during the election year

the political theory of the business cycle two strands of recent empirical work pose a challenge for the macro theorist when brought together one is the rational expectations interpretation of the business cycle the other is the political theory of the business cycle this paper attempts a reconciliation of these two strands in a theory where national political parties have to satisfy the preference of their own supporters as well as the floating voter the implications are that party voters evaluate government performance with respect to expected inflation and output and their variances and that parties will pursue different feedback rules

the duration of employment opportunities in u s manufacturing long duration employment opportunities are a necessary condition for workers to hold lifetime jobs this paper uses longitudinal data on individual u s manufacturing plants from 1963 1982 to estimate the age and completed spell distributions for employment positions the results indicate that of the employment opportunities in progress in the u s manufacturing sector in 1982 30 0 were at least 19 years old and 59 6 would have a completed length of at least 20 years high rates of turnover in employment positions coexist with a large number of long duration employment opportunities because the turnover tends to be concentrated within a subset of the producers copyright 1991 by mit press

the dynamics of job separation the case of federal employees summary in this paper we develop a model of workers quit decisions using panel data on a sample of us federal government employees we use maximum likelihood techniques to determine how much of the observed decline in quits with job tenure is a result of declining individual quit propensities state dependence rather than dynamic sample self selection heterogeneity the latter is found to be much more important than the former the effects of relative federal government wages and other variables on quits are also estimated the results are useful for analysing federal compensation policies

employment relations in dual labor markets it s nice work if you can get it jobs in big firms command higher wages i examine four theories that could explain this relation first large firms incur higher fixed employment costs including more specific training second monitoring costs are greater in big firms and can be spread by hiring more productive workers third large firms may choose to pay efficiency wages to deter shirking finally large employers organize production around teams and pay higher wages to get workers who comply with the discipline of team production the dispersion of wages and working conditions in the u s labor market reflect the heterogeneity of jobs employment relations and individuals

the public choice of educational choice the very small literature explaining i how citizens have voted in two california voucher referenda ii how legislators have voted on voucher bills in the state of florida and the us congress and iii the variation across states in charter school provisions is summarized new empirical evidence documenting the cross state variation in the success of voucher referenda and voucher bills is examined voucher bill characteristics and state characteristics play important roles voucher bills have been passed only in the more conservative republican states and almost all of the successful voucher programs have been targeted at large struggling school districts

efficient labor contracts with employment risk this article analyzes efficient employment agreements where the demand for consumption insurance can be satisfied by noncontractual means we assume that workers can save and that consumption is determined by a strong form of the permanent income hypothesis under conditions of asymmetric information about exogenous shocks to labor demand we derive a unique compensation schedule that efficiently guides decisions by both workers and employers efficient employment outcomes are generated without a need for third party enforcement or monitoring and workers choose a consumption policy that leaves them indifferent among realizations of labor demand within this solution it is both costless and efficient for workers to delegate employment decisions to the firm within the context of the model we analyze implications for the equilibrium distribution of wages and for empirical studies of labor supply

inequality and attainment in a dual labor market models of wage determination and sector attainment are estimated for a cohort of young men in a dual labor market neoclassical economic vs dual labor market views on market equilibrium are contrasted although schooling is rewarded similarly in the primary and secondary sectors other results support the dual labor market view that employment in the primary sector is rationed via a queuing mechanism

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

on political business cycles with endogenous election dates abstract the pattern of policy generated cycles which result in the nordhaus model is examined under different hypotheses regarding election date determination

nonconcavity and proper optimal periodic control this paper deals with optimal periodic control problems in an economic context the main result is that nonconcavity is necessary for proper periodicity of optimal solution paths the theoretical results are illustrated by an unemployment and inflation trade off model

firm specific human capital as an employer discipline device the inability of employers to monitor perfectly the level of effort of their employees is a potentially serious impediment to labor market efficacy indeed a number of recent studies have concluded that this may lead to involuntary unemployment shapiro and stiglitz 1984 sparks 1986 an inefficient sectoral allocation of workers oi 1990 strand 1986 and discrimination against productively identical workers bulow and summers 1986 this paper shows that the lock in effect of firm specific human capital can help alleviate problems of worker moral hazard and thereby promote labor market performance i introduction as the surveys of akerlof yellen 1986 ch 1 carmichael 1990 lang and kahn 1990 and weiss 1990 amply illustrate the last decade witnessed the emergence of a large body of literature which falls under the general rubric of efficiency wage models of the labor market the hallmark of this approach is that some essential aspect of worker performance depends upon the wage paid by the firm much recent work bulow summers 1986 oi 1990 shapiro and stiglitz 1984 sparks 1986 and strand 1986 has considered the case in which due to monitoring difficulties worker effort depends positively upon the wage the popularity of the approach undoubtedly stems from its ability to apparently explain many stylized features of labor market behavior in an attractively simple and straightforward manner in the papers cited above shapiro and stiglitz 1984 and sparks 1987 show that labor market equilibrium can be characterized by involuntary unemployment bulow and summers 1986 demonstrate that inter alia efficiency wage models are consistent with equilibrium discrimination against productively identical agents and finally oi 1990 and strand 1986 show that efficiency wage payments can generate an inefficient sectoral allocation of workers yet recent research now suggests that the results obtained from this class of model are highly sensitive to the specific assumptions made at the outset about the completeness of contractual arrangements indeed as carmichael 1985 astutely observed if contracts can include bond payments even if financed by borrowing from imperfect capital markets the standard imperfect monitoring variant of the efficiency wage hypothesis fails to predict the emergence of equilibrium involuntary unemployment i e all workers receive their reservation utility however proponents of efficiency wage models have responded to this criticism by arguing that workers would be unwilling to post large bonds with firms due to a problem of employer moral hazard specifically workers recognize that firms may hire them in order to steal their bond payment ex post once this limitation on admissible bond payments is recognized it might then be tempting to conclude that the main results of the efficiency wage literature will re emerge in this paper i consider this issue in an environment which also allows for investment in firm specific human capital the basic structure is similar to hashimoto 1981 following macleod and malcomson 1987 1989 i assume that 1 worker performance measures are sufficiently nebulous to preclude verification by third parties and 2 as in carmichael 1983 the courts are unable to ascertain whether in the event of separation a worker quit or was fired this informational structure generates a potentially serious joint worker employer moral hazard problem workers may shirk and employers may simply hire labor in order to collect any bond payments or exit fees stipulated in the contract as emphasized by both carmichael 1989 1990 and macleod and malcomson 1987 1989 the solution to this contracting problem requires that both parties receive a non negative return from the continuation of the match relative to what can be obtained from its dissolution

firm size and job quality a survey of the evidence from germany small firms provide and create a large proportion of jobs in germany are these jobs worse than jobs in larger firms the mosaic picture that emerges from a review of several recent empirical studies using german individual or firm level micro data shows that all in all wages are lower non wage incomes fringes are lower job security is lower work organisation is less rigid institutionalized possibilities for workers participation in decision making are weaker and opportunities for skill enhancement are worse in small firms compared to large firms the weight of evidence therefore indicates that on average small firms offer worse jobs than large firms it is argued that there is no need for policy measures targeted to improve job quality in small firms because higher incomes in large firms can in part be seen as compensating differentials for more rigid work organisation and can follow from wage policies to reduce shirking and turnover that is more costly in large than in small firms furthermore a lower level of remuneration less protection against dismissals a lower level of workers participation and less opportunities for further training all contribute to lower costs in small firms that might be needed to compensate for size related cost disadvantages compared to large firms economic policy should concentrate on keeping barriers to entrepreneurs entry to markets low to foster new firm formation and creative destruction

unemployment behaviour evidence from the cps work experience survey this chapter is empirical and descriptive rather than theoretical it examines the cps unemployment experience data which gives the number of weeks of unemployment and the number of spells of unemployment experienced by a sample of people in a year this chapter focuses on both the entry rate or frequency probability of entering and the exit rate or duration probability of exiting of unemployment spells for it is on both the entry and exit rates that the level and distribution of unemployment depends the conclusion is that entry rates and differences in entry rates across people are of primary importance in explaining unemployment experience

hours layoffs and unemployment insurance funding theory and practice in an international perspective the strikingly different behaviour of important economic aggregates in the united states and other industrial countries has received surprisingly little attention from economists among recent exceptions however gordon i 982 has shown that wages and hours of work are much more flexible in the united kingdom and japan than in the united states such relative hours variability is confirmed in a macro analysis by capdevielle and alvarez i98i and at micro level by sengenberger and kohler i982 the latter authors are concerned with labour market adjustment within the u s and west german automobile industries between i 97 i and i 980 estimates of the german workeroutput elasticity are found to be less than half that of the united states while the german hours elasticity is twice the united states figure at the national aggregate level capdevielle and alvarez also reveal much greater employment variability in the united states than in most other oecd countries in the years following the i973 74 opec supply shock much in line with these employment hours observations moy and sorrentino i98i argue that after

public education supply and student performance this paper develops a model of public exchange whereby voters and education policy makers exchange with one another within school districts because school district consolidation lowers alternatives to voters parents consolidation is hypothesized to raise public education spending because weakened intergovernmental competition allows policy makers to promote their own utility rather than that of constituents models of public education spending and academic performance are estimated over 1988 1990 while evidence indicates little support for the traditional treatment of the leviathan hypothesis that greater competition lowers public spending this paper argues that education spending by itself does not fully provide a valid test of the leviathan hypothesis since spending by itself does not necessarily indicate the quality of public education programmes empirical evidence indicates that greater numbers of schools and school districts promote higher student achievement as evidenced by higher math and v

are displaced manufacturing workers unemployable an analysis of sectorally based adjustment costs in france despite the richness of the literature on the adjustment costs of displaced workers the impact of the former sector of employment on a displaced worker s jobless durations has received little attention this is curious given the policy responses in several countries although the literature indicates the importance of individual characteristics such as educational attainment and demographic traits a non trivial portion of government assistance is based on a collective attribute of the affected workforces namely the sector in which they formerly worked governments often target assistance to specific sectors in the forms of operating subsidies financial bailout packages and trade protection examples include steelworkers and shipyard workers in france coal miners in the united kingdom and fishery and shipyard workers in canada gray 1995 demonstrates that taxpayer funded early retirement benefits in france are heavily weighted toward workers in manufacturing industries in canada similar benefits are currently being received by the early retirees of algoma steel and the steelworkers union has requested a package for older laid off stelco employees the rationale commonly given by government officials and workers unions is that workers in the affected sectors have virtually no alternative employment opportunities possible reasons for the perception that workers displaced from certain sectors have low re employment probabilities have received little attention in the economics literature the thrust of the conjecture posited by policy makers in france is that there is an ethos described in houseman 1988 according to which workers in sectors such as heavy manufacturing are covered by an implicit contract which has conditioned them to expect guaranteed permanent employment the organizational characteristics of the internal labour market cause them to lack the cognitive skills required to

choice of ontario high schools and student sorting by ability to what extent can offering more choice in schooling lead to cream skimming or the sorting of students by ability i study whether increased choice leads to student sorting by ability into high schools in the greater toronto area on average 41 of students opt out of the high school to which they would normally be assigned based on their residence students are more likely to opt out in areas where accessibility to other schools is greatest due to population density and explicit open enrolment policies while students of higher ability are generally more likely to opt out an interaction term between school choice and ability is insignificant suggesting that increased choice does not have differential impacts by student ability findings are robust to changes in assumptions about instrument exogeneity

evidence on adverse selection and establishment size in the labor market a commonly suggested explanation for the finding that laid off workers have greater mean post displacement earnings losses than workers who lose theirjobs through plant closings is that the former are of lower quality than the latter but there is also an alternative explanation for this result laid off workers suffer larger earnings losses because as a group they have more to lose in the first place having been displaced from larger higher wage establishments an analysis of data from the national longitudinal survey of youth confirms this hypothesis accounting for establishment size removes virtually all of the difference in wage losses for the two groups of displaced workers an adverse selection framework has been employed by many authors to explain various phenomena in the labor market spence 1973 harris and holmstrom 1982 greenwald 1986 recently several authors gibbons and katz 1991 doiron 1995 grund 1997 have investigated whether the postjob loss experiences of two different types of displaced workers those who are laid off from their jobs and those who are displaced by a plant closing reflect adverse selection specifically do laid off workers exhibit larger post job loss wage

the influence of private school enrollment on public school performance school choice reform refers to changes that allow parents greater freedom to choose schools for their children school choice reform is contentious because it fundamentally alters the environment in which public and private schools operate and could result in significant changes for both demanders and suppliers of education this article develops a model of public education with imperfect exit to predict how private school enrollment influences performance of public schools empirical evidence from data on all private and public schools in california provides substantial support for the hypothesis that public school test scores are inversely related to private school enrollments and charter school enrollments when private and charter schooling reflects exiting by parents unhappy with local public schools implications regarding how expanded private school choice might influence public school performance in california and elsewhere are discussed

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

estimation of unemployment duration from grouped data a comparative study economists have often found it useful to look at the average length of an unemployment spell in evaluating labor market conditions and in considering the labor market experience of the unemployed usually this statistic has to be estimated from grouped observations on interrupted incomplete unemployment spells this paper is a comparative study of some nonparametric and parametric methods of estimating this quantity using australian department of social security data on unemployment benefit recipients

a theory of dual labor markets with application to industrial policy discrimination and keynesian unemployment this paper develops a model of dual labor markets based on employers need to motivate workers in order to elicit effort from their workers employers may find it optimal to pay more than the going wage this changes fundamentally the character of labor markets the model is applied to a wide range of labor market phenomena it provides a coherent framework for understanding the claims of industrial policy advocates it also can provide the basis for a theory of occupational segregation and discrimination that will not be eroded by market forces finally the model provides the basis for a theory of involuntary unemployment

keeping time an analysis of errors in the measurement of unemployment duration this study uses longitudinal microdata from the current population survey to examine the consistency with which unemployment duration is reported an estimate of measurement error is proposed and analyzed a significant negative relationship is found between the initial month s unemployment duration and the reported change between surveys on average persons who begin spells of unemployment in the second month report durations greater than the actual time elapsed overall the average duration of unemployment in this sample may be overstated by at least two weeks a brief discussion of some implications for empirical labor market research concludes the article

efficiency wages and equilibrium wages i introduction economists have long sought to explain unemployment in ways consistent with individual agents optimizing behavior a recent although controversial model in this vein is the efficiency wage paradigm which focuses on the difficulty of monitoring worker performance when production is organized in teams to discourage nonperformance by employees firms monitor their workers and dismiss those who are caught shirking a firm may further discourage nonfeasance by paying its workers higher wages than they could earn elsewhere then workers caught shirking not only become unemployed but forfeit the rents associated with their jobs 1 in this scenario in order to maintain the incentives not to shirk firms will not cut wages even though equally qualified unemployed workers are willing to work for less the result is disequilibrium in the labor market and possibly involuntary unemployment 2 a series of theoretical studies have demonstrated the conditions under which efficiency wages may occur standard references include eaton and white 1982 1983 shapiro and stiglitz 1984 foster and wan 1984 bowles 1985 and calvo 1985 yellen 1984 reviews the early literature while katz 1986 stiglitz 1987 and carmichael 1990 discuss more recent work but as carmichael emphasizes in his review few papers have actually attempted to test the predictions of the efficiency wage models most of the existing empirical investigations examine the importance of industrial wage differentials krueger and summers 1987 1988 dickens and katz 1987 and murphy and topel 1987a find that there are substantial unexplained industrial wage differentials which bulow and summers 1986 and krueger and summers 1987 1988 attribute to efficiency wages however the magnitude as well as the interpretation of these industrial wage differentials is disputed see carmichael 1990 leonard 1987 and murphy and topel 1987a 1987b for differing views this paper extends the efficiency wage model in a straightforward way to address two questions will the labor market clear if firms can only imperfectly monitor worker effort and do industrial wage differentials provide a test for the importance of efficiency wages we offer two modifications to traditional efficiency wage models first we recognize that there may be an explicit cost to being fired for instance dismissed workers may find it more difficult to find future employment because of poor references from their previous employer they may incur high psychic costs as a result of being fired or they may have to suffer large search costs in locating another job second we let the firm choose the performance standard 3 it seems only natural that a firm wanting more effort from its employees would hold its workers to a more rigorous performance standard just as a firm seeking a higher quality labor force may require more schooling of its applicants while the firm must compensate the worker for the extra effort necessary to meet the higher performance standard payment of efficiency wages could be avoided following the efficiency wage literature we make the strong assumption that all implicit or explicit bonding mechanisms are prohibitively costly to implement our model of the worker s and firm s behavior is specified in section ii the model includes as special cases a market paying equilibrium wages one paying non market clearing efficiency wages and a dual labor market that is a combination of the two we demonstrate that the firm need not pay efficiency wages even in the presence of the agency problem the use of the performance standard gives the firm another instrument other than the wage to control worker effort and welfare there are limits to how high the performance standard will be adjusted however before the firm will offer an efficiency wage we present the details of these arguments in section iii

welfare costs of sticky wages when effort can respond abstract we examine the impact of wage stickiness when employment has an effort as well as hours dimension despite wages being predetermined the labor market clears through the effort margin consequently welfare costs of wage stickiness are potentially much much smaller

employment tenure and earnings profiles in japan and the united states comments the relationship between job tenure and annual earnings in japan has received considerable attention from social scientists examining employment contracts and the japanese compensation system in their widely cited article masanori hashimoto and john raisian 1985 using data for 1980 showed that japanese men have greater job tenure than comparable workers in the united states and that the earnings of japanese men rise more rapidly with increased tenure they found that an additional year of tenure increases earnings in both small and large firms in japan more than does an additional year of general market experience their results for the united states indicate that general market experience increases earnings more than an additional year of job tenure the 1970 s and 1980 s were a period of substantial change in japanese labor markets due to the rapid aging of the population and the restructuring of the economy following the oil crisis the present analysis extends the work of hashimoto and raisian by estimating earnings equations for japanese men for the years 1971 1976 1981 and 1986 specifically we wish to investigate whether hashimoto and raisian s findings have been stable over time or whether changes in the labor market have altered the importance of tenure relative to total labor market experience in the japanese labor market i changes in the labor market

business cycles and compositional variation in u s unemployment in this article we study u s unemployment dynamics using grouped unemployment data from the current population survey over the period 1968 1992 we estimate a model that traces variation in these unemployment data both over time and between demographic groups back to the underlying variation in the inflow and the outflow in turn we model the outflow as a transition process in which we allow the exit probabilities to depend on calendar time duration and demographic group we use the estimation results to provide a decomposition of aggregate u s unemployment dynamics in various incidence and duration components

the importance of lifetime jobs in the u s economy though the u s labor market is justly notorious for high turnover and consequent high unemployment it also provides stable near lifetime employment to an important fraction of the labor force this paper investigates patterns of job duration by age race and sex with the following major conclusions 1 the typical worker today is holding a job which has lasted or will last about eight years over a quarter of all workers are holding jobs which will last twenty years or more sixty percent hold jobs which will last five years or more 2 the jobs held by middle aged workers with more than ten years of tenure are extremely stable over the span of a decade only twenty to thirty percent come to an end 3 among workers aged thirty and above about forty percent are currently working in jobs which eventually will last twenty years or more three quarters are in jobs which will last five years or more 4 the duration of employment among blacks is just as long as among whites even though the jobs held by blacks are worse in almost every other dimension they are no more unstable than those held by whites 5 women s jobs are substantially shorter than men s on the average only about a quarter of all women over the age of thirty are employed in jobs which will last over twenty years whereas over half of men over thirty are holding these near lifetime jobs this abstract was borrowed from another version of this item

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

the economy of high wages an agency problem latitude with respect to the effort they supply and monitoring of effort and output is costly in this paper we examine the agency problem that arises in these circumstances the agent employee is assumed to maximize expected utility which depends on wages and effort a bad we assume that output is a deterministic function of effort that either effort or output can be accurately monitored and that monitoring is costly the firm s problem is to select a level of monitoring and a compensation package that will minimize the cost of obtaining a desired level of effort given the cost of monitoring the agent s preferences and the agent s opportunity cost of accepting employment with the firm his labour supply constraint the firm chooses a compensation scheme from the set in which compensation is contingent on effort if the agent is monitored and is equal to a standard

the congress and fiscal policy although the common belief is that the congress has paid little attention to fiscal policy the same kinds of political economic models which have been used to explain presidential budgetary policy may be used equally well to explain congressional budgetary behavior the congress fiscal policy appears to be systematically sensitive to both economic and political factors changes in the unemployment rate have a major impact on congressional budgetary policy as for political factors the president s lead is followed most closely on revenue proposals and not at all on the expenditure side the electoral cycle in particular the off year congressional election year is also important inducing larger deficits and smaller increases in revenues

efficiency wage models of unemployment keynesian economists hold it to be self evident that business cycles are characterized by involuntary unemployment but construction of a model of the cycle with involuntary unemployment faces the obvious difficulty of explaining why the labor market does not clear involuntarily unemployed people by definition want to work at less than the going wage rate why don t firms cut wages thereby increasing profits

the trade off between supervision and wages evidence of efficiency wages from the nlsy standard efficiency wage models suggest that workers employed in places with lower probabilities of identifying shirking will earn more as will workers who have better alternative opportunities this paper provides new empirical evidence in support of efficiency wage theory using the national longitudinal surveys of youth data the empirical results support the prediction of the model that workers employed in larger work groups are paid more a finding consistent with a supervision wage trade off additional evidence supports the prediction that workers with better alternative opportunities earn more the classical competitive theories of wage determination predict that workers will be paid the value of their marginal product these theories suggest that after accounting for differences in working conditions there should be no variation in wages among homogeneous workers recent findings that industry affiliation and firm size affect wages suggest that part of the explanation of wage structure is missing these results call into question the view that industry wage differentials can plausibly be rationalized with textbook competitive models krueger and summers 1988 p 280 this paper follows the efficiency wage literature by assuming that one important determinant of wage differences is variation in employers ability to monitor workers efforts 2 this paper provides new empirical evidence in support of efficiency wage theory using data from the national longitudinal surveys of youth nlsy a data set that is noticeably absent from the efficiency wage literature efficiency wage models attempt to complete the explanation of wage structure by focusing

internal labour markets causes and consequences the paper analyzes the causes and consequences of internal labor market rules that yield long tenure promotion from within seniority pensions and due process in dismissals about half the workforce are estimated to be in such markets competitive reasons for internal labor markets as a response to specific training and arms length relationships between workers and firms are surveyed these reasons are found to be consistent with the pattern of internal labor markets among non union firms however some internal labor markets e g among small unionized firms are probably a response to union pressure and government regulations in these circumstances low labor mobility could pose problems for policy copyright 1991 by oxford university press

an illfare approach to the measurement of unemployment based on an illfare approach a new index of unemployment is proposed which unlike the traditional measures takes into account the incidence of unemployment mean duration of unemployment and the disparity in the distribution of the burden of unemployment the proposed measure is most relevant for comparing levels of unemployment across regions or over a period of time an illustation with us data is presented

non public competition and public school performance evidence from west virginia abstractin this study we investigate whether non public school enrolment affects the performance of public school districts if homeschooling and private schools act as competition public school districts test scores should be positively associated with non public enrolment using data on west virginia county school districts and controlling for endogeneity with an instrumental variables approach we find that a one standard deviation increase in relative non public enrolment in a county is associated with statistically significant improvements in public school district test scores our findings thus confirm that non public enrolment and the competition it provides act to improve rather than impede public school performance

reconstructing the pattern of american unemployment before the first world war this paper calculates the distribution of unemployment duration lengths and transition rates for massachusetts workers in the late nineteenth century using data on time spent out of work and assuming that the spell durations followed a weibull distribution i parameterize a model of the timing of transitions from unemployment to employment and vice versa i then simulate the employment experience of representative workers and construct distributionis of completed spell lengths the experience of most out of work workers in a year seems to have been in one rather long spell rather than in shorter multiple ones

the political business cycle under rational voting behavior this essay argues that politically motivated business cycles could persist in a democratic society even if the electorate votes in a rational fully informed manner provided that government policymakers have the means to systematically generate macroeconomic fluctuations this cyclic outcome reflects the preferences of an electorate that is composed of imperfectly altruistic voters belonging to different overlapping generations since each generation has a different horizon over which it would like to have elected politicians provide an optimal economic policy plan an intergenerational conflict of interests situation arises this conflict is placed into an explicit political context whereby cycles become generated under the institutional constraint of periodic elections