minimum wages and training revisited theory predicts that minimum wages will reduce employer provided on the job training designed to improve workers skills on the current job but it is ambiguous regarding training that workers obtain to qualify for a job we estimate the effects of minimum wages on both types of training received by young workers exploiting cross state variation in minimum wage increases much of the evidence supports the hypothesis that higher minimum wages reduce formal training to improve skills on the current job but there is little or no evidence of offsetting increases in training undertaken to qualify for or obtain jobs

do minority white unemployment differences really exist we develop a model of labor force status federal employment nonfederal employment unemployment and out of the labor force that depends on human capital variables local labor market conditions and personal characteristics according to the estimated model for white non hispanic males and females a substantial difference exists between blacks and white non hispanics even after correction for the control variables however the control variables explain almost all of the difference between hispanics and white non hispanics

do r d tax credits work evidence from a panel of countries 1979 1997 this paper examines the impact of fiscal incentives on the level of r d investment an econometric model of r d investment is estimated using a new panel of data on tax changes and r d spending in nine oecd countries over a 19 year period 1979 1997 we find evidence that tax incentives are effective in increasing r d intensity this is true even after allowing for permanent country specific characteristics world macro shocks and other policy influences we estimate that a 10 fall in the cost of r d stimulates just over a 1 rise in the level of r d in the short run and just under a 10 rise in r d in the long run

premium levels and demand response in health insurance relative thinking and zero price effects abstract in health care systems with a competitive health insurance market governments or other sponsors e g employers often subsidize premiums to encourage enrolment these subsidies are typically independent of plan choice leaving the absolute premium differences in place so as not to distort consumer choice of plan such subsidies do however change the relative premium differences across plans which according to theories from behavioral economics can affect choice consumers might be sensitive to differences relative to a reference premium relative thinking furthermore consumers might be particularly sensitive to a reference premium of zero zero price effect a relevant range for some subsidized health insurance markets this paper tests these ideas with two sources of evidence we argue that observed equilibria in germany and the u s medicare advantage markets are consistent with a powerful zero price effect resulting in an equilibrium focal pricing at zero this contrasts with the netherlands where equilibrium premiums are well above zero in an empirical test using hypothetical questions in a web based survey in these three countries we also find evidence for both a relative thinking and a zero price effect in the demand for health insurance our findings imply that well designed subsidies can leverage relative thinking to increase demand elasticity for health plans creation of a powerful reference price e g at zero however risks subverting price competition

what explains wage gaps between farm and city exploring the todaro model with american evidence 1890 1941 nominal wage gaps between farm and city employment are one of the most pervasive aspects of modern economic growth so much so that they have become a key stylized fact of development economics indeed a good portion of the literature on the third world has focused on this problem at length both in terms of labor market behavior and in terms of policy formation in the face of factor market distortions yet wage gaps are not simply an institutional peculiarity of newly industrializing third world countries since they seem to have been even greater among nineteenthand twentieth century western nations while unskilled full time nominal city wages are about 41 higher than farm wages in the contemporary third world they were about 51 higher among late nineteenth century industrializers they were even higher in england in the 1830s about 73 2 furthermore the evidence suggests that these wage gaps vary substantially over time they rose from 29 to 41 in the american north between the antebellum and postbellum periods and were about 50 by the mid 1890s in the united states as a whole a figure that reached an all time u s high of about 65 by the late 1930s 3 there are three questions that these wage gaps raise not just one first would these nominal full time wage gaps disappear if they were properly measured proper measurement would include the fact that cities are more costly places to live that cities may have greater disamenities that farmers also make in kind payments to their workers and that farm laborers suffer seasonal underemployment elsewhere

job change patterns and the wages of young men this study uses data from the national longitudinal survey of youth to distinguish empirically between mover stayer search good and experience good models of job mobility we estimate wage models in which the pattern of overall job mobility affects both the level and tenure slope of the log wage path after controlling for the correlation between mobility patterns and time constant person and job specific unobservables we find that workers who undergo persistent mobility have lower log wage paths than less mobile workers this finding is consistent with models in which job mobility is driven by time varying unobservables such as experience good models where changes in perceived match quality cause turnover

the school to work transition a cross national perspective school to work patterns and issues are discussed for seven economies france germany japan the netherlands sweden the united kingdom and the united states the emphasis is placed on differences across countries in the current labor market position of young people and recent trends therein along with the institutions that regulate youth education training and employment the power of public policies including labor market deregulation labor market programs vocationalization of education and apprenticeship to improve youth outcomes is discussed drawing on national evaluation literatures evidence of extensive policy failure points up the need to develop nationally appropriate institutions to improve school to work transitions

health plan choice using a unique panel dataset of health plan choices and personal characteristics of employees at a single firm this paper provides estimates of price elasticities for health insurance plans in a managed competition setting estimated price elasticities are larger in absolute value than most previous estimates and the magnitude of the price elasticity suggests that there is a place for price competition in this market we also find evidence of transition costs in switching health plans for older and less healthy employees such differential responses to price may contribute to adverse selection in this market

what went wrong the erosion of relative earnings and employment among young black men in the 1980s this paper shows a widening in black white earnings and employment gaps among young men from the mid 1970s through the 1980s earnings gaps increased most among college graduates and in the midwest while gaps in employment population rates grew most among dropouts we attribute the differential widening to shifts in demand for subgroups due to shifting industry and regional employment the falling real minimum wage and deunionization the growing supply of black to white workers that was marked among college graduates and to increased crime among dropouts the different factors affecting subgroups highlight the economic diversity of black americans

foreign research and development in swedish multinationals abstract in 1987 sweden s 20 largest multinationals together operated some 170 foreign rd 2 market proximity i e adaptation of centrally developed products and processes to local market conditions 32 3 exploitation of foreign rd 4 political factors i e environmental factors more or less directly influenced by government action 34 the remaining 20 of employment seemed to be motivated by a combination of factors the primary aim of the first three types of foreign r d units is to enhance a company s competitive position in ways not possible from a domestic location hence they should be little cause of concern for swedish policy makers

endogenous market structures in international trade natura facit saltum abstract almost all of the large literature on international trade with imperfect competition assumes exogenous market structures the purpose of this paper is to develop a simple model that generates alternative market structures as nash equilibria for different parameterizations of the basic model equilibrium market structure is a function of the underlying technology familiar configurations such as a duopoly competing in exports or a single multinational producing in both markets arise as special cases small tax policy changes can produce large welfare effects as the equilibrium market structure shifts implying discontinuous jumps in prices quantities and profits

competition and price variation when consumers are loss averse we modify the salop 1979 model of price competition with differentiated products by assuming that consumers are loss averse relative to a reference point given by their recent expectations about the purchase consumers sensitivity to losses in money increases the price responsiveness of demand and hence the intensity of competition at higher relative to lower market prices reducing or eliminating price variation both within and between products when firms face common stochastic costs in any symmetric equilibrium the markup is strictly decreasing in cost even when firms face different cost distributions we identify conditions under which a focal price equilibrium where firms always charge the same focal price exists and conditions under which any equilibrium is focal

the differential effects of output shocks on unemployment rates by race and gender 1 introduction the issues of unemployment and output are central to many macroeconomic policy debates a major source of disagreement among policymakers deals with the maximum sustainable level of output growth that is consistent with the absence of inflation when the economy s rate of output growth exceeds the maximum sustainable rate there will be upward pressure on the economy s overall price level traditional macroeconomic theory emphasizes the role that tight labor markets play in this inflationary pressure the commonly held belief is that in a tight labor market firms must bid workers away from other firms if they wish to expand the size of their workforce hence labor costs in the economy will tend to rise since labor is a major input in the production of virtually all goods and services an increase in labor costs without an accompanying increase in productivity will tend to increase the economy s overall price level conversely when the economy contracts labor costs in the economy will tend to fall inducing a downward movement in the economy s overall price level the labor market is therefore linked to changes in economic activity and to changes in the economy s price level a common feature in many macroeconomic models is the connection between departures from the equilibrium rate of unemployment i e the natural or normal rate and the business cycle these macroeconomic models suggest that unanticipated departures from a steady state in the output market should be related to departures of the actual unemployment rate from the normal rate however the economy s aggregate unemployment rate is actually a weighted average of the unemployment rates of various demographic groups the rate of each demographic group is influenced by that group s flows into and out of unemployment since many of the factors that determine these flows have been found to differ by demographic group it is expected that a given aggregate output shock may have differential effects on the unemployment rates of various groups this article focuses on how unanticipated changes in real output affect the unemployment rate of different demographic groups we examine the time series behavior of black male white male black female and white female monthly unemployment rates over the january 1972august 1999 period specifically we estimate a vector autoregression var and then conduct simulations in the form of impulse responses to determine the extent to which each of these unemployment rates is affected by an aggregate output shock i e an unanticipated change in aggregate output we compare and contrast the magnitude and the persistence of these responses across the groups because the traditional impulse response function generated from a var is sensitive to how the researcher chooses to order the variables with different orderings often giving vastly different results we employ the recently developed generalized impulse response function koop pesaran and potter 1996 pesaran and shin 1998 this technique allows researchers to examine impulse responses that are robust to changes in ordering in the following sections we highlight the major literature that this article builds upon and then we discuss the basics behind the nature of the relationship between the unemployment rate and output a discussion of the data the methodology and the results follows the article closes with concluding remarks and policy implications 2 related literature a number of studies have examined racial differences in unemployment rates and in factors that may affect unemployment rates using data on displaced workers fairlie and kletzer 1998 examine racial differences in job displacement over the years 1984 1992 and find that black males experienced greater rates of job displacement and lower rates of reemployment than white males petterson 1998 uses data from the national longitudinal survey of youth for the 19791986 period to examine the reservation wages of black males compared with those of white males and contrary to earlier research argues that these differences do not explain much if any of the racial employment gap

job matching and on the job training conventional analysis predicts that workers pay part of their on the job training costs by accepting a lower starting wage and subsequently realize a return to this investment in the form of greater wage growth missing from the conventional treatment of on the job training is a discussion of the process by which heterogeneous workers are matched to jobs requiring varying amounts of training this matching process constitutes a key feature of the on the job training model presented in this article and tested with a unique data set containing extensive information concerning on the job training employer search wages and wage and productivity growth

disadvantage and discrimination in self employment caste gaps in earnings in indian small businesses using the 2004 2005 india human development survey data we estimate and decompose the earnings of household businesses owned by historically marginalized social groups known as scheduled castes and tribes scsts and non scsts across the earnings distribution we find clear differences in characteristics between the two types of businesses with the former faring significantly worse the mean decomposition reveals that as much as 55 of the caste earnings gap could be attributed to the unexplained component quantile regressions suggest that gaps are higher at lower deciles providing some evidence of a sticky floor finally quantile decompositions reveal that the unexplained component is greater at the lower and middle deciles than higher suggesting that scst owned businesses at the lower and middle end of the conditional earnings distribution face greater discrimination

zero as a special price the true value of free products when faced with a choice of selecting one of several available products or possibly buying nothing according to standard theoretical perspectives people will choose the option with the highest cost benefit difference however we propose that decisions about free zero price products differ in that people do not simply subtract costs from benefits but instead they perceive the benefits associated with free products as higher we test this proposal by contrasting demand for two products across conditions that maintain the price difference between the goods but vary the prices such that the cheaper good in the set is priced at either a low positive or zero price in contrast with a standard cost benefit perspective in the zero price condition dramatically more participants choose the cheaper option whereas dramatically fewer participants choose the more expensive option thus people appear to act as if zero pricing of a good not only decreases its cost but also adds to its benefits after documenting this basic effect we propose and test several psychological antecedents of the effect including social norms mapping difficulty and affect affect emerges as the most likely account for the effect

how effective are fiscal incentives for r d a review of the evidence this paper surveys the econometric evidence on the effectiveness of fiscal incentives for r d we describe the effects of tax systems in oecd countries on the user cost of r d the current position changes over time and across different firms in different countries we describe and criticize the methodologies used to evaluate the effect of the tax system on

patterns of internationalisation of corporate technology location vs home country advantages given the trends towards increasing globalisation of markets and of production the globalisation of technology remains a subject of considerable interest to analysts and policy makers in the 1990s this paper provides some new empirical observations for debate and discussion on the patterns of technological activities of large firms outside their home countries it is based on a systematic analysis of the us patenting activities of 220 of the most internationalised firms in terms of their technology in the 1990s although firms are active outside their home countries in the high technology fields such as computers pharmaceuticals telecommunications image and sound and materials quite a sizeable proportion of their foreign activities are concerned with process and machinery technologies moreover a comparison of the technological advantage of the company at home and the advantage of the location shows that in a large majority of cases firms tend to locate their technology abroad in their core areas where they are strong at home these results suggest that adapting products and processes and materials to suit foreign markets and providing technical support to off shore manufacturing plants remain major factors underlying the internationalisation of technology they are also consistent with the notion that firms are increasingly engaging in small scale activities to monitor and scan new technological developments in centres of excellence in foreign countries within their areas of existing strength however there is little evidence to suggest that even these most internationalised firms routinely go abroad to compensate for their weakness at home

density dependence of entrepreneurial dynamics competition opportunity cost or minimum efficient scale this paper reports on a new examination of the well established negative effect of localized density on survival in established industries we attempt to discriminate between three competing but not necessarily mutually exclusive explanations resource competition variations in the opportunity costs of entrepreneurship and geographic variations in minimum efficient scale mes we construct a model of firm growth and survival in which each of these potential causes of density dependence has a transparent parametric effect and we derive six predictions that collectively allow for discriminating empirical tests empirical results using confidential geocoded data from the national longitudinal survey of youth consistently favor the opportunity cost mechanism this paper was accepted by toby stuart entrepreneurship and innovation

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

the distributional effects of local labor demand and industrial mix estimates using individual panel data abstract this paper finds that increases in local labor demand have significant progressive effects on the income distribution and significantly reduce poverty the anti poverty effects of stronger demand have not lessened in recent years local labor demand s benefits are particularly great for younger less educated men labor demand s benefits are similar for blacks and whites and men and women the paper also finds that shifts in the local industrial mix toward manufacturing or other high wage industries do not have progressive effects and do not reduce poverty

the perfect storm graduating during a recession in a segmented labor market using spanish social security data merged with labor force survey data this article analyzes the effects of entry labor market conditions on workers careers two to three decades after graduating

early evidence of the impacts of covid 19 on minority unemployment this paper provides early evidence of the impacts of the covid 19 pandemic on minority unemployment in the united states in the first month following march adoptions of social distancing measures by states unemployment rose to 14 5 but a much higher 24 4 when we correct for potential data misclassification noted by the bls using the official definition unemployment in april 2020 among african americans rose by less than what would have been anticipated to 16 6 based on previous recessions and the long term ordering of unemployment across racial ethnic groups was altered with latinx unemployment 18 2 rising for the first time to the highest among major groups difference in difference estimates confirm that the initial gap in unemployment between whites and blacks in april was not different than in periods prior to the pandemic however the racial gap expanded as unemployment for whites declined in the next two months but was largely stagnant for blacks the initially large gap in unemployment between whites and latinx in april was sustained in may and june as unemployment declined similarly for both groups non linear decompositions show a favorable industry distribution partly protected black employment during the early stages of the pandemic but that an unfavorable occupational distribution and lower average skills levels placed them at higher risk of job losses an unfavorable occupational distribution and lower skills contributed to a sharply widened latinx white unemployment gap that moderated over time as rehiring occurred these findings of disproportionate impacts on minority unemployment raise important concerns regarding lost earnings and wealth and longer term consequences of the pandemic on racial inequality in the united states

are ols estimates of the return to schooling biased downward another look the authors examine evidence on bias in ols estimates of the economic return to schooling to study omitted ability bias they use test scores available in the national longitudinal survey of youth as proxies for ability allowing for measurement error in these test scores the authors also explore biases from the endogeneity of schooling or experience or measurement error in these variables in their data ols estimation including test scores appears to be appropriate and indicates an upward bias of roughly 40 percent in the ols estimate ignoring ability this contrasts with evidence from other recent research using different statistical experiments to purge schooling of its correlation with the wage equation error copyright 1995 by mit press

racial disparity in unemployment abstract in the united states black workers earn less than their white counterparts and have higher rates of unemployment empirical work indicates that most of this wage gap is accounted for by differences in cognitive skills that emerge at an early age in this paper we demonstrate that the same is not true for black white disparity in unemployment a large unexplained unemployment differential motivates the paper s second contribution a potential theoretical explanation this explanation is built around a model that embeds statistical discrimination into the subjective worker evaluation process that lies at the root of the efficiency wage theory of equilibrium unemployment

black white wage inequality employment rates and incarceration the observed gap in average wages between black men and white men inadequately reflects the relative economic standing of blacks who suffer from a high rate of joblessness the authors estimate the black white gap in hourly wages from 1980 to 1999 adjusting for the sample selection effect of labor inactivity among working age men in 1999 accounting for labor inactivity including prison and jail incarceration leads to an increase of 7 20 in the black white wage gap adjusting for sample selectivity among men ages 22 30 in 1999 increases the wage gap by as much as 58 increasing selection bias which can be attributed to incarceration and conventional joblessness explains about two thirds of the rise in black relative wages among young men between 1985 and 1998 apparent improvement in the economic position of young black men is thus largely an artifact of rising joblessness fueled by the growth in incarceration during the 1990s

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

how elastic are preferences for redistribution evidence from randomized survey experiments we analyze randomized online survey experiments providing interactive customized information on us income inequality the link between top income tax rates and economic growth and the estate tax the treatment has large effects on views about inequality but only slightly moves tax and transfer policy preferences an exception is the estate tax informing respondents of the small share of decedents who pay it doubles support for it the small effects for all other policies can be partially explained by respondents low trust in government and a disconnect between concerns about social issues and the public policies meant to address them jel d31 d72 h23 h24

optimal selling strategies for oil and gas leases with an informed buyer a study is presented on whether the us government can increase its revenues from the sale of drainage leases by using a different allocation mechanism the optimal mechanism is characterized for selling a lease when there is a single informed buyer and a fixed number of uniformed buyers implementation and the magnitude of potential revenue gains if any are discussed

market versus technology drive in r d internationalization four different patterns of managing research and development research and development are subject to different location drivers the analysis of 1021 r d units each distinguished by its main orientation towards either research or development work reveals that research is concentrated in only five regions worldwide while development is more globally dispersed our research is based on 290 research interviews and database research in 81 technology intensive multinational companies we identify two principal location rationales access to markets and access to science as the principal determinants for four trends that lead to four archetypes of r d internationalization national treasure market driven technology driven and global their organizational evolution is characterized by four trends the model is illustrated with short cases of international r d organization at kubota schindler xerox and glaxo wellcome differences in rd separation seems to contradict this trend we argue that this need not be the case for there are good reasons to maintain some independence between research and development

market price variation perceived price variation and consumers price search decisions for durable goods previous studies have consistently found that most consumers undertake relatively little prepurchase search for durable goods and do even less price comparison shopping despite the reported importance of price to consumers purchase decisions this article proposes and tests two possible explanations for why consumers willingness to engage in price search does not increase concomitantly with the price variation of durable goods the first potential explanation that consumers simply underestimate the market price variation was not supported the second possible explanation which builds upon weber s law of psychophysics and thaler s transaction utility theory was supported the data indicate that the psychological utility that a consumer derives from saving a fixed amount of money is inversely related to the price of the item in this case even if consumers believe that the price variation of more expensive items tends to be greater their motivation to spend time in price comparison shopping for these items may not increase as much as expected

trends in job instability and wages for young adult men data and measurement problems have complicated the debate over trends in job instability in the united states we compare two cohorts of young white men from the national longitudinal surveys nls construct a rigorous measure of job change and confirm earlier findings of a significant increase in job instability we then benchmark the nls against other main data sets in the field and conduct a thorough attrition analysis extending the analysis to wages we find that the wage returns to job changing have both declined and become more unequal for young adults mirroring trends in their long term wage growth

empirical generalizations from reference price research considerable theoretical justification for consumers use of psychological reference points exists from the research literature from a managerial perspective one of the most important applications of this concept is reference price an internal standard against which observed prices are compared in this paper we propose three empirical generalizations that are well supported in the marketing literature first there is ample evidence that consumers use reference prices in making brand choices second the empirical results on reference pricing also support the generalization that consumers rely on past prices as part of the reference price formation process third consistent with other research on loss aversion consumers have been found to be more sensitive to losses i e observed prices higher than reference prices than gains we also propose topics for further research on reference prices

discrimination in the small business credit market we use data from the 1993 and 1998 national surveys of small business finances to examine the existence of racial discrimination in the small business credit market we conduct an econometric analysis of loan outcomes by race and find that black owned small businesses are about twice as likely to be denied credit even after controlling for differences in creditworthiness and other factors a series of specification checks indicates that this gap is unlikely to be explained by omitted variable bias these results indicate that the racial disparity in credit availability is likely caused by discrimination

intermetropolitan variation in the labour force participation rates of white and black men in the united states we decompose the variance in black and white male labour force participation rates across us metropolitan areas in 1990 into three effects that due to variation in labour force participation within labour force categories across metropolitan areas local labour market effects that due to variation in the distribution of those categories across metropolitan areas labour force structure effects and that due to the covariation between these two effects variation in labour force participation rates within labour force categories local labour market effects accounts for 56 per cent of the variance in labour force participation rates across metropolitan areas for white men but over 75 per cent for black men variation in the frequency of membership in each labour force category is a relatively unimportant factor for both groups the covariance between labour force effects and local effects is negligible for black men but accounts for 25 per cent of the intermetropolitan variance in white male participa

good skills in bad times cyclical skill mismatch and the long term effects of graduating in a recession abstract we show that cyclical skill mismatch defined as mismatch between the skills supplied by college graduates and skills demanded by hiring industries is an important mechanism behind persistent career loss from graduating in recessions using norwegian data we find a strong countercyclical pattern of skill mismatch among college graduates initial labor market conditions have a declining but persistent effect on match quality and skill mismatch early in their careers match quality of the first employment may explain up to half of the short term and most of the long term earnings loss from graduating in a recession

the effect of implicit contracts on the movement of wages over the business cycle evidence from micro data in this paper we address the question of whether wages are affected by labor market conditions in a manner more consistent with a contract approach than with a standard spot market model from a simple implicit contract model we derive implications about the links between wages and past labor market conditions using individual data from the current population survey and the panel study of income dynamics we find that an implicit contract model with costless mobility describes these links better than either a simple spot market model or an implicit contract model with costly mobility

job duration seniority and earnings an important stylized fact about labor markets is that workers with longer seniority with their current employer have higher earnings than other workers with the same total labor market experience this study shows that workers in longer jobs earn more throughout than workers in a series of shorter jobs and that the measured positive cross sectional return seniority is largely a statistical artifact due to the correlation of seniority with an omitted variable representing the quality of the worker the job or the worker employer match the implication is tha t earnings do not in fact rise very much with seniority copyright 1987 by american economic association

youth labor markets in the united states shopping around vs staying put the need for school to work programs or other means of increasing early job market stability is predicated on the view that the chaotic nature of youth labor markets in the united states is costly because workers drift from one job to another without developing skills behavior or other characteristics that in turn lead to higher adult earnings however there is also ample evidence that workers receive positive returns to job shopping this paper asks whether youths in unstable jobs early in their careers suffer adverse labor market consequences as adults its specific contribution is to account for the endogenous determination of early job stability and adult wages as outcomes of a job search job shopping process labor market conditions in the early years in the labor market are used as instrumental variables for the job stability experienced during those years the instrumental variables estimates generally point to substantial positive effects of early job stability on adult wages in contrast to

do business cycle conditions at the time of labor market entry affect future employment prospects abstract labor market conditions at the time and place of potential entry into the labor market are shown to have a substantial and persistent effect on adult employment prospects individuals who face particularly depressed local labor markets when they graduate from secondary education are other things equal subject to relatively high rates of nonemployment during their whole prime age work career building on a unique combination of micro and macro data from norway we show that these effects are robust with respect to model specification and conditioning variables and that they are not limited to individuals with a particularly disadvantaged background

explaining the racial unemployment gap race region and the employment status of men 1940 although the substantial and persistent gap between the unemployment rates of african americans and whites in the united states first emerged in aggregate statistics covering the 1940s and 1950s disaggregation reveals that the gap already existed in urban areas before 1940 using individual level data on male workers from the 1940 census the author analyzes the causes of the unemployment gap he finds that racial differences in measured human capital and other characteristics can explain all of the racial gap in the south but less than half of the gap in the north this result contrasts with results from studies of wages which have found a larger racial residual in the south than in the north

does price framing affect the consumer price sensitivity of health plan choice this paper provides field evidence on how price framing affects consumers decision to switch health plans in 2009 german federal regulation required insurers to express premium differences between standardized health plans in absolute euro values relative to a federal reference price rather than in percentage point payroll tax differences representative individual level panel data and aggregated health plan level panel data on the universe of health plans show that the reform strongly increased enrollees willingness to switch plans with demand elasticities increasing fourfold the salience of premium differences and the default premium are obviously key driving forces in the decision to switch insurers

legal minimum wages and employment duration 1 introductionthe effect of a legal minimum wage on employee turnover is an important consideration when evaluating the effectiveness of a minimum wage policy if an increase in the minimum wage results in greater turnover then firms hiring costs are increased and the direct benefit to workers who are paid the minimum wage may be lessened a reduction in turnover on the other hand would mean more stability for employers and workers though access to minimum wage jobs may be reduced for job seekers despite the recent proliferation of studies on the effects of legal minimum wages their impact on turnover has received relatively little attention from economists this may be due to the fact that much of the literature focuses on the teen labor market where there is more churning than in the adult labor market gardecki and neumark 1998 the fact remains however that a significant proportion of workers hired at the minimum wage are adults and the effects of the minimum wage onthe turnover hazard are understudied 1standard economic theory suggests that a price floor such as a minimum wage results in fewer transactions and in rents for those suppliers who manage to sell in the context of the labor market this means workers in minimum wage jobs may be expected to receive rents and therefore may be less likely to quit another possible consequence of a minimum wage arises from imperfect information in the labor market combined with heterogeneity among workers and jobs prior to the start of an employment relationship the worker does not know all the relevant aspects of the job and the employer does not know all the important characteristics of the worker as a result in the absence of a mandated minimum wage job applicants may use wage offers to infer information about the nonpecuniary aspects of jobs thereby facilitating the matching process a binding minimum wage compresses the wage distribution so that a single wage is associated with a larger array of jobs this means that the wage offer becomes a poor indicator of a job s nonwage characteristics which leads to a higher proportion of poor matches and consequently more turnover this paper uses data on young men and women in the 1988 1994 rounds of the national longitudinal survey of youth nlsy to estimate the relationship between the minimum wage and the turnover hazard the extent to which the minimum wage binds varies across states both because of differences in state laws and because of differences in wage levels across states we exploit this variation to estimate turnover hazards as a function of the ratio of the nominal minimum wage to the state median wage this variable measures the extent to which the minimum wage binds we find some evidence that in states where the minimum wage is low relative to the state s median wage men hired at the minimum wage have lower employee initiated separation hazards than other low wage workers as the minimum wage rises relative to the prevailing median wage that is as the minimum wage becomes more binding men hired at the minimum wage are increasingly likely to leave their jobs at any given duration when the minimum wage is high relative to the median wage we find that men hired at the minimum wage have significantly higher employee initiated separation hazards than other low wage workers we interpret these findings as evidence that while rents may accrue to minimum wage workers the job matching process is undermined when the minimum wage binds our results apply to the men in our sample but not to the women indeed for women we find no connection between employment duration and the starting wage rate though we do uncover some evidence that for women in low wage jobs employment duration is more elastic with respect to the presence of family friendly fringe benefits than it is for men the paper proceeds as follows the next section explores the possible reasons minimum wages would affect turnover and discusses the existing empirical and theoretical research on this topic

the employment of black men trends in wages and employment of black men are contradictory wages are rising and employment is falling the article first describes employment trends using data from the five decennial censuses 1940 80 noting that education is becoming a more important determinant of participation next it is shown that ratios of average wages have not been severely biased by falling participation of those who would earn the least if they worked the final question asks whether falling participation of black men results from deteriorating job opportunities or from falling labor supply falling supply appears to dominate

does compulsory school attendance affect schooling and earnings we establish that season of birth is related to educational attainment because of school start age policy and compulsory school attendance laws individuals born in the beginning of the year start school at an older age and can therefore drop out after completing less schooling than individuals born near the end of the year roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws we estimate the impact of compulsory schooling on earnings by using quarter of birth as an instrument for education the instrumental variables estimate of the return to education is close to the ordinary least squares estimate suggesting that there is little bias in conventional estimates every developed country in the world has a compulsory schooling requirement yet little is known about the effect these laws have on educational attainment and earnings 1 this paper exploits an unusual natural experiment to estimate the impact of compulsory schooling laws in the united states the experiment stems from the fact that children born in different months of the year start school at different ages while compulsory schooling laws generally require students to remain in school until their sixteenth or seventeenth birthday in effect the interaction of school entry requirements and compulsory schooling laws compel students born

job mobility and wage trajectories for men and women in the united states young american workers typically change employers many times in the course of establishing their careers this article examines the consequences of this mobility for wage inequalities between and among men and women using multilevel modeling and data from the 1979 to 2002 waves of the national longitudinal survey of youth 1979 nlsy79 i disentangle the various ways in which mobility shapes the trajectories of wage growth findings caution against accepting the adequacy of prevalent economic models of mobility models that tend to isolate individual workers moves from broader patterns of work history and that treat mobility as a decontextualized individual choice although workers who frequently switch employers generally end up earning less than their more stable counterparts the type timing and relative level of changes strongly affect the ultimate wage differential differences in the degree of men s and women s labor force attachment and family circumstances are also influential workers who are l

demand side changes and the relative economic progress of black men 1940 90 this article uses census data from 1940 to 1990 to examine whether the hypotheses advanced for the absence of economic progress of black men relative to white men during the 1980s are consistent with the long run trends the findings indicate that skill biased technological change explains more than changes in industrial composition both in the long run as well as in the 1980s moreover increased competition from women and immigrants does not explain the recent slowed progress of black men instead the evidence suggests that middle skilled white men may be an important source of increased competition

global technology development by colocating r d and manufacturing the case of swedish manufacturing mnes in this study we analyze the role of colocation between research and development r d and manufacturing for global technology development by multinational enterprises mnes the extant literature suggests that the main strategic role of colocated r d units is to locally adapt existing products and processes however data from 146 foreign r d units of sweden s 17 largest manufacturing mnes in 2013 show that they instead mainly develop new technology not only for the local and regional markets but to a large extent for the global market a likely explanation is that colocation positively contributes to joint problem solving and transfer of tacit knowledge between production and r d personnel all of which is necessary in new product development especially in industries characterized by complex products and systems and rapid technological change a theoretical implication is that depending on industry characteristics internal cross functional linkages between r d and manufacturing can be more critical than external supply and demand side factors when it comes to influence where r d units are located globally

health insurance for humans information frictions plan choice and consumer welfare traditional models of insurance choice are predicated on fully informed and rational consumers protecting themselves from exposure to financial risk in practice choosing an insurance plan is a complicated decision often made without full information in this paper we combine new administrative data on health plan choices and claims with unique survey data on consumer information to identify risk preferences information frictions and hassle costs our additional friction measures are important predictors of choices and meaningfully impact risk preference estimates we study the implications of counterfactual insurance allocations to illustrate the importance of distinguishing between these micro foundations for welfare analysis

in the right place at the wrong time the role of firms and luck in young workers careers we examine administrative data on young german workers and their employers to study the long term effects of an early career job loss to account for nonrandom sorting of workers into firms with different turnover rates and for selective job mobility we use changes over time in firm and age specific labor demand as an instrument for displacement we find that wage losses of young job losers are initially 15 percent but drop to zero within five years only workers leaving very large establishments suffer persistent losses a comparison of estimators implies that initial sorting negative selection and voluntary job mobility biases ordinary least squares estimates toward finding permanent negative effects of early displacements

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

a model of focusing in economic choice we present a generally applicable theory of focusing based on the hypothesis that a person focuses more on and hence overweights attributes in which her options dier more our model predicts that the decisionmaker is too prone to choose options with concentrated advantages relative to alternatives but maximizes utility when the advantages and disadvantages of alternatives are equally concentrated in intertemporal choice because the relative concentrations of an option s costs and benets can be dierent from the perspective of a single period and the perspective of the entire choice problem the decisionmaker often exhibits a form of time inconsistency she is present biased when the costs of current misbehavior are distributed over many future dates such as in harmful consumption but future biased when the benet of many

the globalization of r d results of a survey of foreign affiliated r d laboratories in the usa abstract this paper examines the globalization of innovation and the phenomenon of foreign direct investment fdi in research and development to do so it draws from a survey of foreign affiliated r d laboratories in the united states while the literature on foreign direct investment has emphasized the role of markets in driving off shore investments the main conclusion of this research is that the globalization of innovation is driven in large measure by technology factors of particular importance is the objective of firms to secure access to scientific and technical human capital

location choices of multinational firms in europe the role of eu cohesion policy using data on 5509 foreign subsidiaries established in 50 regions of 8 eu countries over the period 1991 1999 we estimate a mixed logit model of the location choice of multinational firms in europe in particular we focus on the role of eu cohesion policy in attracting foreign investors from both within and outside europe we find that after controlling for the role of agglomeration economies as well as a number of other regional and country characteristics and allowing for a very flexible correlation pattern among choices structural and cohesion funds allocated by the eu to laggard regions have indeed contributed to attracting multinationals these policies as well as other determinants play a different role in the case of european investors as opposed to non european ones

crime scars recessions and the making of career criminals recessions lead to short term job loss lower levels of happiness and decreasing income levels there is growing evidence that workers who first join the labour market during economic downturns suffer from poor job matches that have a sustained detrimental effect on their wages and career progression this paper uses a range of us and uk data to document a more disturbing long run effect of recessions young people who leave school in the midst of recessions are significantly more likely to lead a life of crime than those graduating into a buoyant labour market these effects are long lasting and substantial

paying medicare advantage plans to level or tilt the playing field medicare beneficiaries are eligible for health insurance through the public option of traditional medicare tm or may join a private medicare advantage ma plan both are highly subsidized but in different ways medicare pays for most of costs directly in tm and subsidizes ma plans based on a benchmark for each beneficiary choosing a private plan the level of this benchmark is arguably the most important policy decision medicare makes about the ma program many analysts recommend equalizing medicare s subsidy across the options referred to in policy circles as a level playing field this paper studies the normative question of how to set the level of the benchmark applying the versatile model developed by einav and finkelstein ef to medicare the ef framework implies unequal subsidies to counteract risk selection across plan types we also study other reasons to tilt the field the relative efficiency of ma vs tm market power of ma plans and institutional features of the way medicare determines subsidies and premiums after review of the empirical and policy literature we conclude that in areas where the ma market is competitive the benchmark should be set below average costs in tm but in areas characterized by imperfect competition in ma it should be raised in order to offset output enrollment restrictions by plans with market power we also recommend specific modifications of medicare rules to make demand for ma more price elastic

order from chaos the effects of early labor market experiences on adult labor market outcomes this paper examines the consequences of initial periods of churning or mobility in the labor market to help assess whether faster transitions to stable employment relationships as envisioned by advocates of school to work programs would be likely to lead to better adult labor market outcomes an analysis of national longitudinal survey of youth data for the years 1979 92 yields modest evidence at best linking early job market stability to better labor market outcomes the authors find that for both genders adult labor market outcomes defined as of the late 20s or early to mid 30s are for the most part unrelated to early labor market experiences this evidence does not support efforts to explicitly target the school to work transition insofar as doing so implies changing the structure of youth labor markets so that workers form earlier and firmer attachments to employers industries or occupations

location versus home country advantages in r d activities some further results on multinationals locational strategies abstract in this paper we study the question of the determinants of the foreign location of technological activities of multinational firms mnfs do they locate their knowledge activities as a consequence of their home country advantages or according to host country strengths we have defined four types of strategy learning according to revealed technological advantages our results based on the 345 mnfs with the greatest patenting activity in europe globally confirm the main findings of patel and vega research policy 28 2 3 1999 145 155 in a great majority of cases nearly 70 mnfs locate their activities abroad in technological areas or fields where they are strong at home strategies 2 and 3 moreover strategy 3 which corresponds with dynamic learning outclasses strategy 2 which corresponds with myopic learning and becomes increasingly important over time the strategy of japanese firms is very different from european and us mnfs in europe japanese firms seek out locations that have complementary strengths to their own strategy 2 in terms of policy implications it can be noted that the national system of innovation in particular the system of academic research should strengthen the technological advantages of local firms and enable them to successfully locate a part of their r d activities abroad

search method use by unemployed youth this article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions the empirical evidence then shows that the most frequently used search methods i e friends and relatives and direct applications without referral are also the most productive in generating offers and acceptances the number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs specific methods are chosen in a manner that generates positive average effects on outcomes for those using them

consumer discrimination and self employment self employment rates and incomes differ significantly by race we show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller equilibrium income distributions have two properties mean black incomes are lower than mean white incomes and the returns to ability are lower for black than for white sellers able blacks therefore are less likely to self select into the self employment sector than able whites using the 1980 census data we find that observed racial differences in the self employment income distributions are consistent with the theoretical predictions

the emergence persistence and recent widening of the racial unemployment gap census data show that the ratio of black to white unemployment rates currently in excess of 2 1 was small or nonexistent before 1940 widened dramatically during the 1940s and 1950s and widened again in the 1980s the authors decompose changes in the unemployment gap over the years 1880 1990 to identify the separate contributions of changes in observable worker characteristics and shifts in labor demand nearly all of the widening of the gap during the 1940s and 1950s can be attributed to regional shifts of workers and declining demand in markets where black workers were concentrated after 1970 improvements in the relative educational status of black workers would have narrowed the unemployment gap slightly but demand shifts adverse to black workers more than canceled out these gains

racial differences in self employment exits using detailed work history data in the 1979 national longitudinal survey of youth i investigate the reasons behind the racial gap in self employment my analysis of an age uniform sample of men all of whom are observed from age 22 to 40 years reveals that racial differences in cross sectional self employment rates are largely due to the fact that minority workers self employment spells are relatively short lived moreover i find that minority workers relatively high exit rates are driven primarily by transitions to nonemployment estimates from a multinomial logit model of self employment exits suggest that minority workers weak attachment to the labor market prior to entering self employment is an important determinant of their transition from self employment to nonemployment while lack of prior industry and self employment experience contributes to minorities transitions to wage employment when i assign blacks and hispanics the same mean work histories as whites the predicted black white gap in the first year self employment survival rate decreases by 31 and the hispanic white gap decreases by 14

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

what determines the location choice of r d activities by multinational firms abstract we analyse 446 location decisions of r d activities by multinational firms incorporated in the european union over 1999 2006 our results suggest that on average the location probability of a representative r d foreign affiliate increased with agglomeration economies from foreign r d activities human capital proximity to centres of research excellence and the research and innovation capacity of the region further our evidence suggests that in comparison to european multinational firms the effects of patents intensity and proximity to centres of research excellence were stronger in the case of north american multinational firms while government r d expenditure intensity increased the probability of location of r d activities by european multinational firms in the region it did not have a significant effect on the probability of location of r d activities by north american multinational firms

are college graduates more responsive to distant labor market opportunities abstract are highly educated workers better at locating in areas with high labor demand to answer this question i use three decades of u s census data to estimate a mcfadden style model of residential location choice i test for education differentials in the likelihood that young workers reside in states experiencing positive labor demand shocks at the time these workers entered the labor market i find effects of changes in state labor demand on college graduate location choice that are several times greater than for high school graduates nevertheless medium run wage effects of entry labor market conditions for college graduates equal or exceed those of less educated workers

adverse selection and inertia in health insurance markets when nudging hurts this paper investigates consumer inertia in health insurance markets where adverse selection is a potential concern we leverage a major change to insurance provision that occurred at a large firm to identify substantial inertia and develop and estimate a choice model that also quantifies risk preferences and ex ante health risk we use these estimates to study the impact of policies that nudge consumers toward better decisions by reducing inertia when aggregated these improved individual level choices substantially exacerbate adverse selection in our setting leading to an overall reduction in welfare that doubles the existing welfare loss from adverse selection jel d82 g22 i13 a number of potential impediments stand in the way of efficient health insur ance markets the most noted of these is adverse selection first studied by akerlof 1970 and rothschild and stiglitz 1976 in insurance markets prices reflect the expected risk costs of the insured pool whether the reason is price regulation or private information when insurers cannot price all risk characteristics riskier consumers choose more comprehensive health plans this causes the equilibrium prices of these plans to rise and healthier enrollees to select less comprehensive coverage than they would otherwise prefer

why wait the effect of marriage and childbearing on the wages of men and women we use data from the earlier and later cohorts of the nlsy to estimate the effect of marriage and childbearing on wages our estimates imply that marriage lowers female wages 2 4 percent in the year of marriage marriage also lowers the wage growth of men and women by about two and four percentage points respectively a first birth lowers female wages 2 3 percent but has no effect on wage growth male wages are unaffected by childbearing these findings suggest that early marriage and childbearing can lead to substantial decreases in lifetime earnings

the effect of price on switching among health plans a recent policy change by the university of california uc provides a unique natural experiment for investigating the sensitivity of consumers to health plan premiums when the uc moved to a policy of limiting its contribution to the cost of the least expensive plan out of pocket premiums increased for roughly one third of uc employees we examine the extent to which uc employees switched plans in response to this change in premiums our results indicate a strong response individuals facing premium increases of less than 10 were roughly 5 times as likely to switch plans as those whose premiums remained constant

reference dependent risk attitudes we use koszegi and rabin s 2006 model of reference dependent utility and an extension of it that applies to decisions with delayed consequences to study preferences over monetary risk because our theory equates the reference point with recent probabilistic beliefs about outcomes it predicts specific ways in which the environment influences attitudes toward modest scale risk it replicates classical prospect theory including the prediction of distaste for insuring losses when exposure to risk is a surprise but implies first order risk aversion when a risk and the possibility of insuring it are anticipated a prior expectation to take on risk decreases aversion to both the anticipated and additional risk for large scale risk the model allows for standard consumption utility to dominate reference dependent gain loss utility generating nearly identical risk aversion across situations

labor market institutions and long term effects of youth unemployment graduating from a school during a time of adverse economic conditions has a persistent harmful effect on workers subsequent employment opportunities an analysis of panel data from oecd countries during the 1960 2010 periods reveals that a worker who experiences a 1 percentage point higher unemployment rate while the worker is 16 24 years old has a 0 14 percentage point higher unemployment rate at ages 25 29 years and 0 03 percentage points higher at ages 30 34 years the persistence of this negative effect is stronger in countries with stricter employment protection legislation a composite index for labor market rigidity is constructed and the index is shown to have positive correlation with the persistence moderating macroeconomic fluctuations is more important in countries that have more persistent labor market entry effects on subsequent outcomes

the black white difference in youth employment evidence for demand side factors the 1980 census reveals a serious lag in the employment performance of young black men relative to young white men with census data we test for demand side causes of this lag using both aggregate data for 94 standard metropolitan statistical areas smsas and disaggregate or individual data from the 1 in 100 public use sample variation across smsas in the employment and wages of white youth provides indicators of the demand conditions for black youth and we estimate that feasible increases in these demand factors would lead to about a 25 increase in the employment of black youth

labor force participation rates and the informational value of unemployment rates evidence from disaggregated us data the informational value of the aggregate us unemployment rate has recently been questioned because of a unit root in the labor force participation rate the lack of mean reversion implies that long