Labour Empirics 2 Flashcards
Spence 1973
Signalling model. Explains how educ is merely a signal of high productivity, rather than causing it.
Altonji and Pierret, 2001
Marginal effect of educ falls with experience and marginal effect of innate ability rises with experience.
Aligns with Spence: Power of signal down over time as abil is understood by employers
Arcadino et al, 2010
Split into groups (HS vs college). Find for college grads, marginal effect of abil does not rise with exp. Because college grads have already successfully signalled abil?
Sheepskin effects?
Jaeger and Page, 1996: Controlling for years of schooling, still a 22% wage premia for BA
Curriculum effects should be zero if signalling?
Quality of educ shouldn’t matter if signalling. These face self selection issues.
Empirics on curriculum effects?
Altonji, 1995: Returns to extra HS courses small
Rose and Betts, 2001: Large math effects on earnings
Kane and Rouse, 1995: If you fail a degree, number of credits matters!
GED
High school equivalent qualification for dropouts (assume it is a good ability measure).
Tyler, Murrane, Willet, 2000
Exploit variation in passing standards. Use DiD to find variation in identically abled students. Find GED has a 19% impact on wages
Challenge to TMW 2000
Jepsen et al, 2016As individuals can retake, it is not a valid abil control. If we only allow first try, no effect!
Compulsory school attendace laws. If pure HC, only marginals affected. If Spence, all affected as value of signal down. Appears pos effect, but stat not significant
Hysteresis
Kahn, 2010: Graduating in a weak economy leads to wage loss as high as 2.5% 15 years later.
Card, Chetty, Weber 2007
Regression discontinuity. Extension of potential duration of benfits lowers finding rate in first 20 weeks by 5-9%
Katz and Meyer, 1990
Far higher chance of finding a job the week benefits expire
Card and Krueger 1994
DiD for changes to min wage Pennsylvania vs New Jersey. Assume parallel trends. Suggests Ld elasticity of +0.7
Critiques of CK 1994
- Measurement errors: Phone survey vs actual administrative data.
- Fast food not representative? (hungry teenager theory) (Keenan, 1995). Teenagers employed and stim demand.
- Adjustment takes time! (Baker et al, 1999)
Seattle min wage
We see politicised debate! UC Berkeley study backed by mayor’s office so incentive to support min wage.
Key of debate is elasticity of Ld close to min wage barrier
Cain, 1986 on discrimination
Must consider wage differentials given same vector of productivity characteristics
Becker, 1957
Taste based discrimination
Employer has a discrim coefficient and acts as if wage = (1+a)w
1 - If a is common, then B members pay a ‘discrimination tax’ and so wage down.
2 - If a is from a distribution, then the a at which there is indifference rules wage differential.
Implies discrim will be driven out
Phelps (1972)
Statistical discrimination. Observable (eg race) is corr with performance (via unobservables).
Set up using a noisy evaluation process.
Implies return to training is lower for B types! Self fulfilling?
Empirics on race differentials are generated how?
Correspondence: Fictitious paper applications.
Audits: Trained auditors for job interviews
Audit: Pager, Western, Bonikowski (2009)
Blacks less likely to get a callback offer. B roughly equal to Whites with 18 month drug felony
Critique of audit
Heckmann Siegelmann, 1992. Assumes unobservables identical across groups and not double blind so unconcious actions by auditors? Sample sizes inevitably small due to cost
Correspondence:
Bertrand and Mullaithan (2004). Random characteristics and change name. Roughly 50% gap in B/W callback rate!
Fryer and Levitt (2004)
Investigate and find no compelling reln between black names and life outcomes after controlling for background. Thus, black names perhaps used as a signal at resume stage, but not later?
