Labour Empirics (useful) 2 Flashcards
Signalling model
Spence 1973. Explains how educ is merely a signal of high productivity, rather than causing it.
Tests of signalling
Supported!
Altonji and Pierret, 2001: E gets more credit before much experience! Indicates power of signal dies down.
Arcadino et al (2010): College grads have already successfully signalled ability so marginal effect of experience does not rise with exper!
Sheepskin effects?
Jaeger and Page, 1996: Controlling for years of schooling, still a 22% wage premia for BA
Curriculum effects under signalling?
Quality of educ shouldn’t matter if signalling. These studies face self selection issues.
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).
GED test for Spence!
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, 2016
As individuals can retake, it is not a valid abil control. If we only allow first try, no effect!
Compulsory school attendace laws.
Lang and Kropp 2016
If pure HC, only marginal decisions affected. If Spence, all affected as value of signal down. Appears pos effect for all, but stat not significant
Hysteresis
Kahn, 2010: Graduating in a weak economy leads to wage loss as high as 2.5% 15 years later.
Benefits and job search
Card, Chetty, Weber 2007. Regression discontinuity. Extension of potential duration of benfits lowers finding rate in first 20 weeks by 5-9%. This is because length of potential benefits depends positively on number of months employed in last 5 years
Katz and Meyer, 1990 Far higher chance of finding a job the week benefits expire
Min Wage Diff in Diff
Card and Krueger (1994)
DiD for changes to min wage Pennsylvania vs New Jersey (min wage here). Assume parallel trends. Suggests Ld elasticity of +0.7. Specific industries!
Issues with CK 94
- 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
Taste based discrimination
Becker, 1957
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 as not profitable!
Must consider wage differentials given same vector of productivity characteristics
Cain, 1986 on discrimination. Consider Oaxaca Blinder Decomposition
Statistical discrimination.
Phelps (1972) / Arrow (1973)
Observable which doesn’t directly matter (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 and critiques of audit studies
Pager, Western, Bonikowski (2009)
Blacks less likely to get a callback offer. B roughly equal to Whites with 18 month drug felony
Heckmann Siegelmann, 1992. Assumes unobservables identical across groups and not double blind so unconcious actions by auditors? Sample sizes inevitably small due to cost
Visible hand
Doleac and Stein (2013)
iPod sales with hand visible. Black sellers: Fewer and lower offers. Largest difference in thin markets / more racial isolation so appears consistent with this channel
Correspondence
Bertrand and Mullaithan (2004). Random characteristics and change name. Roughly 50% gap in B/W callback rate!
Fryer and Levitt (2004). No compelling effect of life outcomes of black names after we control for background. Suggests perhaps little LR effect?
Oaxaca - Blinder
Decompose differences in wages into due to discrimination and due to skills gap
Return to educ lower for blacks due to school quality, not discrimination?
Card and Krueger 1992
Should we control for industry / occupation?
Yes? Should make comparisons across equivalent occupations/ industries!
No? Choices are at least partly endogenous!
B/W wage ratio over time
US
Men: 1940=0.4 vs 2009=0.77
Sig closer for women
