Mexican Workers and U.S. Agriculture: The Revolving Door

Western U.S. agriculture is an industry that has shaped and been shaped by a peculiar labor policy: seasonal workers were outsiders who looked to agriculture for jobs, not careers. They did not plan to remain farm workers, and the industry and community in which they worked and lived did not see them as long‐term settlers. The immigration and integration policy, in effect, was to recruit new workers willing to accommodate themselves to seasonal employment, and to avoid their integration in agricultural areas. Thus, for most immigrant workers, economic mobility required geographic mobility. However, the major policy issue is not how to enhance the upward mobility of immigrant farm workers and their children; it is how U.S. agriculture should gain access to immigrant farm workers.     

PRODUCTIVITY PERFORMANCE OF U.S. TRUNK AND LOCAL SERVCE AIRLINES IN THE ERA OF DEREGULATION

The transition to deregulation of the U.S. air transport industry began in 1976. In this paper we measure total factor productivity growth of the airlines for the first five years of the transition (1976–1980) and compare the performance with that of the preceding years. We find that productivity growth accelerated from 2.8% per year to 5.1% per year. An analysis of covariance model with individual airlines as observations leads to the conclusion that for the trunk airlines nearly all of the acceleration can be explained by increases in output and load factor and decreases in the growth of capacity. For the local service airlines, however, less than half of the acceleration may be so-explained.     

OUTSOURCING AND UNIONIZATION: A TALE OF MISALLOCATED (RESISTANCE) RESOURCES

While many believe the growth in outsourcing contributed to the decline in U.S. unionization up to the 1990s, this argument has never been investigated systematically. In this article, we analyze the effect of outsourcing on unionization between 1973 and 1993. Instrumental variables estimation shows outsourcing contributes to higher quasirents and industry productivity. We find the union wage premium increases with the extent of outsourcing—both for workers that are substitutable by outsourcing services and workers in jobs that are not substitutes of the tasks being outsourced. Finally, we find no support for the claim that outsourcing reduces unionization. (JEL J5, L2, L6)     

SULPHUR AND THE U.S. GOVERNMENT: PRICE FIGHTING IN THE 1960s*

The interaction between the domestic sulphur industry and the executive branch of the U.S. Government during the Johnson administration suggests that this important extractive industry was sensitive to governmental “moral suasion.” A narrative is provided of the relationship between the industry and the administration's economists, lawyers and departmental politicians. This narrative is followed by an appropriate least squares price model. It is shown that the administration was successful in its efforts to suppress sulphur prices during 1965-66, that is, during the early stages of the commitment of U.S. forces to combat in Southeast Asia.     

Labor Shortages and U.S. Immigration Reform: Promises and Perils of an Independent Commission

Comprehensive U.S. immigration reform proposals have three major elements: improved border and workplace controls, dealing with the 11 million unauthorized foreigners in the U.S., and managing “future flows” of foreign workers requested by U.S. employers. Improved controls and dealing with unauthorized foreigners were discussed extensively in the U.S. Senate in 2006 and 2007. Future flows were not. This article reviews the decisions governments face when employers request migrant workers, Britain’s independent Migration Advisory Committee, and the promises and perils of a similar U.S. commission to manage labor migration. We conclude that a U.S. commission could help to clarify the trade‐offs involved in migrant labor policy, but cannot replace the need for inherently political choices between competing policy objectives.     

BIRTHS, DEATHS, AND MARRIAGES IN THE U.S. COMMERCIAL BANKING INDUSTRY

Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s and culminated with the Interstate Banking and Branching Efficiency Act of 1994. This article examines whether deregulation affected new charter (birth), failure (death), and merger (marriage) rates of U.S. commercial banks from 1978 to 2004 after controlling for bank performance and state economic activity. We find strong evidence that intrastate and interstate deregulation stimulated marriages, but not births or deaths. Finally, temporal causality tests show that mergers temporally lead to new charters and that failures lead to mergers (a demonstration effect) . ( JEL G21, L51)     

Bringing Productivity Back In: Rising Inequality and Economic Rents in the U.S. Manufacturing Sector, 1971 to 2001

Using data on earnings and productivity for U.S. manufacturing industries from 1971 to 2001, we investigate economic rents and rising income inequalities. The results suggest that rents are most significant for managers, professionals, middle‐aged workers, and older workers. Conversely, negative rents are evident for women, Hispanics, single men, and blue‐collar workers. The underpayment of Hispanics appears to have increased while African Americans have gone from being underpaid to being overpaid. Workers with a college degree have become overpaid (i.e., “credentialism”) while “gift‐exchange” efficiency wages have declined. The marginal productivity of labor input has increased but is increasingly underpaid.     

Boeing’s Diffusion of Commercial Aircraft Technology to Japan: Surrendering the U.S. Industry for Foreign Financial Support

Japanese firms have become increasingly important first-tier suppliers to the U.S. commercial aircraft industry (large passenger jets). Over time, this relationship has evolved from a simple “build to print” subcontractor arrangement to a turnkey “design and build” risk-sharing partnership. Using the Boeing 767, 777, and 787 as examples, we argue that the motives for Boeing’s commercial outsourcing to Japan are to access the Japanese market, spread risk, gain access to capital, and lower U.S. spending on research and development (R&D). This has clear implications for U.S. trade and employment, in that Japanese-subcontracting boosts foreign imports and reduces the need for domestic production workers and U.S. suppliers. From a trade perspective, however, a troubling feature of allowing the Japanese to produce large commercial aircraft subassemblies is that major Japanese public financial supports are involved which contravene existing international agreements on production subsidies. We review the types of production contracts that Japanese companies have sought on the Boeing 767, 777, and 787 programs. These contracts have allowed the Japanese to develop new capabilities in terms of production capacity, tooling, design, and final assembly. Ultimately, these capabilities imply that Japan will eventually enter the market as a fully-fledged producer of commercial aircraft. This does not bode well for the U.S. commercial aerospace sector.     

INDUSTRIAL DYNAMICS AND THE NEOCLASSICAL GROWTH MODEL

This paper studies industry-level dynamics and demonstrates the ability of a modified neoclassical growth model to capture a range of empirical facts. The paper begins by using U.S. data to document skilled and unskilled labor trends within industry sector classifications as well as industry sector output trends. Using Current Population Survey data from 1968 to 2004, it is shown that the ratio of skilled workers to unskilled workers employed has risen in all industries. The absolute increase in this ratio was larger in the more skilled industries, while the growth rate was larger in the less skilled industries. Furthermore, using national income account data, it is shown that relatively high-skilled industries have accounted for an increasing share of output over time. A version of the neoclassical growth model is then constructed to match these observations. One important feature of this model is a structure that introduces new goods into the economy at each moment of time. The model is able to capture a rich set of labor market movements between sectors and between skill levels as well as changes in the relative output shares across industries, yet preserves many nice features of the neoclassical growth model. ( JEL E13, J20, 030)     

TRADE,GEOGRAPHY AND THE SKILL PREMIUM IN U.S. MANUFACTURING

A number of studies have suggested that countries (or regions) with access to larger markets have higher wages. In this paper, we examine whether access to larger markets affects skilled and unskilled workers differently. We develop a model relating two key measures of market size, market and supplier access, to industry value added prices. We then estimate the effects of growth in these measures on factor returns in U.S. manufacturing industries between 1984 and 1996. We find that growth in these measures can explain around 5% of the rise in the skill premium over the sample period. (JEL F12, F16, L60)     

The economic effects of labor unions revisited

Using a variety of statistical techniques, we conclude that labor unions have reduced U.S. output by significant amounts —trillions of dollars over time. Additionally, the employment- population ratio and the unemployment rate have been adversely affected by the presence of unions. From the very beginning, unionization materially lowered employment in the auto and steel industries, and union militancy in coal mining has contributed importantly to largely eliminating employment in this once large industry. While some individual workers have profited from unions, the aggregate economic impact is strongly negative.     

Contracts, Individual Revenue and Performance

In some jobs individual workers have control over revenue, effort and productivity. These jobs include professional firms for law, medicine and consulting. They include personal services in areas from hair styling to taxi driving. The firm offers contracts that allow for a sharing of risks and rewards. These incentives include a split of output between the firm and worker and employee ownership. For U.S. real estate agents, a choice is available between splitting revenue with the firm or retaining 100?% above a fixed prepaid minimum. These are equity and sequential debt contracts. Under the sequential debt contract, effort increases but output per hour declines. Separately, agents increase effort and productivity if offered ownership in the firm, effectively a claim on others?? performance.     

Wage determination in U.S. manufacturing 1958–1976: A collective bargaining approach

This paper presents a cross-section collective bargaining approach to the analysis of inter-industry wage movements of production workers in U.S. manufacturing over the period 1958–1976. A Hicksian model is used to classify the determinants of wage change according to their likely influence on the concession and strike costs of management and unions. Three variables which are classified as management concession and strike costs are consistently significant in empirical testing: change in value productivity, labor intensity, and the profit rate. On the basis of this finding it is suggested that inter-industry wage changes are generally a function of management concession costs. The authors acknowledge the helpful comments of an anonymous referee.     

THE SHIFTS IN LEAD-LAG PROPERTIES OF THE U.S. BUSINESS CYCLE

We document shifts in the lead-lag properties of the U.S. business cycle since the mid-1980s. Specifically, (1) the well-known inverted leading indicator property of real interest rates has completely vanished; (2) labor productivity switched from positively leading to negatively lagging output and labor inputs over the cycle; and (3) the unemployment rate shifted from lagging productivity negatively to leading positively. Many contemporary business cycle models produce counterfactual cross-correlations revealing that popular frictions and shocks provide an incomplete account of business cycle comovement. Determining the underlying sources of these shifts in the lead-lag properties and their consequences for macroeconomic forecasts is therefore a promising direction for future research. (JEL E24, E32, E43)     

Shareholder Value and the Transformation of the U.S. Economy, 1984–20001

Using data from 62 U.S. industries for 1984–2000, this article explores the connections between shareholder value strategies, such as mergers and layoffs, and related industry‐level changes, such as de‐unionization, computer technology, and profitability. In line with shareholder value arguments, mergers occurred in industries with low profits, and industries where mergers were active subsequently saw an increase in layoffs. Industries with a high level of mergers increased investment in computer technology. This technology displaced workers through layoffs and was focused on reducing unionized workforces. Contrary to shareholder value arguments, there is no evidence that mergers or layoffs returned industries to profitability.     

WORKER ATTITUDES AND THE COST OF PRODUCTION: HYPOTHESIS TESTS IN AN EQUILIBRIUM MODEL

This paper extends the application of neoclassical production theory to include the effects of worker attitudes on productivity and cost of production, using data for the U.S. automobile industry. Behavioral indicators of worker attitudes are imbedded in a standard four-input translog cost function. The coefficients of the imbedded function are determined in estimation of the cost function simultaneously with its share equations. Hypotheses concerning the effects of worker attitudes on the cost function are tested, and the properties of the index of worker attitude that emerge from the estimation are examined.     

Unemployment,immigration, and NAFTA: a panel study of ten major U.S. industries

We conduct a pooled cross-section and time-series analysis of the unemployment rates across ten major industries in the U.S. from 1983 to 1994 to assess the effect of NAFTA and immigration. Our results indicate that the output produced by the industry, unemployment benefit coverage, and interest rates are significant determinants of industry unemployment rates, but union presence does not affect industry unemployment. Both Canadian and Mexican immigrants appear to be complements to the U.S. labor force, with Canadian immigrants highly complementary to American labor. Finally, the Chow test provides no evidence that NAFTA has changed the structure of unemployment determination in these industries. We are indebted to Emily Hoffman and Matthew Higgins for their comments and suggestions. The usual disclaimer applies.     

IMPLICATIONS OF IMMIGRATION POLICIES FOR THE U.S. FARM SECTOR AND WORKFORCE

We develop a theoretical model using migration and trade theory to examine the effects of domestic and border enforcement policies on unauthorized workers and the U.S. agricultural sector. The theoretical results show that heightened immigration policies increase the illegal farm wage rate, and reduce the employment of unauthorized farm workers and exports. The empirical analysis show that increased domestic enforcements curtail the number of undocumented farm workers by an average of 8,947 and commodity exports to Mexico by an average of $180 million. The tighter border control curbs illegal farm workers by 8,147 and reduces farm exports by $181 million. (JEL F160)     

Economic infrastructure and the development of state autonomy: A case study of U.S. maritime policy

This paper interprets the development of the U.S. maritime industry as reflecting changes in the economic substructure of American capitalism. The analysis seeks to explain how the changing interests of the state, as well as the changing balance of power between capitalists, workers and the state stimulated changes in the maritime industry. Three time periods are used: the Revolution until 1867; 1868 to 1897; and 1898‐on. These three periods represent distinct periods of policy change and strategies of capital accumulation for the state and for capitalists. A combination of Marxian and Weberian theories of political economy are used to explain these capital‐state relations.     

ALTERNATIVES FOR RESTRUCTURING THE RAILROADS: END-TO-END OR PARALLEL MERGERS?

The U.S. railroad industry has seen considerable merger activity over the past two decades and more mergers are expected in the near future, but little is presently known about the relative social benefits of alternative merger configurations. Using traffic data for origin-destination pairs affected by recent mergers, this paper examines the impact of end-to-end and parallel mergers on increases in the market share of merged firms. To the extent that increases in market share reflect social benefits in the form of improved service and lower costs, end-to-end mergers are found to outperform parallel mergers.