ECONOMICS COURSEWORK AND LONG‐TERM BEHAVIOR AND EXPERIENCES OF COLLEGE GRADUATES IN LABOR MARKETS AND PERSONAL FINANCE

Using survey data from over 2,000 students who attended one of four large public universities in 1976, 1986, or 1996, we investigate the relationship between taking more coursework in economics, or choosing economics as an undergraduate major, and a wide range of later decisions and outcomes in labor markets and personal finance, many of which have not been analyzed in earlier research. Generally, economics coursework and majoring in economics are significantly related to higher levels of earnings, home equity, and savings. They are also associated with working more hours and negatively related to completing graduate degrees (except the MBA). Among graduates with positive savings, those with more economics coursework invest more in individual stocks and money market accounts, and are more likely to have employer‐provided life insurance. They have fewer credit cards, which are more often paid in full each month. Most of these findings also hold for graduates who majored in business, but on average economics majors worked more hours and earned more than business majors, were more likely to have been self‐employed, and expected to retire at an older age. Business majors were more likely to have experienced a layoff, and were even less likely than economics majors to complete graduate degrees (except the MBA). Economics majors expected to save even more than business majors by retirement, and viewed short‐term and precautionary motives for saving as more important. Finally, our results suggest that exposure to economics through course‐taking is more important for later outcomes than actual performance in those courses. (JEL A22, J3, D12)     

Gender and racial earnings differentials in academic labor markets

This study estimates earnings differentials across racial and gender groups among college faculty, and decomposes these differentials into the components attributable to differences in individual and institutional characteristics and that which remains unexplained. We find that white females earn approximately 4 percent less than white males; black males earn 7.4 percent more; black females earn one percent more; Hispanic males earn 2.7 percent more; Hispanic females earn 1.7 percent less; and Asian males earn 7.7 percent more than comparable white males. We also find a significant earnings penalty for being a naturalized citizen or noncitizen versus an U.S.-born citizen.     

Self-employment,earnings, and sexual orientation

Although many studies document differences by sexual orientation in earnings and other labor-market outcomes, little is known about differences in self-employment. Our study contributes to both the self-employment literature and sexual-orientation literature by analyzing differences in self-employment rates and earnings by sexual orientation. Gay men are less likely to be self-employed than married men, whereas lesbians are equally likely to be self-employed as married women. We find that gay men earn less than married men. We do find, however, that for those gay men who are self-employed, there is little evidence of a further earnings penalty, at least among full-time workers. Lesbians earn at least as much as married women, but receive no further earnings premium—or penalty—by being self-employed, again among full-time workers.     

Do native-born bilinguals in the US earn more?

This paper uses the pooled data from 2005 to 2009 American Community Survey to analyze the economic benefits associated with bilingualism for adult men born in the United States. Bilingualism among the native born is defined as speaking a language at home other than or in addition to English. Native born bilingualism is rare; only 6.5% report a non-English language, and of those 71% report Spanish. Most of the native-born bilinguals report speaking English “very well” (85%), with most of the others speaking it “well” (10%). Other variables the same, overall bilinguals earn 4.7% less than monolingual English speakers, but the earnings differential varies sharply by the language spoken. Those who speak Native American languages, Pennsylvania Dutch and Yiddish have very low earnings due to a tendency to live in geographic or cultural enclaves. Spanish speakers earn 20% less than the monolingual English speakers overall, and other variables the same, have statistically significant 7% lower earnings. On the other hand, those who speak certain Western European and East Asian languages and Hebrew earn significantly more than monolingual English speakers.     

The reverse wage gap among educated White and Black women

Using the 2004 National Sample Survey of Registered Nurses and the 2004–2005 American Community Surveys, we estimate the Black–White wage gap among females with at least some college education. We find that Black female nurses earn 9% more at the mean and median than White female nurses, controlling for selection into nursing employment. Among K-12 teachers, Black females earn 7% more than White females at the median. There is no Black–White wage gap among all women with a bachelor’s degree. Differences in opportunities for education and marriage between White and Black women may explain why highly educated Black females earn on par with highly educated White females.     

THE SCREENING HYPOTHESIS: AN APPLICATION OF THE WILES TEST

According to Wiles (1974) the screening and human capital theories of the return to education may be discriminated between by determining whether qualified individuals earn more by working in areas where their skills are relevant, than they earn in other areas. Failure to do so is presumed to constitute evidence against human capital theory. This paper applies the Wiles' test to a census of recent Economics and Science graduates from Australian Universities. Only for male science graduates is any evidence found in favour of human capital theory.     

No booze? You may lose: Why drinkers earn more money than nondrinkers

A number of theorists assume that drinking has harmful economic effects, but data show that drinking and earnings are positively correlated. We hypothesize that drinking leads to higher earnings by increasing social capital. If drinkers have larger social networks, their earnings should increase. Examining the Gen-eral Social Survey, we find that selfreported drinkers earn 1014 percent more than abstainers, which replicates results from other data sets. We then attempt to differentiate between social and nonsocial drinking by comparing the earn-ings of those who frequent bars at least once per month and those who do not. We find that males who frequent bars at least once per month earn an addi-tional 7 percent on top of the 10 percent drinkers’ premium. These results sug-gest that social drinking leads to increased social capital. We thank Daniel Arce, Phil Cook, Rodolfo Gonzalez, Teresa Beckham Gramm, Nick McKinney, Tom Means, Jake Vigdor, and participants in the Faculty Development Endowment seminar at Rhodes College for helpful comments and suggestions. We gratefully acknowledge Rhodes College for supporting this research through a Faculty Development Endowment grant.     

Is there a ‘marriage premium’ for gay men?

It is well-known that married men earn more than comparable single men, with typical estimates of the male marriage premium in the range of 10–20%. Some research also finds that cohabiting men earn more than men not living with a female partner. This study uses data from the General Social Survey and the National Health and Social Life Survey to examine whether a similar premium accrues to gay men who live with a male partner and whether cohabiting gay men have different observable characteristics than non-cohabiting gay men. Controlling for observable characteristics, cohabiting gay men do not earn significantly more than other gay men or more than unmarried heterosexual men. Cohabiting heterosexual men also do not earn more than non-cohabiting heterosexual men.

Is the positional bias an artefact? Distinguishing positional concerns from egalitarian concerns

This paper shows that the positional bias underscored by Solnick and Hemenway, 1998, Solnick and Hemenway, 2005, Solnick and Hemenway, 2007 is an experimental artifact. Quoted authors highlighted the importance of positional concerns by finding that people prefer to earn a fewer absolute amount of income but to earn a higher income than others. Why do people prefer to earn more than others? The proposed explanation is that people have a preference for status. This conclusion might be wrong due to their particular design. We conjecture that subjects, by indicating to prefer a state of the world in which they earn more than others, in reality signal a preference for equality. We replicated the same design as in Solnick and Hemenway, 1998, Solnick and Hemenway, 2005, Solnick and Hemenway, 2007 and added a new option so as to disentangle positional concerns from egalitarian ones. We observe that most subjects express egalitarian preferences rather than positional ones.     

Service Credit Banking:

Informal care provided by family and friends is widely recognized as one of the key factors in keeping long-term care financially manageable for individuals as well as for public programs. Sociodemographic trends predict that the demand for formal and informal home care services among the elderly will increase faster than the supply. Programs that allow volunteers to earn credits later redeemable for comparable services when they may be required are beginning to be examined as a way to help fill the need for respite services and other basic home care services. This paper examines key considerations of the service credit concept in the context of existing programs and initiatives designed to encourage its development.     

The Role of Cohabitation in Asset and Debt Accumulation During Marriage

Research has found that married individuals who cohabited only once before marriage with their future spouse (i.e., “spousal cohabiters”) have a distinctive financial advantage: they accumulate more wealth over time than individuals who married without ever cohabiting (i.e., “directly married”). Using the National Longitudinal Survey of Youth 1979 and growth curve models, the present study attempts to identify the source of spousal cohabiters’ wealth advantage. We find that marriage is associated with gains for financial and nonfinancial wealth, increasing home equity, and decreasing debt over time. Spousal cohabiters begin marriage with more debt than the directly married. Conditional on education, income, and other key factors, spousal cohabiters pay down their debt faster and generate greater home equity over time thereby accumulating more wealth than the directly married. This pattern of financial behavior among spousal cohabiters explains some, but not all, of their financial advantage over married persons who never cohabited prior to marrying. Given the increasing prevalence of cohabitation among young adults, these results offer important insights into the long-term economic outcomes associated with premarital cohabitation.     

Opting out among women with elite education

Whether highly educated women are exiting the labor force to care for their children has generated a great deal of media attention, even though academic studies find little evidence of opting out. This paper shows that female graduates of elite institutions have lower labor market involvement than their counterparts from less selective institutions. Although elite graduates are more likely to earn advanced degrees, marry at later ages, and have higher expected earnings, there is little difference in labor market activity by college selectivity among women without children and women who are not married. But the presence of children is associated with far lower labor market activity among married elite graduates. Most women eventually marry and have children, and the net effect is that labor market activity is on average lower among elite graduates than among those from less selective institutions. The largest gap in labor market activity between graduates of elite institutions and less selective institutions is among MBAs, with married mothers who are graduates of elite institutions 30 percentage points less likely to be employed full-time than graduates of less selective institutions.     

Does perceived unfairness affect charitable giving? Evidence from the dictator game

We use a modified version of the dictator game to study whether perceived unfairness affects giving. To earn money, dictators first had to take a test. Our treatment group had participants taking tests of different difficulty levels while the control group had all participants taking a test of the same difficulty level. We found that participants who were in an environment where everyone faced the same challenge to earn money were less generous than participants in an environment where some people had an advantage while others had a disadvantage.     

Honesty or dishonesty of taxpayer communications in an enforcement regime

In many settings the true likelihood of capture when engaging in an illegal activity, such as tax evasion, is not well known to an individual. “Official” statements from the tax administration regarding enforcement effort provide some information. In addition, “informal”, or “unofficial”, communication among taxpayers can supplement these official announcements, but individuals do not know with certainty whether such unofficial information is honest (or accurate) versus dishonest (or inaccurate). We examine the truthfulness of an individual’s revelation of unofficial information to other individuals, along with the factors that affect any revelation, focusing on the intrinsic motivations for revelations. Our experimental design allows us to examine the type and the honesty of messages that an individual chooses to send to other individuals regarding their own audit outcome and their own compliance behavior. Our results indicate that most individuals send accurate messages about their own audit outcomes and their own compliance behaviors. Nevertheless, many individuals are also systematically dishonest about being audited; that is, we observe a significant tendency for individuals to claim that they were audited when they were not. We also observe a strong interaction between individuals’ audit outcomes and their compliance behaviors, so that individuals who engaged in tax evasion and who were audited were more truthful in their communications than those whose tax evasion went undetected.     

Chronic Homelessness Among Working-Age Adults: Personal Problems and Public Assistance

As rapid changes have occurred in the economic and cultural structures of society, some have found themselves more disadvantaged than others. The mismatch between income and the cost of housing means that some of the poor will inevitably become homeless. Given the economics of the situation, prevention of homelessness is a non-issue; more germane is the question of chronic homelessness. This paper takes the position that determining who is most likely to be chronically homeless is related to the cultural ideology of individualism and, more specifically, that the situations likely to create the greatest vulnerability are problems for which individuals are seen as personally responsible. The distress brought about by societal-level changes is manifested in the “personal” problems of individuals. The social welfare system, acting as a substitute for failed social institutions, recreates their failures by relying on a cultural ethos that blames individuals for occupying positions to which the society has relegated them.     

Why do married men earn more: productivity or marriage selection?

Using data from the Current Population Survey March Supplement 1999, this study examines why married men earn more than men who have never married. We find that the marriage wage premium cannot be attributed to the unobservable higher earnings capability of married men. Instead, wage gains from marriage are explained by the degree of specialization within the household. Our findings cast doubt on the argument that the selection of high-ability men into marriage is the cause of the marriage wage premium.     

Taking Pressure Off Families: Child‐Care Subsidies Lessen Mothers’ Work‐Hour Problems

We use the Philadelphia Survey of Child Care and Work to model the effect of child‐care subsidies and other ecological demands and resources on the work hour, shift, and overtime problems of 191 low‐income urban mothers. Comparing subsidy applicants who do and do not receive cash payments for child care, we find that mothers who receive subsidies are 21% less likely to experience at least one work hour–related problem on the job. Our results suggest that child‐care subsidies do more than allow women to enter the labor force. Subsidies help make it easier for mothers in low‐wage labor both to comply with employer demands for additional work hours and to earn the needed wages that accompany them.     

The effects of ethnocultural empathy on level of stereotyping toward college athletes

In the current study the author examined whether ethnocultural empathy affects people's beliefs and expectations regarding athletes, hypothesizing that (1) individuals demonstrating a high level of ethnocultural empathy would be less likely to endorse stereotypes toward athletes, (2) females would be less likely to stereotype toward athletes than would males, (3) athletes would be less likely to stereotype toward athletes than would non-athletes, and (4) behavioral science majors would be less likely to stereotype toward athletes than would non-behavioral science majors. As predicted, participants high on ethnocultural empathy were less likely to stereotype towards athletes, females were less likely to stereotype toward athletes than were males, and behavioral science majors were less likely to stereotype toward athletes than were non-behavioral science majors. However, contrary to the hypotheses, athletes were more likely to stereotype toward their own in-group than were non-athletes.     

Married women's resource position and household food expenditures in Cebu,Philippines

This study analyzes how married women use their access to and control over economic resources to increase household spending on food. Using data from Cebu, Philippines, where child malnutrition is high, this study finds that the more income women earn and control, the more households spend on food. Women's control over their income is particularly important for increasing food expenditures in the poorest households. In richer households, women who earn little of their own income also use spouse income transfers to increase food expenditures. The findings from this study suggest that in a developing country setting, improving women's economic status so that they earn and control more household resources can increase household spending on goods that benefit children.