Occupational Human Capital and Wages: The Role of Skills Transferability Across Occupations

This paper examines the effect of accumulated human capital, and particularly occupational human capital, on the workers’ wages. Unlike previous studies that apply occupational tenure as a proxy for occupational human capital, this paper applies the concept of Shaw’s (1984) occupational human capital to capture the transferability of occupational skills and estimates a new measure of occupational human capital, so-called occupational investment. Using the National Longitudinal Survey of Youth (NLSY) from 1979 to 2000, the key findings of this paper suggest that occupational skills from the previous jobs can also affect the workers’ wages at the current job and that occupational investment is one of the important sources of wages supporting the Shaw’s original work on wage determination. Specifically, 5 years of (3-digit) occupational investment relative to current occupational tenure could lead to a wage increase of 7.7 to 18.4 %. I also find that the general labor market experience accounts for a large share of workers’ wages.     

ARE WORKERS WILLING TO PAY TO JOIN A BETTER TEAM?

Using data from the Major League Baseball free‐agent market, this study is the first to show that the productivity expected of the team a worker will join produces a significant, negative compensating wage differential. The younger workers in the sample drive this result, trading 25% of their wages to join teams with an expected productivity one standard deviation higher. This investment can be recouped if a reasonable increase in human capital occurs. These results are robust to contract length‐wage simultaneity and indicate that investment in human capital motivates the observed tradeoff, suggesting a new pathway through which human capital accumulation can affect wages. Reliable measures of workers' own past productivity and the productivity expected of a worker's future team provide key advantages to identifying these effects. (JEL J31, J24, M54)     

Penalties and payoffs: The short-term economic consequences of human capital acquisition for resettled refugees in the United States

The relationship between refugee investments in human capital and short-run economic outcomes may influence the extent to which refugees invest in human capital that is associated with positive future economic mobility. Using data from the Annual Survey of Refugees from 2016 and 2017 we assess the relationship between recent investments in human capital and hourly wages for employed refugees in the United States. Results suggest that recent job training has a positive effect on hourly wages. In contrast, enrollment in English classes and educational programmes have no short-term positive effects on hourly wages. When combined with the pressure resettled refugees experience to find employment quickly, these results suggest that the lack of short-term wage benefits from English language or educational courses may dissuade refugees from sufficiently investing in the amount of English language or education necessary to promote positive long-term economic mobility.     

Social Capital is Associated with Earnings among Foreign‐born Mexican Men but not Women in Los Angeles County

The mechanisms through which social capital is accumulated may influence its relationship with hourly earnings. Because Mexican men and women accumulate social capital differently, for instance, gender may be an important factor for understanding social capital’s association with Mexican migrant earnings. Unlike past research that often fails to differentiate between various social capital metrics (e.g., social network member reciprocity, participation in civic group organizations, neighbourhood trust), this article estimates two of these associations with wages while controlling for individual‐, household‐ and neighbourhood‐level characteristics. Results suggest that foreign‐born Mexican men receive a wage premium from civic participation (bridging social capital) and a wage penalty from reciprocal social network exchange (bonding social capital). We also find that unauthorized legal status (among Mexican men and all migrants) and having children (among women) were negatively associated with hourly wages. We conclude with a discussion of the relative association of human and social capital with Mexican migrant wages.     

Union membership,economic rents,and migration behavior

This study represents an extension of the human capital paradigm as it relates to an individual’s decision to migrate. It differs from previous studies by incorporating union membership, a labor market variable, into the model. In effect, the National Labor Relations Act of 1935 granted a monopoly bargaining position to unions. The theoretical implication of a union’s monopoly bargaining position is that union wage levels will increase relative to nonunion wages. The increase of relative wages results in union membership granting a property right that possesses positive net present value and hence reduces an employed union member’s probability of migrating. Additionally, the supra-competitive remuneration of union members results in a surplus of labor supplied to union firms. Employers respond by using quality screening to hire workers from the larger labor pool. As a result, unemployed union members will on average possess higher levels of human capital, which will increase their probability of migrating above that of their unemployed nonunion cohorts.     

On-the-job training and starting wages

Human capital theory predicts that training should reduce starting wages, yet this rela-tionship remains empirically undocumented. Estimation of how training affects wages must control heterogeneity bias. I do this by estimating firstdifference starting wage regressions on a sample of workers from the Employment Opportunities Pilot Project (EOPP) data. I find that on-the-job training has a statistically significant effect on starting wages.     

Immigration Policy and Employment Conditions of US Immigrants from Mexico, Nicaragua, and the Dominican Republic1

Prior studies suggest that the passage of the Immigration Reform and Control Act (IRCA) in 1986 signalled a deterioration in the labour market conditions of Mexican migrants. In this paper, we examine whether and how labour market conditions worsened for Dominicans and Nicaraguans after 1986, and the extent to which these shifts were comparable to those experienced by Mexicans. Our analysis relies on a new source of data that offers comparable data across the three national origins. We estimate multivariate models that capture the effects of demographic attributes, human and social capital, migration‐specific human and social capital, legal status, period of trip, national origin, and other controls on the hourly wages earned by household heads and whether they received cash wages on their last US trip. Models with interaction terms reveal significant pre‐ and post‐1986 wage effects, but few differences in these effects between Mexicans and Dominicans or Nicaraguans. In contrast, group differences appear in the risk of cash receipt of wages. Dominicans and Nicaraguans experienced a greater increase in this risk relative to Mexicans pre‐ and post‐1986. Together, these findings depict a broader, negative impact of IRCA on Latino migrant wages than has been documented elsewhere.     

The Effect of Housework on Wages: A Study of Migrants and Native-Born Individuals in Germany

To increase labour market participation among migrants, an increase in female labour market participation is important, with wages being a significant incentive. In research on the gender wage gap, the consideration of housework has been a milestone. Gender differences in housework time have always been much greater among migrants than among native-born individuals. Based on data obtained from the German Socio-Economic Panel from 1995 to 2017, this study questioned whether housework affects the wages of migrant full-time workers differently than those of their native-born counterparts. To consider the possible endogeneity of housework in the wage equation, the analysis estimated, in addition to an OLS model, a hybrid model to estimate within effects. Significant negative effects of housework on wages resulted for migrant women and native-born individuals. The effects for migrant men were significantly smaller or insignificant, which could not be explained by threshold effects. The greater amount of time spent on housework by migrant women than by native-born women will in general lead to a larger wage decrease due to housework for migrant women than for native-born women. The results further showed that the observed variables explained very little of the migrants’ gender wage gap, in contrast to the gap of native-born individuals. Human capital returns, including education and work experiences, were much lower for migrant women than for native-born women, whereas differences in housework equally contributed to the explained share of the gap for both groups, indicating the greater relevance of housework for migrants’ wage gap.

     

The minimum wage and poverty among full-time workers

V. Conclusions The empirical evidence is strong that minimum wages have had little or no effect on poverty in the U.S. Indeed, the evidence is stronger that minimum wages occasionally increase poverty. It also suggests that the minimum wage does not even lower poverty for the one group that, almost by definition, one would expect to be helped: full-time, year-round workers. While the empirical results suggest minimum wages do not achieve what is ostensibly their primary goal — relieving poverty among the working poor — minimum wages do seem to impose a real cost on society in terms of lost income and output. The empirical evidence on work hours suggests that a $1 increase in the minimum wage, far from being almost costless, could conceivably impose income losses to American workers in the $12-15 billion range per year — an amount equal to the “income deficit” of millions of persons counted as poor by the U.S. Bureau of the Census.     

The relationship between employer‐provided training and the retention of older workers: Evidence from Germany

A substantial portion of Germany's workforce will soon retire, making it difficult for businesses to meet their human capital needs; training older workers may help to manage this demographic transition. The authors therefore examine the relationships between employer‐provided training programmes, wages and retirement among older workers. They find that when establishments offer special training programmes targeted at these workers, women – especially low‐paid women – are less likely to retire, possibly because of consequent wage growth. Their results suggest that such targeted training can indeed play an important role in retaining low‐wage older women and advancing their careers.     

Market hours,household work,child care,and wage rates of partners: an empirical analysis

The aim of this paper is to provide new evidence on the effect of partners’ wages on partners’ allocation of time. Earlier studies concluded that wage rates are an important determinant of partners’ hours of market and non-market work and also that house work may lower married women’s wage rates. However, the bulk of earlier literature in this area failed to account for the endogeneity of wages or the simultaneity of partners’ time allocation choices. Here we take a reduced form approach and specify a ten simultaneous equations model of wage rates, employment and hours of market work, house work and childcare of parents. Non-participants are included in the model. We exploit a rich time use dataset for France to estimate the model. We find that the own wage affects positively own market hours and negatively own house work and childcare hours. The wage of the father has a significantly negative effect on the mother’s market hours while her wage rate has a significantly positive effect on his house work hours.     

A THEORY OF DOWNWARD-RIGID WAGES AND CYCLICAL UNEMPLOYMENT

The theory presented below provides a rationale for downward wage rigidity and consequent cyclical unemployment by modifying the neoclassical assumption of behavioral independence. Such a modification permits an examination of important nonmarket relationships holding between the individual's wage and the wages paid to other people and between perceived equity in wages received and worker productivity—both linkages widely recognized by personnel managers but little explored by economists. The resulting model predicts a pattern of behavior that is consistent with the available evidence on the actual operation of labor markets.     

Determinants of executive compensation: The neoclassical model versus concept formation

Neoclassical economic theory describes employee compensation as being equal to the worker's marginal revenue product. Other explanations of the wage formation process exist. For example, concept formation may enable employees to manipulate organizations and thereby receive higher compensation without changing their physical productivity. This study tests the two wage models on a 1983 data set of the 100 highest paid American chief executive officers. During 1983, the data appears to support the neoclassical economic model; while, the psychological model is not fully rejected. By contrast in an earlier study, for 1981, the psychological model took precedence over the economic model. The study fully reconciles the contrasting findings by introducing `stickiness in wages to explain why concept formation impacts executive wages during stagnant economic periods, and why productivity assumes a greater role in setting executive compensation levels during robust economic periods.     

Effects of positive attitude on earnings: Evidence from the US longitudinal data

To examine whether or not the worker's attitude to life affects his/her earnings, this study estimates wage equations with positive attitude as an explanatory variable under different econometric specifications. The results obtained from both cross-sectional and panel data confirm that positive and optimistic attitude to life influence the worker's wages positively, and that the magnitude of this effect is comparable to or even higher than the individual effects of the standard human capital variables on earnings. The study further demonstrates that in addition to its direct effects, positive attitude also affects earnings indirectly through its effects on schooling.     

Occupations,Human Capital and Skills

Economists have long recognized that occupations can be used as proxies for skills in wage regressions. Yet the potential existence of non-market factors such as discrimination and occupational choice (sorting) on the basis of job attributes that are separate from, but potentially correlated with, wages makes occupations an imperfect control for skills. In this paper, we consider whether inter-occupational wage differentials that are unexplained by measured human capital are indeed due to differences in unmeasured skill. Using the National Compensation Survey, a large, nationally-representative dataset on jobs and ten different components of job requirements, we compare the effects on residual wage variation of including occupation indicators and these skill requirements measures. We find that although these skill requirements vary across 3-digit occupations, occupation indicators decrease wage residuals by far more than can be explained by skill alone. This indicates that “controlling for occupation” does not equate to controlling for only these skill measures, but also for other factors. Additionally, we find that there is considerable within-occupation variation in skill requirements, and that the amount of variation is not constant across skill levels. As a result, including occupation indicators in a wage model introduces heteroskedasticity that must be accounted for. We suggest that caution be applied when using and interpreting occupation indicators as controls in wage regressions.     

Cohabitation Premium in Men’s Earnings: Testing the Joint Human Capital Hypothesis

This paper provides new evidence on the increase in wage earnings for men due to marriage and cohabitation (in the literature, commonly referred to as marital and cohabitation wage premiums for men). Using data for a sample of white men from the National Longitudinal Survey of Youth 1979, the paper shows that even after accounting for potential selection bias there is a cohabitation wage premium for men, albeit smaller than the marriage premium. Our analysis shows that a joint human capital hypothesis (a la Benham in J Polit Econ 82(2, Part 2):S57–71, 1974) with intra-household spillover effects of partner’s education can explain the existence of the wage premiums. Our estimates provide some empirical support for the joint human capital hypothesis.     

WAGE DISCRIMINATION ACROSS ETHNIC GROUPS: EVIDENCE FROM ISRAEL

We investigate wage differentials between ethnic groups in Israel, proposing a new methodology and an illustration based on the latest Israeli census. By using separate wage equations for the various occupations, our methodology allows us to decompose the wage differential into three components: one reflecting human capital differences; one reflecting wage discrimination; and a third indicating occupational segregation. We find that 70 percent of the wage gap is due to segregation, 26 percent to wage discrimination and only 4 percent to human capital differences. Evidence is also found for the existence of duality in the Israeli labor market.     

Do unions always decrease wage dispersion? The case of Brazilian manufacturing

The literature on the impact of unions on wages has established that unionized workers earn a wage premium when compared to their nonunion counterparts and that the dispersion of wages within the union sector is lower than in the nonunion sector. I examine the validity of these findings in the context of a developing country labor market and show that unionism does create a positive wage differential but that wage dispersion is greater in the union sector. These findings are explained by the greater variance in the characteristics of unionized workers, the vulnerability of nonunion workers to market conditions, and the structure of wage bargaining.     

PROFIT SHARING, WAGE BARGAINING, AND UNEMPLOYMENT

The Paper examines the effects of profit sharing in an economy with decentralized wage bargaining. Profit sharing makes workers' income more sensitive to wage changes, and this leads to wage moderation. But economy-wide profit sharing may also improve worker's outside income opportunities, and this strengthens the union's hand in bargaining and tend to raise wages. It turns out that equilibrium unemployment is reduced by profit sharing as long as the elasticity of substitution between labour and capital is less than one, whereas unemployment is increased if the elasticity of substitution is greater than one.     

Labor Market Penalties for Mothers in Italy

We use a large Italian employer-employee matched dataset to study how motherhood affects women’s working career in terms of labor force participation and wages. We confirm that the probability of exiting employment significantly increases for mothers of pre-school children; however, this is mitigated by higher job quality, human capital endowment and childcare accessibility. Most importantly, the availability of part-time jobs reduces their probability of moving out of the labor force. Women not leaving employment after becoming mothers experience lower wages than women with no pre-school child, and there are no signs of this gap closing 5 years after childbirth. Contrary to previous literature, the wage gap penalty emerges only among women working full-time, thanks to the high protection accorded to part-time jobs in Italy.