SOFT SKILLS,HARD SKILLS,AND THE BLACK/WHITE WAGE GAP

This study examines the relative importance of soft skills versus hard skills across occupations and its impact on the observed wage gap between Blacks and Whites in the United States. It posits that the Black/White pay gap may vary across occupations that require the use of different types of skills. We classify occupations into hard‐skill intensive versus soft‐skill intensive jobs using the skill content measures of different occupations from the Occupational Information Network (O*Net). We then use data from the National Longitudinal Survey of Youth (NLSY) and Current Population Survey (CPS) to investigate the impact of job skill type on the wage gap. Consistent with our theoretical predictions, we show that this wage gap in white‐collar jobs is smaller for hard‐skills jobs than it is for soft‐skills jobs. Moreover, we demonstrate that, in response to variations in the wage gap across different occupations, Blacks are more likely to self‐select themselves into hard‐skills jobs, ceteris paribus. This shows not only that discrimination against Blacks varies across occupations, but also that such discrimination induces the self‐selection of Blacks into certain occupations. Moreover, this finding highlights the role played by co‐worker/customer discrimination in explaining the racial wage gap in the U.S. labor market. (JEL J15, J31)     

How information technology affects wages: Evidence using internet usage as a proxy for IT skills

Many research studies have found a positive link between information technology (IT) in the work place and wages. Using data from the December, 1998 Current Population Survey, we examine the impact of IT, as proxied by on-the-job Internet usage, on wages. After controlling for selectivity bias, we estimate an average wage gain of 13.5 percent for on-the- job Internet usage. This wage advantage is consistent with estimates from studies based on data collected earlier in the 1990s examining the impact of computers in the workplace. We also tested for differences across industries in the manufacturing sector. We conclude that industries marked by less intensive use of technology offered significantly higher wage premiums than industries characterized by more intensive use of technology. This finding undermines the argument that higher wages go to those working in high-tech firms, not to those with high IT skills. We also find evidence that high-tech firms sort workers by skill level, which is also consistent with earlier studies.     

Native‐Migrant Wage Differential Across Occupations: Evidence from Australia

We investigate wage differential by migrant status across white‐collar and blue‐collar occupations in Australia. Migrants are observed to have a higher wage; this difference, however, does not exist once we control for covariates. The unconditional wage differential varies over wage distribution as well as by occupation. Significant wage differentials are found above the median: positive for white‐collar workers and negative for blue‐collar workers. Using recently developed decomposition methods based on Firpo, Fortin, and Lemieux (2009) we decompose wage differentials across their distribution. Overall, the wage advantage of migrants reflects their superior labour market characteristics, and in particular, their levels of education. We find that English language proficiency plays an important role in wage differences among immigrants from non‐English speaking countries.     

TRADE-INDUCED SKILL POLARIZATION

We study how wage gaps across skills and the skill distribution in an economy respond to trade integration. Using administrative data of Denmark (1995–2011), we find that trade has a negative effect on the wage gap between secondary and primary education and a positive effect on the wage gap between tertiary and secondary education. We also show that trade affects skill distribution and induces skill polarization: trade has a positive effect on both the mean and standard deviation of skills. Wage-gap changes induced by trade shocks explain about 21%–30% of the effect of trade on skills.     

The Effects of First Occupation on Long Term Health Status: Evidence from the Wisconsin Longitudinal Study

In this paper, we use a longitudinal survey that has collected information for 50 years on a large cohort of Wisconsin high school graduates and their siblings to examine the long term impact of early occupational choice on health status. We find evidence that beginning a career in a blue collar occupation is correlated with several measures of poor health outcomes at ages 50–65. Since our dataset includes usually unobserved pre-labor market characteristics, including IQ and childhood health status, we can show that controlling for these variables is important for many results and suggests a high level of selection into occupation based on health and ability. We also provide evidence of gender differentials in the association between first occupation and later health. Then, we replace our basic measure of occupational categories with summary measures of job characteristics and find that employment at “bad jobs” at the beginning of an individual’s career predicts later health outcomes. Finally, we use sibling information in the dataset to show that unmeasured family background factors explain a large share of the effects of occupation on later health. Overall, the evidence points to limited, though heterogeneous, long term effects of health from blue collar employment.     

LABOR SUPPLY ESTIMATION BIASES FROM DISREGARDING NONWAGE BENEFITS

Labor supply models and research underpinned by labor supply decisions often assume that workers' choices are functions of wage and wage offers. However, the literature shows evidence that such decisions at least partly depend on nonwage benefits encompassed in jobs and occupations. In this paper, I develop and estimate a stochastic dynamic model of occupation and job choice, where nonwage benefits are directly incorporated into the decision alongside wages (a full model). Nested within the full model is a wage model, which represents the common practice in the literature of basing selection solely on wages and disregarding nonwage benefits. I separately estimate the full model and the nested wage model to compare the implications (biases) of omitting nonwage benefits. I compare the two models' estimates of elasticities and an inequality reduction intervention policy. I find that disregarding nonwage benefits generally causes biases. There are cases when the two models predict very similar outcomes and have close estimates, such as in occupation‐specific elasticities and job transition elasticities. But these special cases are products of canceling biases. In most cases, ignoring nonwage benefits will bias estimates by overestimating the importance of wage in the selection process and by disregarding changes in relative prices between wage and nonwage benefits. (JEL J20, J32, D91)     

Does High School Employment Develop Marketable Skills?

While decades of academic research have consistently demonstrated a positive relationship between high school employment and adult earnings, the literature is empirically silent in regards to why this association exists. This study uses data from the National Longitudinal Survey of Youth 1997 (NLSY97) to examine the hypothesis that high school employment develops “marketable skills” in the form of occupation-specific human capital. By analyzing wage variation attributable to the commonality of skill portfolios across respondents’ high school and adult (age 20 and 23) occupations, this study fails to find consistent evidence that the types of skills utilized in high school employment are correlated with adult earnings. Within the framework of the human capital model, this would suggest that the positive, post-school economic gains of in-school work are largely attributable to increases in general human capital (e.g., workplace socialization, character building).     

Intangibles and the Gender Wage Gap: An Analysis of Gender Wage Gaps Across Occupations in the Finnish Private Sector

The paper compares the gender wage differentials of two occupation groups—innovation and non-innovation workers—separately for manufacturing and services using Finnish private-sector data. We apply a decomposition method based on unconditional quantile regression techniques to identify key factors underlying the gender wage gaps observed along the whole wage distribution, as well as changes in these wage gaps between 2002 and 2009. This more nuanced approach provides important new insights. We find conspicuous differences in average gender wage gaps, in gender wage-gap profiles across the wage distribution and also in the evolution of gender wage differentials over time between sectors and occupation groups. Our results imply that sector-specific factors are a more important driving force behind these differences in patterns and trends of gender wage gaps, although occupation-specific factors cannot be totally dismissed. Hence, comparisons of gender wage gaps, including their underlying sources, of innovation and non-innovation workers for too broadly defined segments of the labour market may result in misleading conclusions concerning the factual role of intangible capital.     

Regional wages and subjective measures of employment opportunities

We utilise a rich set of regional labour market variables to explain regional variation in Norwegian manufacturing wages. In particular, regional indicators of labour market conditions are computed from survey data in which respondents are asked to evaluate local employment opportunities. We find that average reported satisfaction with local job prospects and other survey-based indicators perform better in regional wage equations than traditional labour market variables, including the regional unemployment rate. Our results suggest that subjective measures of employment opportunities provide useful information about wage pressure.     

Cognitive skills and Black–White wages in the United States labor market

Using data from the National Longitudinal Survey of Youth (NLSY), this study analyzes the effects of cognitive skills on the wages of Whites and African Americans in white and blue collar occupations. The results show that cognitive skills, net of education, are important predictors of wages across all occupations. Mathematics skills, in particular contribute to significant wage premiums for workers in white and blue-collar occupations, with the exception of Blacks in blue-collar professions. English skills lead to significant wage premiums only for Blacks in blue-collar occupations. While the incorporation of cognitive skills narrows the Black-White wage gap considerably, the effects of skills on the wages of Blacks and Whites are far from uniform. The results also show that despite using detailed controls for the quality of education, an extra year of schooling yields the highest wage premium for Whites in all occupations.     

OCCUPATIONAL SEX SEGREGATION AND ECONOMIC INEQUALITY UNDER SOCIALISM:

An increase in scholarly attention to income differences between sex-typed occupations has generated a burgeoning literature. Typically-female occupations require preemployment education, not prolonged on-the-job training; receive less renumeration for work autonomy than male-typed occupations; and are concentrated in economically disadvantaged industrial sectors. However, these issues have received only preliminary consideration regarding noncapitalist societies and research has lacked an integrative, analytical focus. This study compares the earnings effects of education, type of work, and industrial sector between female- and male-dominated occupations in socialist Yugoslavia. As expected, average earnings are significantly higher in male than in female occupations. The results from the earnings regressions reveal a higher explained variance and larger economic returns to education among female- dominated occupations, especially in the managerial and professional strata. A decomposition of the earnings difference between sex-typed occupations suggests a variation in the source of inequality across skill strata. In the discussion, a comparison of capitalism and socialism reveals that while some aspects of the earnings attainment process may be unique to socialism, others are not.     

Testing Fair Wage Theory

Fairness considerations often are invoked to explain wage differences that appear unrelated to worker characteristics or job conditions, but non-experimental tests of fair wage models are rare because market data rarely permit researchers to measure individual workers’ productivity and its value. We use data from the baseball labor market to address this problem, and find no support for fair wage theory. We do find, however, that fairness premia can be illusory: Wages appear to incorporate fairness premia in regressions that control for variation in individuals’ physical output, but such premia evaporate when the value of that output is held constant.

The Within‐Job Motherhood Wage Penalty in Norway, 1979–1996

The motherhood wage penalty is a substantial obstacle to progress in gender equality at work. Using matched employer–employee data from Norway (1979–1996, N = 236,857 individuals, N = 1,027,462 individual‐years), a country with public policies that promote combining family and career, we investigate (a) whether the penalty arises from differential pay by employers or from the sorting of employees on occupations and establishments and (b) changes in the penalties during a period with major changes in family policies. We find that (a) the penalty to motherhood was mostly due to sorting on occupations and occupation‐establishment units (mothers and nonmothers working in the same occupation and establishment received similar pay), and (b) the wage penalties to motherhood declined substantially over the 18‐year period.     

Firm Ownership and Rent Sharing

In this paper we analyse—theoretically and empirically—how the degree of private versus public ownership of firms affects the degree of rent sharing between firms and their workers. Using a particularly rich linked employer-employee dataset from Portugal, covering a large number of corporate ownership changes across a wide spectrum of economic sectors over more than 20 years, we find that rent sharing is significantly higher in firms with a larger share of private ownership. Estimates from our most preferred empirical specification suggest that an increase in the private ownership share of 10 percentage points increases (on average) the rent-sharing elasticity by 0.0002. Based on a theoretical analysis that incorporates union-firm wage bargaining and efficiency wage effects within the same modelling framework, this result cannot be explained by private firms being more profit oriented than public ones. However, the result is consistent with a scenario whereby privatisation leads to less job security for workers, implying stronger efficiency wage effects.     

How Does Occupational Access for Older Workers Differ by Education?

To assess the employment opportunities of older job-changers in the years prior to retirement, this study examines the how the breadth of occupations in which they find employment narrows as they age past their prime working years and how this differs by gender and educational attainment. The results indicate that workers who change jobs in their early 50s find employment in a reasonably similar set of occupations as prime-age workers, with opportunities narrowing at older ages. They also indicate that job opportunities broadened significantly for better-educated older workers since the late 1990s. While job opportunities now narrow significantly for less-educated men in their late 50s, this narrowing primarily occurs in the early 60s for women and better-educated men. In contrast to previous research, the study finds that employer policies that emphasize hiring from within are less important barriers to the hiring of older job-seekers. The study also finds that the narrowing of job opportunities is associated with a general decline in job quality as measured by median occupational earnings, a decline associated with differences in occupational skill requirements and the underlying economic environment. These results suggest that older hiring is not as limited to a select few occupations as it had been in previous decades, and that policy reforms aimed at increasing opportunities and improving labor market fluidity might best be served if they focused on less-educated men.     

On the Labour Market Progress of Polish Accession Workers in South‐East England

The enlargement of the European Union (EU) in May 2004 produced a very significant wave of immigration to the United Kingdom that is likely to continue to impact its labour market in forthcoming years. Polish migrants were by far the largest cohort of the new entrants. This paper complements previous work that has begun to establish the characteristics and labour market performance of migrants from the new member states who have entered the United Kingdom. This paper uses a unique micro‐level data base to investigate the labour market evolution of Polish migrants in the UK labour market. We find that in the first UK job returns to human capital were negligible. However, for the current job an extra year of education increases the weekly gross wage by 3.2 per cent. There is evidence of a gender differential in pay in both jobs and that older workers are paid more than their younger counterparts but this effect becomes insignificant in the current job. We find that hours worked is a significant factor in wage determination. However, the influence of hours worked on wages declined by approximately 38 per cent between the first and current job. Results from multinomial logit models suggest that over‐time there is some “match” between the occupational groupings that these workers were attached to in Poland and the United Kingdom. We also find evidence that the use of employment agencies by some of these workers increases the likelihood of employment in skilled manual and non‐manual occupations. Workers who have had supervisory responsibility in the United Kingdom are more likely to be in professional or intermediate occupations.     

How far merit selection? Social stratification and the labour market1

The question of how societies allocate occupational positions and subsequent rewards has long been of interest to sociologists. According to one influential theory, the needs of modern industrial societies and economies demand that high-level and functionally important occupational positions are allocated according to meritocratic principles. I argue that, ultimately, employers get the final say about which characteristics are rewarded in the labour market. In order to examine which skills and attributes are required by employers for particular occupations I analyse data drawn from a content analysis of c.5000 British newspaper job advertisements. The results show that both merit and non-merit characteristics are requested by employers in job advertisements, even for occupations falling within the higher classes. I also find evidence that employers have similar requirements for similar occupations, cross-cutting class boundaries.     

Using occupational structure to measure employability with an application to the Brazilian labor market

We propose measuring individual employability as a weighted average across occupations of a worker’s predicted wage for each occupation. Weights are given by the individual occupational probability distribution. Under this measure, a worker is more employable than another if she has a greater chance to obtain a better paid occupation. After normalization, expected employability corresponds to the population correlation between occupational predicted wages and the chance to obtain employment in these occupations and serves as a measure of the allocative efficiency of labor market. We apply the methodology to Brazil and found that employability increased and became less unequally distributed from 2002 to 2011. We used a decomposition method to investigate the causes of these changes. Although average normalized employability is weakly positive, it has increased for the period, which suggests that there is room for efficiency gains in the allocation of workers to occupations in the Brazilian labor market.     

Job displacement effects of Canadian immigrants by country of origin and occupation

"Some previous Canadian studies have shown that considering the labor market as a whole and also pooling all immigrants as a group, immigrants do not have any job displacement effects on the Canadian born. This study presents some new evidence. It disaggregates immigrants by country of origin and by occupation groups and provides an analysis of job displacement effects of immigrants on the native-born Canadians by these dimensions. The study finds that (1) U.S. immigrants and the Canadians are substitutes [for] competing groups in the labor market and the effect is quite significant; (2) Canadians and Europeans are competing groups in certain occupations, while they have complementary skills in others; and (3) immigrants from the Third World and the Canadians are slightly competing groups in certain occupations."     

The class‐origin wage gap: heterogeneity in education and variations across market segments

This paper uses unique population‐level matched employer–employee data on monthly wages to analyse class‐origin wage gaps in the Swedish labour market. Education is the primary mediator of class origin advantages in the labour market, but mobility research often only considers the vertical dimension of education. When one uses an unusually detailed measure of education in a horizontal dimension, the wage gap between individuals of advantaged and disadvantaged class origin is found to be substantial (4–5 per cent), yet considerably smaller than when measures are used which only control for level of education and field of study. This is also the case for models with class or occupation as outcome. The class‐origin wage gap varies considerably across labour market segments, such as those defined by educational levels, fields of education, industries and occupations in both seemingly unsystematic and conspicuous ways. The gap is small in the public sector, suggesting that bureaucracy may act as a leveller.