Orley Ashenfelter

First name
Orley
Last name
Ashenfelter
Abstract
Based on hourly wage rates from nearly all McDonald’s restaurants, and prices of the Big Mac sandwich, we find an elasticity of the wage with respect to the minimum wage of 0.7. This elasticity does not differ between affected and unaffected restaurants because many restaurants maintain a constant wage ‘premium’ above the minimum wage. Higher minimum wages are not associated with faster adoption of touch-screen ordering, and there is near-full price pass-through of minimum wages. Minimum wages lead to higher real wages (expressed in Big Macs per hour) that are one fifth lower than the corresponding increases in nominal wages.
Year of Publication
2021
Number
646
Date Published
01/2021
Ashenfelter, O., & Jurajda, Š. (2021). Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald’s Restaurants. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01sb397c318 (Original work published 01/2021AD)
Working Papers
Abstract
Throughout the post—war period, U.S. and Canadian unemployment rates
moved in tandem, but this historical link apparently ended in 1982.
During the past three years, Canadian unemployment rates have been some
three percentage points higher than their U.S. analogues, and this gap
shows no sign of diminishing. This paper is an empirical evaluation of
a variety of explanations for this new unemployment gap.
We first show that the demographic and industrial composition of
the two countries is remarkably similar, so that no simple mechanical
hypothesis explain the basic puzzle. It is also evident that the
increase in Canadian unemployment relative to U.S. unemployment cannot
be fully attributed to output movements. We find that the gap between
actual and predicted Canadian output, based on U.S. output, has fallen
dramatically since 1982 while the unemployment gap has widened. We also
find that unemployment in Canada was 2 to 3 percentage points higher in
1983 and 1984 than predicted by Canadian output.
We have investigated a variety of hypotheses to explain the slow
growth of employment in Canada after 1982. These hypotheses attribute
the slow growth of employment to rigidities in the labor market that
raise employers’ costs and restrict the flow of workers between
sectors. The evidence does not support the notion that the growth in
relative unemployment in Canada is due to differences in the regulation
of the labor market in the two countries. Minimum wage laws and
unemployment benefits are fairly similar in Canada and the U.S., and
neither has changed relative to the other in the last decade.
Unionization rates have increased in Canada relative to U.S. since
1970. Most of this divergence occurred before 1980, however, and does
not seem to have created an unemployment gap prior to 1980. Finally,
the hypothesis that differential real wage rates are a major determinant
of relative employment in the U.S. and Canada is soundly rejected by the
data. Real wage rates have been essentially uncorrelated with employ-
ment movements within each country and between the two countries.
Year of Publication
1986
Number
204
Date Published
02/1986
Publication Language
eng
Citation Key
Economica, 53 Special Issue July 1986 S171 - S195
Ashenfelter, O., & Card, D. (1986). Why Have Unemployment Rates in Canada and the U.S. Diverged?. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01bn999673s (Original work published 02/1986AD)
Working Papers
Abstract
In this paper we show that omitted variables and publication bias lead to severely biased
estimates of the value of a statistical life. Although our empirical results are obtained in
the context of a study of choices about road safety, we suspect that the same issues
plague the estimation of monetary trade-offs regarding safety in other contexts.
Year of Publication
2004
Number
479
Date Published
01/2004
Publication Language
eng
Citation Key
8102
Ashenfelter, O., & Greenstone, M. (2004). Estimating the Value of a Statistical Life: The Importance of Omitted Variables and Publication Bias. Retrieved from http://arks.princeton.edu/ark:/88435/dsp018336h1898 (Original work published 01/2004AD)
Working Papers
Abstract
The goal of this paper is to explore the possibility that the costs
and benefits of legal representation are structured so that each individual
party seeks legal representation in the hope of exploiting the other party,
while knowing full well that failing to do so will open up the possibility
of being exploited. The first part of the paper shows how the structure of
the incentives faced by the parties may be estimated, and the second
describes the results of empirical tests in several different settings.
The empirical results strongly suggest that the parties do face "prisoner's
dilemma" incentives, although no attempt is made to determine whether the
parties respond to these incentives.
Year of Publication
1990
Number
270
Date Published
09/1990
Publication Language
eng
Citation Key
8224
Ashenfelter, O., & Bloom, D. (1990). Lawyers as Agents of the Devil in a Prisoner's Dilemma Game. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01h128nd70z (Original work published 09/1990AD)
Working Papers
Year of Publication
1978
Number
109
Date Published
01/1978
Publication Language
eng
Citation Key
Proceedings of the American Philosophical Society, Vol. 122, No. 3, April 1978
Ashenfelter, O. (1978). What is Involuntary Unemployment?. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01fn106x942 (Original work published 01/1978AD)
Working Papers
Year of Publication
1970
Number
21
Date Published
01/1970
Publication Language
eng
Citation Key
Industrial and Labor Relations Review, Vol. 24, No. 2, January 1971
Ashenfelter, O. (1970). The Effect of Unionization on Wages in the Public Sector: The Case of Firemen. Retrieved from http://arks.princeton.edu/ark:/88435/dsp015x21tf410 (Original work published 01/1970AD)
Working Papers
Year of Publication
1973
Number
42D
Date Published
05/1973
Publication Language
eng
Citation Key
In The Collected Essays of Orley Ashenfelter, Volume 3 edited by Kevin F. Hallock (Cheltenham, U.K. and Lyme, N.H.:Elgar) 1997
Ashenfelter, O., & Ehrenberg, R. (1973). The Demand for Labor in the Public Sector. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01vx021f10m (Original work published 05/1973AD)
Working Papers
Abstract
The available estimates of the wage elasticity of male labor supply in the literature have varied between -0.2 and 0.2, implying that permanent wage increases have relatively small, poorly determined effects on labor supplied. The variation in existing estimates calls for a simple, natural experiment in which men can change their hours of work, and in which wages have been exogenously and permanently changed. We introduce a panel data set of taxi drivers who choose their own hours, and who experienced two exogenous permanent fare increases instituted by the New York City Taxi and Limousine Commission. Our preferred estimate suggests that their elasticity of labor supply is about -0.2.
Year of Publication
2009
Number
551
Date Published
09/2009
Publication Language
eng
Citation Key
8241
Ashenfelter, O., Schaller, B., & Doran, K. (2009). A Shred of Credible Evidence on the Long Run Elasticity of Labor Supply. Retrieved from http://arks.princeton.edu/ark:/88435/dsp019880vq993 (Original work published 09/2009AD)
Working Papers
Abstract
In 1987 the federal government permitted states to raise the speed limit on their rural interstate roads, but not on their urban interstate roads, from 55 mph to 65 mph for the first time in over a decade. Since the states that adopted the higher speed limit must have valued the travel hours they saved more than the fatalities incurred, this experiment provides a way to estimate an upper bound on the public’s willingness to trade off wealth for a change in the probability of death. We find that the 65 mph limit increased speeds by approximately 3.5% (i.e., 2 mph), and increased fatality rates by roughly 35%. In the 21 states that raised the speed limit and for whom we have complete data, the estimates suggest that about 125,000 hours were saved per lost life. Valuing the time saved at the average hourly wage implies that adopting states were willing to accept risks that resulted in a savings of $1.54 million (1997$) per fatality, with a sampling error that might be around one-third this value. Since this estimate is an upper bound of the value of a statistical life (VSL), we set out a simple structural model that is identified by variability across the states in the probability of the adoption of increased speed limits to recover the VSL. The empirical implementation of this model produces estimates of the VSL that are generally smaller than $1.54 million, but these estimates are very imprecise.
Year of Publication
2002
Number
463
Date Published
04/2002
Publication Language
eng
Citation Key
Journal of Political Economy, vol. 112, no. 1, pt. 2, 2004
Ashenfelter, O., & Greenstone, M. (2002). Using Mandated Speed Limits to Measure the Value of a Statistical Life. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01sq87bt61q (Original work published 04/2002AD)
Working Papers