This paper summarizes the results of nearly a dozen new papers presented at the Sundance Conference on Monopsony in Labor Markets held in October 2018. These papers, to be published as a special issue of the Journal of Human Resources, study various aspects of monopsony and failures of competition in labor markets. It also reports on the new developments in public policies associated with widespread concerns about labor market competition and efforts to ameliorate competitive failures. The conference papers range from studies of the labor supply elasticity individual firms face to studies of local labor market concentration to studies of explicit covenants suppressing labor market competition. New policies range from private and public antitrust litigation to concerns about the effect of mergers and inter-firm agreements on labor market competition. We provide a detailed discussion of the mechanics of the Silicon Valley High Tech Worker conspiracy to suppress competition based on Court documents in the case. Non-compete agreements, which are not enforceable in three states already, have also come under scrutiny.
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.
This paper contains some early results of a longer term empirical
study of a New Jersey arbitration statute that covers police officers and
firefighters. The purpose of this larger study is twofold. First, we hope
to shed some light on how differences in the structure of arbitration
mechanisms affect the size and frequency of negotiated settlements as well
as arbitration outcomes. This is possible in New Jersey because the same
panel of arbitrators administers both final—offer and conventional arbitra-
tion systems simultaneously. Second, it is our view that arbitration
systems share much in common with other judicial and quasi-judicial dispute
settlement mechanisms. It is our hope to shed some light on the more
general issues surrounding the design and evaluation of these systems
through the much needed empirical study of the operation of one such
system. In this paper we report some important results for the interpreta-
tion and evaluation of arbitrator impartiality under the New Jersey sta-
tute. We suspect these results are equally relevant for the interpretation
of other arbitration experiences.
In this paper we set out a simple model of optimal schooling investments that
emphasizes the interaction between schooling choices and income determination; and
estimate it using a fresh sample of data on over 700 identical twins. According to the model,
equally able individuals from the same family should attain the same observed schooling
levels, apart from random errors of optimization or measurement. A variety of direct and
indirect tests provides no evidence against this hypothesis.
We estimate an average return to schooling of 10% for genetically identical
individuals, but estimated returns are slightly higher for less able individuals. Unlike the
results in Ashenfelter and Krueger (1994), which were based on a much smaller sample, we
estimate that schooling is positively correlated with ability level, so that simple cross-section
estimates are slightly upward biased. Taken together these empirical results imply that
more able individuals attain more schooling because they face lower marginal costs of
schooling, not because they obtain higher marginal beneﬁts. The results stand in sharp
contrast to recent claims that genetic factors predetermine education and income, and that
such differences are not amenable to alteration by public or private choices.
In this paper we set out some methods that utilize the longitudinal
structure of earnings of trainees and a comparison group to estimate the
effectiveness of training for the 1976 cohort of CETA trainees. By
fitting a components-of—variance model of earnings to the control group,
and by posing a simple model of program participation, we are able to
predict the entire pre-training and post—training earnings histories
of the trainees. The fit of these predictions to the pre-training
earnings of the CETA participants provides a test of the model of
earnings generation and program participation and a simple check on
the corresponding estimate of the effectiveness of training.
Two assumptions have a strong influence on the magnitude of the
estimated training effects: the timing of the decision to participate
in training, and the presence or absence of individual-specific trends
in earnings. We find considerable evidence that trainee earnings con—
tain permanent, transitory,and trend—like components of selection bias.
We are less successful
in empirically distinguishing between alternative
assumptions on the timing of the participation decision. If earnings
in the year prior to training are the appropriate selection criterion,
then our estimate of the training effect for adult male CETA partici-
pants is about 300 dollars per year. Our estimates for female CETA
participants are larger and less sensitive to alternative models of
This paper presents data on airline mechanics at eight of the
largest U.S. airlines and describes the impact of the 1978 Airline
Deregulation Act on their wage rates and employment levels. The major
findings are: (1) up to 1983, real and relative wage rates of airline
mechanics remained more or less constant across firms and over time; (2)
the independence of mechanics’ wage rates from firm-specific employment
conditions after 1978 is consistent with pre-deregulatory experiences;
(3) deregulation contributed to an existing trend of declining
employment; and (4) deregulation did not bring about any systematic
increase in mechanics’ productivity.