A Case Study of the Fast Food Industry in New Jersey and Pennsylvania

This paper considers economic issues and trends in the rock and roll industry, broadly
defined. The analysis focuses on concert revenues, the main source of performers’
income. Issues considered include: price measurement; concert price acceleration in the
1990s; the increased concentration of revenue among performers; reasons for the
secondary ticket market; methods for ranking performers; copyright protection; and
technological change.

In 1988, the wage distribution in East Germany was much more
compressed than in West Germany or the U.S. Since the
collapse of Communism and unification with West Germany,
however, the wage structure in eastern Germany has changed
considerably. In particular, wage variation has increased,
the payoff to education has decreased somewhat, industry
differentials have expanded, and the white collar premium has
increased. Although average wage growth has been remarkably
high in eastern Germany, individual variation in wage growth
is similar to typical western levels. The wage structure of
former East Germans who work in western Germany resembles the
wage structure of native West Germans in some respects, but
their experience-earnings profile is flat.

This paper uses a new administrative micro-data set to examine the effect
of a legislated increase in the minimum and maximum workers’ compensation
benefit on the duration of workplace injuries in Minnesota. As a result of
legislation, workers in some earnings groups received higher benefits if they
were injured after the effective date of the benefit increase, while workers
in other earnings groups received the same benefit regardless of when they
were injured. The analysis compares the change in mean log injury duration
for workers who were affected by the benefit increase to that of workers who
were not affected by the benefit increase. The findings indicate that the
duration of injuries increased by 8 percent more for the group of workers that
experienced a 5 percent increase in benefits than for the group of workers
that had no change in their benefit. Additional findings suggest that
employees of self-insured firms who are injured on the job tend to return to
work faster than employees of imperfectly experience rated firms who incur
similar injuries.

This paper provides a long-term follow-up of students who participated in the Tennessee STAR experiment. The Tennessee STAR experiment randomly assigned l 1,600 elementary school
students and their teachers to a small class, regular-size class or regular-size class with a teacher-
aide. The experiment began with the wave of students who entered kindergarten in 1985, and
lasted for four years. After third grade, all students returned to regular-size classes. We analyze
the effect of past attendance in a small class on standardized test scores through the eighth grade,
on whether students took the ACT or SAT college entrance exam, and on how they performed on
the ACT or SAT exam. The results suggest that attending a small class in the early grades is
associated with somewhat higher performance on standardized tests, and an increase in the
likelihood that students take a college-entrance exam, especially among minority students. Most
significantly, being assigned to a small class appears to have narrowed the black-white gap in
college-test taking by 54 percent.

This paper considers the likely impact that European Union (EU) will have on the labor compact.
It is argued that, despite increased economic integration in Europe, countries will still be able to
maintain distinct labor practices if they are willing to bear the cost of those practices. The incidence
of many social protections probably already falls on workers. In addition, it is argued that imperfect
mobility of capital, labor, goods and services will limit the pressure that integration will place on the
labor compact. Evidence is presented suggesting that labor mobility among EU countries has not
increased after the elimination of remaining restrictions on intra-EU labor mobility in 1993.
Moreover, immigration from non-EU countries, which is much larger than intra-EU migration, has
declined since 1993. Evidence is also reviewed suggesting that the demand for social protection
rises when countries are more open, and therefore subject to more severe external shocks. This
finding suggests that increased economic integration and European Monetary Union could lead to
greater demand for social protection. The U.S. experience with state workers’ compensation
insurance programs is offered as an example of enduring differences in labor market protections in
highly integrated regional economies with a common currency.

This paper provides evidence on the behavior of reservation wages over the spell of
unemployment using high‐frequency longitudinal data. Using data from our survey of unemployed workers in New Jersey, where workers were interviewed each week for up to 24 weeks, we find that self‐reported reservation wages decline at a modest rate over the spell of unemployment, with point
estimates ranging from 0.05 to 0.14 percent per week of unemployment. The decline in reservation wages is driven primarily by older individuals and those with personal savings at the start of the survey.
The longitudinal nature of the data also allows us to test the relationship between job acceptance and the reservation wage and offered wage, where the reservation wage is measured from a previous interview to avoid bias due to cognitive dissonance. Job offers are more likely to be accepted if the offered wage exceeds the reservation wage, and the reservation wage has more predictive power in this regard than the pre‐displacement wage, suggesting the reservation wage contains useful information
about workers’ future decisions. In addition, there is a discrete rise in job acceptance when the offered wage exceeds the reservation wage. In comparison to a calibrated job search model, the reservation
wage starts out too high and declines too slowly, on average, suggesting that many workers persistently misjudge their prospects or anchor their reservation wage on their previous wage.

A Case Study of the Fast Food Industry in New Jersey and Pennsylvania

This paper performs a longitudinal comparison of public and
private sector pay. Although not decisive because of small sample
sizes, the results tend to corroborate the conclusions of previous
cross-sectional studies. Specifically, I find that on average
wages of federal workers exceed those of private sector workers by
10% to 25%, while wages of state and local government workers are
roughly equivalent to or slightly less than the wages of private
sector workers. Furthermore, these conclusions hold for a sample
of workers who joined the government after being involuntarily
displaced from their private sector jobs. In addition, a
comparative analysis of the length of job queues suggests that on
average more workers apply for job openings in the federal
government than in the private sector.
Finally, both longitudinal and cross-sectional analyses support
the conclusion that the union wage gap is substantially smaller in
the public sector than in the private sector.

This paper presents evidence showing that individuals’ season of birth is
related to their educational attainment because of the combined effects of
school start age policy and compulsory school attendance laws. In most school
districts, individuals born in the beginning of the year start school at a
slightly older age, and therefore are eligible to drop out of school after
completing fewer years of schooling than individuals born near the end of the
year. Our estimates suggest that as many as 25 percent of potential dropouts
remain in school because of compulsory schooling laws. We estimate the impact
of compulsory schooling on earnings by using quarter of birth as an
instrumental variable for education in an earnings equation. This provides a
valid identification strategy because date of birth is unlikely to be
correlated with omitted earnings determinants. The instrumental variables
estimate of the rate of return to education is remarkably close to the
ordinary least squares estimate, suggesting that there is little ability bias
in conventional estimates of the return to education. The results also imply
that individuals who are compelled to attend school longer than they desire by
compulsory schooling laws reap a substantial return for their extra schooling.