Henry Farber

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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.  

Year of Publication
Date Published
Ashenfelter, O., Card, D., Farber, H., & Ransom, M. R. (2021). Monopsony in the Labor Market New Empirical Results and New Public Policies. Retrieved from http://arks.princeton.edu/ark:/88435/dsp016m311s43b (Original work published October 2021)
Working Papers

The wave of corporate downsizing in the 1990s focused attention on the role
of long-term employment relationships in the United States. Given 1) the importance
that these relationships have played historically, 2) the general view that
long-term jobs are “good jobs,” and 3) the suspicion that long-term employment
relationships are becoming less common, I carry out a systematic investigation
of the extent to which long-term employment relationships have, in fact, become
less common. Specifically, I examine age-specific changes in the length of employment
relationships for different birth cohorts from 1914-1981 using data from
various supplements to the Current Population Survey (CPS) from 1973 through
2006. After controlling for demographic characteristics, I find that mean tenure
and the fraction of workers reporting at least ten and at least twenty years of
tenure have both fallen substantially. This decline is concentrated among men,
while long-term employment relationships have became slightly more common
among women. Mirroring this decline in tenure and long-term employment relationships,
there has been an increase in “churning” (defined as the proportion of
workers in jobs with less than one year of tenure) for males as they enter their
thirties and later. This pattern suggests that more recent cohorts are less likely
than their parents to have a career characterized by a “life-time” job with a single

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Publication Language
Citation Key
Farber, H. (2007). Is the Company Man an Anachronism? Trends in Long Term Employment in the U.S. , 1973-2006. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01ft848q61h (Original work published September 2007)
Working Papers

In this paper, we review the central claim of a growing literature: that is, that democratic
states rarely, if ever, wage war against and are very unlikely to engage in militarized disputes
with other democratic states. We first examine the analytic foundations of this claim. We
conclude that they are tenuous. Next, we examine the evidence.
We find that no statistically significant relationship exists between regime type and the
probability of war before World War I. We also find that the probability of disputes short of war
is significantly higher for democratic-democratic pairs than for other pairs of states in the pre-
1914 period. In both cases, our analysis shows that the hypothesized relationship prevails only
after World War H.
Because of the Cold War that ensued after 1945, our results suggest that the relationship
we observe between democracy and conflict is the product of common interests rather than of
common polities. An analysis of the relationship between regime type and the probability of
alliance formation lends support to this interpretation.

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International Security, Vol. 20, No. 2, Fall, 1995
Gowa, J., & Farber, H. (1994). Polities and Peace. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01tb09j567g (Original work published January 1994)
Working Papers

It is well known that the organizing environment for labor unions in the
U.S. has deteriorated dramatically over a long period of time, contributing to
the sharp decline in the private sector union membership rate and resulting in
many fewer representation elections being held. What is less well known is that,
since the late 1990s, average turnout in the representation elections that are held has dropped substantially. These facts are related. I develop a model of union decision making regarding selection of targets for organizing through the NLRB election process with the clear implication that a deteriorating organizing environment will lead to systematic change in the composition of elections held. The model implies that a deteriorating environment will lead unions not only to contest fewer elections but also to focus on larger potential bargaining units
and on elections where they have a larger probability of winning. A standard
rational-voter model implies that these changes in composition will lead to lower
turnout. I investigate the implications of these models empirically using data on turnout in over 140,000 NLRB certification elections held between 1973 and 2009. The results are consistent with the model and suggest that changes in composition account for about one-fifth of the decline in turnout between 1999 and 2009.

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Citation Key
Farber, H. (2013). Union Organizing Decisions in a Deteriorating Environment: The Composition of Representation Elections and the Decline in Turnout. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01mg74qm23v (Original work published November 2013)
Working Papers

We examine whether the decline in the availability of employer-provided
health insurance is a phenomenon common to all jobs or is concentrated only on certain
jobs. In particular, we investigate the extent to which employers have continued to
provide health insurance on what we term “core” jobs while reducing the availability of
health insurance on “peripheral” jobs. We consider two dimensions on which jobs may
be considered peripheral: if they are new (tenure less than one year) or part-time. We
consider three outcomes whose product is the health insurance coverage rate: 1) the
fraction of worker who are in firms that offer health insurance to at least some workers
(the offer rate); 2) the fraction of workers who are eligible for health insurance,
conditional on being in a firm where it is offered (the eligibility rate); and 3) the fraction
of workers who enroll in health insurance when they are eligible for it (the takeup rate).
We find that declines in own-employer insurance coverage over the 1988-1997 period are
driven primarily by declines in takeup for core workers and declines in eligibility for
peripheral workers. We also look at trends by workers’ education level, and see how
much of the decline in is offset by an increase in coverage through a spouse’s policy. Our
findings are consistent with the view that employers are continuing to make health
insurance available to their core long-term, full-time employees but are restricting access
to health insurance by their peripheral short-term and part-time employees.

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Publication Language
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National Bureau of Economic Research Working Paper No. 6709
Levy, H., & Farber, H. (1998). Recent Trends in Employer-Sponsored Health Insurance Coverage: Are Bad Jobs Getting Worse?. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01q811kj61r (Original work published July 1998)
Working Papers

We develop a dynamic model of learning and wage determination.
Education may convey initial information about ability, but subsequent
performance observations also are informative. Although the role of
schooling in the labor market's inference process declines as performance
observations accumulate, the estimated effect of schooling on the level of
wages is predicted to be independent of labor-market experience. The model
also predicts that time-invariant variables correlated with ability but
unobserved by employers should be increasingly correlated with wages as
experience increases and that wage residuals should be a martingale.
We present evidence from the National Longitudinal Survey of Youth that
is generally consistent with the model's predictions, but a chi-squared
goodness-of-fit test does reject the martingale prediction for wage residuals
even after accounting for classical measurement error. We investigate
alternative specifications and find that a modification of the learning model
that allows for worker ability to evolve as an AR1 process fits the data
quite well.

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Date Published
Publication Language
Citation Key
Quarterly Journal of Economics, 111, November, 1996
Gibbons, R., & Farber, H. (1994). Learning and Wage Dynamics*. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01mc87pq252 (Original work published May 1994)
Working Papers

I use a sample of over fourteen thousand full-time jobs held by workers
in the National Longitudinal Survey of Youth (NLSY) to examine mobility
patterns and to evaluate theories of inter-firm worker mobility. The roles
of both heterogeneity and state dependence in determining mobility rates for
young workers are investigated, and both are found to be very important.
There are three main findings. First, mobility is strongly positively
related to the frequency of job change prior to the start of the Job.
Second, job change in the most recent year prior to the start of the job is
more strongly related than earlier job change to mobility on the current job.
Third, the monthly hazard of job ending is not monotonically decreasing in
tenure as most earlier work using annual data has found, but it increases to
a maximum at three months and declines thereafter. The first two findings
suggest that there is important heterogeneity in mobility but that this
heterogeneity is not fixed over time (workers might mature). The third
finding is consistent with models of heterogeneous match quality that cannot
be observed ex ante. I also find that females hold fewer Jobs per year in
the labor force than males and that this result is driven by a lower exit
rate for females from the first job after entry.

Year of Publication
Date Published
Publication Language
Citation Key
Journal of Labor Economics, October, 1994
Farber, H. (1992). The Analysis of Inter-Firm Worker Mobility. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01qb98mf46z (Original work published October 1992)
Working Papers

In a seminal paper, Camerer, Babcock, Loewenstein, and Thaler (1997) find
that the wage elasticity of daily hours of work New York City (NYC) taxi drivers
is negative and conclude that their labor supply behavior is consistent with target
earning (having reference dependent preferences). I replicate and extend the
CBLT analysis using data from all trips taken in all taxi cabs in NYC for the five
years from 2009-2013. Using the model of expectations-based reference points of
Koszegi and Rabin (2006), I distinguish between anticipated and unanticipated
daily wage variation and present evidence that only a small fraction of wage
variation (about 1/8) is unanticipated so that reference dependence (which is
relevant only in response to unanticipated variation) can, at best, play a limited
role in determining labor supply. The overall pattern in my data is clear: drivers
tend to respond positively to unanticipated as well as anticipated increases in
earnings opportunities. This is consistent with the neoclassical optimizing model
of labor supply and does not support the reference dependent preferences model.
I explore heterogeneity across drivers in their labor supply elasticities and
consider whether new drivers differ from more experienced drivers in their behavior. I find substantial heterogeneity across drivers in their elasticities, but the
estimated elasticities are generally positive and only rarely substantially nega-
tive. I also find that new drivers with smaller elasticities are more likely to exit
the industry while drivers who remain learn quickly to be better optimizers (have
positive labor supply elasticities that grow with experience).

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Citation Key
Farber, H. (2014). Why You Can’t Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01fx719p70r (Original work published October 2014)
Working Papers

I examine changes in the incidence and consequences of job loss between 1981 and
1999 using data from the DisplacedWorkers Surveys (DWS) from 1984-2000. The
overall rate of job loss has a strong counter-cyclical component, but the job loss
rate was higher than might have been expected during the mid-1990's given the
strong labor market during that period. While the job loss rate of more-educated
workers increased, less-educated workers continue to have the highest rates of job
loss overall. Displaced workers have a substantially reduced probability of em-
ployment and an increased probability of part-time employment subsequent to
job loss. The more educated have higher post-displacement employment rates
and are more likely to be employed full-time. The probabilities of employment
and full-time employment among those reemployed subsequent to job loss in-
creased substantially in the late 1990s, suggesting that the strong labor market
has eased the transition of displaced workers. Those re-employed, even full-time
and regardless of education level, suffer significant earnings declines relative to
what they earned before they were displaced. The earnings decline increases
dramatically with tenure on the lost job. Additionally, foregone earnings growth
(the growth in earnings that would have occurred had the workers not been dis-
placed), is an important part of the cost of job loss for re-employed full-time job
losers. There is no evidence of a decline during the tight labor market of the
last seven years in the earnings loss of displaced workers who are reemployed

Year of Publication
Date Published
Publication Language
Citation Key
Farber, H. (2001). Job Loss in the United States, 1981-1999. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01kh04dp694 (Original work published June 2001)
Working Papers