Henry Farber

First name
Henry
Last name
Farber
Author
Abstract

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
full-time.

Year of Publication
2001
Number
453
Date Published
06/2001
Publication Language
eng
Citation Key
7906
Farber, H. (2001). Job Loss in the United States, 1981-1999. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01kh04dp694 (Original work published 06/2001AD)
Working Papers
Abstract

This paper reports the results of a systematic experimental comparison
of the effect of alternative arbitration systems on dispute rates. The key to
our experimental design is the use of a common underlying distribution of
arbitrator "fair" awards in the different arbitration systems. This allows
us to compare dispute rates across different arbitration procedures where we
hold fixed the amount of objective underlying uncertainty about the
arbitration awards.
There are three main findings. First, dispute rates are inversely
related to the monetary costs of disputes. Dispute rates were much lower in
cases where arbitration was not available so that the entire pie was lost in
the event of a dispute. This confirms the empirical importance of the
so-called "chilling effect" on bargaining that has been conjectured is
produced by the adoption of arbitration systems. Second, the dispute rate in
a final—offer arbitration system is at least as high as the dispute rate in a
comparable conventional arbitration system. Contrary to the usual argument,
we find no evidence that final-offer arbitration eliminates the chilling
effect. Third, dispute rates are inversely related to the uncertainty costs
of disputes. Dispute rates were lower in conventional arbitration treatments
where the variance of the arbitration award was higher and imposed greater
costs on risk-averse negotiators. Our results can also be interpreted as
providing tentative evidence that the negotiators were risk—averse on
average. Finally, we find general agreement between the dispute rates in our
experiment and dispute rates found in the field in comparable settings.

Year of Publication
1990
Number
267
Date Published
07/1990
Publication Language
eng
Citation Key
Econometrica ,Vol 60, No. 6, November 1992
Ashenfelter, O., Currie, J., Spiegel, M., & Farber, H. (1990). An Experimental Comparison of Dispute Rates in Alternative Arbitration Systems. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01fx719m46n (Original work published 07/1990AD)
Working Papers
Abstract

Unemployment Insurance benefit durations were extended during the Great Recession, reaching 99 weeks for most recipients. The extensions were rolled back and eventually terminated by the end of 2013. Using matched CPS data from 2008-2014, we estimate the effect of extended benefits on unemployment exits separately during the earlier period of benefit expansion and the later period of
rollback. In both periods, we find little or no effect on job-finnding but a reduction
in labor force exits due to benefit availability. We estimate that the rollbacks
reduced the labor force participation rate by about 0.1 percentage point in early
2014.

Year of Publication
2015
Number
586
Date Published
01/2015
Publication Language
eng
Citation Key
9137
Farber, H., Valletta, R., & Rothstein, J. (2015). The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out. Retrieved from http://arks.princeton.edu/ark:/88435/dsp019c67wq05f (Original work published 01/2015AD)
Working Papers
Author
Abstract

It is a common observation that many individuals vote despite the fact that, in
elections with even a moderate number of voters, the probability their vote will be
pivotal is quite small. The theoretical solution of positing that individuals receive
utility from the act of voting itself \explains" why individuals vote, but it leaves
open the question of whether or not there is a signi cant margin of individuals
who consider the e ect of their vote on the outcome in deciding whether or not
to vote.
I develop a rational choice model of voting in union representation elections
(government supervised secret ballot elections, generally held at the workplace,
on the question of whether the workers would like to be represented by a union).
These elections provide a particularly good laboratory to study voter behavior
because many of the elections have su ciently few eligible voters that individuals
can have a substantial probability of being pivotal. I implement this model
empirically using data on over 75,000 of these elections held from 1972-2009.
The results suggest that most individuals (over 80 percent) vote in these elec-
tions independent of consideration of the likelihood that they will be pivotal.
Among the remainder, it appears that 1) the likelihood of voting falls with elec-
tion size, 2) the likelihood of voting increases with the expected closeness of the
election outcome, and 3) the marginal e ect of closeness on the likelihood of
voting increases in magnitude with election size. While the rst two ndings are
consistent with the standard rational choice model, the third is not. The results
suggest that, while these individuals consider rst-order variation in the proba-
bility that they will be pivotal, they do not carry out a complete calculation of
the probability of being pivotal.

Year of Publication
2009
Number
552
Date Published
10/2009
Publication Language
eng
Citation Key
7921
Farber, H. (2009). Rational Choice and Voter Turnout: Evidence from Union Representation Elections. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01n870zq81j (Original work published 10/2009AD)
Working Papers
Abstract

We develop a model of the plaintiff’s decision to file a law suit that has
implications for how differences between the federal government and private litigants and
litigation translate into differences in trial rates and plaintiff win rates at trial. Our case
selection model generates a set of predictions for relative trial rates and plaintiff win rates
depending on the type of case and whether the government is defendant or plaintiff. In
order to test the model, we use data on about 350,000 cases filed in federal district court
between 1979 and 1997 in the areas of personal injury and job discrimination where the
federal government and private parties work under roughly similar legal rules. We find
broad support for the predictions of the model.

Year of Publication
1999
Number
418
Date Published
07/1999
Publication Language
eng
Citation Key
8123
Farber, H., & Eisenberg, T. (1999). The Government As Litigant: Further Tests of the Case Selection Model. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01jd472w450 (Original work published 07/1999AD)
Working Papers
Author
Abstract

I examine changes in the incidence and consequences of job loss by reported
cause between 1981 and 1993 using data from Displaced Workers Surveys (DWS), con-
ducted as part of the Current Population Survey (CPS) in even years since 1984. The
overall rate of job loss is up somewhat in the 1990’s. The increase in job loss is larger
for older and more educated workers, but younger and less-educated workers continue to
have the highest rates of job loss. The rate of job loss due to plant closings has been fairly
constant over time while the rate of job loss due to ” slack work” moves counter-cyclically.
The most substantial changes are increases in the last several years in rates of job loss
due to ”position or shift abolished” and for other (unspecified) reasons. These changes in
composition are larger among more educated workers. Next I examine the consequences of
displacement for several post-displacement labor market outcomes, including the probabil-
ity of employment, full-time/part-time status, earnings, job stability, and self-employment
status. The consequences of job loss, which have always been substantial, do not appear
to have changed systematically over time. More educated workers suffer less economic loss
relative to income due to displacement than do the less educated. The more educated
have higher post-displacement employment rates, are more likely to be employed full-time,
have more stable employment histories, and suffer smaller proportional earnings losses on
average. Self-employment appears to be an important response to displacement, and older
workers and the more educated are more likely to turn to self-employment. Workers dis-
placed due to slack work are substantially less likely to be reemployed, and, among those
reemployed, are more likely to be working part-time relative to workers displaced for other
reasons.

Year of Publication
1996
Number
360
Date Published
03/1996
Publication Language
eng
Citation Key
8280
Farber, H. (1996). The Changing Face of Job Loss in the United States, 1981-1993. Retrieved from http://arks.princeton.edu/ark:/88435/dsp018623hx74x (Original work published 03/1996AD)
Working Papers
Author
Abstract

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. Additionally, using a discrete choice stopping model, the probability of a shift ending is strongly positively related to hours worked but at best weakly related to income earned. These results are consistent with the neoclassical optimizing model of labor supply and suggest that consideration of gain-loss utility and reference dependence is not an important factor in these labor supply decisions.I explore heterogeneity across drivers in their labor supply elasticities and consider whether new drivers differ from more experienced drivers in their be-havior. 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).

Year of Publication
2015
Number
583a
Date Published
02/2015
Publication Language
eng
Citation Key
9185
Farber, H. (2015). 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/dsp014b29b826g (Original work published 02/2015AD)
Working Papers
Abstract

In negotiations where disputes are resolved via adjudication (as in the courts or
arbitration), beliefs about a potential adjudicated outcome are central in determining the
bargaining environment. The present research investigates how negotiators (trial attorneys and
students) involved in a hypothetical product liability case use information about adjudicated
outcomes regarding the amount of damages in previous similar cases in forming beliefs about
their own case. In particular, we examine how the parameters of the distribution of previous
outcomes (variance and range) contribute to the differences between the expected outcome and
the parties’ reservation values. We find that the range of earlier outcomes has no significant
effect on subjects’ reservation values but that the variance does have a systematic effect,
particularly on plaintiffs’ behavior.
A pair of separate findings may have important implications for the negotiation process.
First, whether or not subjects exhibited risk averse behavior depended on the role to which they
were assigned in a way that is consistent with the risk attitudes and framing notion implied by
Kahneman and Tversky’s prospect theory (1979). Second, only subjects assigned to roles for
which they had extensive experience exhibited over-optimism about the likely outcome.

Year of Publication
1994
Number
325
Date Published
01/1994
Publication Language
eng
Citation Key
International Review of Law and Economics, Vol. 15, 1995, pp. 289-303
Fobian, C., Shafir, E., Babcock, L., & Farber, H. (1994). Forming Beliefs about Adjudicated Outcomes: Risk Attitudes, Uncertainty, and Reservation Values. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01q237hr93q (Original work published 01/1994AD)
Working Papers
Year of Publication
1978
Number
112
Date Published
05/1978
Publication Language
eng
Citation Key
Journal of Political Economy, Vol. 88, No. 2, 1980
Saks, D., & Farber, H. (1978). Why Workers Want Unions: The Role of Relative Wages and Job Characteristics. Retrieved from http://arks.princeton.edu/ark:/88435/dsp010g354f21c (Original work published 05/1978AD)
Working Papers