We use a field experiment to study how workers value alternative work arrangements. During the
application process to staff a national call center we randomly offered applicants choices between traditional
M-F 9 am – 5 pm office positions and alternatives. These alternatives include flexible scheduling,
working from home, and positions that give the employer discretion over scheduling. We randomly
varied the wage difference between the traditional option and the alternative, allowing us to estimate
the entire distribution of willingness to pay (WTP) for these alternatives. We validate our results using
a nationally-representative survey. The great majority of workers are not willing to pay for flexible
scheduling relative to a traditional schedule: either the ability to choose the days and times of work or
the number of hours they work. However, the average worker is willing to give up 20% of wages to
avoid a schedule set by an employer on a week’s notice. This largely represents workers’ aversion to
evening and weekend work, not scheduling unpredictability. Traditional M-F 9 am – 5 pm schedules are
preferred by most jobseekers. Despite the fact that the average worker isn’t willing to pay for scheduling
flexibility, a tail of workers with high WTP allows for sizable compensating differentials. Of the worker friendly
options we test, workers are willing to pay the most (8% of wages) for the option of working
from home. Women, particularly those with young children, have higher WTP for work from home and
to avoid employer scheduling discretion. They are slightly more likely to be in jobs with these amenities,
but the differences are not large enough to explain any wage gaps.
We study the time-series properties of firm effects in the two-way fixed effects model popularized by Abowd, Kramarz, and Margolis (1999) (AKM) using two approaches. The first—the rolling AKM approach (R-AKM)—estimates AKM models separately for successive two-year intervals. The second—the time-varying AKM approach (TV-AKM)—is an extension of the original AKM model that allows for unrestricted interactions of year and firm indicators. We apply to both approaches the leave-out methodology of Kline, Saggio and Sølvsten (2020) to correct for biases in the estimated variance components. Using administrative wage records from Washington State, we find, first, that firm effects for hourly wage rates are highly persistent with an autocorrelation coefficient between firm effects in 2002 and 2014 of 0.74. Second, the R-AKM approach reveals cyclicality in firm effects and worker-firm sorting. During the Great Recession the variability in firm effects increased, while the degree of worker-firm sorting decreased. Third, misspecification of standard AKM models resulting from restricting firm effects to be fixed over time appears to be minimal.
We estimate the magnitudes of reduced earnings, work hours, and wage rates of workers displaced during the Great Recession using linked employer-employee panel data from Washington State. Displaced workers’ earnings losses occurred mainly because hourly wage rates dropped at the time of displacement and recovered sluggishly. Lost employer-specific premiums explain only 17 percent of these losses. Fully 70 percent of displaced workers moved to employers paying the same or higher wage premiums than the displacing employers, but these workers nevertheless suffered substantial wage rate losses. Loss of valuable specific worker employer
matches explain more than half of the wage losses.
We examine the impact of public sector salary disclosure laws on university faculty salaries in Canada. The laws, which enable public access to the salaries of individual faculty if they exceed specified thresholds, were introduced in different provinces at different times. Using detailed administrative data covering the majority of faculty in Canada, and an event-study research design that exploits within-province variation in exposure to the policy across institutions and academic departments, we find robust evidence that that the laws reduced the gender pay gap between men and women by approximately 30 percent. There is suggestive evidence that higher female salaries contributed to the narrowing of the gender gap. The reduction in the gender gap is
primarily in universities where faculty are unionized.
Using newly digitized data from the Federal Trade Commission, I examine the evolution of executive compensation during the Great Depression, before and after mandated pay disclosure in 1934. I find that disclosure did not achieve the intended effect of broadly lowering CEO compensation. If anything, and in spite of popular outrage against compensation practices, average CEO compensation increased following disclosure relative to the upper quantiles of the non-CEO labor income distribution. Pay disclosure coincided with compression of the CEO earnings distribution. Following disclosure there was a pronounced drop in the residual variance of earnings—computed with size and industry controls—that accounts for almost the entire drop in the unconditional variance. The evidence suggests an upward “ratcheting” effect whereby lower paid CEOs given the size and industry of their firm experienced relative gains while well paid CEOs conditional on these characteristics were not penalized. The exception is at the extreme right tail of the CEO distribution, which fell precipitously, suggesting that disclosure may only have restrained only the most salient and visible wages.
In a classic paper, Schelling (1971) showed that extreme segregation can arise from
social interactions in preferences: once the minority share in a neighborhood exceeds a
"tipping point", all the whites leave. We use regression discontinuity methods and
Census tract data from the past four decades to test for the presence of discrete nonlinearities
in the dynamics of neighborhood racial composition. White mobility patterns
in most cities exhibit tipping-like behavior, with a range of tipping points centered
around a 13% minority share. These patterns are very pronounced during the 1970s
and 1980s, and diminish but do not disappear in the 1990s. We find similar dynamic
patterns in neighborhoods and in schools. A variety of specification checks rule out the
possibility that the discontinuity in the initial minority share is driven by income
stratification or other factors, and underscore the importance of white preferences over
neighbors ' race and ethnicity in the dynamic process of segregation. Finally, we relate
the location of the estimated tipping points in different cities to measures of the racial
attitudes of whites, and find that cities with more racially tolerant whites have higher
Alternative work arrangements, defined both by working conditions and by workers’ relationship to their employers, are heterogeneous and common in the U.S. This article reviews the literature on workers’ preferences over these arrangements, inputs to firms’ decision to offer them, and the impact of regulation. It also highlights several descriptive facts. Work arrangements have been relatively stable over the past 20 years, work conditions vary substantially with education, and jobs with schedule or location flexibility are less family-friendly on average. This last fact helps explain why women are not more likely to have schedule or location flexibility and seem to largely reduce hours to get more family-friendly arrangements.
A great deal of urban policy depends on the possibility of creating stable, economically and
racially mixed neighborhoods. Many social interaction models- including the seminal
Schelling (1971) model- have the feature that the only stable equilibria are fully segregated.
These models suggest that if home-buyers have preferences over their neighborhoods' racial
composition, a neighborhood with mixed racial composition is inherently unstable, in the
sense that a small change in the composition sets off a dynamic process that converges to
either 0% or 100% minority share. Card, Mas, and Rothstein (2008) outline an alternative
"one-sided" tipping model in which neighborhoods with a minority share below a critical
threshold are potentially stable, but those that exceed the threshold rapidly shift to 100%
minority composition. In this paper we examine the racial dynamics of Census tracts in
major metropolitan areas over the period from 1970 to 2000, focusing on the question of
whether tipping is "two-sided" or "one-sided". The evidence suggests that tipping behavior
is one-sided, and that neighborhoods with minority shares below the tipping point attract
both white and minority residents.
Although economists acknowledge that various indicators of educational attainment (e.g., highest
grade completed, credentials earned) might serve as signals of a worker’s productivity, the practical
importance of education-based signaling is not clear. In this paper we estimate the signaling value
of a high school diploma, the most commonly held credential in the U.S. To do so, we compare the
earnings of workers that barely passed and barely failed high school exit exams, standardized tests
that, in some states, students must pass to earn a high school diploma. Since these groups should, on
average, look the same to firms (the only difference being that "barely passers" have a diploma while
"barely failers" do not), this earnings comparison should identify the signaling value of the diploma.
Using linked administrative data on earnings and education from two states that use high school exit
exams (Florida and Texas), we estimate that a diploma has little effect on earnings. For both states, we
can reject that individuals with a diploma earn eight percent more than otherwise-identical individuals
without one; combining the state-specific estimates, we can reject signaling values larger than five or six
percent. While these confidence intervals include economically important signaling values, they exclude
both the raw earnings difference between workers with and without a diploma and the regression-adjusted
estimates reported in the previous literature.