Several important social science literatures hinge on the functional relationship between
neighborhood characteristics and individual outcomes. Although there have been numerous
non-experimental estimates of these relationships, there are serious concerns about their
reliability because individuals self-select into neighborhoods. This paper uses data from HUD’s
Moving to Opportunity (MTO) randomized housing voucher experiment to estimate the
relationship between neighborhood poverty and individual outcomes using experimental
variation. In addition, it assesses the reliability of non-experimental estimates by comparing
them to experimental estimates.
We find that our method for using experimental variation to estimate the relationship
between neighborhood poverty and individual outcomes – instrumenting for neighborhood
poverty with site-by-treatment group interactions – produces precise estimates in models in
which poverty enters linearly. Our estimates of nonlinear and threshold models are not precise
enough to be conclusive, though many of our point estimates suggest little, if any, deviation from
linearity. Our non-experimental estimates are inconsistent with our experimental estimates,
suggesting that non-experimental estimates are not reliable. Moreover, the selection pattern that
reconciles the experimental and non-experimental results is complex, suggesting that common
assumptions about the direction of bias in non-experimental estimates may be incorrect.

This paper examines the effect of technological change and other factors on the relative demand
for workers with different education levels and on the recent growth of U.S. educational wage
differentials. A simple supply-demand framework is used to interpret changes in the relative quantities,
wages, and wage bill shares of workers by education in the aggregate U.S. labor market in each decade
since 1940 and over the 1990 to 1995 period. The results suggest that the relative demand for college
graduates grew more rapidly on average during the past twenty-five years (1970-95) than during the
previous three decades (1940-70). The increased rate of growth of relative demand for college graduates
beginning in the 1970s did not lead to an increase in the college/high school wage differential until the
1980s because the growth in the supply of college graduates increased even more sharply in the 1970s
before returning to historical levels in the 1980s. The acceleration in demand shifts for more-skilled
workers in the 1970s and 1980s relative to the 1960s is entirely accounted for by an increase in within-
industry changes in skill utilization rather than between-industry employment shifts. Industries with large
increases in the rate of skill upgrading in the 1970s and 1980s versus the 1960s are those with greater
growth in employee computer usage, more computer capital per worker, and larger shares of computer
investment as a share of total investment. The results suggest that the spread of computer technology
may "explain" as much as 30 to 50 percent of the increase in the rate of growth of the relative demand
for more-skilled workers since 1970.

The wage structure in the U.S. public sector responded sluggishly to
substantial changes in private sector wages during the 1970s and 1980s.
Despite a large expansion in the college/high school wage differential during
the 1980s in the private sector, the public sector college wage premium
remained fairly stable. Although wage differentials by skill in the public
sector were fairly unresponsive to changes in the private sector, overall pay
levels for state and local government workers were quite sensitive to local
labor market conditions. But federal government regional pay levels appear
unaffected by local economic conditions. Several possible explanations are
considered to account for the rigidity of the government internal wage
structure, including employer size, unionization, and nonprofit status. None
of these factors adequately explains the pay rigidity we observe in the
government.

This paper examines the impact of selected labor market changes on the decline in the unemployment rate in the 1990s. The first section provides an overview of aggregate unemployment trends, inflation, and price and wage Phillips curves. The second section examines the effect of demographic changes on the unemployment rate. The third section examines the impact of the 150 percent increase in the number of men in jail or prison since 1985 on the unemployment rate. The fourth section examines the impact of evolving labor market intermediaries (namely worker profiling by the Unemployment Insurance system and the growth of the temporary help industry) on the unemployment rate. The fifth section explores whether worker bargaining power has become weaker, allowing for low unemployment and only modest wage pressure, because of worker job anxiety, the decline in union membership, or increased competitive pressures. The final section examines the impact of the tightest labor market in a generation on poverty. Our main findings are that changes in the age structure of the labor force, the growth of the male prison population, and, more speculatively, the rise of the temporary help sector, are the main labor market forces behind the low unemployment rate in the late 1990s.

In this paper we provide theoretical and empirical analyses of an
asymmetric-information model of layoffs in which the current employer is
better informed about its workers’ abilities than prospective employers
are. The key feature of the model is that when firms have discretion with
respect to whom to lay off, the market infers that laid-off workers are of
low ability. Since no such negative inference should be attached to
workers displaced in a plant closing, our model predicts that the post-
displacement wages of otherwise observationally equivalent workers will be
higher for those displaced by plant closings than for those displaced by
layoffs. A simple extension of our model predicts that the post-
displacement unemployment duration of otherwise observationally equivalent
workers will be lower for those displaced by plant closings than for those
displaced by layoffs.
In our empirical work, we use data from the Displaced Workers Supplements
in the January l984 and 1986 Current Population Surveys. For our whole
sample, we find that the evidence (with respect to both re-employment wages
and post-displacement unemployment duration) is consistent with the idea
that laid-off workers are viewed less favorably by the market than are
those losing jobs in plant closings. Furthermore, our findings are much
stronger for workers laid-off from jobs where employers have discretion
over whom to lay off, and much weaker for workers laid-off from jobs where
employers have little or no discretion over whom to lay off.

This paper uses two data sets to examine the impact of the potential
duration of unemployment insurance (UI) benefits on the duration of
unemployment and the time pattern of the escape rate from unemployment in the
United States. The first part of the empirical work uses a large sample of
household heads to examine differences in the unemployment spell distributions
of UI recipients and nonrecipients. Sharp increases in the rate of escape
from unemployment both through recalls and new job acceptances are apparent
for UI recipients around the time when benefits are likely to lapse. The
absence of such spikes in the escape rate from unemployment for nonrecipients
strongly suggests that the potential duration of UI benefits affects firm
recall policies and workers’ willingness to start new jobs. The second part
of our empirical work uses accurate administrative data to examine the effects
of the level and length of UI benefits on the escape rate from unemployment of
UI recipients. The results indicate that a one week increase in potential
benefit duration increases the average duration of the unemployment spells of
UI recipients by 0.16 to 0.20 weeks. The estimates also imply that policies
that extend the potential duration of benefits increase the mean duration of
unemployment by substantially more than policies with the same predicted
impact on the total U1 budget that raise the level of benefits while holding
potential duration constant.

We re-examine the evidence presented by Neumark and Wascher (1992) on
the employment effect of the minimum wage. We find three critical flaws in
their analysis. First, the school enrollment variable that plays a pivotal
role in their specifications is derived on the false assumption that
teenagers either work or attend school. Measurement error biases
contaminate all the empirical estimates that use this enrollment variable.
Second, Neumark and Wascher measure the effect of the minimum wage by a
coverage-weighted relative minimum wage index. This variable is negatively
correlated with average teenage wages. Taken literally, their results show
that a rise in the coverage-weighted relative minimum wage lowers teenage
wages. Examining the direct effects of state-specific minimum wages, we
find that increases in state minimum wages raise average teenage wages but
have essentially no employment effects.
Finally, a careful analysis of Neumark and Wascher's data shows that
subminimum wage provisions are rarely used. This casts doubt on their
claim that subminimum provisions blunt any disemployment effect of the
minimum wage.
Neumark and Wascher contend that other minimum wage studies are biased
by failing to control for school enrollment, and by failing to consider the
lagged effects of minimum wages. We re-analyze the experiences of
individual states following the April 1990 increase in the Federal minimum
wage, allowing for a full year lag in the effect of the law and controlling
for changes in (properly measured) enrollment rates. Contrary to their
claims, allowing for lagged effects and controlling for enrollment status
actually strengthens the conclusion that the 1990 increase in the Federal
minimum had no adverse employment effect.

Using data from a longitudinal survey of fast food restaurants in Texas, the authors examine
the impact of recent changes in the federal minimum wage on a low-wage labor market. The authors
draw three main conclusions. first. the survey results indicate that less than 5 percent of fast food
restaurants use the new youth subminimum wage even though the vast majority paid a starting wage
below the new hourly minimum wage immediately before it went into effect. Second, although some
restaurants increased wages by an amount exceeding that necessary to comply with higher minimum
wages in both 1990 and 1991, recent increases in the federal minimum wage have greatly compressed
the distribution of starting wages in the Texas fast food industry. Third, employment increased
relatively in those firms likely to have been most affected by the 1991 minimum wage increase, while
price changes appear to be unrelated to mandated wage changes. These employment and price
changes do not seem consistent with conventional views of the effects of increases in a binding
minimum wage.

This paper examines the short-run impacts of a change in residential neighborhood on the
well-being of low-income families, using evidence from a program in which eligibility for a housing
voucher was determined by random lottery. We examine the experiences of households at the
Boston site of Moving To Opportunity (MTO), a demonstration program in five cities. Families in
high poverty public housing projects applied to MTO and were assigned by lottery to one of three
groups: Experimental — offered mobility counseling and a Section 8 subsidy valid only in a Census
tract with a poverty rate of less than 10 percent; Section 8 Comparison — offered a geographically
unrestricted Section 8 subsidy; or Control — offered no new assistance, but continued to be eligible
for public housing.
Our quantitative analyses of program impacts uses data on 540 families from a baseline
survey at program enrollment, a follow-up survey administered l to 3.5 years after random
assignment, and state administrative data on earnings and welfare receipt. 48 percent of the
Experimental group and 62 percent of the Section 8 Comparison group moved through the MTO
program. One to three years after program entry, families in both treatment groups were more likely
to be residing in neighborhoods with low poverty rates and high education levels than were families
in the Control group. However, while members of the Experimental group were much more likely
to be residing in suburban communities than were those in the Section 8 group, the lower program
take-up rate among the Experimental group resulted in more families remaining in the most
distressed communities. Households in both treatment groups experienced improvements in
multiple measures of well-being relative to the Control group including increased safety, improved
health among household heads, and fewer behavior problems among boys. Experimental group
children were also less likely to be a victim of a personal crime, to be injured, or to experience an
asthma attack. There are no significant impacts of either MTO treatment on the employment,
earnings, or welfare receipt of household heads in the first three years after random assignment.