Joseph Altonji

First name
Joseph
Last name
Altonji
Abstract

This paper tests the rational expectations lifecycle model of consumption
against (i) a simple Keynesian model and (ii) the rational expectations
lifecycle model with imperfect capital markets. The tests are based upon the
relative responsiveness of consumption to income changes which can be
predicted from past information and income changes which cannot be predicted.
Problems caused by measurement error in the income changes are circumvented by
using the innovations from a vector autoregression of the measures of the
determinants of income to form a noisy instrument for the unanticipated change
in incomfi and using the lagged values of the measures of the income
determinants to form an instrument for the anticipated income change. We show
that the Keynesian model implies that the regression coefficients relating the
change in consumption to the instruments for the anticipated and unanticipated
components of the income change should be equal. The lifecycle model (with
perfect capital markets) implies that only the instrument for the
unanticipated component should affect consumption. The empirical results
support the lifecycle model. In addition, we incorporate capital market
imperfections into our empirical formulation of the lifecycle model by
assuming that the marginal interest rate at a point in time is a
differentiable, concave function of net assets. This leads to a test for
capital market imperfections based upon whether consumption responds
differently to positive and negative predictable changes in income. Our
results are inconclusive.

Year of Publication
1985
Number
186
Date Published
04/1985
Publication Language
eng
Citation Key
Quarterly Journal of Economics, vol. 102, no.2, May 1987
Siow, A., & Altonji, J. (1985). Testing the Response of Consumption to Income Changes. Retrieved from http://arks.princeton.edu/ark:/88435/dsp0108612n549 (Original work published April 1985)
Working Papers
Abstract

If hours can be freely varied within jobs, the effect on hours of
changes in preferences for those who do change jobs should be similar to
the effect on hours for those who do not change jobs. Conversely, if
employers restrict hours choices, then changes in preferences should affect
hours more strongly when the job changes than when it does not change. For a
sample of married women we find that changes in many of the labor supply
preference variables produce much larger effects on hours when the job
changes.

Year of Publication
1990
Number
271
Date Published
09/1990
Publication Language
eng
Citation Key
The Journal of Human Resources, Vol. 27, No. 2, Spring, 1992
Paxson, C., & Altonji, J. (1990). Labor Supply, Hours Constraints and Job Mobility. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01ns0646039 (Original work published September 1990)
Working Papers
Year of Publication
1978
Number
114
Date Published
09/1978
Publication Language
eng
Citation Key
7903
Altonji, J. (1978). Does the Labor Market Clear? A Test of the Equilibrium Hypothesis. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01zp38wc61n (Original work published September 1978)
Working Papers
Year of Publication
1984
Number
182
Date Published
11/1984
Publication Language
eng
Citation Key
In Labor Economics, Volume I, ed. Orley Ashenfelter and Kevin Hallock (Aldershot, U.K. and Brookfield, VT.:Elgar; Ashgate, 1995)
Altonji, J. (1984). Intertemporal Substitution in Labor Supply: Evidence from Micro Data. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01hd76s005c (Original work published November 1984)
Working Papers
Abstract

This paper examines the effects of immigration on the labor market
outcomes of less-skilled natives. Working from a simple model of a local
labor market, we show that the effects of immigration can be estimated from
the correlations between the fraction of immigrants in a city and the
employment and wage outcomes of natives. The size of the effects depend on
the fraction and skill composition of the immigrants. We go on the compute
these correlations using city-specific outcomes for individuals in 120
major SMSA's in the 1970 and 1980 Censuses. We also use the relative
industry distributions of immigrants and natives to provide a direct
assessment of the degree of labor market competition between them.
Our empirical findings indicate a modest degree of competition between
immigrants and less-skilled natives. A comparison of industry
distributions shows that an increase in the fraction of immigrants in the
labor force translates to an approximately equivalent percentage increase
in the supply of labor to industries in which less-skilled natives are
employed. Based on this calculation, immigrant inflows between 1970 and
1980 generated l-2 percent increases in labor supply to these industries in
most cities. A comparison of industry distributions of less-skilled
natives in high- and low-immigrant share cities between 1970 and 1980 shows
some displacement out of low-wage immigrant-intensive industries.
We find little effect of immigration on the employment outcomes of
the four race/sex groups that we consider. Our estimates of the effect of
immigration on the wages of less-skilled natives are sensitive to the
specification and estimation procedure. However, our preferred estimates,
which are based on first differences between 1980 and 1970 and the use of
instrumental variables to control for the endogeneity of immigrant inflows,
imply that an increase in immigrants equal to l percent of an SMSA's
population reduces native wages by roughly 1.2 percent.

Year of Publication
1989
Number
256
Date Published
10/1989
Publication Language
eng
Citation Key
In John Abowd and Richard Freeman, eds., Immigration, Trade and Labor, Chicago: University of Chicago Press, 1991
Card, D., & Altonji, J. (1989). The Effects of Immigration on the Labor Market Outcome of Less-Skilled Natives. Retrieved from http://arks.princeton.edu/ark:/88435/dsp018910jt58d (Original work published October 1989)
Working Papers
Abstract

In a labor market in which firms offer tied hours-wage packages and
there is substantial dispersion in the wage offers associated with a
particular type of job, the best job available to a worker at a point in
time may pay well but require an hours level which is far from the worker's
labor supply schedule, or pay poorly but offer desirable hours.
Intuitively, one would expect hours constraints to influence the pattern of
wage-hours tradeoffs which occur when workers quit to new jobs. Constrained
workers may be willing to sacrifice wage gains for better hours. Likewise,
workers may accept jobs offering undesirable hours only if the associated
wage gains are large. We investigate this issue empirically by examining
whether overemployment (underemployment) on the initial job increases
(reduces) the partial effect on the wage gain of a positive change in hours
for those who quit. We also examine whether overemployment
(underemployment) on the new job increases (reduces) the partial effect on
the wage gain of a positive change in hours for those who quit. Despite the
limitations imposed by small sample sizes and lack of information on the
magnitude of hours constraints, our results support the view that an
individual requires compensation to work in jobs which, given the
individual’s particular preferences, offer unattractive hours.

Year of Publication
1987
Number
214
Date Published
01/1987
Publication Language
eng
Citation Key
Journal of Labor Economics, Vol. 6, No. 2, (April, 1988
Paxson, C., & Altonji, J. (1987). Labor Supply Preferences, Hours Constraints, and Hours-Wage Tradeoffs. Retrieved from http://arks.princeton.edu/ark:/88435/dsp015999n3374 (Original work published January 1987)
Working Papers
Abstract

The paper examines how hours constraints affect the decision to change
jobs and the patterns of hours-wage tradeoffs which result from job changes.
We analyze job mobility in a labor market in which work hours on a given job
are inflexible and it is costly for workers to locate and move to alternative
jobs. Costs of mobility and imperfect information about job offers will
prevent a worker from adjusting hours by costlessly moving to jobs which offer
wage—hours combinations on the his or her labor supply schedule.
Consequently, workers will trade off wage gains for hours adjustments in
making job changes. Specifically, we show that the partial effect of a
positive change in hours by job changers who were overemployed (underemployed)
on their prior job is to increase (reduce) the size of the wage gain required
to induce a quit. The partial effect of a positive change in hours by job
changers who are overemployed (underemployed) on their new job is to increase
(reduce) the size of the wage gain associated with the quit.
We test these propositions through an empirical study of the relationship
between the wage change and interactions among the change in hours and
indicators of overemployment and underemployment on the old job and the new
job. Despite the limitation imposed by small sample sizes and lack of
information on the magnitude of hours constraints, our results are supportive
of the theory.

Year of Publication
1985
Number
199
Date Published
08/1985
Publication Language
eng
Citation Key
8132
Paxson, C., & Altonji, J. (1985). Hours-Wage Tradeoffs and Job Mobility. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01cr56n098k (Original work published August 1985)
Working Papers
Abstract

This paper presents a method for assessing the impact of external,
national, and sectoral shocks on Canadian employment fluctuations at the
national, industry, and provincial levels. Special attention is given to the
contribution of sectoral shocks to aggregate employment fluctuations. Shocks
which initially affect specific industries and provinces can induce aggregate
fluctuations not only because national employment is the sum of employment in
various sectors but also because of feedback across sectors.
The analysis is based on an econometric model relating employment growth in
each province and industry to the current and lagged change in U.S. output, the
lags of employment growth at the national, industry, and provincial levels, a
Canadian national shock, and shocks affecting specific industries, specific pro-
vinces, and specific province—industry pairs. The model is estimated using
annual data on Canadian employment at the province-industry level.
The results suggest that U.S. shocks are responsible for two-thirds of the
steady—state variance in the growth of Canadian national employment, while the
Canadian national shock accounts for approximately one quarter of this variance.
Taken together, industry specific, province specific and province—industry spe-
cific shocks account for about one—tenth of the variance of Canadian national
employment growth. Although U.S. shocks are the dominant influence on aggregate
employment growth in Canada, sectoral shocks account for about thirty percent of
the variance in national employment due to Canadian sources.
Estimates of the contribution of U.S., Canadian national, industry, and
provincial shocks to the variance of employment in specific industries and pro-
vinces are also provided.

Year of Publication
1985
Number
201
Date Published
11/1985
Publication Language
eng
Citation Key
Journal of Labor Economics, Vol. 8, No. 1, Part 2, January 1990
Ham, J., & Altonji, J. (1985). Variation in Employment Growth in Canada: The Role of External, National, Regional and Industrial Factors. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01k3569433c (Original work published November 1985)
Working Papers
Year of Publication
1979
Number
130
Date Published
11/1979
Publication Language
eng
Citation Key
Economica, 47, 1980
Ashenfelter, O., & Altonji, J. (1979). Wage Movements in the Labor Market Equilibrium Hypothesis. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01w6634363w (Original work published November 1979)
Working Papers