Unlike existing models which rely heavily on assumptions regarding unions’
distributional preferences, we present a very simple model in which union
seniority-layoff rules and rising seniority-wage profiles result from
optimal price discrimination against the firm. Surprisingly, even when
cash transfers among union members are ruled out, unions’ optimal
seniority-wage profiles are likely to be completely unaffected by their
distributional preferences because of a kink in the utility-possibility
frontier. This suggests that the simple technology of price discrimination
may play a key role, hitherto unappreciated, in explaining union policies
that affect the relative wellbeing of different union members.

Since recent immigrants tend to earn less than natives, their relative labor market
status has been adversely impacted by an increase in the return to labor market skills
and widening wage inequality over the past two decades. To evaluate the magnitude
of this effect, this study uses Social Security earnings records matched to recent cross
sections of the SIPP and CPS to estimate the change in the return to skills among
native born workers. This is then used to adjust the earnings gap between immigrants
and natives in order to estimate what the gap would have been if the return to skills
had remained at its 1980 level. The results suggest that the return to skills rose by 40
percent between 1980 and 1997, leading to a 10 to 15 percentage point decrease in the
relative earnings of recent immigrants. Thus examining solely the earnings of recent
immigrants may lead to an overly pessimistic picture of their actual labor market skills.

This paper investigates cyclicality in real wages between 1969 and 1982,
using 14 years of data from the Panel Survey of Income Dynamics. First, it
investigates the extent to which movements in and out of the labor market
created apparent wage cyclicality. Second, it investigates whether cyclical
movements of workers between heterogeneous wage sectors within the labor market
created cyclicality. Little evidence of the first effect is found. The second
effect is much more important, and cyclicality clearly occurs in the movement
of workers between different labor market sectors. However, sector selection
is not correlated with wage determination. Thus, individual wage change
estimates of cyclicality need to control for sector location, but need not
account for sector selection. The third conclusion of the paper is that
cyclicality is present in real wages even within sectors over this time period,
and is the result of both cyclicality in overall wage levels (cyclicality in
the constant term in wage equations), as well as in the coefficients associated
with particular worker characteristics.

Private information models of strikes suggest that the
strike is used as an information revealing device by the union in
the presence of asymmetrical information. A testable prediction
of these models is that there is a concession schedule which maps
out a negative relationship between wages and strikes. In this
paper a concession schedule is estimated using a unique micro
data set of about 3000 contracts over the period 1970-1981.
Unlike previous wage determination studies, which use the
percentage change in nominal wages as the dependent variable,
this study uses the average expected real wage over the length of
the contract as the dependent variable as this is the wage that
is of interest to the negotiating parties. In order to estimate
the concession schedule it is necessary to control for all
observable variables which effect the level of wages and strike
activity. The most important determinants of the real wage are
found to be bargaining pair specific fixed effects and a general
time trend. Wage settlements at other firms in the sane industry
prior to the negotiations were also important. The estimated
concession schedule has a negative slope as predicted by the
private information models. The concession schedule is fairly
flat -— the real wage decreases by only 3% after a strike lasting
100 days.

Some workers bargain with prospective employers before accepting a job. Others could
bargain, but find it undesirable, because their right to bargain has induced a sufficiently
favorable offer, which they accept. Yet others perceive that they cannot bargain over
pay; they regard the posted wage as a take-it-or-leave-it opportunity. Theories of wage
formation point to substantial differences in labor-market equilibrium between bargained
and posted wages. The fraction of workers hired away from existing jobs is another key
determinant of equilibrium, because a worker with an existing job has a better outside
option in bargaining than does an unemployed worker. Our survey measures the
incidences of wage posting, bargaining, and on-the-job search. We find that about a
third of workers had precise information about pay when they first met with their
employers, a sign of wage posting. We find that another third bargained over pay before
accepting their current jobs. And about 40 percent of workers could have remained on
their earlier jobs at the time they accepted their current jobs.

Both marital status and computer usage on the job have been found to increase earnings by as much as two
additional years of schooling. If correct, these findings suggest that factors other than long-term human
capital investments are key determinants of earnings. Data on identical twins are used in this paper to sweep
out selection effects and examine the effect of marital status and computer usage on wages. Within-twin
estimates indicate that, unlike education, job tenure and union status, neither marital status nor computer
usage have a large or significant effect on wages.

This paper uses a variety of data sources to track the earnings
of airline industry employees over the past two decades and assess
the changes that have occurred since deregulation in 1978.
Individual microdata from Census files as well as collective
bargaining contract information are used to follow wages for
pilots, flight attendants, mechanics, and workers as a whole.
Perhaps surprisingly, I find that the real earnings of airline
workers have declined only modestly in the past 10 years.
Comparisons with other groups of workers suggest that these
declines have been about the same or only slightly larger than
those observed for most other workers in the economy. Furthermore,
within the airline industry, the declines in earnings have been
similar for all three groups of skilled workers. If the
deregulated industry can be taken as a competitive benchmark, these
findings suggest that the regulatory rents earned by airline
workers prior to deregulation were relatively small. This view
fails to explain the wide inter-firm variation in earnings that has
emerged in the post-deregulation period, however. An alternative
interpretation is that rents continue to exist at many airline
firms, and that these rents continue to be shared by employees at
the successful airlines.

Periods of rapid U.S. economic growth during the 1960s and 1970s coincided with improved living standards for many segments of the population, including the disadvantaged as well as the affluent, suggesting to some that a rising economic tide lifts all demographic boats. This paper investigates the impact of U.S. business cycle conditions on population well-being since the 1970s. Aggregate employment and hours worked in this period are strongly procyclical, particularly for low-skilled workers, while aggregate real wages are only mildly procyclical. Similar patterns appear in a balanced panel of PSID respondents that removes the effects of changing workforce composition, though the magnitude of the responsiveness of real wages to unemployment appears to have declined in the last 20 years. Economic upturns increase the likelihood that workers acquire jobs in sectors with positively sloped career ladders. Spending by state and local governments in all categories rises during economic expansions, including welfare spending, for which needs vary countercyclically. Since the disadvantaged are likely to benefit disproportionately from such government spending, it follows that the public finances also contribute to conveying the benefits of a strong economy to diverse population groups.

This paper presents evidence on the quality of schooling by race and ethnic
origin in the United States. Although substantial racial segregation
across schools exists, the average pupil-teacher ratio is approximately the
same for black and white students. Hispanic students, however, on average have
l0 percent more students per teacher. Relative to whites, blacks
and Hispanics are less likely to use computers at school and at work. The
implications of these differences in school quality for labor market
outcomes are examined. We conclude by examining reasons for the increase
in the black-white earnings gap since the mid-1970s.