The Phillips Curve is Back? Using Panel Data to Analyze the Relationship Between Unemployment and Inflation in an Open Economy

Expanding on an approach suggested by Ashenfelter (1984), we extend the Phillips curve to an open economy and exploit panel data to estimate the textbook 'expectations augmented' Phillips curve with a market-based and observable measure of inflation expectations. We develop this measure using assumptions common in economic analysis of open economies. Using quarterly data from 9 OECD countries and the simplest econometric specification, we estimate the Phillips curve with the same functional form for the 1970s, 1980s, and 1990s. Our analysis suggests that although changing expectations played a role in creating the empirical failure of the Phillips Curve in the 1970s, supply shocks were at least as important.

Technology and U.S. wage inequality: a brief look

As labor market analysts in the late 1980s and early 1990s documented a rising wage inequality, a series of papers argued that this development was related to rapid technological change. These papers and the large literature that followed established a basis for the virtually unanimous agreement among economists that developments in computers and related information technologies in the 1970s, '80s, and '90s have led to increased wage inequality. ; This view has become known as the "skill-biased technological change" (SBTC) hypothesis-the view that a burst of new technologies increased demand by employers for highly skilled workers (who are more likely to use computers) and that this increased demand led to a rise in the wages of the highly skilled relative to those of the less skilled. ; The authors of this article reconsider the evidence for the SBTC hypothesis and focus on changes over time in overall wage inequality and in the evolution of different groups of workers' relative wages. In doing so, they conclude that SBTC falls far short of unicausal explanation of the substantial changes in the U.S. wage structure of the 1980s and 1990s and does not, by itself, prove to be particularly helpful in organizing or understandings these changes. The article concludes that it is time to re-evaluate the case that SBTC offers a satisfactory explanation for the rise in U.S. wage inequality.Wages ; Productivity ; Technology ; Economic development

New Evidence on the Finite Sample Properties of Propensity Score Matching and Reweighting Estimators

Currently available asymptotic results in the literature suggest that matching estimators have higher variance than reweighting estimators. The extant literature comparing the finite sample properties of matching to specific reweighting estimators, however, has concluded that reweighting performs far worse than even the simplest matching estimator. We resolve this puzzle. We show that the findings from the finite sample analyses are not inconsistent with asymptotic analysis, but are very specific to particular choices regarding the implementation of reweighting, and fail to generalize to settings likely to be encountered in actual empirical practice. In the DGPs studied here, reweighting typically outperforms propensity score matching.treatment effects, propensity score, semiparametric efficiency

Unions and Managerial Pay

Unions compress the wage distribution among workers covered by union contracts. We ask whether unions also have an effect on the managers of unionized firms. To this end we collected and assembled data on unionization and managerial pay within firms and industries in the U.S. and across countries. Generally, we find a negative correlation between executive compensation and unionization in our cross-section data, but no relationship of changes in unionization on the growth of compensation of executives over time. Using NLRB elections data, we find that a loss of union members due to decertification elections is associated with higher CEO pay, although our estimates are imprecise. With CPS data we consistently find that where unions are stronger, fewer managers are employed

The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?

Are the large measured wage differentials associated with on-the-job computer use productivity gains or the result of unobserved heterogeneity? We examine this issue with three large cross-sectional surveys from Germany. First, we confirm that the estimated wage differentials associated with computer use in Germany are very similar to the U.S. differential. Second, using the same techniques we also measure large differentials for on-the-job use of calculators, telephones, pens or pencils, or for those who work while sitting down. Along with our reanalysis of the U.S. data these findings cast some doubt on the interpretation of the computer-use wage differential as reflecting productivity effects arising from the introduction of computers in the workplace.

‘When Unions Mattered\u27: Assessing the Impact of Strikes on Financial Markets: 1925-1937

This examination of the Stock Market’s responsiveness to strikes looks specifically at strike actions that labor historians generally view as the major ones occurring in the United States in the years 1925–37. The authors find that strikes had large, negative effects on industry stock value. Longer strikes, violent strikes, strikes in which unions “won,” industry-wide strikes, strikes that led to union recognition, and strikes that led to large wage increases were associated with larger negative share price reactions than were other strikes. Much of the “news” generated by the typical strike seems to have been registered by the Stock Market very early in the strike. However, there were also some fairly large stock price reactions to news that could be fully revealed only at the end of a strike

The Effect of an Employer Health Insurance Mandate on Health Insurance Coverage and the Demand for Labor: Evidence from Hawaii

Over the past few decades, policy makers have considered employer mandates as a strategy for stemming the tide of declining health insurance coverage. In this paper we examine the long term effects of the only employer health insurance mandate that has ever been enforced in the United States, Hawaii's Prepaid Health Care Act, using a standard supply-demand framework and Current Population Survey data covering the years 1979 to 2005. During this period, the coverage gap between Hawaii and other states increased, as did real health insurance costs, implying a rising burden of the mandate on Hawaii's employers. We use a variant of the traditional permutation (placebo) test across all states to examine the magnitude and statistical properties of these growing coverage differences and their impacts on labor market outcomes, conditional on an extensive set of covariates. As expected, the coverage gap is larger for workers who tend to have low rates of coverage in the voluntary market (primarily those with lower skills). We also find that relative wages fell in Hawaii over time, but the estimates are statistically insignificant. By contrast, a parallel analysis of workers employed fewer than 20 hours per week indicates that the law significantly increased employers' reliance on such workers in order to reduce the burden of the mandate. We find no evidence suggesting that the law reduced employment probabilities.health insurance, employment, hours, wages

Union Effects on Health Insurance Provision and Coverage in the United States

During the past two decades, union density has declined in the United States and employer provision of health benefits has undergone substantial changes in extent and form. Using individual data spanning the years 1983-1997, combined with establishment data for 1993, we update and extend previous analyses of private-sector union effects on employer-provided health benefits. We find that the union effect on health insurance coverage rates has fallen somewhat but remains large, due to an increase over time in the union effect on employee 'take-up' of offered insurance, and that declining unionization explains 20-35 percent of the decline in employee health coverage. The increasing union take-up effect is linked to union effects on employees' direct costs for health insurance and the availability of retiree coverage.

The Impact of Unionization on Establishment Closure: A Regression Discontinuity Analysis of Representation Elections

Using data on more than 27,000 establishments (1983-1999) in the United States, this paper produces estimates of the causal effect of unionization of employer closure by exploiting the fact that most employers become 'unionized' as a partial consequence of a secret ballot election among the workers. If employers where unions barely won the election (e.g. by one vote) are ex ante comparable in all other ways to employers where unions barely lost (by one vote), differences in their subsequent outcomes should represent the true impact of union recognition. The regression discontinuity analysis finds little or no union effect on short- and long-run employer survival rates over 1- to 18-year horizons. We thus conclude that evidence of large effects of unions would more likely be found 1) along the within-employer (intensive margin) of employment and/or 2) in analyses of union threat effects.