Papers Containing Tag(s): 'Ordinary Least Squares'
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Viewing papers 261 through 270 of 301
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Working PaperAbandoning the Sinking Ship: The Composition of Worker Flows Prior to Displacement
August 2002
Working Paper Number:
tp-2002-11
declines experienced by workers several years before displacement occurs. Little attention, however, has been paid to other changes in compensation and employment in firms prior to the actual displacement event. This paper examines changes in the composition of job and worker flows before displacement, and compares the "quality" distribution of workers leaving distressed firms to that of all movers in general. More specifically, we exploit a unique dataset that contains observations on all workers over an extended period of time in a number of US states, combined with survey data, to decompose different jobflow statistics according to skill group and number of periods before displacement. Furthermore, we use quantile regression techniques to analyze changes in the skill profile of workers leaving distressed firms. Throughout the paper, our measure for worker skill is derived from person fixed effects estimated using the wage regression techniques pioneered by Abowd, Kramarz, and Margolis (1999) in conjunction with the standard specification for displaced worker studies (Jacobson, LaLonde, and Sullivan 1993). We find that there are significant changes to all measures of job and worker flows prior to displacement. In particular, churning rates increase for all skill groups, but retention rates drop for high-skilled workers. The quantile regressions reveal a right-shift in the distribution of worker quality at the time of displacement as compared to average firm exit flows. In the periods prior to displacement, the patterns are consistent with both discouraged high-skilled workers leaving the firm, and management actions to layoff low-skilled workers.View Full Paper PDF
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Working PaperIs it Who You Are, Where You Work, or With Whom You Work? Reassessing the Relationship Between Skill Segregation and Wage Inequality
June 2002
Working Paper Number:
tp-2002-10
In a recent paper, Kremer & Maskin (QJE, forthcoming) develop an assignment model in which increases in the dispersion and mean of the skill distribution can lead simultaneously to increases in wage inequality and skill segregation. They then present evidence that, concurrent with rising wage inequality, wage segregation increased for production workers in the United States between 1975 and 1986. My paper argues that relying on wages as a proxy for skill may be problematic. Using a newly developed longitudinal dataset linking virtually the entire universe of workers in the state of Illinois to their employers, I decompose wages into components due, not only to person and firm heterogeneity, but also to the characteristics of their co-workers. Such "co-worker effects" capture the impact of a weighted sum of the characteristics of all workers in a firm on each individual employee's wage. While rising wage segregation can result from greater skill segregation, it may also be due to changes in the variance of co-worker effects in the economy, or to changes in the covariance between the person, firm, and co-worker components of wages. Due to the limited availability of demographic information on workers, I rely on the person specific component of wages to proxy for co-worker "skills." Because these person effects are unknown ex ante, I implement an iterative estimation approach where they are first obtained from a preliminary regression that excludes any role for co-workers. Because virtually all person and firm effects are identified, the approach yields consistent estimates of the co-worker parameters. My estimates imply that a one standard deviation increase in both a firm's average person effect and experience level is associated, on average, with wage increases of 3% to 5%. Firms that increase the wage premia they pay workers appear to do so in conjunction with upgrading worker quality. Interestingly, the average effect masks considerable variation in the relative importance of co-workers across industries. After allowing the co-worker parameters to vary across 2 digit industries, I find that industry average co-worker effects explain 26% of observed inter-industry wage differentials. Finally, I decompose the overall distribution of wages into components due to persons, firms, and coworkers. While co-worker effects do indeed serve to exacerbate wage inequality, the tendency for high and low skilled workers to sort non-randomly into firms plays a considerably more prominent role.View Full Paper PDF
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Working PaperParent-Child Bargaining, Parental Transfers, and the Postsecondary Education Decision
May 2002
Working Paper Number:
CES-02-13
Economic models of schooling decisions are largely unitary preference in nature. They ignore parent-child conflict, with parents often acting as the sole decisionmaker. In this paper, a theoretical model is formulated in which parents and child participate in cooperative bargaining as a means of resolving disagreements. The model's implications are compared to those of the unitary preference model, motivating tests of parental altruism and income pooling. Reduced form equations for years of postsecondary schooling and transfers are estimated, both for the full sample and for subsamples defined by type of disagreement, using student-level data from the National Center for Education Statistics' High School and Beyond Surveys. While income pooling is rejected only for the group of students who prefer more schooling than their parents, parental altruism is rejected for all groups. A major finding is that parent-child disagreement is an important determinant of the level of financial support parents provide.View Full Paper PDF
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Working PaperThe Mis-Measurement of Permanent Earnings: New Evidence from Social Security Earnings Data
May 2002
Working Paper Number:
CES-02-12
This study investigates the reliability of using short-term averages of earnings as a proxy for permanent earnings in empirical research. An earnings dynamics model is estimated on a large sample of men covering the period from 1983 to 1997 following the cohort-based methodology of Baker and Solon (1999). The analysis uses a unique dataset that matches men in the 1984, 1990 and 1996 Surveys of Income and Program Participation (SIPP) to the Social Security Administration's Summary Earnings Records (SER). The results confirm that using a short-term average of earnings can lead to spurious estimates of the effect of lifetime earnings on a particular outcome. In addition, the transitory variance appears to vary considerably over the lifecycle. The share of earnings variance due to transitory factors is higher among blacks and the persistence of transitory shocks appears to be greater for this group as well. Finally, the transitory variance appears to be a more important factor in explaining the overall earnings variance of college educated men than those without college.View Full Paper PDF
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Working PaperEarnings Mobility in the US: A New Look at Intergenerational Inequality
May 2002
Working Paper Number:
CES-02-11
This study uses a new data set that contains the Social Security earnings histories of parents and children in the 1984 Survey of Income and Program Participation, to measure the intergenerational elasticity in earnings in the United States. Earlier studies that found an intergenerational elasticity of 0.4 have typically used only up to five-year averages of fathers' earnings to measure fathers' permanent earnings. However, dynamic earnings models that allow for serial correlation in transitory shocks to earnings imply that using such a short time span may lead to estimates that are biased down by nearly 30 percent. Indeed, by using many more years of fathers' earnings than earlier studies, the intergenerational elasticity between fathers and sons is estimated to be around 0.6 implying significantly less mobility in the U.S. than previous research indicated. The elasticity in earnings between fathers and daughters is of a similar magnitude. The evidence also suggests that family income has an even larger effect than fathers' earnings on children's future labor market success. The elasticity of earnings is higher for families with low net worth, offering some empirical support for theoretical models that predict differences due to borrowing constraints. Some evidence of a higher elasticity among blacks is found but the results are not conclusive.View Full Paper PDF
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Working PaperComputer Networks and U.S. Manufacturing Plant Productivity: New Evidence from the CNUS Data
January 2002
Working Paper Number:
CES-02-01
How do computers affect productivity? Many recent studies argue that using information technology, particularly computers, is a significant source of U.S. productivity growth. The specific mechanism remains elusive. Detailed data on the use of computers and computer networks have been scarce. Plant-level data on the use of computer networks and electronic business processes in the manufacturing sector of the United States were collected for the first time in 1999. Using these data, we find strong links between labor productivity and the presence of computer networks. We find that average labor productivity is higher in plants with networks. Computer networks have a positive and significant effect on plant labor productivity after controlling for multiple factors of production and plant characteristics. Networks increase estimated labor productivity by roughly 5 percent, depending on model specification. Model specifications that account for endogenous computer networks also show a positive and significant relationship. Our work differs from others in several important aspects. First, ours is the first study that directly links the use of computer networks to labor productivity using plant-level data for the entire U.S. manufacturing sector. Second, we extend the existing model relating computers to productivity by including materials as an explicit factor input. Third, we test for possible endogeneity problems associated with the computer network variable.View Full Paper PDF
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Working PaperMarshall's Scale Economies
December 2001
Working Paper Number:
CES-01-17
In this paper, using panel data, I estimate plant level production functions that include variables that allow for two types of scale externalities which plants experie nce in their local industrial environments. First are externalities from other plants in the same industry locally, usually called localization economies or, in a dynamic context, Marshall, Arrow, Romer [MAR] economies. Second are externalities from the scale or diversity of local economic activity outside the own industry involving some type of cross- fertilization, usually called urbanization economies or, in a dynamic context, Jacobs economies. Estimating production functions for plants in high tech industries and in capital goods, or machinery industries, I find that local own industry scale externalities, as measured specifically by the count of other own industry plants locally, have strong productivity effects in high tech but not machinery industries. I find evidence that single plant firms both benefit more from and generate greater external benefits than corporate plants. On timing, I find evidence that high tech single plant firms benefit from the scale of past own industry activity, as well as current activity. I find no evidence of urbanization economies from the diversity of local economic activity outside the own industry and limited evidence of urbanization economies from the overall scale of local economic activity.View Full Paper PDF
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Working PaperPlant Vintage, Technology, and Environmental Regulation
September 2001
Working Paper Number:
CES-01-08
Does the impact of environmental regulation differ by plant vintage and technology? We answer this question using annual Census Bureau information on 116 pulp and paper mills' vintage, technology, productivity, and pollution abatement operating costs for 1979-1990. We find a significant negative relationship between pollution abatement costs and productivity levels. This is due almost entirely to integrated mills (those incorporating a pulping process), where a one standard deviation increase in abatement costs is predicted to reduce productivity by 5.4 percent. Older plants appear to have lower productivity but are less sensitive to abatement costs, perhaps due to 'grandfathering' of regulations. Mills which undergo renovations are also less sensitive to abatement costs, although these vintage and renovation results are not generally significant. We find similar results using a log-linear version of a three input Cobb-Douglas production function in which we include our technology, vintage, and renovation variables. Sample calculations of the impact of pollution abatement on productivity show the importance of allowing for differences based on plant technology. In a model incorporating technology interactions we estimate that total pollution abatement costs reduce productivity levels by an average of 4.7 percent across all the plants. The comparable estimate without technology interactions is 3.3 percent, approximately 30% lower.View Full Paper PDF
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Working PaperExporting and Productivity: The Importance of Reallocation
June 2001
Working Paper Number:
CES-01-02
Exporting is often touted as a way to increase economic growth. This paper examines whether exporting has played any role in increasing productivity growth in U.S. manufacturing. While exporting plants have substantially higher productivity levels, there is no evidence that exporting increases plant productivity growth rates. However, within the same industry, exporters do grow faster than non-exporters in terms of both shipments and employment. Exporting is associated with the reallocation of resources from less ecient to more ecient plants. In the aggregate, these reallocation eects are quite large, making up over 40% of total factor productivity growth in the manufacturing sector. Half of this reallocation to more productive plants occurs within industries and the direction of the reallocation is towards exporting plants. The positive contribution of exporters also shows up in import-competing industries and non-tradable sectors.View Full Paper PDF
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Working PaperAn Economist's Primer on Survey Samples
September 2000
Working Paper Number:
CES-00-15
Survey data underlie most empirical work in economics, yet economists typically have little familiarity with survey sample design and its effects on inference. This paper describes how sample designs depart from the simple random sampling model implicit in most econometrics textbooks, points out where the effects of this departure are likely to be greatest, and describes the relationship between design-based estimators developed by survey statisticians and related econometric methods for regression. Its intent is to provide empirical economists with enough background in survey methods to make informed use of design-based estimators. It emphasizes surveys of households (the source of most public-use files), but also considers how surveys of businesses differ. Examples from the National Longitudinal Survey of Youth of 1979 and the Current Population Survey illustrate practical aspects of design-based estimation.View Full Paper PDF
