Archives for wages



The Long-Term Effects of Birth Control

A new working paper (PDF; abstract) by Martha J. Bailey, an economics professor at the University of Michigan, analyzes the effects of increased access to birth control in the 1960s and 1970s:

This paper assembles new evidence on some of the longer-term consequences of U.S. family planning policies, defined in this paper as those increasing legal or financial access to modern contraceptives. The analysis leverages two large policy changes that occurred during the 1960s and 1970s: first, the interaction of the birth control pill’s introduction with Comstock-era restrictions on the sale of contraceptives and the repeal of these laws after Griswold v. Connecticut in 1965; and second, the expansion of federal funding for local family planning programs from 1964 to 1973. Building on previous research that demonstrates both policies’ effects on fertility rates, I find suggestive evidence that individuals’ access to contraceptives increased their children’s college completion, labor force participation, wages, and family incomes decades later.



Why It’s Hard to Find a Used Bicycle in Denmark

Visiting friends in Copenhagen and cycling around the city, I wondered why so many bicycles were new (and, having experienced Scandinavian pricing, expensive). When I lived in England, I bought a three-speed BSA bicycle from the wonderful Chris Lloyd Bikes repair shop for only £60 (about $100). The bicycle had already lasted 40 or 50 years; according to Laplace’s rule of succession, it would probably last another 40 or 50 years — at least with regular maintenance. Which I provided. When any problem turned up, I took the bicycle back to Chris Lloyd, who set it right for a right price.

That’s the difference from Denmark, with one of the world’s highest hourly wages. Read More »



Same Job, Same Wage?

Every time I visit Australia, one of the first things I see in the news is a discussion of minimum wages. Pay rates in Australia are to some extent set by the government; these days by the Fair Work Commission.  Today there is a news story that a labor union will seek to have teenagers paid the same wage as adults for the same job.  This increase in youth wages will decrease the quantity of young workers demanded, especially as that demand is typically quite elastic. Worse still, this will prevent some kids from obtaining job experience, thus reducing their human capital and making them less employable in the future.  As Peter Seeger sang, “When Will They Ever Learn?”



Does Military Service Increase Future Wages?

In this month’s American Economic Journal, David Card and Ana Rute Cardoso explore the relationship between military service and future wages (abstract; PDF): 

We provide new evidence on the long-term impacts of peacetime conscription, using longitudinal data for Portuguese men born in 1967. These men were inducted at age 21, allowing us to use preconscription wages to control for ability differences between conscripts and nonconscripts. We find a significant 4-5 percentage point impact of service on the wages of men with only primary education, coupled with a zero effect for men with higher education. The effect for less-educated men suggests that mandatory service can be a valuable experience for those who might otherwise spend their careers in low-level jobs.



Does Raising the Minimum Wage Increase Unemployment?

Conventional wisdom holds that instituting or raising the minimum wage will increase unemployment. But a recent paper by Jeremy Magruder, an economist at Berekley, finds the opposite effect. Magruder examines the case of Indonesia in the 1990s, “where real minimum wages rose rapidly in a varied way and then dropped quickly with the inflation rate in the South East Asian financial crash.” Here’s an excerpt:

When minimum wages rose in one district relative to their neighbors, that district observed an increase in formal sector employment and a decrease in informal employment. It also observed an increase in local expenditures, which is consistent with the hypothesized mechanism of the big push: that local product demand increases labor demand. Moreover, this increase was only observed in local industries which can be industrialized and do supply local demand, supporting the model further. Tradable manufacturing firms saw no growth in employment, and un-tradable, but non-industrializable services saw an increase in informal employment.

Read More »



Did Risk of Divorce Drive Boomer Women to Increase Their Education?

A new working paper from authors Raquel Fernandez and Joyce Cheng Wong highlights the stark differences in the lives of two generations of American women: those born in 1935 and those born just 20 years later in 1955. The authors found that education, wage structure and divorce were the main causes to changes in labor force participation.

From the abstract:

Women born in 1935 went to college significantly less than their male counterparts and married women’s labor force participation (LFP) averaged 40% between the ages of thirty and forty. The cohort born twenty years later behaved very differently. The education gender gap was eliminated and married women’s LFP averaged 70% over the same ages… We find that the higher probability of divorce and the changes in wage structure faced by the 1955 cohort are each able to explain, in isolation, a large proportion (about 60%) of the observed changes in female LFP.

Read More »



Explaining the Black-White Wage Gap

As of 2010, black men in America earned 74.5 percent of a typical white man’s wage; black women earned 69.6 percent. A new paper from Harvard’s Roland Fryer (certified genius), Princeton’s Devah Pager and Jorg L. Spenkuch of the University of Chicago examines some of the factors driving the black-white wage gap.

Using data from unemployed workers in New Jersey who sought employment for up to 12 weeks, the authors show that racial discrimination accounts for one-third of the wage difference. They also estimate that blacks have a 7 percent lower reservation wage than their white counterparts at a comparable job that demands a comparable skill level. Fryer and his colleagues control for skill level by measuring the job applicants’ wage at their previous job against the wage they were seeking.

Here’s the abstract: Read More »



Do Lower Wages and Higher Unemployment Increase Voter Turnout?

A recent study by Kerwin Kofi Charles and Melvin Stephens Jr argues that increases in wages and employment reduce voter turnout in gubernatorial elections, though not in presidential contests.

From the abstract:

This paper argues that, since activities that provide political information are complementary with leisure, increased labor market activity should lower turnout, but should do so least in prominent elections where information is ubiquitous. Using official county-level voting data and a variety of OLS and TSLS models, we find that increases in wages and employment: reduce voter turnout in gubernatorial elections by a significant amount; have no effect on Presidential turnout; and raise the share of persons voting in a Presidential election who do not vote on a House of Representative election on the same ballot.

Read More »