eginning with the important work of Murphy and Welch (1992), a great deal of recent research has attempted to document and explain the dramatic changes in the wage distribution that occurred during the 1980s (see also Katz and Murphy 1992). Practically every income group faced a decline in real wages during the 1980s. However, workers at the 33rd percentile experienced a 14 percent drop in the ...

I develop a model of life-cycle portfolio choice with non-tradeable idiosyncratic labor income where the agent has an option to invest in human capital, for example through education. The inability to borrow against her human capital depresses the agent’s demand for equity, as she is concerned about being liquidity constrained when it is optimal to invest. The model has many predictions that ar...

This paper examines the value that firms create by building outsourcing and backsourcing flexibility while operating under demand uncertainty. Unlike earlier studies, it provides an analytical investigation regarding the probability of switching to the outsourcing option and the expected time to make a switch. Employing a simplified real options model, it investigates the influence of three for...

The rate of change in the share of skilled labor has increased steadily over the past 35 years in Swedish manufacturing. A closer inspection of the period after 1970 indicates that while relative supply changes of skilled labor seem to have been the main driving force behind the growing skill shares in manufacturing industries over the period 1970-85, an acceleration in the relative demand for ...

What Explains the Stagnation of Female Labor Force Participation in Urban India? We study the surprisingly low level and stagnation of female labor force participation rates in urban India between 1987 and 2009. Despite rising growth, fertility decline, and rising wages and education levels, women’s labor force participation stagnated at around 18%. Using five large cross-sectional micro survey...

55. Frank Sammartino, "The Impact of Tax Reform on Income Distribution," (Washington, D.C.: NPA, 1996). 56. Council of Economic Advisers, Economic Report of the President (Washington, D.C.: USGPO, 1996). 57. U.S. Department of Labor, Report on the American Workforce (Washington, D.C.: USGPO, 1995). 58. James Heckman, "Assessing Clinton's Program on Job Training, Workfare, and Education in the W...

Documentation IZAΨMOD: The IZA Policy SImulation MODel This paper describes IZAΨMOD, the policy microsimulation model of the Institute for the Study of Labor (IZA). The model uses household microdata from the German SocioEconomic Panel Study and firm data from the German linked employer-employee dataset LIAB. IZAΨMOD consists of three components: First, a static module simulates the effects of ...

The supply behavior of labor frequently depends on the demand conditions that prevail on the labor market. If demand is inadequate, households may send additional household members, who otherwise would not have worked, to look for work, for fear that the main income earner may lose his job. This paper is a study of the theoretical consequences of this ’’added worker’’ affect. It is shown that t...

There are three distinct research traditions in the analysis of individual earnings determination: human capital, or earnings function, analyses; aggregate wage analyses; and labor demand analyses. An important and incongruous aspect of each is the treatment of geographical differences in labor markets. This paper first investigates the magnitude and character of geographical wage differentials...