Personality undoubtedly plays a role in determining educational attainment and labor market outcomes. We investigate the role of self-esteem in determining wages directly and indirectly via education. We use data from the 1979 wave of the National Longitudinal Study of Youth (NLSY79) to estimate a three equation simultaneous equation model that treats self-esteem, educational attainment, and re...

Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior We analyze how quits responded to arbitrary differences in own and peer wages using an unusual feature of a pay raise at a large U.S. retailer. The firm’s use of discrete pay steps created discontinuities in raises, where workers earning within 1 cent of each other received new wages that differed by 10 cents. First, we estim...

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We use data from the earlier and later cohorts of the NLSY to estimate the effect of marriage and childbearing on wages. Our estimates imply that marriage lowers female wages 2-4 percent in the year of marriage. Marriage also lowers the wage growth of men and women by about two and four percentage points, respectively. A first birth lowers female wages 2-3 percent, but has no effect on wage gro...

Prof. Ken Chay Department of Economics Fall Semester, 2005 ECON 142 SKETCH OF SOLUTIONS FOR APPLIED EXERCISE #2 Question 1: a. Below are the scatter plots of hourly wages and log-wages on the y-axes and education on the x-axis, respectively. In both figures, there appears to be evidence of heteroskedasticity in the variance of the outcome with respect to education. Notice how the dispersion of ...

High rates of corporate taxation reduce corporate investment and thereby depress local wages. Using cross-country data I estimate that a ten percentage point increase in the corporate tax rate of high-income countries reduces mean annual gross wages by seven percent. The results do not support the common belief that the burden of corporate taxes falls most heavily on skilled labor; corporate ta...

Does import competition alter the extent to which employers, after negotiating workers’ wages upon hire, subsequently shield those wages from external labor-market conditions? If increased competition induces a switch away from these wage implicit agreements, then (1) the sensitivity of workers’ wages to the current unemployment rate should increase as competition increases and (2) the sensitiv...

Decomposing wages into worker and firm wage components, we find that firm-fixed components are sizeable parts of workers' wages. If workers can only imperfectly observe the extent of firm-fixed components in their wages, they might be misled about the overall wage distribution. Such misperceptions may lead to unjustified high reservation wages, resulting in overly long unemployment durations. W...

Wage rigidity, stemming from highly distortive labor market policies, is a natural candidate to explain the over-valuation of the CFA Franc after the adverse external shocks of the 1980s. This paper uses a variety of data sources to assess the actual rigidity of wages in CFA countries and to analyze how it relates to their labor market policies. The paper shows that wages are high in CFA countr...

We estimate the employment effects of changes in national minimum wages using a pooled crosssection time-series data set comprising 17 OECD countries for the period 1975-2000, focusing on the impact of cross-country differences in minimum wage systems and in other labor market institutions and policies that may either offset or amplify the effects of minimum wages. The average minimum wage effe...