July 18, 2005
Recent NBER Reports
Organization and Inequality in a Knowledge Economy
by Luis Garicano, Esteban Rossi-Hansberg - #11458 (EFG)
We present a theory of the organization of work in an economy where knowledge is an essential input in production: a knowledge economy. In this economy a continuum of agents with heterogeneous skills must choose how much knowledge to acquire and may produce on their own or in organizations. Our theory generates an assignment of workers to positions, a wage structure, and a continuum of knowledge-based hierarchies. Organization allows low skill agents to ask others for directions. Thus, they acquire less knowledge than in isolation. In contrast, organization allows high skill agents to leverage their knowledge through large teams. Hence, they acquire more knowledge than on their own. As a result, organization decreases wage inequality within workers, but increases income inequality among the highest skill agents. We also show that equilibrium assignments and earnings can be interpreted as the outcome of alternative market institutions such as firms, or consulting and referral markets. We use our theory to study the impact of information and communication technology, and contrast its predictions with US evidence.
Affirmative Action and Its Mythology
by Roland G. Fryer, Jr., Glenn C. Loury - #11464 (LS PE)
For more than three decades, critics and supporters of affirmative action have fought for the moral high ground -- through ballot initiatives and lawsuits, in state legislatures, and in varied courts of public opinion. The goal of this paper is to show the clarifying power of economic reasoning to dispel some myths and misconceptions in the racial affirmative action debates. We enumerate seven commonly held (but mistaken) views one often encounters in the folklore about affirmative action (affirmative action may involve goals and timelines, but definitely not quotas, e.g.). Simple economic arguments reveal these seven views to be more myth than fact.
Age, Women, and Hiring: An Experimental Study
by Joanna Lahey - #11435 (LS)
As the baby boom cohort reaches retirement age, demographic pressures on public programs such as social security may cause policy makers to cut benefits and encourage employment at later ages. This paper reports on a labor market experiment to determine the hiring conditions for older women in entry-level jobs in Boston, MA and St. Petersburg, FL. Differential interviewing by age is found for these jobs. A younger worker is more than 40% more likely to be offered an interview than an older worker. No evidence is found to support taste-based discrimination as a reason for this differential and some suggestive evidence is found to support statistical discrimination.
Impacts of Policy Reforms on Labor Migration From Rural Mexico to the United States
by Susan M. Richter, J. Edward Taylor, Antonio Naude - #11428 (ITI LS)
Using new survey data from Mexico, a dynamic econometric model is estimated to test the effect of policy changes on the flow of migrant labor from rural Mexico to the United States and test for differential effects of policy changes on male and female migration. We find that both IRCA and NAFTA reduced the share of rural Mexicans working in the United States. Increased U.S. border enforcement had the opposite effect. The impacts of these policy variables are small compared with those of macroeconomic variables. The influence of policy and macroeconomic variables is small compared with that of migration networks, as reflected in past migration by villagers to the United States. The effects of all of these variables on migration propensities differ, quantitatively and in some cases qualitatively, by gender.
Firms' Demand for Employment-Based Mental Health Benefits
by Judith Shinogle, David Salkever - #11436 (HC)
Employment-based health insurance is the main source of health coverage for the non-elderly. Few previous studies have examined the factors that impact employer decision-making in selecting the coverage to offer to their employees and none have examined generosity of mental health coverage. This paper uses cross-sectional data from a survey of medium to large firms, including information on employee characteristics, to examine the empirical determinants of mental health coverage choices. We find that the firm's demand for mental health coverage is strongly influenced by employee characteristics. We also find that certain state and local policy interventions directed at enhancing access to mental health care have impacts on coverage decisions. Specifically, public provision of mental health lowers mental health coverage generosity and parity legislation increases mental health generosity. Future research with panel data is warranted to examine the causal effects of these policies.
Thanks to Joe Hodnicki, editor of Law Librarian Blog for the tip.