Table of contents for Modern labor economics : theory and public policy / Ronald G. Ehrenberg, Robert S. Smith.

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Detailed Contents vii
Preface xvii
CHAPTER 1 Introduction 1
CHAPTER 2 Overview of the Labor Market 24
CHAPTER 3 The Demand for Labor 56
CHAPTER 4 Labor Demand Elasticities 96
CHAPTER 5 Quasi-Fixed Labor Costs
and Their Effects on Demand 131
CHAPTER 6 Supply of Labor to the Economy:
The Decision to Work 163
CHAPTER 7 Labor Supply: Household Production,
the Family, and the Life Cycle 203
CHAPTER 8 Compensating Wage Differentials
and Labor Markets 231
CHAPTER 9 Investments in Human Capital:
Education and Training 265
CHAPTER 10 Worker Mobility: Migration, Immigration
and Turnover 310
CHAPTER 11 Pay and Productivity: Wage Determination
within the Firm 344
CHAPTER 12 Gender, Race, and Ethnicity in the Labor Market 377
CHAPTER 13 Unions and the Labor Market 423
CHAPTER 14 Inequality in Earnings 471
CHAPTER 15 Unemployment 503
Answers to Odd-Numbered Review Questions and Problems 537
Name Index 571
Subject Index 577
Preface xvii
CHAPTER 1 INTRODUCTION 1
The Labor Market 2
Labor Economics: Some Basic Concepts 2
Positive Economics 3
The Models and Predictions of Positive Economics 4
Normative Economics 7
Normative Economics and Government Policy 9
Plan of the Text 12
EXAMPLE 1.1 POSITIVE ECONOMICS: WHAT DOES ITMEAN TO "UNDERSTAND" BEHAVIOR? 5
APPENDIX 1A STATISTICAL TESTING OF LABORMARKET HYPOTHESES 15
CHAPTER 2 OVERVIEW OF THE LABOR MARKET 24
The Labor Market: Definitions, Facts, and Trends 25
The Labor Force and Unemployment 26
Industries and Occupations: Adapting to Change 29
The Earnings of Labor 30
How the Labor Market Works 34
The Demand for Labor 36
The Supply of Labor 40
The Determination of the Wage 42
Applications of the Theory 47
Who Is Underpaid and Who Is Overpaid? 48
International Differences in Unemployment 51
EXAMPLE 2.1 THE BLACK DEATH AND THEWAGES OF LABOR 46
EXAMPLE 2.2 ENDING THE CONSCRIPTION OF YOUNG AMERICANMEN:
THE ROLE OF ECONOMISTS 51
CHAPTER 3 THE DEMAND FOR LABOR 56
Profit Maximization 57
Marginal Income from an Additional Unit of Input 58
Marginal Expense of an Added Input 60
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The Short-Run Demand for Labor When Both Product and Labor Markets
Are Competitive 60
A Critical Assumption: Declining MPL 61
From Profit Maximization to Labor Demand 62
The Demand for Labor in Competitive Markets When Other Inputs
Can Be Varied 67
Labor Demand in the Long Run 67
More Than Two Inputs 69
Labor Demand When the Product Market Is Not Competitive 71
Maximizing Monopoly Profits 71
Do Monopolies Pay Higher Wages? 72
Monopsony in the Labor Market 73
Profit Maximization 73
How Do Monopsonists Respond to Supply Shifts and Mandated Wage
Increases? 76
Policy Application: The Labor Market Effects of Employer Payroll Taxes
and Wage Subsidies 79
Who Bears the Burden of a Payroll Tax? 79
Are Payroll Taxes Responsible for European Unemployment? 82
Employment Subsidies as a Device to Help the Poor 83
EXAMPLE 3.1 THEMARGINAL REVENUE PRODUCT OF COLLEGE FOOTBALL STARS 59
EXAMPLE 3.2 MONOPSONY AND COMPETITION INMAJOR-LEAGUE
AND NEGRO-LEAGUE BASEBALL 75
APPENDIX 3A GRAPHIC DERIVATION OF A FIRM'S LABOR DEMAND CURVE 88
CHAPTER 4 LABOR DEMAND ELASTICITIES 96
The Own-Wage Elasticity of Demand 97
The Hicks-Marshall Laws of Derived Demand 100
Estimates of Own-Wage Labor Demand Elasticities 102
Applying the Laws of Derived Demand: Inferential Analysis 104
The Cross-Wage Elasticity of Demand 105
Can the Laws of Derived Demand Be Applied to Cross-Elasticities? 107
Estimates Relating to Cross-Elasticities 109
Policy Application: Effects of Minimum Wage Laws 110
History and Description 110
Employment Effects: Theoretical Analysis 111
Employment Effects: Empirical Estimates 115
Does the Minimum Wage Fight Poverty? 117
Applying Concepts of Labor Demand Elasticity to the Issue
of Technological Change 118
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EXAMPLE 4.1 WHY ARE UNIONWAGES SO DIFFERENT IN TWO PARTS
OF THE TRUCKING INDUSTRY? 106
EXAMPLE 4.2 THE EMPLOYMENT EFFECTS OF THE FIRST FEDERALMINIMUMWAGE 116
APPENDIX 4A INTERNATIONAL TRADE AND THE DEMAND FOR LABOR: CAN HIGH-WAGE
COUNTRIES COMPETE? 123
CHAPTER 5 QUASI-FIXED LABOR COSTS
AND THEIR EFFECTS ON DEMAND 131
Nonwage Labor Costs 132
Hiring and Training Costs 132
Employee Benefits 134
The Quasi-Fixed Nature of Many Nonwage Costs 134
The Employment/Hours Trade-off 136
Determining the Mix of Workers and Hours 136
Policy Analysis: The Overtime-Pay Premium 137
Policy Analysis: Part-Time Employment and Mandated Employee
Benefits 140
Firms' Labor Investments and the Demand for Labor 141
The Concept of Present Value 143
The Multiperiod Demand for Labor 146
Constraints on Multiperiod Wage Offers 148
General and Specific Training 150
Specific Training and the Wage Profile 151
Implications of the Theory 153
Do Employers Ever Pay for General Training? 156
Hiring Investments 158
The Use of Credentials 158
Internal Labor Markets 158
How Can the Employer Recoup Its Hiring Investments? 159
EXAMPLE 5.1 "RENTING" WORKERS AS AWAY OF COPING WITH HIRING COSTS 138
EXAMPLE 5.2 DO UNJUST DISMISSAL POLICIES REDUCE EMPLOYMENT? 142
EXAMPLE 5.3 APPRENTICESHIP IN THE UNITED STATES AND ELSEWHERE 151
EXAMPLE 5.4 WHY DO TEMPORARY-HELP FIRMS PROVIDE FREE GENERAL SKILLS TRAINING? 157
CHAPTER 6 SUPPLY OF LABOR TO THE ECONOMY:
THE DECISION TO WORK 163
Trends in Labor Force Participation and Hours of Work 164
Labor Force Participation Rates 164
Hours of Work 166
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A Theory of the Decision to Work 167
Some Basic Concepts 168
Analysis of the Labor/Leisure Choice 173
Empirical Findings on the Income and Substitution Effects 187
Policy Applications 190
Budget Constraints with "Spikes" 190
Programs with Net Wage Rates of Zero 193
Subsidy Programs with Positive Net Wage Rates 196
EXAMPLE 6.1 THE LABOR SUPPLY OF PIGEONS 171
EXAMPLE 6.2 DO LARGE INHERITANCES INDUCE LABOR FORCEWITHDRAWAL? 184
EXAMPLE 6.3 DAILY LABOR SUPPLY AT THE BALLPARK 187
EXAMPLE 6.4 LABOR SUPPLY EFFECTS OF INCOME TAX CUTS 189
EXAMPLE 6.5 STAYING AROUND ONE'S KENTUCKY HOME: WORKERS' COMPENSATION BENEFITS
AND THE RETURN TOWORK 193
EXAMPLE 6.6 WARTIME FOOD REQUISITIONS AND AGRICULTURALWORK INCENTIVES 197
CHAPTER 7 LABOR SUPPLY: HOUSEHOLD PRODUCTION,
THE FAMILY, AND THE LIFE CYCLE 203
The Theory of Household Production 203
Graphing the Model 204
Implications of the Model 206
The Tripartite Choice: Market Work, Household Work, and Leisure 207
Time Use by Women and Men 207
Two Substitution Effects 208
Joint Labor Supply Decisions within the Household 210
Specialization of Function 211
Do Both Partners Work for Pay? 212
The Joint Decision and Cross-Effects 212
Labor Supply in Recessions: The "Discouraged" vs. the "Additional" Worker 213
Life-Cycle Aspects of Labor Supply 216
The Labor Force Participation Patterns of Married Women 216
The Substitution Effect and When to Work over a Lifetime 218
The Choice of Retirement Age 220
Policy Application: Child Care and Labor Supply 223
Child-Care Subsidies 224
Child Support Assurance 226
EXAMPLE 7.1 WORK AND LEISURE: PAST VS. PRESENT 208
EXAMPLE 7.2 HUSBANDS, WIVES, NEIGHBORS AND THE END OF THE SIX-HOURWORKDAY
AT KELLOGG'S 214
EXAMPLE 7.3 THE VALUE OF A HOMEMAKER'S TIME 218
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CHAPTER 8 COMPENSATING WAGE DIFFERENTIALS
AND LABOR MARKETS 231
Job Matching: The Role of Worker Preferences and Information 231
Individual Choice and Its Outcomes 232
Assumptions and Predictions 234
Empirical Tests for Compensating Wage Differentials 236
Hedonic Wage Theory and the Risk of Injury 238
Employee Considerations 239
Employer Considerations 241
The Matching of Employers and Employees 242
Normative Analysis: Occupational Safety and Health Regulation 246
Hedonic Wage Theory and Employee Benefits 251
Employee Preferences 251
Employer Preferences 253
The Joint Determination of Wages and Benefits 255
EXAMPLE 8.1 WORKING ON THE RAILROAD: MAKING A BAD JOB GOOD 238
EXAMPLE 8.2 PARENTHOOD, OCCUPATIONAL CHOICE, AND RISK 244
EXAMPLE 8.3 COMPENSATINGWAGE DIFFERENTIALS IN 19TH-CENTURY BRITAIN 247
APPENDIX 8A COMPENSATINGWAGE DIFFERENTIALS AND LAYOFFS 260
CHAPTER 9 INVESTMENTS IN HUMAN CAPITAL:
EDUCATION AND TRAINING 265
Human Capital Investments: The Basic Model 267
The Demand for a College Education 269
Weighing the Costs and Benefits of College 269
Predictions of the Theory 271
Market Responses to Changes in College Attendance 276
Education, Earnings, and Postschooling Investments in Human Capital 276
Average Earnings and Educational Level 278
On-the-Job Training and the Concavity of Age/Earnings Profiles 279
The Fanning Out of Age/Earnings Profiles 281
Women and the Acquisition of Human Capital 282
Is Education a Good Investment? 286
Is Education a Good Investment for Individuals? 286
Is Education a Good Social Investment? 289
Is Public Sector Training a Good Social Investment? 297
EXAMPLE 9.1 WAR AND HUMAN CAPITAL 266
EXAMPLE 9.2 DID THE G.I. BILL INCREASE EDUCATIONAL ATTAINMENT FOR RETURNING
WORLDWAR II VETS? 274
EXAMPLE 9.3 VALUING A HUMAN ASSET: THE CASE OF THE DIVORCING DOCTOR 287
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EXAMPLE 9.4 THE SOCIALLY OPTIMAL LEVEL OF EDUCATIONAL INVESTMENT 295
APPENDIX 9A A "COBWEB" MODEL OF LABORMARKET ADJUSTMENT 301
APPENDIX 9B A HEDONICMODEL OF EARNINGS AND EDUCATIONAL LEVEL 305
CHAPTER 10 WORKER MOBILITY: MIGRATION,
IMMIGRATION, AND TURNOVER 310
The Determinants of Worker Mobility 311
Geographic Mobility 311
The Direction of Migratory Flows 312
Personal Characteristics of Movers 313
The Role of Distance 314
Skills, the Earnings Distribution, and International Migration 315
The Returns to International and Domestic Migration 317
Policy Application: Restricting Immigration 321
U.S. Immigration History 321
Naive Views of Immigration 323
An Analysis of the Gainers and Losers 326
Do the Overall Gains from Immigration Exceed the Losses? 328
Employee Turnover and Job Matching 331
Effects of Job Tenure and Age 331
Other Patterns of Job Mobility 332
Are Quits Different from Layoffs? 336
International Comparisons 336
Is More Mobility Better? 337
Costs of Turnover and the Monopsony Model 338
EXAMPLE 10.1 THE GREATMIGRATION: SOUTHERN BLACKSMOVE NORTH 314
EXAMPLE 10.2 MIGRATION AND ONE'S TIME HORIZON 316
EXAMPLE 10.3 ECONOMIC VS. POLITICAL IMMIGRANTS 318
EXAMPLE 10.4 THEMARIEL BOATLIFT AND ITS EFFECTS ONMIAMI'SWAGE AND
UNEMPLOYMENT RATES 328
EXAMPLE 10.5 MONOPSONY IN THE COAL FIELDS? PROBABLY NOT 340
CHAPTER 11 PAY AND PRODUCTIVITY: WAGE
DETERMINATION WITHIN THE FIRM 344
Motivating Workers: An Overview of the Fundamentals 346
The Employment Contract 346
Coping with Information Asymmetries 347
Motivating Workers 349
Motivating the Individual in a Group 351
Compensation Plans: Overview and Guide to the
Rest of the Chapter 352
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Productivity and the Basis of Yearly Pay 353
Employee Preferences 353
Employer Considerations 354
Productivity and the Level of Pay 359
Why Higher Pay Might Increase Worker Productivity 359
Efficiency Wages 360
Productivity and the Sequencing of Pay 362
Underpayment Followed by Overpayment 363
Promotion Tournaments 366
Career Concerns and Productivity 368
Applications of the Theory: Explaining Three Puzzles 370
Why Do Earnings Increase with Job Tenure? 370
Why Do Large Firms Pay More? 372
Monopsonistic Behavior by Employers 374
EXAMPLE 11.1 THEWIDE RANGE OF POSSIBLE PRODUCTIVITIES: THE CASE OF THE FACTORY
THAT COULD NOT CUT OUTPUT 345
EXAMPLE 11.2 CALORIE CONSUMPTION AND THE TYPE OF PAY 351
EXAMPLE 11.3 POOR GROUP INCENTIVES DOOM THE SHAKERS 357
EXAMPLE 11.4 DID HENRY FORD PAY EFFICIENCYWAGES? 361
EXAMPLE 11.5 DEMANDING EMPLOYERS, OVERWORKED EMPLOYEES, AND NEGLECTED FAMILIES 368
CHAPTER 12 GENDER, RACE, AND ETHNICITY IN THE LABOR MARKET 377
Measured and Unmeasured Sources of Earnings Differences 379
Earnings Differences by Gender 379
Earnings Differences between Black and White Americans 388
Earnings Differences by Ethnicity 392
Theories of Market Discrimination 394
Personal Prejudice Models: Employer Discrimination 395
Personal Prejudice Models: Customer Discrimination 399
Personal Prejudice Models: Employee Discrimination 400
Statistical Discrimination 402
Noncompetitive Models of Discrimination 403
A Final Word on the Theories of Discrimination 407
Federal Programs to End Discrimination 408
Equal Pay Act of 1963 408
Title VII of the Civil Rights Act 409
The Federal Contract Compliance Program 411
Effectiveness of Federal Antidiscrimination Programs 414
EXAMPLE 12.1 BIAS IN THE SELECTION OFMUSICIANS BY SYMPHONY ORCHESTRAS 382
EXAMPLE 12.2 THE GENDER EARNINGS GAP ACROSS COUNTRIES 385
EXAMPLE 12.3 FEAR AND LATHING IN THEMICHIGAN FURNITURE INDUSTRY 401
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EXAMPLE 12.4 COMPARABLEWORTH AND THE UNIVERSITY 412
APPENDIX 12A ESTIMATING "COMPARABLE-WORTH" EARNINGS GAPS: AN APPLICATION
OF REGRESSION ANALYSIS 419
CHAPTER 13 UNIONS AND THE LABOR MARKET 423
Union Structure and Membership 424
International Comparisons of Unionism 424
The Legal Structure of Unions in the United States 426
Constraints on the Achievement of Union Objectives 429
The Monopoly-Union Model 431
The Efficient-Contracts Model 432
The Activities and Tools of Collective Bargaining 436
Union Membership: An Analysis of Demand and Supply 437
Union Actions to Alter the Labor Demand Curve 442
Bargaining and the Threat of Strikes 444
Bargaining in the Public Sector: The Threat of Arbitration 449
The Effects of Unions 452
The Theory of Union Wage Effects 452
Evidence of Union Wage Effects 456
Evidence of Union Total Compensation Effects 458
The Effects of Unions on Employment 459
The Effects of Unions on Productivity and Profits 459
Normative Analyses of Unions 460
EXAMPLE 13.1 THE EFFECTS OF DEREGULATION ON TRUCKING AND AIRLINES 440
EXAMPLE 13.2 PERMANENT REPLACEMENT OF STRIKERS 447
EXAMPLE 13.3 DO RIGHT-TO-WORK LAWSMATTER? 461
APPENDIX 13A ARBITRATION AND THE BARGAINING CONTRACT ZONE 466
CHAPTER 14 INEQUALITY IN EARNINGS 471
Measuring Inequality 472
Earnings Inequality since 1980: Some Descriptive Data 475
The Occupational Distribution 476
Changes in Relative Wages 478
Relative Changes in Hours of Work 478
Growth of Earnings Dispersion within Human Capital Groups 480
Summarizing the Dimensions of Growing Inequality 481
The Underlying Causes of Growing Inequality 482
Changes in Supply 483
Changes in Institutional Forces 485
Changes in Demand 486
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International Comparisons of Changing Inequality 492
Why Did Inequality Grow Most in Great Britain and the United States? 493
Causes and Effects of Different Real Wage Changes among
the Unskilled 495
EXAMPLE 14.1 LABOR'S SHARE OF TOTAL INCOME: "RAW" LABOR VS.
HUMAN CAPITAL 482
EXAMPLE 14.2 CHANGES IN THE PREMIUM TO EDUCATION AT THE BEGINNING
OF THE TWENTIETH CENTURY 491
APPENDIX 14A LORENZ CURVES AND GINI COEFFICIENTS 499
CHAPTER 15 UNEMPLOYMENT 503
A Stock-Flow Model of the Labor Market 505
Sources of Unemployment 506
Rates of Flow Affect Unemployment Levels 507
Frictional Unemployment 509
The Theory of Job Search 510
Effects of Unemployment Insurance Benefits 513
Structural Unemployment 516
Occupational and Regional Unemployment Rate Differences 517
International Differences in Long-Term Unemployment 519
Do Efficiency Wages Cause Structural Unemployment? 519
Demand-Deficient (Cyclical) Unemployment 522
Downward Wage Rigidity 523
Financing U.S. Unemployment Compensation 526
Seasonal Unemployment 529
When Do We Have Full Employment? 530
Defining the Natural Rate of Unemployment 531
Unemployment and Demographic Characteristics 531
Demographic Change and the Natural Rate 532
What Is the Natural Rate? 533
EXAMPLE 15.1 THE UNEMPLOYMENT INSURANCE BONUS EXPERIMENT 515
EXAMPLE 15.2 UNEMPLOYMENT INSURANCE AND SEASONAL UNEMPLOYMENT:
A HISTORICAL PERSPECTIVE 530
Answers to Odd-Numbered Review Questions and Problems 537
Name Index 571
Subject Index 577

Library of Congress Subject Headings for this publication:

Labor economics.
Labor policy.
Personnel management.