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Wage Posting or Wage Bargaining? A Test Using Dual Jobholders
Get PDFThis paper examines the behavior of dual jobholders to test a simple model of wage bargaining and wage posting. We estimate the sensitivity of wages and separation rates to wage shocks in a worker’s secondary job to assess the degree of bargaining versus wage posting in the labor market. We interpret the evidence within a model where workers facing hours constraints in their primary job may take a second, flexible-hours job for additional income. When a secondary job offers a sufficiently high wage, a worker either bargains with the primary employer for a wage increase or separates. The model provides a number of predictions that we test using matched employer-employee administrative data from Washington State. In the aggregate, wage bargaining appears to be a limited determinant of wage setting. The estimated wage response to improved outside options, which we interpret as bargaining, is precisely estimated, but qualitatively small. Wage posting appears to be more important than bargaining for wage determination overall, and especially in lower parts of the wage distribution. Observed wage bargaining takes place mainly among workers in the highest wage quartile. For this group, improved outside options translate to higher wages, but not higher separation rates. In contrast, for workers in the lowest wage quartile, wage increases in the secondary job lead to higher separation rates but no significant wage increase in the primary job, consistent with wage posting. We also find evidence in support of the hours-constraint model for dual jobholding. In particular, work hours in the primary job do not respond to wages in the secondary job, but hours and separations in the secondary job are sensitive to wages in the primary job due to income effects
Pell Grants and Labor Supply: Evidence from a Regression Kink
Get PDFA concern in higher education policy is that students are taking longer to graduate. One possible reason for this observation is an increase in off-campus labor market participation among college students. Financial aid may play a role in the labor/study choice of college students—as college becomes more affordable, students my substitute away from work and toward increased study. I use data from the National Postsecondary Student Aid Study (NPSAS) to exploit nonlinearity in the Pell Grant formula to estimate a regression kink and regression discontinuity designs. I find that conditional on receiving the minimum of 2,250 are 7.6 percentage points (or around 12 percent) less likely to work and, if working, supply 5.10 less hours per week, or around 30.67 percent reduction. I find Pell Grants do increase academic achievement, implying that students substitute study time for work
Why Aren’t People Leaving Janesville? Industry Persistence, Trade Shocks, and Mobility
Get PDFParticular industries have dominated many locations in the United States for more than a century. We show that individuals residing in such locations were systematically less likely to move away from there during the past few decades. By identifying locations with sizable employment shares in the same manufacturing industries in 1870 and 1980, we documented less out-migration in the decades following 1980 than earlier. In response to the largest shock affecting manufacturing employment since then, these locations adjusted differently: the “China shock” led to higher unemployment in their communities, but fewer people moved away. Drawing on rich data of social links across counties and surveys of individuals residing there, we document that these individuals have stronger local friendship networks than residents of more thriving communities and exhibit systematic differences in their job-market search behavior. We hypothesize that when local opportunities narrow, residents of these locations both lack information about job opportunities elsewhere and benefit from the amenity value of extended social networks in their location of origin. Instrumental variable results based on a historical shock to local industries’ chances of survival suggest that the effect of dominant manufacturing industries on migration is causal. Mediation analysis reveals that the emergence of strong local ties primarily drives such migration