nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒04‒09
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Suicidal Behavior and the Labor Market Productivity of Young Adults By Erdal Tekin; Sara Markowitz
  2. Bargaining Power in Marriage: Earnings, Wage Rates and Household Production By Robert A. Pollak
  3. What Do Wage Differentials Tell Us about Labor Market Discrimination? By June E. O'Neill; Dave M. O'Neill
  4. The Limited Influence of Unemployment on the Wage Bargain By Robert E. Hall; Paul R. Milgrom

  1. By: Erdal Tekin; Sara Markowitz
    Abstract: This paper provides a comprehensive analysis of the link between suicidal behaviors and labor market productivity of young adults in the United States. Using data from the National Survey of Adolescent Health (Add Health), we estimate the effects of suicide thoughts and suicide attempts on the work and schooling activities of young adults as well as on their hourly wage rates. The richness of the data set allows us to implement several strategies to control for unobserved heterogeneity and the potential reverse causality. These include using a large set of control variables that are likely to be correlated with both the suicidal behavior and the outcome measures, an instrumental variables method, and a twin fixed effects analysis from the subsample of twin pairs contained in the data. The longitudinal nature of the data set also allows us to control for past suicide thoughts and attempts of the individuals from their high school years as well as the suicide behaviors of the members of their family. Results from the different identification strategies consistently indicate that both suicide thoughts and suicide attempts decrease the hourly wage rate and the probability that a young adult individual works and/or attends school. The results are found to be robust to various specification tests.
    JEL: I1 J24
    Date: 2005–04
  2. By: Robert A. Pollak
    Abstract: What determines bargaining power in marriage? This paper argues that wage rates, not earnings, determine well-being at the threat point and, hence, determine bargaining power. Observed earnings at the bargaining equilibrium may differ from earnings at the threat point because hours allocated to market work at the bargaining solution may differ from hours allocated to market work at the threat point. In the divorce threat model, for example, a wife who does not work for pay while married might do so following a divorce; hence, her bargaining power would be related to her wage rate, not to her earnings while married. More generally, a spouse whose earnings are high because he or she chooses to allocate more hours to market work, and correspondingly less to household production and leisure, does not have more bargaining power. But a spouse whose earnings are high because of a high wage rate does have more bargaining power. Household production has received little attention in the family bargaining literature. The output of household production is analogous to earnings, and a spouse's productivity in household production is analogous to his or her wage rate. Thus, in a bargaining model with household production, a spouse's productivity in home production is a source of bargaining power.
    JEL: D1 J1 J2
    Date: 2005–04
  3. By: June E. O'Neill; Dave M. O'Neill
    Abstract: We examine the extent to which non-discriminatory factors can explain observed wage gaps between racial and ethnic minorities and whites, and between women and men. In general we find that differences in productivity-related factors account for most of the between group wage differences in the year 2000. Determinants of wage gaps differ by group. Differences in schooling and in skills developed in the home and in school, as measured by test scores, are of central importance in explaining black/white and Hispanic/white wage gaps among both women and men. Immigrant assimilation is an additional factor for Asians and workers from Central and South America. The sources of the gender gap are quite different, however. Gender differences in schooling and cognitive skills as measured by the AFQT are quite small and explain little of the pay gap. Instead the gender gap largely stems from choices made by women and men concerning the amount of time and energy devoted to a career, as reflected in years of work experience, utilization of part-time work, and other workplace and job characteristics.
    JEL: J0
    Date: 2005–04
  4. By: Robert E. Hall; Paul R. Milgrom
    Abstract: When a job-seeker and an employer meet, find a prospective surplus, and bargain over the wage, conditions in the outside labor market, including especially unemployment, may be irrelevant. The job-seeker's threat point in the bargain is to delay bargaining, not to terminate bargaining and resume search at other employers. Similarly, the employer's threat point is to delay bargaining, not to terminate it. Consequently, the outcome of the bargain depends on the relative costs of delay to the parties, not on the results of irrational threats to disclaim any bargain. In a model of the labor market that otherwise adopts all of the features of the standard Mortensen-Pissarides model, unemployment is much more sensitive to changes in productivity than in the standard model, because feedback through the wage is absent. We also present models where the wage bargain is in partial contact with conditions in the labor market.
    JEL: E24 E32 J64
    Date: 2005–04

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