New Issue of ILR Review Features Research on Labor Standards, Workhours and other Timely Issues

Recent issue of the ILR Review features new and important research on labor standards enforcement, the long and unusual workhours of American workers compared to Europeans, the use of foreign-trained nurses in the US, individual employment rights, and other timely issues.

Editors: Rose Batt and Larry Kahn

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The Impact of Franchising on Labor Standards Compliance (MinWoong Ji and David Weil)

Recent studies document pervasive noncompliance with basic labor standards in industries with high concentrations of low-wage workers. The authors examine how franchising, a common form of business organization in low-wage industries, affects compliance. They estimate the effect of franchise ownership on compliance with federal minimum wage and overtime standards in the fast food industry using unique data on Top 20 branded restaurants. Franchised outlets have far higher levels of noncompliance than comparable company-owned establishments. The authors argue that observed differences arise from internal incentives facing franchisees versus franchisors rather than from external enforcement pressures facing the parties.

Long Workweeks and Strange Hours (Daniel S. Hamermesh and Elena Stancanelli)

U.S. workweeks are long compared to workweeks in other rich countries. Much less well-known is that Americans are more likely to work at night and on weekends. The authors examine the relationship between these two phenomena using the American Time Use Survey and time-diary data from France, Germany, the Netherlands, and the United Kingdom. Only small portions of the U.S.–European differences are attributable to observable characteristics. Adjusting for demographic and occupational differences, Americans’ incidence of night and weekend work would drop by no more than 10% if the average European workweek prevailed. Even if no Americans worked long hours, the incidence of unusual work times in the United States would far exceed those in continental Europe.

Individual Employment Rights Arbitration in the United States: Actors and Outcomes (Alexander J. S. Colvin and Mark D. Gough)

The authors examine disposition statistics from employment arbitration cases administered over an 11-year period by the American Arbitration Association (AAA) to investigate the process of dispute resolution in this new institution of employment relations. They investigate the predictors of settlement before the arbitration hearing and then estimate models for the likelihood of employee wins and damage amounts for the 2,802 cases that resulted in an award. Their findings show that larger-scale employers who are involved in more arbitration cases tend to have higher win rates and have lower damage awards made against them. This study also provides evidence of a significant repeat employer-arbitrator pair effect; employers that use the same arbitrator on multiple occasions win more often and have lower damages awarded against them than do employers appearing before an arbitrator for the first time. The authors find that self-represented employees tend to settle cases less often, win cases that proceed to a hearing less often, and receive lower damage awards. Female arbitrators and experienced professional labor arbitrators render awards in favor of employees less often than do male arbitrators and other arbitrators.

Labor Disputes and Job Flows (Henri Fraisse, Francis Kramarz, and Corinne Prost)

Using a data set of individual labor disputes brought to French courts over the years 1996 to 2003, the authors use variations in local conditions of the activity of the labor courts to assess the effect of dismissal costs on the labor market. First, the authors present a simple theoretical framework to explain the links between litigation costs, judicial outcomes, and firing costs. Second, they regress job flows on indicators of judicial outcomes, using an instrument, based on local shocks in the supply of lawyers. They find that when the numbers of lawyers increase, workers litigate more often, which should increase the firing costs for the firms. This increased filing rate causes a large decrease in employment fluctuations, especially for shrinking or exiting firms. The total effect on employment growth is slightly positive, and this result is more sensitive to the adopted specification.

Returns to Apprenticeship Based on the 2006 Canadian Census (Morley Gunderson and Harry Krashinsky)

To study the effect of apprenticeships in Canada, the authors use the 2006 Census, the first large-scale, representative Canadian data set to include information on apprenticeship certification. They find large returns for males with an apprenticeship certification when compared with no degree, a high school degree, or a trade certificate; these returns are almost as high as those to a community college diploma. By contrast, the returns for females who hold an apprenticeship certification are generally less than the returns to any other educational certification, except for no degree. For both genders, differences in observable characteristics account for little of the overall pay differences between apprentices and the alternative educational pathways, and the patterns tend to prevail across the quantiles of the pay distributions and for instrumental variable (IV) estimates.

Are Foreign-Trained Nurses Perfect Substitutes for U.S.-Trained Nurses? (Neeraj Kaushal and Robert J. Kaestner)

The authors investigate whether foreign- and U.S.-trained nurses are substitutes by studying the differences in their wages and whether wage differentials respond to relative supplies of foreign- and U.S.-trained nurses. Regression estimates suggest that foreign-trained nurses without a bachelor’s degree enjoy a wage premium of 1 to 3% over similar U.S.-trained nurses after adjusting for demographic, workplace, work type, and geographic differences, but no wage difference remains among those with a bachelor’s degree. For all nurses combined, the wage difference is modest and statistically insignificant. This result suggests that foreign- and U.S.-trained nurses are equally productive and close substitutes. The authors also test explicitly for whether foreign- and U.S.-trained nurses are substitutes and cannot reject the hypothesis that they are.

Union Organizing Decisions in a Deteriorating Environment: The Composition of Representation Elections and the Decline in Turnout (Henry Farber)

It is well known that the organizing environment for labor unions in the United States has deteriorated dramatically over a long period of time, a situation that has contributed to the sharp decline in the private-sector union membership rate and resulted in many fewer representation elections. What is less well known is that since the late 1990s, average turnout in the representation elections that are held has dropped substantially. These facts are related. The author develops a model of how unions select targets for organizing through the NLRB election process that clearly implies that a deteriorating organizing environment will lead to systematic change in the composition of elections held. The model implies that a deteriorating environment will lead unions not only to contest fewer elections but also to focus on larger potential bargaining units and on elections where they have a larger probability of winning. A standard rational-voter model implies that these changes in composition will lead to lower turnout. The author investigates the implications of these models empirically, using data on turnout in more than 140,000 NLRB certification elections held between 1973 and 2009. The results are consistent with the model and suggest that changes in composition account for about one-fifth of the decline in turnout between 1999 and 2009.

Dividing the Pie: Firm-Level Determinants of the Labor Share (Michael Siegenthaler and Tobias Stucki)

The authors are the first to study the factors determining labor’s share of income on the level of the individual firm, employing an unusually informative panel data set. The empirical examination is concerned with Switzerland, which stands out as one of the very few developed countries with a stable labor share. Broadly confirming results from previous cross-country and industry-level studies, the authors find that the main factor decreasing the labor share between 2001 and 2010 was the increase in the firm’s share of workers using information and communication technology. The main reasons why Switzerland’s labor share remained almost constant are the counteracting effects of a relatively slow rate of technological progress in 1980 to 1995 and sectoral reallocation toward industries with above-average labor shares.

Do Geographical Mobility Requirements for the Unemployed Affect their Exit Rate to Work? Evidence from a Policy Change (Barbara Hofmann)

A policy change tightened job search requirements regarding geographical mobility for unemployment insurance–benefit recipients in Germany. Those affected by the policy change were individuals without family ties and whose reemployment prospects were low in their home labor market region. The author finds that after one year the policy change led to a 4.6 percentage point increase in employment among women without children who lived in regions with relatively high unemployment. Women responded to the policy change by taking up jobs in their home labor market region as well as outside of that region. The author does not find any effects of the tightened mobility requirements for men.

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