New Issue of ILR Review. March 2016 Table of Contents

ILR Review

March 2016; Vol. 69, No. 2


Are the Effects of Minimum Wage Increases Always Small? A Reanalysis of Sabia, Burkhauser, and Hansen

Saul D. Hoffman

In a 2012 article, Sabia, Burkhauser, and Hansen reported very large negative effects of the 2004 to 2006 increase in the New York State minimum wage on the employment of young, less-educated workers. Hoffman reexamines their estimates using data from the full Current Population Survey (CPS), rather than the smaller CPS-MORG files they used, and finds no evidence of a negative employment impact. The full CPS, which is the source of U.S. official labor market statistics, is certainly the more appropriate and reliable data source. Furthermore, when Hoffman repeats the analysis using three states and the District of Columbia, which also had a substantial increase in the state minimum wage in the same time period, he finds evidence of a small positive employment effect. Together, the two findings are consistent with other, more recent research that reports very weak or zero employment effects of the minimum wage.


When Good Measurement Goes Wrong: New Evidence That New York State’s Minimum Wage Reduced Employment

Joseph J. Sabia, Richard V. Burkhauser, and Benjamin Hansen

Hoffman’s (2015) replication of Sabia, Burkhauser, and Hansen (SBH 2012) suggests that “unlucky” measurement error in low-skilled employment in the Current Population Survey Outgoing Rotation Groups (CPS-ORG) led SBH to produce upwardly biased estimates of the labor demand effects of the 2005 to 2006 New York State minimum wage increase. This study replicates Hoffman’s preferred policy estimates from the full CPS and finds evidence that the parallel trends assumption underlying his difference-in-difference approach is violated. When a synthetic control state with pretreatment employment trends similar to those in New York is constructed, this study estimates a relatively large negative employment elasticity with respect to the minimum wage for low-skilled individuals (–0.5), similar to the estimate SBH obtained using the CPS-ORG (–0.6).


Within- and Cross-Firm Mobility and Earnings Growth

Anders Frederiksen, Timothy Halliday, and Alexander K. Koch

A widely accepted premise is that promotions within firms and mobility across firms lead to significant earnings progression. Existing research generally has examined cross-firm mobility separately from hierarchical advancement. Yet, as the authors’ descriptive evidence from Danish panel data shows, how the two types of mobility interact is important for understanding earnings growth. Cross-firm moves at the nonexecutive level provide sizable short-run earnings growth (similar to the effect of being promoted to an executive position). These gains, however, appear modest compared with the persistent impact on earnings growth of promotions (either within or across firms) and subsequent mobility at a higher hierarchy level.


From Pyramids to Diamonds: Legal Process Offshoring, Employment Systems, and Labor Markets for Lawyers in the United States and India

Sarosh Kuruvilla and Ernesto Noronha

In this article, the authors argue that offshoring of legal work from the United States has contributed to the fracturing of the long-established internal labor market arrangements in large U.S. law firms. Drawing on evidence from the United States and India on legal employment, the growth of offshoring, and the rapidly changing nature of work that is offshored, the authors contend that the changes in employment systems in law firms are likely to be permanent, in contrast to other researchers who suggest they are temporary adjustments to the financial crisis. As U.S. law firms are dismantling their internal labor market systems, Indian law firms are partially recreating them.


Firm/Employee Matching: An Industry Study of U.S. Lawyers

Paul Oyer and Scott Schaefer

The authors study the sources of match-specific value at large U.S. law firms by analyzing how graduates of law schools group into law firms. They measure the degree to which lawyers from certain schools concentrate within certain firms and then analyze how this agglomeration can be explained by “natural advantage’’ factors (such as geographic proximity) and by productive complementarities across graduates of a given school. Large law firms tend to hire from a select group of law schools, and individual offices within these firms are substantially more concentrated in terms of hires from particular schools. The degree of concentration is highly variable, as there is substantial variation in firms’ hiring strategies. Two main drivers of variation in law school concentration occur within law offices. First, geography drives a large amount of concentration, as most firms hire largely from local schools. Second, school-based networks (and possibly productive complementarities) appear to be important because partners’ law schools drive associates’ law school composition even when controlling for firm, school, and firm/school match characteristics and when instrumenting for partners’ law schools.


Did Employers in the United States Back Away from Skills Training during the Early 2000s?

C. Jeffrey Waddoups

A number of recent studies suggest that employer-paid training is on the decline in the United States. The present study provides empirical evidence on the issue by analyzing data on employer-paid training from the Survey of Income and Program Participation, a nationally representative data set. The findings reveal a 28% decline in the incidence of training between 2001 and 2009. Very few industries were immune from the decline, and the pattern was evident across occupation, education, age, job-tenure, and demographic groups. A decomposition of the difference in training incidence reveals a diminishing large-firm training effect. In addition, the workforce appears to have had the educational credentials by 2009 that, had they occurred in 2001, would have led to substantially more training.


Intra-firm Wage compression and Coverage of Training Costs: Evidence from Linked Employer-Employee Data

Christian Pfeifer

The author uses German linked employer-employee data to estimate the impact of intra-firm wage dispersion on the probability that establishments pay for further training. About half of all establishments in the estimation sample cover all direct and indirect training costs, which contradicts the standard human capital approach with perfect labor markets. The main finding of cross-section, panel, and instrumental variable probit estimations is that establishments with larger intra-firm wage compression are more likely to cover all direct and indirect training costs, which is consistent with theoretical considerations of the “new training literature” about imperfect labor markets.


Social Protection and Labor Market Outcomes of Youth in South Africa

Cally Ardington, Till Bärnighausen, Anne Case, and Alicia Menendez

An Apartheid-driven spatial mismatch between workers and jobs leads to high job search costs for people living in rural areas of South Africa—costs that many young people cannot pay. In this article, the authors examine whether the arrival of a social grant—specifically a generous state-funded old-age pension given to men and women above prime age—enhances the ability of young men in rural areas to seek better work opportunities elsewhere. Based on eight waves of socioeconomic data on household living arrangements and household members’ characteristics and employment status, collected between 2001 and 2011 at a demographic surveillance site in KwaZulu-Natal, the authors find that young men are significantly more likely to become labor migrants when someone in their household becomes age-eligible for the old-age pension. But this effect applies only to those who have completed high school (matric), who are on average 8 percentage points more likely to migrate for work when their households become pension eligible, compared with other potential labor migrants. The authors also find that, upon pension loss, it is the youngest migrants who are the most likely to return to their sending households, perhaps because they are the least likely to be self-sufficient at the time the pension is lost. The evidence is consistent with binding credit constraints limiting young men from poorer households from seeking more lucrative work elsewhere.


Private and Public Placement Services for Hard-to-Place Unemployed: Results from a Randomized Field Experiment

Gerhard Krug and Gesine Stephan

The authors analyze a randomized field experiment in two German labor market agencies that provide public and private provision of intensive job placement services. The findings, based on analysis of administrative agency data over 18 months in 2009–2010, show that assignment to public employment services reduced accumulated days in unemployment by one to two months, compared to an assignment to a private provider. The effects, however, were short-lived. Moreover, two-thirds of the effect is attributable to labor force withdrawals. Finally, several important differences in the modes of service provision are only partially attributable to inherent aspects of in-house production and contracting out.


Book Reviews

Book Review: Editorial Essay: How Workplace Ethnographies Can Inform the Study of Work and Employment Relations

Michel Anteby and Beth A. Bechky


Book Review: Seeing like a Rover: How Robots, Teams, and Images Craft Knowledge of Mars

Stephen R. Barley


Book Review: Unknotting the Heart: Unemployment and Therapeutic Governance in China

Ofer Sharone


Book Review: All I Want Is a Job! Unemployed Women Navigating the Public Workforce System

Mark Zbaracki


Book Review: In the Meantime: Temporality and Cultural Politics

Melissa Mazmanian


Book Review: Pedigree: How Elite Students Get Elite Jobs

Curtis K. Chan

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