ILR Review: March 2019 Issue in Honor of Henry Farber

Dear Friends,

We are very pleased to publish this special issue in honor of Henry Farber’s contributions to the field of labor economics and as a longstanding author of articles in the ILR Review. Many thanks to Orley Ashenfelter and Alexandre Mas for guest editing this special issue. It features papers that were presented in a spring, 2016 Festschrift in Hank’s honor, with papers that covered many areas in labor economics, including some (but not all) of the key research areas where he has contributed substantially to advancing the field: consequences of unemployment, the changing nature of employment relations, and the role of unions. Contributions from leading labor economists include: Katharine Abraham, Ran Abramitzky, Leah Boustan, Mark Chin, Katherine Eriksson, Deepti Goel, John Haltiwanger, Thomas Kane, Lawrence Katz, Alan Krueger, Whitney Kozakowski, Kevin Lang, Craig Olson, Paul Oyer, Douglas Staiger, Kristin Sandusky, Scott Schaefer, Beth Schueler, and James R. Spletzer.

From the editors,

Rose Batt and Larry Kahn

ILR Review Volume: 72, Number: 2 (March 2019)

A Special Issue in Honor of Henry Farber

Special Issue Articles

Editorial Essay: Introduction to a Special Issue in Honor of Henry Farber

Orley Ashenfelter and Alexandre Mas

The Consequences of Long-Term Unemployment: Evidence from Linked Survey and Administrative Data

Katharine G. Abraham, John Haltiwanger, Kristin Sandusky, and James R. Spletzer

Abstract: That the long-term unemployed fare worse in the labor market than do the short-term unemployed is well-known, but why? One potential explanation is that the long-term unemployed are “bad apples” who had poorer prospects from the outset of their spells (heterogeneity). Another is that these bad outcomes are a consequence of their extended unemployment (state dependence). The authors use Current Population Survey data on unemployed individuals linked to unemployment insurance wage records for the same people to distinguish between these explanations. The rich work history information contained in the wage records allows the authors to control for individual heterogeneity that could affect post-unemployment labor market outcomes. Even with these controls in place, they find that unemployment duration has a strongly negative effect on the likelihood of subsequent employment. The results are robust to accounting for differences in the labor market conditions experienced by the long-term and short-term unemployed.

To the New World and Back Again: Return Migrants in the Age of Mass Migration

Ran Abramitzky, Leah Boustan, and Katherine Eriksson

Abstract: The authors compile large data sets from Norwegian and US historical censuses to study return migration during the Age of Mass Migration (1850–1913). Norwegian immigrants who returned to Norway held lower-paid occupations than did Norwegian immigrants who stayed in the United States, both before and after their first transatlantic migration, suggesting they were negatively selected from the migrant pool. Upon returning to Norway, return migrants held higher-paid occupations relative to Norwegians who never moved, despite hailing from poorer backgrounds. These patterns suggest that despite being negatively selected, return migrants had been able to accumulate savings and could improve their economic circumstances once they returned home.

School District Reform in Newark: Within- and Between-School Changes in Achievement Growth

Mark Chin, Thomas J. Kane, Whitney Kozakowski, Beth E. Schueler, and Douglas O. Staiger

Abstract: In the 2011–12 school year, the Newark Public School district (NPS) launched a set of educational reforms supported by a gift from Facebook CEO Mark Zuckerberg and Priscilla Chan. Using data from 2008–09 through 2015–16, the authors evaluate the change in Newark students’ achievement growth relative to similar students and schools elsewhere in New Jersey. They measure achievement growth using a “value-added” model, controlling for prior achievement, demographics, and peer characteristics. By the fifth year of reform, Newark saw statistically significant gains in English language arts (ELA) achievement growth and no significant change in math achievement growth. Perhaps because of the disruptive nature of the reforms, growth declined initially before rebounding in later years. Much of the improvement was attributed to shifting enrollment from lower- to higher-growth district and charter schools.

Social Ties and the Job Search of Recent Immigrants

Deepti Goel and Kevin Lang

Abstract: This article highlights a specific mechanism through which social networks help in job search. The authors characterize the strength of a network by its likelihood of providing a job offer. Using a theoretical model, they show that the difference between wages in jobs found using networks versus those found using formal channels decreases as the network becomes stronger. The authors verify this result for recent immigrants to Canada for whom a strong network is captured by the presence of a “close tie.” Furthermore, structural estimates confirm that the presence of a close tie operates by increasing the likelihood of generating a job offer from the network rather than by altering the network wage distribution.

The Rise and Nature of Alternative Work Arrangements in the United States, 1995–2015

Lawrence F. Katz and Alan B. Krueger

Abstract: To monitor trends in alternative work arrangements, the authors conducted a version of the Contingent Worker Survey as part of the RAND American Life Panel in late 2015. Their findings point to a rise in the incidence of alternative work arrangements in the US economy from 1995 to 2015. The percentage of workers engaged in alternative work arrangements—defined as temporary help agency workers, on-call workers, contract workers, and independent contractors or freelancers—rose from 10.7% in February 2005 to possibly as high as 15.8% in late 2015. Workers who provide services through online intermediaries, such as Uber or TaskRabbit, accounted for 0.5% of all workers in 2015. Of the workers selling goods or services directly to customers, approximately twice as many reported finding customers through off-line intermediaries than through online intermediaries.

Union Threat Effects and the Decline in Employer-Provided Health Insurance

Craig A. Olson

Abstract: Employer-provided health insurance decreased by an average of almost 0.6 percentage points per year for adults aged 18 to 64 who were working full-time in the private sector between 1983 and 2007. Most of this decline was among non-union workers. This study reports estimates that suggest the decrease was caused by a decline employers faced in the threat of being unionized, as measured by the drop in state-level private-sector union density over the 25 years and across the 50 states. The author hypothesizes the decline in union density caused some non-union employers to decide not to offer health insurance. The study shows the importance of accounting for measurement error in union density when estimating the declining threat effect of unionization on non-union employer-provided health insurance coverage.

The Returns to Elite Degrees: The Case of American Lawyers

Paul Oyer and Scott Schaefer

Abstract: The authors study the market for young attorneys. Using data from two surveys of attorneys who passed the bar exam in 2000, they find that attorneys who graduate from law schools ranked in the Top 10 nationally earn considerably more than those without such a qualification, even compared to attorneys who graduate from schools ranked 11–20. The premium to an elite education carries over to an attorney’s undergraduate institution as well, and the findings suggest that elite bachelor’s degrees and elite law degrees are close substitutes in terms of their relationships to salaries. The elite–law school premium is more robust to various methods for correcting for selection on ability than the widely studied premium to attending a selective undergraduate institution. The authors consider several reasons elite-school premiums may exist in this labor market.

Non–Special Issue Article

State Collective Bargaining Laws and Public-Sector Pay

Eric J. Brunner and Andrew Ju

Abstract: Using the Public Use Microdata Sample from the 2005 to 2015 American Community Survey, the authors provide new evidence on how state collective bargaining laws affect public-sector wages. To isolate the causal effect of bargaining laws on public-sector pay, they examine wage differentials between otherwise similar public- and private-sector employees located in the same local labor market. They estimate difference-in-differences (DD) models that exploit two sources of plausibly exogenous variation: 1) policy discontinuities along state borders and 2) variation within states in collective bargaining laws in states where the majority of public workers are without collective bargaining rights. Findings show that mandatory collective bargaining laws increase public-sector wages by approximately 5 to 8 percentage points. Results therefore suggest that mandatory collective bargaining laws provide a formal mechanism through which public-sector workers are able to bargain for increased compensation.