Arthur H. Goldsmith

From Dark to Light: Skin Color and Wages among African-Americans.

This paper develops and tests a theory, referred to as “preference for whiteness,” which predicts that the interracial (white-black) and intraracial wage gap widens as the skin shade of the black worker darkens. Using data drawn from the Multi City Study of Urban Inequality and the National Survey of Black Americans, we report evidence largely consistent with the theory. Moreover, we decompose the estimated interracial and intraracial wage gaps, and find that favorable treatment of lighter-skinned workers is a major source of interracial and intraracial wage differences as predicted by the theory.

The impact of labor force history on self-esteem and its component parts, anxiety, alienation and depression

Abstract Psychologists Erikson (1959), Jahoda (1979, 1981, 1982) and Warr (1987) have offered theories to explain how experiences such as joblessness may lead to a decline in mental health. Other psychologists, including Rotter (1966) and Rosenberg (1965), have designed and validated survey instruments capable of measuring various aspects of emotional health including self-esteem. Using such construct measures the correlation between unemployment and self-esteem has been estimated. Unfortunately, the accuracy of these estimates is marred by three statistical problems: omitted variables, unobserved heterogeneity, and data selection. Therefore, the failure of a consensus to emerge regarding the impact of unemployment on self-esteem is not surprising. This paper offers new estimates of the relation between unemployment and self-esteem using a methodology that controls for the three potential sources of bias identified. The data are drawn from the U.S. National Longitudinal Survey of Youth which provides detailed information on the personal characteristics of individuals in the sample, including their self-esteem, as well as their labor force experiences. We find clear evidence that having recently completed a spell of joblessness, due either to unemployment or time spent out of the labor force, damages an individuals perception of self-worth. Exposure to bouts of both forms of joblessness also significantly harms self-esteem, and the effect of such exposure persists. Our decompositional analysis suggests that joblessness damages self-esteem by generating feelings of depression. Clearly, policies designed to lessen joblessness will also yield a psychologically healthier labor force.

Unemployment, joblessness, psychological well-being and self-esteem: Theory and evidence

Abstract Social psychologists Erikson (1959), Jahoda (1979, 1981, 1982) and Seligman (1975) believe that exposure to events such as joblessness are capable of impairing an individuals psychological well-being. Psychological well-being is a multidimensional concept. Therefore, the impact of unemployment on mental health is likely to be manifest in many forms, including denigration of self-worth or self-esteem. The primary purpose of this study is to investigate the relationship between joblessness and its component parts, unemployment and dropping out of the labor force, on self-esteem using data drawn from the National Longitudinal Survey of Youth (NLSY). The NLSY is well suited for such an investigation since it contains detailed information on the personal characteristics of individuals in the sample, as well as their labor force experiences and measures of self-esteem. Two additional issues will be addressed. First, we examine the psychological counterpart of Ellwoods (1982) hypothesis that joblessness may scar an individual. Second, we shed new light on the debate between Clark and Summers (1979) and Flinn and Heckman (1982, 1983) over whether being out of the labor force (OLF) and being unemployed should be thought of as distinct states. We find that joblessness damages self-esteem for female youths; however, the damage is akin to a blemish. Surprisingly, prior labor force experiences generally fail to influence perceptions of self-worth on the part of young men. However, we do find that for both young men and women who in the past spent time out of the labor force, the greater the duration of their exposure to this form of joblessness, the lower their level of self-esteem. We also offer psychological evidence on the relative emotional wellbeing of the unemployed and labor force drop outs that largely supports the position of Clark and Summers that these conditions are essentially indistinguishable.

The psychological impact of unemployment and joblessness

Abstract Economists have identified two principal adverse effects of unemployment. One is the output foregone that could have been produced if unemployed workers had been productively employed. The second is the psychological damage suffered by unemployed workers and their families. Psychologists have offered theories to explain how experiences such as Joblessness may lead to a deterioration in mental health. They also have designed and validated survey instruments capable of measuring various aspects of emotional health. Unfortunately, their efforts to document the psychological impact of unemployment have been plagued by data limitations, while economists largely have ignored this task. The purpose of this study is three-fold. First, we discuss why unemployment and Joblessness are likely to influence an individuals perception of personal efficacy, locus of control, and hence psychological well-being. Second, we discuss and critique existing efforts to examine the relationship between labor force experiences and locus of control. Third, we investigate the relationship between Joblessness and its component parts—unemployment and dropping out of the labor force—on personal locus of control, using observations from the NLSY and an alternative methodological framework. The NLSY is a longitudinal data set that contains detailed information on the personal characteristics of individuals in the sample, their labor force experiences and a specific personal locus of control. In discussing the results we also attempt to shed some new light on the debate between Clark and Summers (1979) and Flinn and Heckman (1982, 1983) over the question of whether being out of the labor force and being unemployed should be thought of as distinct states. We add further insight into this issue by examining whether there are psychological differences, as measured by locus of control, between otherwise comparable members of these two groups. Finally, we reconsider the Ellwood and Ruhm exchange over whether joblessness and unemployment lead to “psychological” scarring. We find that labor force experiences fail to influence personal locus of control for male youths. There is evidence, however, that perception of personal efficacy is altered by joblessness among young women. As the duration of a current unemployment spell lengthens, the likelihood of holding beliefs of personal efficacy decline for young women. There is also some evidence of scarring among women. For females who in the past have spent time both unemployed and out of the labor force, the greater the duration of their joblessness the more likely is a reduction in feelings of personal efficacy and more aggravated ones self-perception of helplessness. We also offer psychological evidence on the relative emotional well-being of the unemployed and labor force drop outs that largely supports the position of Clark and Summers that these conditions are largely indistinguishable.

Working hard for the money? Efficiency wages and worker effort

This paper oAers a test of the relative wage version of the eAciency wage hypothesis ‐ that firms are able to improve worker productivity by paying workers a wage premium. Psychologists believe work eAort reflects motivation that is governed by a feature of personality referred to as locus of control. Measures of locus of control are available in the National Longitudinal Survey of Youth, Using data drawn from the NLSY in 1992 we simultaneously estimate structural real wage and eAort equations. We find that receiving an eAciency wage enhances a person’s eAort and that person’s providing greater eAort earn higher wages. ” 2000 Elsevier Science B.V. All rights reserved.

Are being unemployed and being out of the labor force distinct states?: A psychological approach

Abstract Clark and Summers (1979) found a high rate of transition between unemployed and out of the labor force status. These findings led them to conclude that “many of those classified as not in the labor force are functionally indistinguishable from the unemployed.” Flinn and Heckman (1982,1983) questioned the validity of the conclusion reached by Clark and Summers. Heretofore, the debate between Clark and Summers and Flinn and Heckman over whether the two forms of nonemployment are distinct states has been conducted by examining transition probabilities and observable external characteristics. Unfortunately, the narrowness of the debate may have prevented this issue from being resolved. Psychologists have offered several explanations that seek to establish how experiences such as joblessness can lead to a deterioration in psychological health. For instance, unemployment may damage a persons locus of control, a concept that accounts for perceptions of personal efficacy, leaving them with a sense of helplessness. Although the psychological status of individuals in the two states of joblessness may differ, due to their respective rationales for withdrawal from the labor force, this possibility has yet to be investigated. This paper uses data from the National Longitudinal Survey of Youth (NLSY) to examine whether a difference in psychological well-being exists between the unemployed and labor force drop outs. We find some evidence that joblessness fosters feelings of externality. In addition, we also find evidence in favor of the stages of psychological impairment theory. Moreover, as the duration of joblessness advances so do feelings of helplessness. Finally, on balance, we offer evidence on the psychological status of the jobless that is consistent with the view of Clark and Summers that the two forms of joblessness are effectively indistinguishable.

The labor supply consequences of perceptions of employer discrimination during search and on-the-job: Integrating neoclassical theory and cognitive dissonance

Abstract This paper offers a theory of how a person’s perception that they face discrimination during job search influences their labor supply, and provides evidence on the relation between this form of perceived discrimination and subsequent labor supply. The theory is developed by extending the neoclassical theory of labor supply to incorporate the insights of Festinger’s theory of cognitive dissonance. A unique feature of our theory is that a person seeks simultaneously both an economic objective – utility maximization – and psychological balance. The theory we advance predicts that a person who faces job search discrimination is thrust into an unbalanced psychological state. This person will make cognitive adjustments to renew psychological balance. They are likely to change their beliefs about the quality of the job that they can expect to attain, which provides an incentive to reduce their labor supply. Alternatively, they may decide that a resume with more work experience is a superior way to restore cognitive consistency. This resume-based strategy generates an impulse to enhance labor supply. Therefore, efforts to restore psychological balance after exposure to job search discrimination may, on net, affect labor supply. Using data drawn from the Multi-City Study of Urban Inequality (MCSUI) this paper offers estimates of the impact on subsequent labor supply of perceived discrimination due to race, ethnicity, or gender while seeking a job and while on-the-job.

Social psychology, unemployment exposure and equilibrium unemployment

Abstract Statistical evidence provided by social psychologists suggests an association between unemployment and social psychological well-being. They believe unemployment exposure leaves an individual with a sense of ‘helplessness’ that impairs motivation, hampers learning and generates adverse emotional consequences all of which are expected to reduce personal productivity. If a substantial number of people experience spells of unemployment these individually based productivity and attachment affects are likely to manifest themselves in observable impacts upon aggregate labor supply and demand. In this paper, the labor market is respecified to account explicitly for social psychological influences. Then the impact of an exogenous contractionary shock is explored within the context of this model.

Wages and the Composition of Experience

This paper provides evidence on the relation between alternative forms of experience and wages using data drawn from the National Longitudinal Survey of Youth. Prior labor market experience is segmented into mutually exclusive categories based on industry and occupation to examine how subsequent employers value skills acquired on previous jobs. We find that most forms of experience, including tenure at the current job, provide a comparable return. However, the wage return to prior experience in a different occupation and industry is significantly lower. Such “career changes” constitute over half of all prior work experience among workers in their mid-30s.

Measuring the Wage Costs of Limited English Issues With Using Interviewer Versus Self-Reports in Determining Latino Wages

Scholars have found that poor English proficiency is negatively associated with wages using self-reported measures. However, these estimates may suffer from misclassification bias. Interviewer ratings are likely to more accurately proxy employer assessment of worker language ability. Using self-reported and interviewer ratings from the Multi-City Study of Urban Inequality, the authors estimate the impact of English proficiency on wages for men (n = 267) and women (n = 178) with Mexican ancestry residing in the Los Angeles metropolitan area. Use of interviewer proficiency ratings suggests a larger and more gradational language penalty as fluency falls, and women face a stronger penalty than their male counterparts. Moreover, controlling for worker accent and skin shade does little to alter these effects.