David Neumark

Does Marriage Really Make Men More Productive

This paper presents new descriptive evidence regarding marital pay premiums earned by white males. Longitudinal data indicate that wages rise after marriage, and that cross-sectional marriage premiums appear to result from a steepening of the earnings profile. Data from a company personnel file that includes information on job grades and supervisor performance ratings reveal large marital status pay differences within a narrow range of occupations (managers and professionals) and environments (a single firm). Married workers tend to be located in higher paying job grades; there are very small pay differentials within grades. Married men receive higher performance ratings than single men; as a result, they are much more likely to be promoted. Controlling for rated performance, however, eliminates the promotion differential.

Market Structure and the Nature of Price Rigidity: Evidence from the Market for Consumer Deposits

Panel data on consumer bank deposit interest rates reveal asymmetric impacts of market concentration on the dynamic adjustment of prices to shocks. Banks in concentrated markets are slower to raise interest rates on deposits in response to rising market interest rates, but are faster to reduce them in response to declining market interest rates. Thus, banks with market power skim off surplus on movements in both directions. Since deposit interest rates are inversely related to the price charged by banks for deposits, the results suggest that downward price rigidity and upward price flexibility are a consequence of market concentration.(This abstract was borrowed from another version of this item.)

EMPLOYMENT EFFECTS OF MINIMUM AND SUBMINIMUM WAGES: PANEL DATA ON STATE MINIMUM WAGE LAWS

Using panel data on state minimum wage laws and economic conditions for the years 1973–89, the authors reevaluate existing evidence on the effects of a minimum wage on employment. Their estimates indicate that a 10% increase in the minimum wage causes a decline of 1–2% in employment among teenagers and a decline of 1.5–2% in employment for young adults, similar to the ranges suggested by earlier time-series studies. The authors also find evidence that youth subminimum wage provisions enacted by state legislatures moderate the disemployment effects of minimum wages on teenagers.

Sex Discrimination in Restaurant Hiring: An Audit Study

This paper reports on a small-scale audit study that investigates sex discrimination in restaurant hiring. Comparably matched pairs of men and women applied for jobs as waiters and waitresses at 65 restaurants in Philadelphia. The 130 applications led to 54 interviews and 39 job offers. The results provide statistically significant evidence of sex discrimination against women in high-price restaurants. In high-price restaurants, job applications from women had an estimated probability of receiving a job offer that was lower by about .5, and an estimated probability of receiving an interview that was lower by about .4. These hiring patterns appear to have implications for sex differences in earnings, as informal survey evidence indicates that earnings are higher in high-price restaurants.

Minimum Wages and Employment

We review the burgeoning literature on the employment effects of minimum wages – in the United States and other countries – that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. Two other important conclusions emerge from our review. First, we see very few – if any – studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.

Do Small Businesses Create More Jobs? New Evidence for the United States from the National Establishment Time Series

We use the National Establishment Time Series (NETS) to revisit the debate about the role of small businesses in job creation (Birch, 1987; Davis, Haltiwanger, & Schuh, 1996a). Using the NETS data, we examine evidence for the overall economy, as well as for different sectors. The results indicate that small firms and small establishments create more jobs, on net, although the difference is much smaller than Birchs methods suggest. Moreover, in the recent period we study, a negative relationship between establishment size and net job creation holds for both the manufacturing and services sectors.

Minimum Wages, Labor Market Institutions, and Youth Employment:A Cross-National Analysis

The authors estimate the employment effects of changes in national minimum wages using a pooled cross-section time-series data set comprising 17 OECD countries for the period 1975–2000. The average effects they find are consistent with the view that minimum wages cause employment losses among youths. However, the evidence also shows considerable variation across countries. In particular, disemployment effects of minimum wages appear to be smaller in countries that have subminimum wage provisions for youths. Regarding other labor market policies and institutions, the authors find that more restrictive labor standards and higher union coverage strengthen the disemployment effects of minimum wages, while employment protection laws and active labor market policies designed to bring unemployed individuals into the work force help to offset these effects. Overall, the disemployment effects of minimum wages are strongest in the countries with the least regulated labor markets.

Minimum Wage Effects throughout the Wage Distribution

This paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage, including wages, hours, employment, and ultimately labor income. Not surprisingly, the evidence indicates that low-wage workers are most strongly affected, while higher-wage workers are little affected. Workers who initially earn near the minimum wage experience wage gains. Nevertheless, their hours and employment decline, and the combined effect of these changes on earned income suggests adverse consequences, on net, for low-wage workers.

Job Stability in the United States

Two key attributes of a job are its wage and its duration. Much has been made of changes in the wage distribution in the 1980s, but little attention has been given to job durations since Hall. We fill this void by examining the temporal evolution of job retention rates in U.S. labor markets, using data assembled from the sequence of Current Population Survey job tenure supplements. There have been relative declines in job stability for some of the groups that experienced the sharpest declines in relative wages. However, we find that aggregate job retention rates have remained stable.

Are Earnings Profiles Steeper Than Productivity Profiles? Evidence from Israeli Firm-Level Data

We test competing explanations of rising age-earnings profiles by obtaining direct estimates of marginal productivity differentials between workers in different age groups and comparing these to associated earnings differentials, using contemporary data from Israeli manufacturing firms. The results indicate that, controlling for other productive inputs and firm characteristics, for the unskilled or less-skilled workers who represent most of the workers in our sample, both earnings and productivity profiles are upward sloping. Moreover, these profiles mirror each other closely, and are statistically indistinguishable. However, the estimates of the profiles are sufficiently imprecise that even sizable deviations between point estimates of earnings growth and productivity growth would not be statistically significant. While we view the results as most consistent with a general human capital model of rising earnings profiles over the life cycle, there is not strong evidence with which to reject alternative models.