Finis Welch

The Structure of Wages

Although surveys show that traditional orderings of average wage—i.e., higher earnings with higher schooling and concave age-wage profiles—have not changed during the past three decades, the actual size of the wage differentials measured by education or by work experience has varied from peak to trough by a factor of two-to-one. The patterns are not monotone, but there is a trend toward increased skill premiums. We first examine the structure of wages among white men distinguished by age and schooling for the period from 1963 to 1989. We then compare shifts in the distribution of wages and employment among the age x schooling categories to show in reference to a stable demand structure that employment alone cannot account for observed changes in relative wages. Finally, we describe the characteristics required of candidate demand shifters and offer examples using linear trend, business cycle shocks, and recent patterns of deficits in international trade.

Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust

The arrival of the post--World War II baby boom cohorts in the job market raises many questions of effects associated with a rapidly declining average age of the labor force. This paper first summarizes 1967-75 wage behavior, showing that relative wages between schooling groups have not changed for prime-aged workers, but there is some evidence, for new job-market entrants, that wages of more educated workers have fallen relative to wages of less educated workers. However, changes among schooling groups are small in comparison to those between new entrants and peak earners within schooling group. The evidence is very direct: as work-experience distributions shifted toward increased proportions of young workers, their relative wages fell. After examining a career-phase model in which workers at different phases are imperfect substitutes, estimates of empirical relationships between cohort size and wages are presented. The main result is that income-depressant effects of (own) cohort size decline over the career but do not vanish altogether. Initial effects include reductions in wage rates and in hours and weeks worked, while persistent effects extend only to wages.

Earnings of Hispanic Men: The Role of English Language Proficiency

The size and rapid growth of the Hispanic population in the United States raise many questions about the effects of language on the process of economic assimilation. This paper uses data on earnings for 1975 to explore the role of English language proficiency in the assimilation of Hispanic men into the U.S. labor market. The results are strong: differences associated with English language skills explain virtually all of the Hispanic wage differences usually attributed to ethnicity, national origin, and time in the United States. The analysis is completed by relating the measure of English language proficiency to assimilation-related variables.

The Panel Study of Income Dynamics after Fourteen Years: An Evaluation

This article considers the representativeness of the Panel Study of Income Dynamics (PSID) over its 14-year history from 1968 to 1981 given the dynamics of entry and exit from the panel. By 1981, 40% of the original members had left the sample and were replaced by new entrants who joined either existing households or new households being formed by members of the original sample. We consider the distribution of demographic characteristics and earnings equations over time, and we compare the PSID with the Current Population Survey (CPS). By either approach we find little evidence that the PSID has become unrepresentative.

Do Sex Preferences Really Matter

Some theoretical guidelines, 286. — Evidence: fertility and sex composition, 289. — Would family size change if sex of children were controlled? 297. — Variation in the probability for a boy and the aggregate sex ratio, 299. — Summary, 302. — Appendix, 302.

Trends in Labor Force Transitions of Older Men and Women

We use the Current Population Survey to describe what we believe are the most salient aspects of labor force behavior of older men and women during the last 2 decades. First, we show that early retirement has increased dramatically, and this trend continued through the 1980s. Second, we show that the factors that most sharply distinguish propensities toward early retirement are those usually associated with low wages. Third, we show that trends in reduced participation for older men parallel those for younger men, while a pattern of increasing female participation is to be expected given the behavior of younger cohorts.

Closing the Gap: Forty Years of Economic Progress for Blacks.

Forty years ago Gunnar Myrdal assessed the economic situation of blacks in America as pathological. The 40-year record clearly points to a significant and quantitatively large improvement in the relative economic status of black men. In 1940 the typical black male earned around

Affirmative Action and Labor Markets

4500 (in 1984 dollars); a similarly employed black male earned almost

The Employment of Black Men

19000 by 1980. The typical black male worker in 1940 earned only 43% as much as his white counterpart; by 1980 the figure was 73%. Whether distinguishing between low or middle-income blacks between the old and the young or the more or less educated the incomes of black men have risen relative to comparable whites. The data show simultaneously the persistence of black poverty the growth of the black middle class and the emergence of a nonnegligible black upper class. The growth in size of the black middle class is so spectacular that as a group it outnumbers the black poor. The 2 dimensions of education that closed the racial wage gap are the narrowing of educational disparities between the races and the improving economic return to black schooling. Southern black migration to Northern cities increased black-white male wage ratios by 11-19% between 1940 and 1980 but the income gains from migration were largely exhausted by 1970. After 1970 the wages of both black and white men increased faster in the South than in the rest of the country. The introduction of the mechanical cotton picker caused a sharp decline in the demand for a largely Southern black labor force in cotton and gave additional impetus to the migration of young Southern blacks to the North. The increasing tendency of many middle-aged black men to drop out of the labor force is an important and neglected social problem. Affirmative action resulted in a radical reshuffling of black jobs in the labor force. Unfortunately its ability to raise the incomes of black men has proven to be far more difficult to achieve.

How representative are matched cross-sections? Evidence from the Current Population Survey

Affirmative action remains controversial. The controversy extends from the original antidiscrimination legislation and its interpretation to estimates of affirmative actions effect on the labor market. This paper provides a progress report on our recent efforts at detecting the effects of affirmative action on minority wages and employment. Although we find a substantial increase in wages for black men and black women over our sample period, the timing of these wage changes is surprising. Most of the wage gains came prior to 1974, before the establishment of an effective monitoring structure for affirmative action. Indeed, when the powers of the EEOC and OFCC are greatest, the wage effects for young blacks are somewhat perverse. Using EEO-1 reports we find a major shift in black employment toward firms most vulnerable to the monitoring and potential sanctions of the affirmative action programs. As with wages, the shift in minority employment came prior to the expansion of the powers and budgets of the EEOC and OFCC. We are surprised by the timing of these changes and are concerned about the quality of the EEO-1 reports.