Harley Frazis

Reexamining the Returns to Training: Functional Form, Magnitude, and Interpretation

We investigate the functional form for formal training in a wage equation and derive estimates of its rate of return. The cube root fits best in our two data sets. We show that if wages are not adjusted continuously, estimating the return to training requires one lag and one lead of training. Using the cube root and a semi-nonparametric estimator, estimated returns are 150–180 percent. Adjusting for heterogeneity in wage growth, promotions, and direct costs reduces the return to 40–50 percent. We find evidence of heterogeneity in returns. Our estimates can thus be regarded as the return to training for the trained, but cannot be extrapolated to the untrained.

Data Watch: The American Time Use Survey

We discuss the new American Time Use Survey (ATUS), an on-going household survey of roughly 1,200 Americans per month (1,800 per month in the first year, 2003) that collects time diaries as well as demographic interview information from respondents who had recently been in the Current Population Survey. The characteristics of the data are presented, as are caveats and concerns that one might have about them. A number of novel uses of the ATUS in economic research, including in the areas of macroeconomics, national income accounting, labor economics, and others, are proposed to illustrate the magnitude of this new surveys possible applications.

Selection Bias and the Degree Effect

This paper evaluates the evidence for a college degree effect-a particularly high return to completing college compared to the first three years-in the National Longitudinal Study of the High School Class of 1972 (NLS-72). An ordered probit model of schooling choice is developed to correct for selection bias. If conventional exclusion restrictions are adopted, selection bias does not appear to account for the degree effect. However, use of Leamers (1978, 1982) extreme bounds analysis shows that the results are very dependent on acceptance of the exclusion restrictions used to identify the model.

How to Think About Time-Use Data: What Inferences Can We Make About Long- and Short-Run Time Use from Time Diaries?

Time-use researchers are typically interested in the time use of individuals, but time use data are samples of person-days. Given day-to-day variation in how people spend their time, this distinction is analytically important. We examine the conditions necessary to make inferences about the time use of individuals from a sample of person-days. We also discuss whether and how surveys with multiple household members or multiple days are an improvement over single-diary surveys.

Tracking the Returns to Education in the 1990s. Bridging the Gap between the New and Old Current Population Survey Education Items.

The Current Population Survey (CPS) is used for many studies examining trends in the returns to education. The CPS changed its education item in 1992. This paper develops adjustment factors for earnings at different education levels to make pre- and post- 1992 earnings comparable. To accomplish this, contradictory results from alternative data sources are analyzed and, to the extent possible, reconciled. The adjustments reduce the estimated growth in the College/High School earnings ratio between 1989 and 1993 by between 29 and 48 percent for men and between 44 and 73 percent for women.

How Does Household Production Affect Earnings Inequality? Evidence from the American Time Use Survey

Although income inequality has been studied extensively, relatively little attention has been paid to the role of household production. Economic theory predicts that households with less money income will produce more goods at home. Thus extended income, which includes the value of household production, should be more equally distributed than money income. We find this to be true, but not for the reason predicted by theory. Virtually all of the decline in measured inequality, when moving from money income to extended income, is due to the addition of a large constant--the average value of household production--to money income. This result is robust to alternative assumptions that one might make when estimating the value of household production.

How Responsive are Quits to Benefits

Economists have argued that one function of fringe benefits is to reduce turnover. However, the effect on quits of the marginal dollar of benefits relative to wages is underresearched. We use the benefit incidence data in the 1979 National Longitudinal Survey of Youth and the cost information in the National Compensation Survey to impute benefit costs and estimate quit regressions. The quit rate is much more responsive to benefits than to wages, and total turnover even more so; benefit costs are also correlated with training provision. We cannot disentangle the effects of individual benefits due to their high correlation.