Harry A. Krashinsky

Liquidity Constraints, Household Wealth, and Entrepreneurship Revisited

A large body research shows a positive relationship between wealth and entrepreneurship and interprets the relationship as providing evidence of liquidity constraints. Recently, however, the liquidity constraint interpretation has been challenged because of the finding that the relationship between business entry rates and assets is flat throughout most of the asset distribution and only rises dramatically after this point (Hurst and Lusardi 2004). We reexamine the liquidity constraint hypothesis in three ways. First, we demonstrate that examining the relationship separately for those who experience a job loss and those who do not reveals generally increasing entry rates through the wealth distribution for both groups. Based on the entrepreneurial choice model of Evans and Jovanovic (1989), these two groups face different incentives, and thus have different solutions to the entrepreneurial decision. We also find evidence of a stronger relationship between entrepreneurship and a different measure of wealth – net housing equity – for the two groups. Second, we examine the liquidity constraint hypothesis using a two-period simulation model that extends the Evans and Jovanovic (1989) model. The model shows how exogenous wealth shocks can be used to accurately identify the presence of liquidity constraints even allowing for endogenous saving and correlated abilities. Third, we provide new evidence from matched Current Population Survey (1993-2004) data to study whether changes in housing prices affect self-employment entry.

Do Marital Status and Computer Usage Really Change the Wage Structure

This analysis uses several identification strategies and data sources to control for individual ability and determine the causal effect of marital status and computer usage on wages. Although data from the CPS, NLSY and a data set of identical twins show that there are large cross-sectional effects of these variables, new econometric specifications are applied to these data which indicate that marital status and computer usage are not important causal determinants of earnings, even after adjustments are made for measurement error and within-twin differences in ability.

Evidence on Adverse Selection and Establishment Size in the Labor Market

A commonly suggested explanation for the finding that laid-off workers have greater mean post-displacement earnings losses than workers who lose their jobs through plant closings is that the former are of lower quality than the latter. But there is also an alternative explanation for this result: laid-off workers suffer larger earnings losses because, as a group, they have more to lose in the first place, having been displaced from larger, higher-wage establishments. An analysis of data from the National Longitudinal Survey of Youth confirms this hypothesis. Accounting for establishment size removes virtually all of the difference in wage losses for the two groups of displaced workers.

How Would One Extra Year of High School Affect Academic Performance in University? Evidence from an Educational Policy Change

This paper uses a unique policy change in Ontario, Canada, to provide direct evidence on how reducing the length of high school would impact student performance in university. After a fiveyear educational program was eliminated from Ontario high schools and replaced with a fouryear program, two graduating cohorts with different amounts of high school education simultaneously entered university. The results demonstrate that students who receive one less year of high school education perform significantly worse than their counterparts in all subjects, even after the age difference between the cohorts is accounted for.

Do English Canadian Hockey Teams Discriminate Against French Canadian Players

The paper considers whether or not English-Canadian teams discriminated against French-Canadian players during the 1989/1990 season, and finds that there is no evidence of discrimination.

Do Marital Status and Computer Usage Really Change the Wage Structure? Evidence from a Sample of Twins

Both marital status and computer usage on the job have been found to increase earnings by as much as two additional years of schooling. If correct, these findings suggest that factors other than long-term human capital investments are key determinants of earnings. Data on identical twins are used in this paper to sweep out selection effects and examine the effect of marital status and computer usage on wages. Within-twin estimates indicate that, unlike education, job tenure and union status, neither marital status nor computer usage have a large or significant effect on wages.

Indian Entrepreneurial Success in the United States, Canada and the United Kingdom

Indian immigrants in the United States and other wealthy countries are successful in entrepreneurship. Using Census data from the three largest developed countries receiving Indian immigrants in the world -- the United States, United Kingdom and Canada -- we examine the performance of Indian entrepreneurs and explanations for their success. We find that business income of Indian entrepreneurs in the United States is substantially higher than the national average and is higher than any other immigrant group. Approximately half of the average difference in income between Indian entrepreneurs and the national average is explained by their high levels of education while industry differences explain an additional 10 percent. In Canada, Indian entrepreneurs have average earnings slightly below the national average but they are more likely to hire employees, as are their counterparts in the United States and United Kingdom. The Indian educational advantage is smaller in Canada and the United Kingdom contributing less to their entrepreneurial success.

Returns to Apprenticeship Based on the 2006 Canadian Census

To study the effect of apprenticeships in Canada, the authors use the 2006 Census, the first large-scale, representative Canadian data set to include information on apprenticeship certification. They find large returns for males with an apprenticeship certification when compared with no degree, a high school degree, or a trade certificate; these returns are almost as high as those to a community college diploma. By contrast, the returns for females who hold an apprenticeship certification are generally less than the returns to any other educational certification, except for no degree. For both genders, differences in observable characteristics account for little of the overall pay differences between apprentices and the alternative educational pathways, and the patterns tend to prevail across the quantiles of the pay distributions and for instrumental variable (IV) estimates.

The Effect of Labor Market Institutions on Salaried and Self-Employed Less-Educated Men in the 1980s

Less-educated workers exhibited negative real wage growth from the late 1970s to the early 1990s. Frequently cited to explain this pattern are such labor market trends as union decline and the falling real value of the minimum wage, but also of concern is the possible contribution of decreased demand, caused by factors such as skill-biased technological change. To investigate the relative importance of these determinants, the author, using CPS data, compares the experiences of wage-and-salary workers with those of the self-employed. Wages apparently declined little for less-educated self-employed workers, but greatly for similar wage-and-salary workers. Because self-employed workers are affected by the same demand shocks as wage-and-salary workers but are not subject to labor market institutions such as the minimum wage or labor unions, the author concludes that the main source of the observed negative real wage growth was the decline of labor market institutions, not skill-biased technological change.

Apprenticeship in Canada: An Increasingly Viable Pathway?

The authors argue that apprenticeships have proven to be a viable way to improve the skills and wages of workers. But there are also substantial obstacles to an improved system in Canada that can be addressed by appropriate policies. They carefully present both the beneficial and the troubling side of the apprenticeship equation. They are optimistic that the system can be made to work better.