James F. Ragan

The Impact of Host-Country Schooling on Earnings: A Study of Male Immigrants in the United States

Immigrants in the United States who acquire U.S. schooling earn higher wages than other immigrants. Using data from the U.S. censuses and the National Longitudinal Survey of Youth, we show that this wage advantage results from both greater educational attainment and higher returns to education. The higher returns are not the consequence of ability bias or greater English proficiency of those who acquire U.S. schooling. Returns to years of non-U.S. education are higher for immigrants who complete their schooling in the United States, consistent with the view that U.S. schooling upgrades or certifies education received in the source country. For those without U.S. schooling, returns are higher for immigrants from highly developed countries and countries for which English is an official language.

The Effect of Naturalization on Wage Growth— A Panel Study of Young Male Immigrants

For young male immigrants, naturalization facilitates assimilation into the U.S. labor market. Following naturalization, immigrants gain access to public‐sector, white‐collar, and union jobs, and wage growth accelerates—consistent with removal of employment barriers. The faster wage growth of immigrants who naturalize might alternatively result from greater human capital investment prior to naturalization, stemming from a long‐term commitment to U.S. labor markets, but there is no evidence that wage growth accelerates or the distribution of jobs improves until citizenship is attained. Finally, the gains from naturalization are greater for immigrants from less‐developed countries and persist when we control for unobserved productivity.

Changes in the Union Wage Premium by Industry

Relying on CPS data, the authors estimate the union wage premium—the amount by which wages of union workers exceeded those of nonunion workers in the same industry conditional on worker characteristics—for 32 industries over the period 1971–99. The dispersion of union premiums across industries narrowed over time as high premiums tended to fall and low premiums to rise. At the aggregate level, the premium drifted lower. When the authors model the union premium as a function of cyclical and structural variables and unmeasured industry characteristics, they find that Cost-of-Living-Adjustment (COLA) clauses reduced the responsiveness of the union premium to economic conditions and that increases in import penetration were strongly associated with rising union premiums. The effect of deregulation was mixed.

Negative Returns to Seniority: New Evidence in Academic Markets

Recent research has suggested that the long-observed negative association between seniority and pay among college faculty largely reflects below-average research productivity of senior faculty—a possibility that most earlier studies did not examine. Overlooked in both waves of studies, however, is match quality. Because the higher quality of the faculty/institutional match implied by higher seniority should, all else equal, result in higher salaries, failure to account for match quality inflates the estimated returns to seniority. Indeed, that positive bias, the authors find, is roughly equal in magnitude to the negative bias caused by failure to account for research quantity and quality. When they account for both match quality and faculty research productivity in an analysis of data on economics faculty at five research universities over a 21-year period, the authors estimate that, holding experience and other factors constant, the penalty for twenty years of seniority is 16% of salary.

Differences in Student Evaluations of Principles and Other Economics Courses and the Allocation of Faculty across Courses

The authors analyze 19 semesters of student evaluations at Kansas State University. Faculty member fixed effects are sizable and indicate that among faculty members who teach both types of courses, the best principles teachers also tend to be the best nonprinciples teachers. Estimates that ignore faculty effects are biased because principles teachers are drawn from the top of the distribution and because unmeasured faculty member characteristics are correlated with such variables as the response rate. Student ratings are lowest for new faculty but stabilize quickly. Lower student interest and especially larger class size reduce student ratings and fully explain the lower evaluations of principles classes. By accounting for differences in characteristics over which the instructor has no control, departments can adjust student ratings to more accurately assess the contributions of their teachers.

Do student evaluations of teaching depend on the distribution of expected grade

Prior research suggests that student evaluations of teaching may depend on the average grade expected in a class. We hypothesize that, because of risk aversion, student ratings also depend on the distribution of expected grades. As predicted, student ratings at the University of Puerto Rico at Bayamón are significantly and negatively related to the variance of expected grades, implying that faculty may be able to boost their student evaluations of teaching ratings by narrowing the grade distribution. Findings are also consistent with the hypothesis that weak students place the highest value on a tight distribution of expected grades.

Un-COLA: Why Have Cost-of-Living Clauses Disappeared from Union Contracts and Will They Return?

For more than 20 years, unions have been trading cost-of-living adjustment clauses (COLAs) for other forms of compensation. Various explanations have been offered for the erosion of COLA coverage—including reduced inflationary uncertainty, lower union power, and structural shifts in the economy—but the relative importance of these and competing hypotheses remains untested. We investigate the reasons for the decline in COLA coverage using a pooled cross-sectional, time-series model that accounts for industry fixed effects and recognizes the multiyear nature of most union contracts. After assessing the relative importance of alternative hypotheses, we conclude with a discussion of the potential for a rebound in COLA rates.

How similar are pay structures in `similar' departments of economics?

Using a unique panel data set spanning 21 years, we estimate a fixed-effects model of pay determination for five Ph.D.-granting departments of economics in large Midwestern state universities. Despite program similarities, no two departments have comparable reward structures, which points to the perils of generalizing across universities. We also explore the effects of faculty leaves. Although the first sabbatical leave typically has little effect on pay, a second sabbatical is usually associated with higher pay, consistent with the proposition that a second sabbatical restores more lost human capital than the first sabbatical. With some exceptions, leaves without pay are associated with lower pay. Finally, in estimating rewards for research, we find that at four of the universities returns to quality overwhelm returns to quantity. At these universities, an article published in the AER boosts pay by as much as 11 percent, whereas an article in an unranked journal increases pay by at most 1%.

Earnings Profiles of Department Heads: Comparing Cross-Section and Panel Models

Academics who become department heads suffer declining research skills because of time spent performing administrative tasks, and this skill depreciation slows future wage growth. This study examines Kansas State University faculty who served as department heads during the period 1965–92. Cross-section estimates of the compensation for serving as department head are biased upward because of a correlation between unmeasured productivity characteristics and selection as department head. To correct for this bias, the authors reestimate earnings equations using a panel model that incorporates personal fixed effects. Although the average department head in the sample received a wage premium of 12%, the premium for past administrative service had completely disappeared for the typical former head. Another finding is that skill depreciation was most severe and wage growth most adversely affected in the sciences. As compensation, department heads in the sciences received a larger initial administrative premium than did other department heads.

Differences in Student Evaluations of Principles and Non-Principles Economics Courses and the Allocation of Faculty Across These Courses

We analyze 19 semesters of student evaluations at Kansas State University. Faculty fixed effects are sizable and indicate that, as assessed by students, the best principles teachers also tend to be the best non-principles teachers. OLS estimates are biased because principles teachers are drawn from the top of the distribution and because unmeasured faculty characteristics are correlated with such variables as the response rate and student effort. Student ratings are lowest for new faculty but stabilize quickly. Expected GPA of the class is not an important determinant of student ratings, but equitable grading is; and the rewards for equitable grading appear larger for principles classes. The lower ratings in principles classes are fully accounted for by greater class size.