John DiNardo

Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach

This paper provides evidence that the decline in the real value of the minimum wage and in the rate of unionization account for a significant share of the increase in wage inequality in the United States between 1979 and 1988. The role of the minimum wage is particularly important for women, while deunionization has the largest impact on men. The authors develop a semiparametric procedure that applies kernel density methods to appropriately weighted samples. The procedure provides a visually clear representation of where in the density of wages institutional and labor market forces exert the greatest impact. Copyright 1996 by The Econometric Society.

Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles

The recent rise in wage inequality is usually attributed to skill‐biased technical change (SBTC), associated with new computer technologies. We review the evidence for this hypothesis, focusing on the implications of SBTC for overall wage inequality and for changes in wage differentials between groups. A key problem for the SBTC hypothesis is that wage inequality stabilized in the 1990s despite continuing advances in computer technology; SBTC also fails to explain the evolution of other dimensions of wage inequality, including the gender and racial wage gaps and the age gradient in the return to education.

The Effect of Implicit Contracts on the Movement of Wages over the Business Cycle: Evidence from Micro Data

In this paper we address the question of whether wages are affected by labor market conditions in a manner more consistent with a contract approach than with a standard spot market model. From a simple implicit contract model, we derive implications about the links between wages and past labor market conditions. Using individual data from the Current Population Survey and the Panel Study of Income Dynamics, we find that an implicit contract model with costless mobility describes these links better than either a simple spot market model or an implicit contract model with costly mobility.

Economic Impacts of New Unionization on Private Sector Employers: 1984–2001

Economic impacts of unionization on employers are difficult to estimate in the absence of large, representative data on establishments with union status information. Estimates are also confounded by selection bias, because unions could organize at highly profitable enterprises that are more likely to grow and pay higher wages. Using multiple establishment-level data sets that represent establishments that faced organizing drives in the U.S. during 1984-1999, this paper uses a regression discontinuity design to estimate the impact of unionization on business survival, employment, output, productivity, and wages. Essentially, outcomes for employers where unions barely won the election (e.g. by one vote) are compared to those where the unions barely lost. The analysis finds small impacts on all outcomes that we examine; estimates for wages are close to zero. The evidence suggests that at least in recent decades the legal mandate that requires the employer to bargain with a certified union has had little economic impact on employers, because unions have been somewhat unsuccessful at securing significant wage gains.

Alcohol, marijuana, and American youth: the unintended consequences of government regulation

This paper analyzes the impact of increases in the minimum drinking age on the prevalence of alcohol and marijuana use among high school seniors. The empirical analysis is based on a large sample of students from 43 states over the years 1980-1989. We find that increases in the legal minimum drinking age did slightly reduce the prevalence of alcohol consumption. We also find, however, that increased legal minimum drinking ages had the unintended consequence of slightly increasing the prevalence of marijuana consumption. Estimates from a structural model suggest that this unintended consequence is attributable to standard substitution effects.

New Evidence on the Finite Sample Properties of Propensity Score Reweighting and Matching Estimators

Frölich (2004) compares the finite sample properties of reweighting and matching estimators of average treatment effects and concludes that reweighting performs far worse than even the simplest matching estimator. We argue that this conclusion is unjustified. Neither approach dominates the other uniformly across data-generating processes (DGPs). Expanding on Frölichs analysis, this paper analyzes empirical as well as hypothetical DGPs and also examines the effect of misspecification. We conclude that reweighting is competitive with the most effective matching estimators when overlap is good, but that matching may be more effective when overlap is sufficiently poor.

The Immigrant and Native-Born Wage Distributions: Evidence from United States Censuses

Recent studies document a large widening of the immigrant/native-born mean wage gap since about 1970, a trend that some observers ascribe to post-1965 changes in U.S. immigration policy. These studies are limited, however, by their exclusive focus on men, which ignores important gender differences in the wage gap, and by the inadequacy of the mean wage for characterizing the gap when, as in recent decades, the wage distribution dramatically changes. This study of recent immigrants examines changes across the entire wage distribution, for both genders. The authors find evidence, based partly on gender differences, that minimum wages strongly influenced the gap. A counterfactual analysis also indicates that if recent immigrants in 1970 had faced the 1990 wage structure, their wage distribution would have closely resembled that of recent immigrants in 1990. These and other results suggest that the increasing wage gap is linked to changes in the wage structure.

Diverging male wage inequality in the United States and Canada, 1981-1988: Do institutions explain the difference?

The U.S. and Canadian economies have much in common, including similar collective bargaining structures. During the period 1981–88, however, although both countries witnessed a decline in the percentage of workers belonging to unions and an increase in hourly wage inequality, those changes were much more pronounced in the United States than in Canada. Using data on men in Canada and the United States in 1981 and 1988 (from the Labour Force Survey and supplements to the Current Population Survey), the authors study the effect of labor market institutions on changes in wage inequality by computing simple counterfactuals such as the distribution of wages that would prevail if all workers were paid according to the observed nonunion wage schedule. Their results suggest that much more severe declines in the unionization rate in the United States than in Canada account for two-thirds of the differential growth in wage inequality between the two countries.

Law enforcement, the price of cocaine and cocaine use

In this paper I investigate the relationship between law enforcement and the price and use of cocaine. I merge data from the Drug Enforcement Administrations (DEA) STRIDE (System to Retrieve Information from Drug Evidence) and MTF (Monitoring the Future). In particular, I apply a variety of grouped data estimators and relate these estimators to instrumental variables techniques, quasi-experiments, and classical experimental design. I find no evidence that regional and time variation in DEA seizures of cocaine is helpful in explaining variation in either the demand or price of cocaine.

Wellness Incentives In The Workplace: Cost Savings Through Cost Shifting To Unhealthy Workers

The Affordable Care Act encourages workplace wellness programs, chiefly by promoting programs that reward employees for changing health-related behavior or improving measurable health outcomes. Recognizing the risk that unhealthy employees might be punished rather than helped by such programs, the act also forbids health-based discrimination. We reviewed results of randomized controlled trials and identified challenges for workplace wellness programs to function as the act intends. For example, research results raise doubts that employees with health risk factors, such as obesity and tobacco use, spend more on medical care than others. Such groups may not be especially promising targets for financial incentives meant to save costs through health improvement. Although there may be other valid reasons, beyond lowering costs, to institute workplace wellness programs, we found little evidence that such programs can easily save costs through health improvement without being discriminatory. Our evidence suggests that savings to employers may come from cost shifting, with the most vulnerable employees--those from lower socioeconomic strata with the most health risks--probably bearing greater costs that in effect subsidize their healthier colleagues.