John T. Addison

Job Displacement, Relative Wage Changes, and Duration of Unemployment

Using special CPS data on displaced workers, this article investigates the wage consequences of job displacement in a framework that emphasizes the effects of past job duration(s) and unemployment duration(s) on postdisplacement wages. Our model also attempts to take account of the simultaneity between unemployment duration and the postdisplacement wage. It is found that duration strongly reduces subsequent earnings and that considerable overstatement of the loss in firm-specific training investments is implied by conventional routes to measuring wage losses.

Union Effects on Productivity, Profits, and Growth: Has the Long Run Arrived?

This article interprets literature examining union effects on economic performance. Production function studies indicate small overall union impacts on productivity; positive effects, where they exist, appear to result from management response to decreased profit expectations and from a natural selection process. Lower profitability among unionized firms is well established; more interesting is the possibility that unions appropriate quasi rents deriving from long-lived tangible and intangible capital. The connection between unions, investment behavior, and productivity growth emerges as a particularly fruitful line of empirical inquiry, although it does not encourage a sanguine view of unionisms long-run impact.

The Economic Returns to Lifelong Learning in OECD Countries

Recent literature on the returns to schooling and vocational and occupational training in OECD countries is examined, with somewhat greater emphasis being accorded the US and UK experience. We provide estimates of short-cut, Mincer-type and internal rates of return to schooling, as well as alternative estimates of the returns to formal and informal post-school training investments.

Minimum Wages and Poverty

The principal justification for minimum wage legislation has been the claim that it would improve the economic condition of low-wage workers. Most previous analyses of the distributional effects of minimum wages have been based on simulation exercises employing restrictive assumptions that guarantee the conclusion that an increase in the minimum wage reduces poverty. In contrast, the authors of this paper adopt a more flexible “reduced-form” approach that links increases in both federal and state minima to contemporaneous changes in poverty rates. For the period 1983–96, they find indications of a poverty-reducing effect of minimum wages among teenagers and older junior high school dropouts.

Updating the Determinants of Firm Performance: Estimation using the 1998 UK Workplace Employee Relations Survey

We examine the determinants of establishment performance in the UK, using cross‐sectional data from the 1998 Workplace Employee Relations Survey to replicate research by Fernie and Metcalf (1995) who used data from the 1990 Workplace Employee Relations Survey; specifically, we test whether employee representation, contingent pay and efforts to boost employee participation affect a set of economic and industrial relations outcome indicators in the manner they suggest. We also re‐estimate the influential WERS90‐based study of Machin and Stewart (1996) on the links between union status and financial performance. In both cases we report very different results.

Worker participation and firm performance : evidence from Germany and Britain

The Freeman–Lazear works council/worker involvement model is assessed over two distinct industrial relations regimes. In non‐union British establishments our measures of employee involvement are associated with improved economic performance, whereas for unionized plants negative results are detected. The suggestion is that local distributive bargaining can cause the wrong level of worker involvement to be chosen. Also consistent with the model is our finding that mandatory works councils do not impair, and may even improve, the performance of larger German establishments. Yet smaller plants with works councils under‐perform, illustrating the problem of tailoring mandates to fit heterogeneous populations.

The effects of unemployment insurance on postunemployment earnings

Abstract There is surprisingly little research into the effects of unemployment insurance (UI) on postunemployment wage outcomes. Moreover, the few existing studies are sufficiently varied in their approach and conclusions that experienced observers have reached very different interpretations of their implications. We provide new estimates of the effect of UI on subsequent earnings, using data on workers displaced in the period 1983–1990. Our objective is to provide a systematic evaluation of the approaches used in the existing literature. We find some limited evidence of a favorable impact of UI on earnings, but only when we compare recipients with nonrecipients. Even in this case, our point estimates lie well below those reported in earlier studies that pointed to beneficial UI effects.

On the Determinants of Mandatory Works Councils in Germany

German works councils are often thought of as operating in all firms that exceed the basic size threshold (of five permanent employees) established under law. Drawing on a new large-scale, representative German data set, we report that only one-fifth of firms in our sample have works councils even if such firms do account for almost three-fourths of employment. The principal factors behind works council presence emerge as fairly conventional: firm size, firm age, branch plant status, the gender composition of the work force, and certain working arrangements. There are also signs of a close relation between workplace union density and council presence. However, some controversial causal links suggested in an earlier econometric literature receive little support.

The Effect of Dismissals Protection on Employment: More on a Vexed Theme

This paper presents new results on the relationship between severance pay and labor market performance for a sample of 21 OECD countries, 1956–1984. Specifically, it evaluates Lazear’s empirical argument that severance pay reduces employment and elevates joblessness. His findings are shown not to survive correction for errors in the data and the application of correct estimation procedures. Furthermore, adverse labor market consequences of severance pay are not detected in a dynamic characterization of the Lazear model. Limitations of the approach followed here are also addressed and contextualized.

The Impact of Financial Participation and Employee Involvement on Financial Performance: A Re-estimation Using the 1998 WERS

This note re-iterates McNabb and Whitfields (1998) empirical investigation of the relationship between workplace performance and various indicators of employee involvement. McNabb and Whitfield used the 1990 WIRS, whereas our re-estimation is for the 1998 WERS. Our results differ sharply from theirs; in particular, we discern no significant association between downward communication and firm performance, nor do we find that employee share ownership and profit related pay are substitutes. More generally, our findings underscore the difficulty of specifying the relationship between firm performance and employee involvement that is amply reflected in the diversity of findings in the wider literature. Copyright 2000 by Scottish Economic Society.