Jonathan R. Veum

SOURCES OF TRAINING AND THEIR IMPACT ON WAGES

Using data from the National Longitudinal Survey of Youth from 1986 to 1990, the author investigates the wage impact of various sources of training—among them, company training programs, apprenticeships, business schools, vocational and technical institutes, correspondence courses, and seminars outside the workplace. Time spent in training (of whatever kind) apparently did not affect 1990 wage levels. The incidence of two kinds of training, however—company training and seminars outside work—was positively related to wage levels as well as to wage change between 1986 and 1990; that is, workers who undertook such training enjoyed higher wages than those who did not. Time spent in vocational schools was also positively associated with wage change, though not with 1990 wage levels. The other forms of training had no apparent impact on either wage levels or wage change.

WHAT IS A PROMOTION

Using National Longitudinal Survey of Youth data, the authors analyze the determinants and consequences of a promotion among young workers. Most events that workers called “promotions” involved no change in position or duties, but were simply an upgrade of the current position. Typically, only one person was considered for the promotion. Men were more likely to be promoted than women, and whites more likely than blacks or Hispanics. The acquisition of company training and the receipt of a prior promotion were two of the most important predictors of promotion. Consequences of promotion included increased wages, training receipt, supervisory responsibilities, and increased job satisfaction. There is little evidence that promotion had a direct impact on job attachment.

The impact of labor force history on self-esteem and its component parts, anxiety, alienation and depression

Abstract Psychologists Erikson (1959), Jahoda (1979, 1981, 1982) and Warr (1987) have offered theories to explain how experiences such as joblessness may lead to a decline in mental health. Other psychologists, including Rotter (1966) and Rosenberg (1965), have designed and validated survey instruments capable of measuring various aspects of emotional health including self-esteem. Using such construct measures the correlation between unemployment and self-esteem has been estimated. Unfortunately, the accuracy of these estimates is marred by three statistical problems: omitted variables, unobserved heterogeneity, and data selection. Therefore, the failure of a consensus to emerge regarding the impact of unemployment on self-esteem is not surprising. This paper offers new estimates of the relation between unemployment and self-esteem using a methodology that controls for the three potential sources of bias identified. The data are drawn from the U.S. National Longitudinal Survey of Youth which provides detailed information on the personal characteristics of individuals in the sample, including their self-esteem, as well as their labor force experiences. We find clear evidence that having recently completed a spell of joblessness, due either to unemployment or time spent out of the labor force, damages an individuals perception of self-worth. Exposure to bouts of both forms of joblessness also significantly harms self-esteem, and the effect of such exposure persists. Our decompositional analysis suggests that joblessness damages self-esteem by generating feelings of depression. Clearly, policies designed to lessen joblessness will also yield a psychologically healthier labor force.

Unemployment, joblessness, psychological well-being and self-esteem: Theory and evidence

Abstract Social psychologists Erikson (1959), Jahoda (1979, 1981, 1982) and Seligman (1975) believe that exposure to events such as joblessness are capable of impairing an individuals psychological well-being. Psychological well-being is a multidimensional concept. Therefore, the impact of unemployment on mental health is likely to be manifest in many forms, including denigration of self-worth or self-esteem. The primary purpose of this study is to investigate the relationship between joblessness and its component parts, unemployment and dropping out of the labor force, on self-esteem using data drawn from the National Longitudinal Survey of Youth (NLSY). The NLSY is well suited for such an investigation since it contains detailed information on the personal characteristics of individuals in the sample, as well as their labor force experiences and measures of self-esteem. Two additional issues will be addressed. First, we examine the psychological counterpart of Ellwoods (1982) hypothesis that joblessness may scar an individual. Second, we shed new light on the debate between Clark and Summers (1979) and Flinn and Heckman (1982, 1983) over whether being out of the labor force (OLF) and being unemployed should be thought of as distinct states. We find that joblessness damages self-esteem for female youths; however, the damage is akin to a blemish. Surprisingly, prior labor force experiences generally fail to influence perceptions of self-worth on the part of young men. However, we do find that for both young men and women who in the past spent time out of the labor force, the greater the duration of their exposure to this form of joblessness, the lower their level of self-esteem. We also offer psychological evidence on the relative emotional wellbeing of the unemployed and labor force drop outs that largely supports the position of Clark and Summers that these conditions are essentially indistinguishable.

The psychological impact of unemployment and joblessness

Abstract Economists have identified two principal adverse effects of unemployment. One is the output foregone that could have been produced if unemployed workers had been productively employed. The second is the psychological damage suffered by unemployed workers and their families. Psychologists have offered theories to explain how experiences such as Joblessness may lead to a deterioration in mental health. They also have designed and validated survey instruments capable of measuring various aspects of emotional health. Unfortunately, their efforts to document the psychological impact of unemployment have been plagued by data limitations, while economists largely have ignored this task. The purpose of this study is three-fold. First, we discuss why unemployment and Joblessness are likely to influence an individuals perception of personal efficacy, locus of control, and hence psychological well-being. Second, we discuss and critique existing efforts to examine the relationship between labor force experiences and locus of control. Third, we investigate the relationship between Joblessness and its component parts—unemployment and dropping out of the labor force—on personal locus of control, using observations from the NLSY and an alternative methodological framework. The NLSY is a longitudinal data set that contains detailed information on the personal characteristics of individuals in the sample, their labor force experiences and a specific personal locus of control. In discussing the results we also attempt to shed some new light on the debate between Clark and Summers (1979) and Flinn and Heckman (1982, 1983) over the question of whether being out of the labor force and being unemployed should be thought of as distinct states. We add further insight into this issue by examining whether there are psychological differences, as measured by locus of control, between otherwise comparable members of these two groups. Finally, we reconsider the Ellwood and Ruhm exchange over whether joblessness and unemployment lead to “psychological” scarring. We find that labor force experiences fail to influence personal locus of control for male youths. There is evidence, however, that perception of personal efficacy is altered by joblessness among young women. As the duration of a current unemployment spell lengthens, the likelihood of holding beliefs of personal efficacy decline for young women. There is also some evidence of scarring among women. For females who in the past have spent time both unemployed and out of the labor force, the greater the duration of their joblessness the more likely is a reduction in feelings of personal efficacy and more aggravated ones self-perception of helplessness. We also offer psychological evidence on the relative emotional well-being of the unemployed and labor force drop outs that largely supports the position of Clark and Summers that these conditions are largely indistinguishable.

Training, Wages, and the Human Capital Model

Using recent data from the National Longitudinal Survey of Youth, this study examines the predictions of the human capital model concerning the relationship between training, starting wages, and wage growth. As implied by the model, training, particularly employer-financed training, is positively related to wage growth. Company-financed training also appears to be portable across jobs or to have a general component. In addition, there is some evidence that workers pay for initial training through a reduced starting wage. The results provide partial support for the human capital model.

Working hard for the money? Efficiency wages and worker effort

This paper oAers a test of the relative wage version of the eAciency wage hypothesis ‐ that firms are able to improve worker productivity by paying workers a wage premium. Psychologists believe work eAort reflects motivation that is governed by a feature of personality referred to as locus of control. Measures of locus of control are available in the National Longitudinal Survey of Youth, Using data drawn from the NLSY in 1992 we simultaneously estimate structural real wage and eAort equations. We find that receiving an eAciency wage enhances a person’s eAort and that person’s providing greater eAort earn higher wages. ” 2000 Elsevier Science B.V. All rights reserved.

Are being unemployed and being out of the labor force distinct states?: A psychological approach

Abstract Clark and Summers (1979) found a high rate of transition between unemployed and out of the labor force status. These findings led them to conclude that “many of those classified as not in the labor force are functionally indistinguishable from the unemployed.” Flinn and Heckman (1982,1983) questioned the validity of the conclusion reached by Clark and Summers. Heretofore, the debate between Clark and Summers and Flinn and Heckman over whether the two forms of nonemployment are distinct states has been conducted by examining transition probabilities and observable external characteristics. Unfortunately, the narrowness of the debate may have prevented this issue from being resolved. Psychologists have offered several explanations that seek to establish how experiences such as joblessness can lead to a deterioration in psychological health. For instance, unemployment may damage a persons locus of control, a concept that accounts for perceptions of personal efficacy, leaving them with a sense of helplessness. Although the psychological status of individuals in the two states of joblessness may differ, due to their respective rationales for withdrawal from the labor force, this possibility has yet to be investigated. This paper uses data from the National Longitudinal Survey of Youth (NLSY) to examine whether a difference in psychological well-being exists between the unemployed and labor force drop outs. We find some evidence that joblessness fosters feelings of externality. In addition, we also find evidence in favor of the stages of psychological impairment theory. Moreover, as the duration of joblessness advances so do feelings of helplessness. Finally, on balance, we offer evidence on the psychological status of the jobless that is consistent with the view of Clark and Summers that the two forms of joblessness are effectively indistinguishable.

Wages and the Composition of Experience

This paper provides evidence on the relation between alternative forms of experience and wages using data drawn from the National Longitudinal Survey of Youth. Prior labor market experience is segmented into mutually exclusive categories based on industry and occupation to examine how subsequent employers value skills acquired on previous jobs. We find that most forms of experience, including tenure at the current job, provide a comparable return. However, the wage return to prior experience in a different occupation and industry is significantly lower. Such “career changes” constitute over half of all prior work experience among workers in their mid-30s.