Lowell J. Taylor

Demographics of the Gay and Lesbian Population in the United States: Evidence from Available Systematic Data Sources

This work provides an overview of standard social science data sources that now allow some systematic study of the gay and lesbian population in the United States. For each data source, we consider how sexual orientation can be defined, and we note the potential sample sizes. We give special attention to the important problem of measurement error, especially the extent to which individuals recorded as gay and lesbian are indeed recorded correctly. Our concern is that because gays and lesbians constitute a relatively small fraction of the population, modest measurement problems could lead to serious errors in inference. In examining gays and lesbians in multiple data sets we also achieve a second objective: We provide a set of statistics about this population that is relevant to several current policy debates.

The Earnings Effects of Sexual Orientation

This investigation of the effect of sexual orientation on earnings employs General Social Survey data from 1989–96. Depending largely on the definition of sexual orientation used, earnings are estimated as having been between 14% and 16% lower for gay men than for heterosexual men, and between 20% and 34% higher for lesbian women than for heterosexual women. This evidence, the authors suggest, is consistent with either of two complementary constructions: Gary Beckers argument that male/female earnings differentials are rooted in specialization within households and in optimal human capital accumulation decisions individuals make when they are young; and Claudia Goldins observations about marriage-based gender discrimination, according to which the paternalistic “protection” of wives and mothers from the world of work has tended to overlook lesbians.

The consequences of minimum wage laws Some new theoretical ideas

Economists generally agree that the immediate and direct effect of a binding minimum wage law is to move firms backward along the demand curve for low skill workers. However, this prediction of worker displacement depends critically on a model of firm behavior that abstracts from problems of work incentives. In this paper we re-examine the theoretical basis for the consensus view of minimum wage laws. The central finding is that when firms use the threat of dismissal to elicit high levels of work effort, an increase in the minimum wage may have the immediate and direct effect of increasing the level of employment in low wage jobs. The formal logic of our model is similar to that found in the model of labor demand under monopsony. However, unlike the monopsony model, the positive employment effect of the minimum wage emerges in a labor market comprised of a large number of firms competing for the labor services of identical workers.

Gender Wage Disparities among the Highly Educated.

We examine gender wage disparities for four groups of college-educated women—black, Hispanic, Asian, and non-Hispanic white—using the National Survey of College Graduates. Raw log wage gaps, relative to non-Hispanic white male counterparts, generally exceed –0.30. Estimated gaps decline to between –0.08 and –0.19 in nonparametric analyses that (1) restrict attention to individuals who speak English at home and (2) match individuals on age, highest degree, and major. Among women with work experience comparable to men’s, these estimated gaps are smaller yet—between –0.004 and –0.13. Importantly, we find that inferences from familiar regression-based decompositions can be quite misleading.

Earnings Functions When Wages and Prices Vary by Location

Economists generally assume, implicitly, that “the return to schooling” is invariant across local labor markets. We demonstrate that this outcome pertains if and only if preferences are homothetic—a special case that seems unlikely. Our theory predicts that returns to education will instead be relatively low in expensive high‐amenity locations. Our analysis of U.S. data provides support for this contention; returns to college are especially low in such cities as San Francisco and Seattle. Our findings call into question standard empirical exercises in labor economics that treat the returns to education as a single parameter.

Physician Incentives in Health Maintenance Organizations

Managed care organizations rely on incentives that encourage physicians to limit medical expenditures, but little is known about how physicians respond to these incentives. We address this issue by analyzing the physician incentive contracts in use at a health maintenance organization. By combining knowledge of the incentive contracts with internal company records, we examine how medical expenditures vary with the intensity of the incentive to cut costs. Our investigation leads us to a novel explanation for high‐powered group incentives: such incentives can improve efficiency in the allocation of resources when the allocation process is based on the professional judgment of multiple agents. Our empirical work indicates that medical expenditures at the HMO are 5 percent lower than they would have been in the absence of incentives.

Why do minority men earn less? A study of wage differentials among the highly educated

We estimate wage gaps using nonparametric matching methods and detailed measures of field of study for university graduates. We find a modest portion of the wage gap is the consequence of measurement error in the Census education measure. For Hispanic and Asian men, the remaining gap is attributable to premarket factorsprimarily differences in formal education and English language proficiency. For black men, only about one-quarter of the wage gap is explained by these same factors. For a subsample of black men born outside the South to parents with some college education, these factors do account for the entire wage gap.

The Employment Effect in Retail Trade of California's 1988 Minimum Wage Increase

In this article, we study the labor-market effect of Californias 1988 minimum wage increase in the retail trade industry. Two different approaches to evaluating the minimum wage effects suggest that the textbook economic analysis of minimum wages pertains; employment growth in Californias low-wage retail trade sector appears to have been tempered by the minimum wage increase.

Measurement of Higher Education in the Census and Current Population Survey

We examine measurement error in the reporting of higher education in the 1990 Decennial Census and the post-1991 Current Population Survey (CPS). We document that measurement error in the reporting of higher education is prevalent in Census data. Further, these errors violate models of classical measurement error in important ways. The level of education is consistently reported as higher than it is (errors are not mean 0), errors in the reporting of education are correlated with covariates that appear in earnings regressions, and errors in the reporting of education appear correlated with the error term in a model of earnings determination. Thus, neither well-known results on classical measurement error nor recent models of nonclassical measurement error are likely valid when using Census and CPS data. We find some evidence that the measurement error is lower in the CPS than in the Census, presumably because first interviews are generally conducted in person.

Racial Disparity in Unemployment

In the United States, black workers earn less than their white counterparts and have higher rates of unemployment. Empirical work indicates that most of this wage gap is accounted for by differences in cognitive skills that emerge at an early age. In this paper, we demonstrate that the same is not true for black-white disparity in unemployment. A large unexplained unemployment differential motivates the papers second contributiona potential theoretical explanation. This explanation is built around a model that embeds statistical discrimination into the subjective worker evaluation process that lies at the root of the efficiency-wage theory of equilibrium unemployment.