McKinley L. Blackburn

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.

Are OLS Estimates of the Return to Schooling Biased Downward? Another Look

We examine evidence on omitted-ability bias in estimates of the economic return to schooling, using proxies for unobserved ability. We consider measurement error in these ability proxies and the potential endogeneity of both experience and schooling, and examine wages at labor market entry and later. Including ability proxies reduces the estimate of the return to schooling, and instrumenting for these proxies reduces the estimated return still further. Instrumenting for schooling leads to considerably higher estimates of the return to schooling, although only for wages at labor market entry. This estimated return generally reverts to being near (although still above) the OLS estimate if we allow experience to be endogenous. In contrast, for observations at least a few years after labor market entry, the evidence indicates that OLS estimates of the return to schooling that ignore omitted ability are, if anything, biased upward rather than downward.

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.

The Declining Marital-Status Earnings Differential

Earnings differentials between married and unmarried men have been declining since the late 1960s. We consider two possible explanations for this decline: changes in the nature of selection into marriage; and changes in role specialization within marriage. Our analysis of changes in marriage differentials within cohorts supports only a small contribution of changes in selection. There is some evidence that differences in human-capital investment between married and unmarried men have fallen over time, but this effect has apparently been largely offset by increases in the return to that human capital.

Earnings and Income Inequality in the United States

This article explores the relationship between technological change and income inequality in the United States since the late 1960s. The analysis focuses primarily on patterns and trends in the dispersion of various distributions of earnings and income during this recent period of rapid technological progress. The authors review relevant literature and perform several empirical analyses using microdata from the March Current Population Surveys from 1968 to 1986. They find little empirical evidence that earnings inequality measured across individual workers has increased since the late 1960s and even less evidence that any changes that have occurred have resulted from the effect of technological change on the demand for labor. On the other hand they find evidence of an increase since the late 1960s in the inequality of total family income measured across families. Moreover much of this increase appears to be due to changes in family composition and labor supply behavior suggesting that the main effects of recent technological change on inequality have been supply-side in nature. (SUMMARY IN FRE AND SPA) (EXCERPT)

Minimum Wages and Alcohol-Related Traffic Fatalities among Teens

Using cross-state variation in minimum wages, we observe a positive relationship between the minimum wage and the number of alcohol-related accidents involving teen drivers. A similar effect is not observed when examining accidents among adults. The results are consistent with a positive income elasticity for alcoholic beverages and driving activities among young people, in particular for consumption out of discretionary income accorded by higher minimum wages. Evidence of a sizable impact of beer taxes on alcohol-related accidents among youths suggests that beer taxes are one avenue for policymakers to consider in counteracting this unintended consequence of minimum wages.

Interpreting the magnitude of changes in measures of income inequality

Abstract No intuitive metric exists for assessing the empirical importance of changes over time in income inequality. This paper suggests a method for quantifying the importance of such changes. This method involves a hypothetical redistribution of a constant amount of income, from every income unit below the median level of income to every income unit above the median, so as to make measured inequality in the year to which the redistribution is applied equal to inequality in some other year. For the Gini coefficient, a simple expression for the size of this redistribution exists.

The Effect of Minimum Wages on Labour Market Outcomes: County-Level Estimates from the Restaurant-and-Bar Sector

We use US county‐level data on employment and earnings in the restaurant‐and‐bar sector to evaluate the impact of minimum‐wage changes in low‐wage labour markets. Our estimated models are consistent with a simple competitive model in which supply‐and‐demand factors affect both the equilibrium outcome and the probability of the minimum wage being binding. Our evidence does not suggest that minimum wages reduce employment once controls for trends in county‐level sectoral employment are incorporated. Rather, employment appears to exhibit an independent downward trend in states that have increased their minimum wages relative to states that have not, thereby predisposing estimates towards reporting negative outcomes.

Changes in Earnings Differentials in the 1980s: Concordance, Convergence, Causes, and Consequences

This paper analyzes changes in U.S. earnings differentials in the 1980s between race, gender, age, and schooling groups. There are four main sets of results to report. First, the economic position of less-educated workers declined relative to the more-educated among almost all demographic groups. Education-earnings differentials clearly rose for whites, but less clearly for blacks, while employment rate differences associated with education increased more for blacks than for whites. Second, much of the change in education-earnings differentials for specific groups is attributable to measurable economic factors: to changes in the occupational or industrial structure of employment; to changes in average wages within industries; to the fall in the real value of the minimum wage and the tall in union density; and to changes in the relative growth rate of more-educated workers. Third, the earnings and employment position of white females, and to a lesser extent of black females, converged to that of white males in the 1980s, across education groups. At the same time, the economic position of more-educated black males appears to have worsened relative to their white-male counterparts. Fourth, there has been a sizable college-enrollment response to the rising relative wages of college graduates. This response suggests that education-earnings differentials may stop increasing, or even start to decline, in the near future.

Has WARN warned? The impact of advance-notice legislation on the receipt of advance notice

The Worker Adjustment and Retraining Notification Act of 1988 requires large employers to provide sixty days of written notice to affected employees prior to a plant closing or large-scale layoff. We use individual-level data from the 1990 Displaced Worker Survey to measure the extent to which the provision of advance notice changed after the Act was implemented in early 1989. Surprisingly, the Act appears to have had virtually no impact on the provision of advance notice of the length mandated by the law.