Paul Sicilian

Minimum Wages, On-the-Job Training, and Wage Growth

Using data from the Employment Opportunities Pilot Project, we examine the relationships between minimum wages, wage growth, and on-the-job training. We find that minimum wage jobs exhibit less wage growth than other jobs, particularly for men. We find no evidence, however, of a unique minimum wage effect on training opportunities. We conclude that indirect methods of proxying training with wage growth can be misleading as they fail to distinguish whether the reduced wage growth of workers on minimum wage jobs results from their receiving less training than other workers or whether it is strictly a result of the wage determination process.

Investment in human capital and gender wage differences: evidence from the NLSY

This paper uses data from the National Longitudinal Survey of Youth (NLSY) to investigate gender differences in returns to various forms of human capital. Since the NLSY includes relatively detailed information regarding on- and off-the-job training, we place special emphasis on measuring gender differences in the incidence of and returns to formal post-school training. Also considered is the role of nonhuman capital factors such as industry and occupation in explaining the wage gap. It is found that about 60% of the gender wage gap in the sample is explained by mean differences in individual characteristics and market circumstances. This suggests a smaller role for discrimination in explaining the wage gap than previous research has found. The research indicates that training does not affect the gender wage gap. Also it is found that there is no statistically significant difference in the rate of return to other measures of human capital for women versus men. Our research suggests that the largest factors contributing to the wage gap are differences in the stocks of human capital for men and women, and differences in the distributions of men and women across industries and occupations.

Employer search and worker-firm match quality

Labor economists are devoting increasing attention to employer search. The existing literature falls into two categories: research on information networks and research on search effort. The empirical research on search effort considers the determinants of effort but does not attempt to measure its effectiveness. Other research considers the impact of information networks on labor market outcomes, but ignores the role of search effort. Using data from the Employment Opportunities Pilot Project (EOPP), this paper attempts to synthesize the empirical research on employer search effort by considering information networks and search effort together within a job-matching framework. Specifically, the effects of employer search on employee turnover are examined using both hazard models and Probit analysis. The effect of employer search on wage growth within the job is also considered. I find, consistent with prior research, that when firms search through informal networks, the resulting worker-firm matches are superior to those resulting from search through formal networks. I also find that the impact of employer search effort depends upon the type of information network used in the search process.

Legal Minimum Wages and Employment Duration

We estimate the effect of minimum wages on employment duration using event history data from the 1988–1994 rounds of the National Longitudinal Survey of Youth. Existing literature takes two alternative tracks: Some studies predict reduced turnover due to rents created by minimum wages, others focus on the expected increase in turnover due to reduced job amenities and imperfect information. We find that for men, the net effect of a minimum wage depends on its magnitude relative to the typical wage in the local labor market. We find some evidence that where the minimum wage is low, separation rates for men hired at the minimum wage are reduced. We also find that as the relative value of the minimum wage rises, separation hazards increase. We interpret these findings as evidence that rents may accrue to minimum wage workers, but that the job matching process is undermined when the minimum wage binds.

Economic Freedom and the Affordable Care Act Medicaid Expansions and Labor Mobility by Race and Ethnicity

A greater level of government involvement in the financing of health care is generally viewed unfavorably by organizations monitoring economic freedom. However, increased government provision of health insurance could be associated with improved economic freedom through enhanced labor market mobility. For example, job-lock alleviation accompanying a public insurance expansion could lead to increased innovation or a higher likelihood of self-employment. In this article, we use the Affordable Care Act (ACA)’s recent Medicaid expansions to examine the effect of an increase in public health insurance provision on labor market outcomes by gender and race/ethnicity. Our results lend support to the notion that state Medicaid expansions are associated with improved labor market autonomy for white men and white women; however, we find mixed results for black and Hispanic men and women. Notably, our findings cast doubt on earlier claims that the ACA would lead to large reductions in labor force participation and employment.

A Property-Rights Approach for Unifying the Teaching of Externalities, Moral Hazard, and Market Power

We show how several concepts that are treated separately in general economics texts - externalities, moral hazard, and collusion - submit to a unified treatment based on a standard analysis of property rights. Most texts recognize externalities as a problem of open access to a resource. We show that moral hazard, which is usually viewed as an information problem, is more usefully viewed as cheating on a common-property resource. We also show that while the efficiency implications differ, the logic of the textbook analysis of monopoly, oligopoly, and competition is identical to the analysis of private, common-property, and open-access resources. Unifying the analysis of these concepts is time-efficient and emphasizes the common economic intuition, reinforcing economic principles while demonstrating the power of basic economic reasoning.