Robert J. Newman

Econometric analysis of business tax impacts on industrial location: What do we know, and how do we know it?

Abstract This paper reviews econometric analyses of business tax impacts on location written after Oaklands 1978 review [in “Metropolitan Financing and Growth Management Policies” (G. F. Break, Ed.), Univ. of Wisconsin Press, Madison, 1978]. There is a particular focus on model specification and the underlying theoretical structure. Both intrametropolitan and interstate location studies are reviewed.

Do Academic Salaries Decline with Seniority

This article reexamines the negative seniority‐earnings relationship for academic economists. The empirical results show that the anomalous negative seniority effect found in earlier academic market studies holds in the absence of direct measures of research productivity. The negative effect, however, eventually disappears as more comprehensive measures of publishing, citations, and other productivity measures are included in the wage equation to control for the quantity and quality of faculty productivity. Faculty with greater seniority appear to be rewarded relatively less simply because many have been relatively less productive than their colleagues with less seniority at similar stages in their careers.

The Effects of Right-to-Work Laws: A Review of the Literature

This paper reviews the several studies that have assessed the impact of right-to-work (RTW) laws on union membership, wages, and industry location. The authors show that the considerable difference in findings among these studies results largely from whether a study treats the presence or absence of an RTW law as an exogenous variable or one jointly endogenous with the extent of unionism in a state. Studies using the latter approach, which the authors believe preferable, have primarily concluded that the effects of RTW laws are more symbolic than substantive.

Accounting for South/Non-South Real Wage Differentials and for Changes in Those Differentials over Time

A unified accounting framework for analyzing differences in real wages between the South and non-South in 1979 and for changes in South/non-South wage ratios between 1973 and 1979 is outlined. Cross-section analysis of real wage differentials allows two sources of regional wage variation: (1) worker and job characteristics; and (2) returns to those characteristics. Our results suggest that differences in the latter may be as important in accounting for regional wage differentials as the former. An interactive specification permits decomposition of changes in regional wage ratios into direct effects of changes in characteristics and indirect effects of region, year, and region-year variations in returns. More than half the predicted changes in South/non-South wage ratios can be accounted for by changing relative returns to characteristics between the South and non-South.

The effect of the extent of unionism on union and nonunion wages

This paper provides estimates, derived from micro wage equations, of the effects of unionism on the wages for both union and nonunion labor. These equations control not only for union status, but also include measures of the extent of unionism in product and labor markets. The results suggest,inter alia, that an increase in the extent of unionization in an industry has substantial positive effects on the wages of nonunion as well as union workers. Increases in the extent of union coverage within an occupation, however, have little or no effect on nonunion wages.

Government Wage Differentials in a Municipal Labor Market: The Case of Houston Metropolitan Transit Workers

Previous studies of wage and fringe benefit differentials between public and private sector workers have generally employed one of three different methods to measure the differentials. This study is the first to use all three simultaneously. The authors find that the Houston Metropolitan Transit Authority provided total hourly compensation that was 82.8% higher for cleaners, 82.9% higher for bus drivers, and 31.3% higher for mechanics than the compensation received by comparable private sector workers in 1988. Separation rates for these three groups were less than half the national rate for similar workers. These findings suggest that previous studies, most of which have shown no significant wage premium for government workers, may be misleading. Also, estimates of government wage differentials may be biased downward for skilled workers because available data sets generally lack adequate information on fringe benefits and their distribution across occupations.

Regional Wage Differentials and the Spatial Convergence of Worker Characteristic Prices

This paper provides a test for variation in wage structures across regions. The authors suggest that the appropriate test for structural variation incorporates a combination of two lines of research: structural variation and compensating variation. The model of earnings determination used implies that, while job characteristic prices may be subject to stochastic shocks or industry-specific factors and, hence, may differ between regions, the returns to human capital characteristics will be regionally invariant. The results suggest that the theoretical expectations of regional homogeneity is generally supported for the decade of the 1970s. Copyright 1989 by MIT Press.

A simultaneous-equations model of the relationship between public sector bargaining legislation and unionization

This paper estimates a simultaneous-equations model with public sector bargaining laws and union membership treated as jointly-determined variables. The extent of public sector unionization has a significant positive influence on the passage of prolabor bargaining legislation and bargaining legislation has strong, independent effects on the extent of public sector unionization.

Welfare Expenditures and the Decline of Unions

To what extent has the increased supply by government of certain union-like services reduced the demand for union membership and thereby contributed to the decline in trade union density? The existing empirical evidence is meager and conflicting. The puropse of our paper is to reexamine the government substitution hypothesis, specifically with respect to the relationship between government welfare spending and union density. We test the hypothesis with time-series data using three alternative models of union growth. The advantage of this approach is that it will permit an assessment of how sensitive the results are to both specification and sample period changes. In all, we find the time-series evidence of a negative welfare effect on union density to be mixed. Copyright 1989 by MIT Press.

US Medicaid Drug Formularies

SummaryDoes the use of a restricted drug formulary achieve cost savings within state Medicaid programmes? Restricted formularies are often justified by putting forth the attributes of a perfectly operating and implicitly costless policy. Analysis suggests, however, that the operation of ‘actual’ restricted formularies produce realised effects that are substantially at odds with the desired effects. Although the implementation of a restricted formulary can reduce a state’s drug expenditures, service substitution causes expenditures to increase elsewhere in the system. Furthermore, direct savings in the drug budget are completely offset by these spillover effects.