Saul D. Hoffman

The incidence and wage effects of overeducation

Abstract Data gathered from a recent national sample of workers on educational requirements and attainments are used to examine the extent and economic effects of overeducation. Nearly 40 percent of the U.S. work force-and about 50 percent of black males-have more education than their jobs require. But we also find that “surplus” education does have economic value. The individual return to an additional year of surplus education was positive and significant for all major demographic groups. The estimated return is, however, only about half the size of the return to an additional year of required education.

Reevaluating the costs of teenage childbearing.

household income and mothers education, to 0.16 in Table 4 which include these two important household-level covariates. This finding is consistent with our results in the gamma models. Furthermore, the z-score for 1f1 (the probability that a family belongs to the first group) is reduced from 1.76 to 1.34 when family income and mothers education are added, an indication of the uncertainty about the two-group division. This finding also is consistent with our results in the gamma models.Teenage childbearing in the United States has long been regarded as an important social problem with substantial costs to teen mothers and their children. Recently, however, several researchers have argued that the apparent negative effects of teenage childbearing primarily reflect unmeasured family background rather than the true consequences of a teen birth. To distinguish the effect of teen childbearing from that of family background, we use data from the Panel Study of Income Dynamics and compare teen mothers with their sisters. We find that accounting for unobserved family background reduces, but does not eliminate, the estimated consequences of early childbearing. Statistically significant and quantitatively important effects of teen parenthood remain for high school graduation, family size, and economic well-being.

A RECONSIDERATION OF THE ECONOMIC CONSEQUENCES OF MARITAL DISSOLUTION

We use longitudinal data from the Panel Study of Income Dynamics to assess the economic consequences of divorce and separation for the women and men involved. In contrast to previous studies focusing exclusively on those who remain unmarried, our approach integrates the probability of remarriage into the analysis and produces a much less dramatic picture of change in economic status than analyses not incorporating remarriage. However, we also find evidence of selection bias in the subgroup of women who remarry, suggesting that currently unmarried women might not improve their economic status through remarriage as much as women who have remarried.

The effect of incomes wages and AFDC benefits on marital disruption.

This paper uses a choice-based model to estimate the effects of a broad set of economic factors, including AFDC benefit levels, husbands earnings, and a womans wage rate, on the probability of marital dissolution. We find that the probability of divorce is lower for marriages in which the husbands labor income is higher. We also find that while AFDC income has a substantial effect on welfare receipt by a divorced woman, it has a relatively small effect on the probability that a married woman will become divorced. Finally, we find no support for the hypothesis that rising wages for women have increased marital instability.

Welfare benefits, economic opportunities, and out-of-wedlock births among black teenage girls

This article presents a model of teenage out-of-wedlock births that incorporates the effectsof both welfare and nonwelfare economic opportunities. We construct measures of the likely “medium-run” income available to a teenage girl in the event of an out of-wedlock birth and in the absence of a birth and then estimate a logit model to determine their importance in influencing fertility behavior. The model is estimated with data from the Panel Study of Income Dynamics on nearly 900 black teenagers. We find weak and statistically insignificant positive effects of Aid to Families With Dependent Children (AFDC) benefit levelsand stronger and significant negative effects of economic opportunities on the probability of AFDC-related out-of-wedlock teen births.

On-the-Job Training and Earnings Differences by Race and Sex

M OST theoretical and empirical work on the determinants of individual earnings has placed special emphasis on an individuals educational attainment and on his or her years of work experience. Although interpreting the effects of education on earnings is relatively straightforward,1 the proper interpretation of the effects of experience on earnings is much less clear. It is certainly true that earnings tend to rise with years of experience, but the nature of the underlying mechanism that generates that increase is still largely an unresolved issue. An understanding of the way in which experience increases earnings is especially critical for the analysis of wage differentials by race and sex. Previous empirical research has shown that black men and both black and white women have flatter experience-earnings profiles than white males and that differences in the returns to experience account for a large portion of observed wage differences.2 The most widely accepted interpretation of the relationship between experience and earnings is that of the human capital model, which considers years of work experience as a proxy for unobservable investment in on-the-job training.3 According to the human capital model, wage differentials among individuals over the life-cycle are largely the result of differential patterns of investment in human capital, primarily in the form of investments in on-the-job training. Most human capital training models have been developed for the case of training that increases worker productivity in more than one firm (general training) as opposed to specific training that increases productivity in only one firm. It is frequently argued that because women expect to have a less regular pattern of labor force participation, they have a shorter work horizon than otherwise similar men and, thus, they have clear economic incentives to invest in less on-the-job training.4 As a result, women will, in general, have accumulated less human capital than men with the same number of years of experience and, consequently, their returns to experience would be expected to be lower. For black males, lower human capital investment is attributed to discrimination and/or their presumed poorer quality of schooling. Discrimination reduces the value of any potential investment, while poor schooling is thought to increase the costs of acquiring training.5 An alternative view of the earnings-experience relationship draws on models of labor market segmentation.6 These models differ from the human capital model primarily in their focus on the characteristics of jobs and job markets, rather than the characteristics of individuals. Earnings are thought to be largely determined by the labor market in which an individual works rather than the skills (or human capital) he or she possesses. Training itself is viewed as being largely technologically determined by the design of jobs, so that a specified amount of training is intrinsic in any given job. An individual acquires training by first gaining access to a job that provides training; that is, jobs and job markets intercede between an individual and investment in on-the-job training. Segmented market theorists usually argue that because hiring decisions involve a considerable amount of subjective input there is ample opportunity to practice discrimination. They cite entry level discrimination as a major institutional barrier between the primary and secondary sector, Received for publication January 17, 1978. Revision accepted for publication November 1, 1978. * Institute for Social Research and University of Michigan, and University of Delaware, respectively. 1 A recent review of this literature is given in Blaug (1976). 2 For example, see Mincer and Polachek (1974), Blinder (1973). 3The basic references are Becker (1964), Ben-Porath (1967), and Rosen (1972). 4 Mincer and Polachek (1974); Johnson and Stafford (1974). 5 The effect of discrimination on investment varies in different versions of the human capital model. It has no effect in a Ben-Porath type model, but reduces optimal investment in Rosens model. 6 This model was popularized by Doeringer and Piore (1971).

Multinomial and Conditional Logit Discrete-Choice Models in Demography

Although discrete-choice statistical techniques have been used with increasing regularity in demographic analyses, Mcl’adden’s conditional logit model is less well known and seldom used. Conditional logit models are appropriate when the choice among alternatives is modeled as a function of the characteristics of the alternatives, rather than (or in addition to) the characteristics of the individual making the choice. We argue that this feature of conditionallogit makes it more appropriate for estimating behavioral models. In this article, the conditional logit model is presented and compared with the more familiar multinomial logit model. The difference between the two techniques is illustrated with an analysis of the choice of marital and welfare status by divorced or separated women.

What are the economic consequences of divorce

SummaryOur analysis suggests that Weitzman’s finding concerning the precipitous decline in the economic status of women following divorce is likely to be incorrect. Her findings not only imply improbably large changes in income but are also inconsistent with the information she reports on changes in income and in income per capita. Corrected estimates suggest a decline in economic status of about one-third, rather than the widely cited 73 percent figure.It remains the case that the economic status of men and women diverge substantially in the years after divorce. That difference, however, is not nearly as dramatic as suggested by Weitzman’s findings.

The effect of divorce on intergenerational transfers: New evidence

This paper draws on new data on intergenerational transfers of time and money that were collected in the Panel Study of Income Dynamics. We use these data to examine the effects of divorce on these transfers. We find that the timing of divorce is critical. Fathers and mothers involved in late divorces have similar levels of transfers with their adult children, while divorce during a child’s childhood years increases transfers with mothers and sharply lowers them with fathers. Somewhat surprisingly, we find no evidence that divorced fathers who paid child support are more likely to be involved in intergenerational transfers than those who did not pay child support.

Marital instability and the economic status of women

This paper uses longitudinal data from the Panel Study of Income Dynamics to examine the relationship between changes in marital status and economic status. Differences between men and women and between whites and blacks are also considered. A major finding is that, after adjusting for changes in family size, the economic status of divorced or separated men improves, while that of women declines. Components of income change are discussed, with special emphasis on changes in the labor force and welfare status of women who were divorced or separated during the analysis period. Finally, data on the magnitude and distribution of alimony/child-support payments are presented.