Thomas Lemieux

Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach

This paper provides evidence that the decline in the real value of the minimum wage and in the rate of unionization account for a significant share of the increase in wage inequality in the United States between 1979 and 1988. The role of the minimum wage is particularly important for women, while deunionization has the largest impact on men. The authors develop a semiparametric procedure that applies kernel density methods to appropriately weighted samples. The procedure provides a visually clear representation of where in the density of wages institutional and labor market forces exert the greatest impact. Copyright 1996 by The Econometric Society.

Alcohol, marijuana, and American youth: the unintended consequences of government regulation

This paper analyzes the impact of increases in the minimum drinking age on the prevalence of alcohol and marijuana use among high school seniors. The empirical analysis is based on a large sample of students from 43 states over the years 1980-1989. We find that increases in the legal minimum drinking age did slightly reduce the prevalence of alcohol consumption. We also find, however, that increased legal minimum drinking ages had the unintended consequence of slightly increasing the prevalence of marijuana consumption. Estimates from a structural model suggest that this unintended consequence is attributable to standard substitution effects.

The “Mincer Equation” Thirty Years After Schooling, Experience, and Earnings

This paper evaluates the empirical performance of the standard Mincer earnings equation thirty years after the publication of Schooling, Experience and Earnings. Over this period, there has been a dramatic expansion in micro data and estimation techniques available to labor economists. How does the Mincer equation stand in light of these advances in empirical labor economics? Is it time to revise our benchmark model? On the basis of the existing literature and some new empirical estimates, I conclude that the Mincer equation remains an accurate benchmark for estimating wage determination equations provided that it is adjusted by (1) including a quartic function in potential experience instead of just a quadratic, (2) allowing for a quadratic term in years of schooling to capture the growing convexity in the relationship between schooling and wages, and (3) allowing for cohort effects to capture the dramatic growth in returns to schooling among cohorts born after 1950.

Rank Regressions, Wage Distributions and the Gender Gap.

In this paper, we model the interactions between the distribution of male and female wages under the assumption that any change in the wage distribution of women must be offset by an opposite change in the wage distribution of men.

Decomposing Changes in Wage Distributions: A unified Approach

Over the last fifteen years, many researchers have attempted to explain the determinants and changes of wage inequality. I propose a simple procedure to decompose changes in the distribution of wages or in other distributions into three factors: changes in regression coefficients; the distribution of covariates, and residuals. The procedure requires only estimating standard OLS regressions augmented by a logit or probit model. It can be extended by modelling residuals as a function of unmeasured skills and skill prices. Two empirical examples showing how the procedure works in practice are considered. In the first example, sources of differences in the wage distribution in Alberta and British Columbia are considered; in the second, sources of change in overall wage inequality in the United States, 1973-99, are re-examined. Finally, the proposed procedure is compared with existing procedures.

Estimating the Effects of Unions on Wage Inequality in a Panel Data Model with Comparative Advantage and Nonrandom Selection

This article considers the estimation of the structure of wages in union and nonunion sectors. It proposes an estimator that extends standard panel data techniques to the case in which the return to the permanent component of the error term is differently rewarded in the two sectors. The econometric model is used to estimate the effect of unions on both the level and the variance of wages in Canada. The findings indicate that unions increase the average wage of workers and compress the returns to observable measures of skill and to a time‐invariant unobservable measure of skill.

Diverging male wage inequality in the United States and Canada, 1981-1988: Do institutions explain the difference?

The U.S. and Canadian economies have much in common, including similar collective bargaining structures. During the period 1981–88, however, although both countries witnessed a decline in the percentage of workers belonging to unions and an increase in hourly wage inequality, those changes were much more pronounced in the United States than in Canada. Using data on men in Canada and the United States in 1981 and 1988 (from the Labour Force Survey and supplements to the Current Population Survey), the authors study the effect of labor market institutions on changes in wage inequality by computing simple counterfactuals such as the distribution of wages that would prevail if all workers were paid according to the observed nonunion wage schedule. Their results suggest that much more severe declines in the unionization rate in the United States than in Canada account for two-thirds of the differential growth in wage inequality between the two countries.

The Evolution of the Returns to Human Capital in Canada, 1980–2005

Dans cet article, nous étudions l’évolution du rendement du capital humain au Canada de 1980 à 2005. La principale conclusion à laquelle nous arrivons – et qui s’oppose à celles d’études antérieures – est que les avantages associés à un niveau d’études plus élevé ont considérablement augmenté dans le temps chez les hommes; cette augmentation a été enregistrée en très grande partie d’abord au début des années 1980, puis après 1995. On observe le même phénomène chez les femmes, quoique de façon moins marquée. Par ailleurs, nous relevons une autre tendance non moins importante : après s’être accru pendant de nombreuses années, l’écart de salaires entre les travailleurs plus jeunes et les travailleurs plus âgés s’est stabilisé après 1995. Enfin, le fait d’avoir pris en considération « l’expérience de travail » dans nos analyses, et l’utilisation des données des recensements canadiens semblent expliquer les différences importantes entre nos résultats et ceux des études antérieures.

Education, Earnings, and the 'Canadian G.I. Bill'

Canadian Second World War veterans benefited from an extensive educational program similar to the U.S. G.I. Bill. Because of differences in military enlistment rates, however, a much lower fraction of Quebec men were eligible for these benefits than men from other provinces. Building on this fact, we analyse inter-cohort patterns of education and earnings for English-speaking men from Ontario, using French-speaking men from Quebec as a control group. We find that the instrumental variables estimates of the return to schooling are typically as big or bigger than the corresponding OLS estimates.

Canadian Inequality: Recent Developments and Policy Options

Les inégalités de revenus ont fait l’objet d’inquiétudes de plus en plus marquées depuis quelque temps dans le monde. Toutefois, le débat s’est fait en des termes très généraux et a surtout porté sur le cas des États-Unis. On ne peut comprendre comment le Canada devrait réagir à cette situation sans présenter des faits et des chiffres clairs. Dans cet article, nous analysons les tendances des inégalités de revenus, et nous examinons en particulier le groupe constitué par le 1 % des citoyens ayant le revenu le plus élevé – celui dont il est le plus souvent question. Nous résumons ensuite les connaissances actuelles sur les causes des inégalités croissantes de revenus, dont la disparité salariale entre les sexes. Enfin, nous décrivons des politiques publiques qui permettraient de réduire ces inégalités – ou à tout le moins d’en ralentir l’aggravation.