William T. Dickens

Hours Restrictions and Labor Supply

This study presents a model of labor supply in which individuals may face constraints on their choice of work hours, and analyzes the sensitivity of parameter estimates and policy conclusions to the usual assumption of unrestricted choice. We set up the labor supply decision asa discrete choice problem, where each worker faces a finite number of employment opportunities, each offering fixed hours of work.The distribution from which these are drawn, as well as the number of draws, is estimated along with the behavioral parameters of individual labor supply.The standard model with unconstrained hours appears as a special case where the number of draws approaches infinity. We estimate the mean absolute difference between desired and actual work hours to be about ten hours perweek. The results strongly support the notion that hours choices are constrained, and suggest that models which ignore restrictions on hours worked may yield biased estimates of the wage elasticity of desired hours. Further, we suggest that analysis of policies such as income transfers and the flat rate tax which do not consider their effects on the distribution of hours offered may be very misleading.

Accounting for the Decline in Union Membership, 1950–1980:

This study analyzes the components of the post-1950 trends in the share of the private work force organized by unions, which rose from 1950 to 1954 and then fell steadily to 1980. The authors decompose the sources of growth and decline into changes in organizing activity, success in certification elections, losses from decertification elections, and net growth due to economic causes—the last a residual measure designed to capture the effect of factors such as plant closings, layoffs, and new hires. They find that all factors except decertifications accounted for a substantial part of the decline since 1954. When the level of aggregate economic activity is held constant, loss of membership due to other economic causes shows no downward trend, a finding that challenges the view that the decline in the unionized share of the work force has been due primarily to a secular decline in employment in the strongly unionized industries.

Labor Market Segmentation Theory: Reconsidering the Evidence

We argue that Labor Market Segmentation theory is a good alternative to standard views of the labor market. Since it is sometimes argued that labor market segmentation theory is untestable, we first consider the uses of theory and the attributes of a good theory. We then argue that labor market segmentation has these attributes. It is internally consistent and is based on plausible assumptions about behavior and technology. More significantly, many of the predictions of the theory have been tested and confirmed. Further, from a dynamic view the theory has done quite well. When the theory has suggested new tests, far more often than not the predictions have been validated. Labor market segmentation theory has had to make little recourse to post-hoc explanations for unexpected empirical results. In contrast, human capital theory has required a series of post-hoc rationalizations to explain a large and growing body of empirical work motivated by the labor market segmentation perspective. Finally, we consider the implications of labor market segmentation theory for the practice of labor economics. We argue that further exploration of the implications of the theory for unemployment, trade. industrial policy and income distribution will provide useful insights and further tests of the theory.

The Effect of Company Campaigns on Certification Elections: Law and Reality Once Again

Recent studies have challenged the conclusion Getman, Goldberg, and Herman reached in their 1976 study that company campaigns have little if any effect on how workers vote in union certification elections. This study attempts to reconcile these conflicting results by re-analyzing data collected by Getman, Goldberg, and Herman for their study. The author estimates a probit model of voting that controls for several variables not considered in other studies. He finds that employer threats and actions taken against union supporters, some written communications, and captive-audience speeches all have statistically significant effects on voting. Election simulations based on the voting model also show that the effects of these employer tactics can be important in determining election outcomes.

Crime and Punishment Again: the Economic Approach with a Psychological Twist

Akerlof and Dickens (1982) suggested that in a model of criminal behavior which considered the effects of cognitive dissonance, increasing the severity of punishment could increase the crime rate. This paper demonstrates that that conjecture was correct. With cognitive dissonance, people may have to rationalize not committing crimes under normal circumstances if punishment is not severe. The rationalization may lead them to underestimate the expected utility of committing crimes when opportunities present themselves. If punishment is severe, then rationalization may not be necessary and people may be more likely to commit crimes when opportunities arise.

Neoclassical and Sociological Perspectives on Segmented Labor Markets

Neoclassical theory has been misrepresented in the segmented economy literature. Consequently, most tests of structural vs. neoclassical models are inadequate. Moreover, segmented economy theorists have concentrated on the least significant departures of segmented models from neoclassical economics. In fact, neoclassical economists have developed elements of a segmented labor market model which is similar to the segmented economy theories. We sketch this model and argue that the neoclassical model gives a precise meaning to the concept of dual or segmented labor markets but does not suggest that a classification system for job characteristics must rely on a single dimension.

Labor and an integrated Europe

As the European Community moves towards full integration of its members economies, one of the most far-reaching changes will be in the European labour market. The increased mobility of labour - as well as capital, goods, and services - will have profound consequences for workers, employers and unions. The authors address such questions as: will European unions become more decentralized and increase their infuence?; will the German system of industrial relations serve as a model for power-sharing between workers and managers?; do benefits systems hinder worker mobility?; will the completion of the EC internal market lead to reductions in the disparities in incomes across countries?; are European immigration policies responsible for creating unemployment in several countries?; and, what are the implicaitons of integration for other parts of the world?

Labor Market Segmentation and the Union Wage Premium

Studies of the earnings of union workers have consistently shown that they earn considerably more than nonunion workers. This paper considers whether part of this observed union/nonunion differential is due to unions organizing high paying primary sector jobs. We extend our earlier work on the dual labor market in which we used an unknown regime switching regression to identify two labor market sectors --a high wage primary sector and a low wage secondary sector. Here we estimate a model where workers wages are determined by one of three wage equations: a union wage equation, a nonunion primary equation or a nonunion secondary equation. If individuals are in the union sector their sector is treated as known. If they are not then their sector is treated as unknown. Parameter estimates for this model suggest that union/nonunion differences are very large for average workers even when comparing union and nonunion primary workers. We continue to find distinct primary and secondary sectors with wage equations similar to those that would be expected from the dual market perspective. Since it appears that union workers may be receiving large wage premiums it seems likely that there is non-price rationing of union jobs. If there is, our finding inprevious papers of non-price rationing of primary sector jobs may have been due only to the rationing of union jobs. We test for the existence of non-price rationing of nonunion primary sector employment in this three sector model and continue to find evidence that at least black workers find it difficult to secure primary sector employment.

What can we learn by disaggregating the unemployment-vacancy relationship?

This policy brief explores the nature of the recent change in the vacancy-unemployment relationship by disaggregating the data by industry, age, education, and duration of unemployment, and by examining blue- and white-collar groups separately.

The productivity crisis: Secular or cyclical?

Abstract Contrary to current theory, it is shown that some productivity lost in business cycle downturns is not regained in the upturn. These losses account for most, if not all, of the recent productivity slowdown.