Possible explanations for earnings differentials in self‐employment and paid employment are investigated. The empirical results suggest that the nonpecuniary benefits of self‐employment are ...substantial: Most entrepreneurs enter and persist in business despite the fact that they have both lower initial earnings and lower earnings growth than in paid employment, implying a median earnings differential of 35 percent for individuals in business for 10 years. The differential cannot be explained by the selection of low‐ability employees into self‐employment and is similar for three alternative measures of self‐employment earnings and across industries. Furthermore, the estimated earnings differentials may understate the differences in compensation across sectors since fringe benefits are not included in the measure of employee compensation.
This paper uses household data to provide direct estimates of intergenerational transfers as a source of wealth. The authors distinguish between intended transfers (for example, gifts to other ...households) and possibly unintended transfers (bequests) and estimate that intended transfers account for at least 20 percent of net worth. Thus, a significant portion of the U.S. wealth cannot be explained by the life-cycle model, even when the model is augmented to allow for bequests. Estimated bequests can account for an additional 31 percent of net worth. The authors also show that transfers among living people are about half as large as bequests.
This study uses data on the personnel policies and economic characteristics of businesses in the manufacturing sector to measure the impact of formal training programs on labor productivity. The ...major finding is that businesses that were operating below their expected labor productivity levels in 1983 implemented new employee training programs after 1983 that resulted in significantly larger increases in labor productivity growth between 1983 and 1986. This higher rate of productivity growth was sufficient to bring these businesses up to the labor productivity levels of comparable businesses by 1986.
This paper examines the effect of cash transfers and food stamp benefits on family labor supply and welfare participation among two-parent families. The Aid to Families with Dependent ...Children--Unemployed Parent Program has provided cash benefits to two-parent households since 1961. Despite recent expansions, little is known about the program's effect on labor supply and welfare participation. I develop a model of family labor supply in which hours of work for the husband and wife are chosen to maximize family utility subject to a family budget constraint accounting for AFDC-UP benefits and other tax and transfer programs. The husband's and wife's labor supply decisions are restricted to no work, part-time work, and full-time work. Maximum likelihood techniques are used to estimate parameters of the underlying hours of work and welfare participation equations. The estimates are used to determine the magnitude of the work disincentive effects of the AFDC-UP program, and to simulate the effects of changes in AFDC-UP benefit and eligibility rules on family labor supply and welfare participation. The results suggest that labor supply and welfare participation among two-parent families are highly responsive to changes in the benefit structure under the AFDC-UP program.
The growing study of leaving home in young adulthood in the United States has been hampered by data and measurement problems, which are producing a major theoretical confusion about the role of ...parental resources in influencing young adults' leaving home. Does high parental income retain young adults in the home or subsidize their leaving (and parental privacy)? This paper uses the 1984 panel of Survey of Income and Program Participation to clarify this issue, and shows that the effects of parental resources differ depending on the route out of the home under consideration (marriage or premarital residential independence). Effects change substantially over the nest-leaving ages, but relatively few differences are found between young men and young women.
In this paper an encompassing model of the diffusion of new process technologies is used to predict the relationship between firm profitability and the adoption of technology. The model is tested on ...data relating to a sample of firms in the UK engineering industry over the period 1983-6. The results indicate that non-adopters experience reduced profits as other firms adopt new technologies and that the gross profit gains to adopters of new technology are related to firm and industry characteristics, the number of other users of new technologies and the cost of acquisition.
We attempt to draw inferences about behavioral responses to means-tested income support for the elderly by examining the effects on saving of the Supplemental Security Income (SSI) program for the ...aged in the U.S. Part of this program provides payments to the poor elderly, operating as a means-tested public retirement program. We exploit state-level variation in SSI benefits to estimate the effects of SSI on saving, using data from the 1984 Survey of Income Program Participation. We find evidence that high SSI benefits reduce saving among households with heads who are approaching the SSI eligibility age and are likely participants in the program.
We estimate a target zone model for three ERM exchange rates for 1983-6 and 1987-91 by the method of simulated moments, taking account of the continuous time specification by using daily data with ...the interruptions of holidays and weekends. Specification tests are unable to reject the model. The estimates imply, however, an essentially linear relationship between the exchange rate and the fundamentals, with a very limited `honeymoon effect'. Using Monte Carlo simulations, calibrated on the estimates, we find that standard tests for mean reversion of the exchange rate would largely reject the target zone model when, in fact, it held.
The spatial mismatch hypothesis asserts that job decentralization adversely impacts the labor market outcomes of African Americans. This paper tests whether race and job access have an independent ...effect on the probability of a joint residential move and job change. No evidence is found to indicate that race directly influences the joint probability. The paper finds, however, that poor job access has an independent negative effect on the probability of a joint residential move and job change. Because African-American residences are heavily concentrated in American central cities, these results suggest that African-American workers may not be able to fully adjust as new jobs are created in the suburbs.
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