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Author:Taylor, Lowell J. 

Working Paper
Are children 'normal'?

In his classic work on the economics of fertility, Becker (1960) suggests that children are likely ?normal.? We examine this contention. Our first step is documenting an empirical regularity about the cross section of white married couples in the U.S.: when we restrict comparisons to households living in broadly similar locations (e.g., in expensive urban areas, or in rural areas), completed fertility is positively correlated with the husband?s income. Two alternative models rationalize the data?one in which children are ?normal? and a second in which the observed pattern emerges solely as a ...
Working Papers , Paper 2008-040

Working Paper
Valuable jobs and uncertainty

Little attention has been given to the link between variation in a firm's circumstances and the resolution of agency problems that pervade the relationship between a firm and its employees. We construct stochastic versions of standard efficiency-wage and performance-bonding models and find that this connection has important and apparently inescapable consequences. Compensation levels depend on characteristics of the firm. The possibility of the firm's exit drive an important counterfactual prediction in both classes of model: compensation rises in dying firms. This result illustrates the need ...
Working Papers , Paper 1997-005

Journal Article
Local price variation and labor supply behavior

In standard economic theory, labor supply decisions depend on the complete set of prices: wages and the prices of relevant consumption goods. Nonetheless, most theoretical and empirical work in labor supply studies ignores prices other than wages. We address the question of whether the common practice of ignoring local price variation in labor supply studies is as innocuous as generally assumed. We describe a simple model to demonstrate that the effects of wage and nonlabor income on labor supply typically differ by location. In particular, we show that the derivative of the labor supply with ...
Regional Economic Development , Issue Oct , Pages 2-14

Journal Article
Work motivation, commentary

Review , Issue May , Pages 51-54

Working Paper
Local price variation and labor supply behavior

In standard economic theory, labor supply decisions depend on the complete set of prices: the wage and the prices of relevant consumption goods. Nonetheless, most of theoretical and empirical work ignores prices other than wages when studying labor supply. The question we address in this paper is whether the common practice of ignoring local price variation in labor supply studies is as innocuous as has generally been assumed. We describe a simple model to demonstrate that the effects of wage and non-labor income on labor supply will typically differ by location. We show, in particular, the ...
Working Papers , Paper 2008-016

Working Paper
Earnings functions when wages and prices vary by location

In this paper we study whether location-specific price variation likely affects statistical inference and theoretical interpretation in the empirical implementation of human capital earnings functions. We demonstrate, in a model of local labor markets, that the ?return to schooling" is a constant across locations if and only if preferences are homothetic ? a special case that seems unlikely to generally pertain. Examination of U.S. Census data (for 1980, 1990, and 2000) provides persuasive evidence that the return to a college education, relative to a high school education, does indeed vary ...
Working Papers , Paper 2007-031

Working Paper
Low-powered incentives

We study low-powered incentives in a model that captures important features of workplaces in which incentive-pay approaches are minimally relevant. Our motivation is that incentive pay, while not rare, is clearly far less common than are agency problems: many firms with agency problems nonetheless pay fixed compensation and offer continued employment to all but those workers judged "unsatisfactory" according to largely subjective criteria. We find that low-powered incentives can achieve efficient outcomes in simple workplaces and function surprisingly well even when the environment is ...
Working Papers , Paper 1999-005

Working Paper
Seniority-based layoffs as an incentive device

This paper provides a simple economic rationale for two elements that often appear - implicitly or explicitly - in firms' personnel policies. When firms reduce their labor input they often (i) lay off a few individuals rather than adjust work hours, and (ii) make retention decisions on the basis of seniority. We show that in a stochastic environment, a seniority-based layoff policy can have the effect of making the job valuable to a worker over most of her career. This provides work-life incentives using a mechanism similar to Lazear's well known model of upward-sloping wage profiles. Firms ...
Working Papers , Paper 1998-006

Working Paper
African-American economic progress in urban areas: a tale of 14 American cities

How significant was the economic progress of African-Americans in the U.S. between 1970 and 2000? In this paper we examine this issue for black men 25-55 years old who live in 14 large U.S. metropolitan areas. We present the evidence that significant racial disparities remain in education and labor market outcomes of black and white men. We discuss changes in industrial composition, migration, and demographic changes that might have contributed to the stagnation of economic progress of black men between 1970 and 2000. In addition, we show that there was no progress in a financial well-being ...
Working Papers , Paper 2010-015

Working Paper
Economic models of employee motivation

Workers, being human beings, present employers with a range of tricky problems. Humans, unlike filing cabinets, can be crooked, subversive, surly, or indolent, even if they are paid on time. In this article we explore economists' main models of how compensation is used to address employee motivation and how these models help to explain puzzling features of the labor market.
Working Papers , Paper 1997-006

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