The Role of the Employer in the Labor Market
Saturday, Jan. 6, 2018 10:15 AM - 12:15 PM
- Chair: Susan Houseman, W.E. Upjohn Institute for Employment Research
Sources of Displaced Workers' Long-term Earnings Losses
AbstractIt is well-known that displaced workers suffer substantial long-term earnings losses, but progress on formulating policy to address those losses has been hampered by limited understanding of the reasons for them. We estimate the earnings losses of a cohort of workers displaced during the Great Recession and decompose those long-term losses into components attributable to fewer work hours and to reduced hourly wage rates. We also examine the extent to which the reduced earnings, work hours, and wage rates of these displaced workers can be attributed to factors specific to pre- and post-displacement employers; that is, to lost employer-specific rents. The analysis is based on employer-employee linked panel data from Washington State assembled from 2002 - 2014 administrative wage and unemployment insurance records.
Wage Premiums, Shirking Deterrence, Gift Exchange, and Employee Quality: Firm Evidence
AbstractMany incentive schemes rely partially or fully on wages that are both (i) not contingent on workers' output, and (ii) at a premium compared to market wages. Two main theories explain why paying these wage premiums may be efficient for firms. First, they may create incentives for the provision of effort by deterring shirking. Second, workers may reciprocate higher wages with increased effort in a gift exchange with the employer. Third, they may attract higher quality workers. The first two theories have different implications for incentives but are hard to disentangle because they are usually observationally equivalent. We solve this issue by using two novel multiyear personnel datasets from two wage-premium firms where workers transition from long-term probation contracts to permanent 'tenured' contracts with strong employment protection. We find that absenteeism, our measure of effort, increases post-tenure: it more than doubles for one firm and almost quadruples for the other in the first six months immediately post-tenure. This finding is consistent with shirking deterrence, although it does not rule out gift exchange. Despite the increase in shirking after tenure, premium wages appear to yield positive returns: workers at these firms have fewer absences and more schooling than workers earning average wages. This finding is consistent with wage premiums leading to selection of abler workers. We develop a model of wage premiums and worker effort to further disentangle and quantify these effects. This model, informed by our estimates, suggests that a substantial fraction of the return to paying wage premiums (82% in one firm and 27% in the other) stems from firms' ability to attract better workers.
Regulation by Shaming: Deterrence Effects of Publicizing Violations of Workplace Safety and Health Laws
AbstractRatings, scores and other forms of information disclosure are widely used to incentivize firms to improve their quality or performance. Increasingly, such policies are targeted to exclusively publicize firms whose performance is deemed particularly poor--i.e. through “shaming.” Shaming may affect the behavior of publicized firms (“specific deterrence”), and more broadly it may affect the behavior of other firms that may seek to avoid their own publicity (“general deterrence”). This paper studies a targeted disclosure policy that publicized firms whose workplace safety and health records were deemed especially poor. In 2009 the Occupational Safety and Health Administration (OSHA) began issuing press releases about facilities found to be in violation of safety and health regulations if the penalties levied for those violations exceeded a cutoff. Using quasi-random variation induced by this cutoff, and the media sources to which these press releases were distributed, this paper finds that publicizing the violations of one facility leads geographically proximate facilities in the same sector to improve their compliance with safety and health regulations and to experience fewer occupational injuries. The effect sizes conservatively suggest that OSHA would have to conduct at least 40 additional inspections to achieve the same improvement in compliance as that achieved with a single press release. Finally, using geographic variation in the strength of labor unions, the paper provides evidence that employers improve safety following a press release to avoid costly responses from workers.
- J3 - Wages, Compensation, and Labor Costs