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<p>This dissertation is composed of three essays. In the first essay of this dissertation, I reexamine the effect of industrial mobility on the cost of worker displacement. While the human capital implications of this regularity are well understood, no current model can explain why a displaced worker would ever choose to "switch." I develop a match-based model of wages and endogenous mobility and show that switching industries may, indeed, be optimal for some "mismatched" workers. I then use data on displaced workers to re-estimate the cost of switching industries that controls for the endogeneity of industrial mobility. I find that switching industries is an optimal decision from the point of view of individual displaced workers &mdash; i.e. that losses would have been even larger had they "stayed." The results suggest that skill mismatch and the resulting inability of some workers to re-match their task-specific skills via reemployment is an important determinant of the observed costs of worker displacement. </p><p> In the second essay, I estimate the degree of heterogeneity in the outcomes of displaced workers and analyze the extent to which these heterogeneous experiences can be explained by observable (or "systematic") factors as opposed to unobserved (or "idiosyncratic") factors. To this end, I use data on displaced workers to estimate the standard deviation of earnings losses following displacement. I find statistically significant heterogeneity at the lower bound, which is equal to about half of the mean effect each year following displacement. Once I control for systematic differences in observable characteristics, the remaining idiosyncratic variation is estimated to be about 20%-40% less than the total variation in the first few years following displacement and 50%-80% less than the total variation six to eight years after displacement. Systematic variation, however, remains fairly large and constant over time. These results suggest that idiosyncratic factors, such as luck or unobserved quality, have largely transitory effects on the outcomes of displaced workers while systematic factors, such as industrial mobility and unemployment duration, disproportionately explain the persistent heterogeneity in the costs of worker displacement. </p><p> The third essay explores the potential causes of spillovers in the wage distribution that occur when the minimum wage increases. This empirical phenomenon, known as the "ripple effect" of minimum wage laws, is typically explained in terms of demand substitution: where the rising minimum increases the demand for more-skilled workers who become relatively inexpensive compared to less-skilled workers. I show that workers will also respond to changes in the minimum wage by re-optimizing their labor supply since an increase in the minimum wage leads to lower compensating wage differentials. The resulting decline in labor supply at hedonically less desirable (and hence, higher paying) jobs could also cause the ripple effect. I combine labor market data on individuals with occupation-level hedonic data and provide evidence that the ripple effect is largely caused by labor supply substitution and <i>not</i> labor demand substitution as previously believed. </p><p> Keywords: Job Displacement, Tasks, Mismatch, Human Capital, Heterogeneous Treatment Effects Minimum Wage, Ripple Effect, Hedonic Wages. </p>

This dissertation consists of three empirical essays on the economic adjustments that followed trade liberalization and other market-oriented reforms in Mexico during the 1980s and 1990s. In the first essay, I use micro data from the Mexican Population Census to explain the recent reversal in economic convergence between Mexican states. I decompose the divergence into components due to economy-wide changes in skill prices and components due to state-specific changes in the composition of workers. I find that the rise in the education premium hindered the progress of poor states and raised the variance of average state wages. However, educational attainment mostly compensated for this income widening effect. State-level regressions reveal that initial level of education, size of the agricultural sector, and distance to the U.S. border were important factors while public infrastructure was not. In the second essay, I use Mexican Income-Expenditure Surveys to examine relative wages and employment of women in Mexico during the trade liberalization period. The gender wage gap was relatively stable during 1989--2000 while the relative supply of women increased, suggesting that relative demand for women also increased. I find that industrial change, such as the decline of agriculture and the expansion of services and light manufacturing, moved in favor of women. Using state-level data, I find that the wage bill share of women is negatively related to agricultural employment and positively related to maquiladora employment, a proxy for foreign direct investment. In the third essay, I use micro data from the Mexican Population Census to study the effects of trade liberalization and domestic reforms on rural-urban migration in Mexico. To take better advantages of the new rules of international trade, a new agrarian law gave property rights to communal farmers. At the same time, tariff and quota protection for agriculture as well as price supports, credits and subsidies to this sector were virtually dismantled. I find that in addition to city-village wage differences and after controlling for self-selection, the share of former communal land within a community has an important positive effect on the probability of individual migration.

Utilizing a unique and comprehensive data set on the personal and job characteristics of workers from three firms, we test the equalizing wage differential theory and study the determinants of the persistent male-female earnings gap. Access to information on the point-grading systems used by the three firms to set their wages, permits us to expose the methodology behind the systems which are being considered by Comparable Worth advocates as potential substitutes for the market in the determination of wages. Our data on grades, and on directly observed job characteristics that are homogeneous across firms, reduce the biases of the traditional wage hedonic estimators and enhances their efficiency. Our results show systematic support for the theory of equalizing wage differentials. The inclusion of grade information increases the flexibility of traditional models by complementing human capital theory with important administrative constraints that usually accompany internal labor markets. Our model reduces the unexplained portion of the observed earnings gap between males and females and highlights the difficulties associated with using inter-firm data from national samples. Using an arbitrary set of job characteristics we explain approximately 80 percent of the grades used in the firms under study. By contructing a variable to simulate the job analyst's estimate of the sex of the worker, we show that analysts can, by choosing the appropriate weights, set wages and manipulate grades to perpetuate the earnings gap. A high correlation between market wages and grades is found, which confirms that it is impossible to escape market realities using grading systems in their present form. Therefore, if, as Comparable Worth advocates desire, grading system are to be used to set wages for all workers across the country in a way that market distortions are not reflected by the grades, the existing systems are not adequate. We show that if analysts were forced to use the same weights across firms the flexibility of their system to adapt to local market conditions would be severely hindered.

The purpose of these essays is to test empirically a model of wage contract duration developed by Gray (1978). The focus is on wage agreements negotiated between unions and firms. In most contract length models negotiating agents seek to minimize an objective function comprised of costs associated with a contract. This objective function has two components, a fixed cost borne each time negotiations are undertaken and a variable cost which increases with the level of uncertainty confronting the firm and as the bargain becomes longer. The presence of the fixed cost usually makes a spot market suboptimal while the variable component prevents the agreement from being of infinite duration. These models suggest that contracts will become shorter as price or output uncertainty increases. The initial empirical findings, surprisingly, suggest that contracts become longer, not shorter, as output fluctuations, measured by the output forecast standard error, increase; a result opposite to that predicted by the theoretical models. There are several possible explanations for such a result. First, and most obviously, the theory may be wrong. Second, a missing variable such as the degree of wage indexation may affect both contract length and the uncertainty measure thus obscuring the true relationship between the two included variables. Third, econometric problems including bias, heteroscedasticity, and autocorrelation may be affecting the estimated coefficients. An alternative estimation procedure using individual firm data indicates that, for some industries, contract length is positively related to uncertainty caused by productivity (industry-specific) shocks and negatively related to money supply shocks. In other instances the results suggest no significant relationship between contract duration and the uncertainty measures. Using pooled data adjusted to eliminate heteroscedasticity and introducing industry dummy variables into the estimations indicates that contract length is not significantly related to the industry-specific shock measure. At the 95% confidence level contract duration is negatively affected by money supply uncertainty only among durable goods producers.

The use of performance-based payments to compensate rank and file workers in the U.S. has increased substantially since the 1980s. This dissertation presents three papers that examine the empirical implications of these compensation structures on the U.S. labour market. The first paper investigates whether performance pay is contributing to the difference in residual wage inequality between the March and the Merged Outgoing Rotation Group (MORG) samples of the Current Population Survey (CPS). Lemieux (2006) and Autor, Katz, and Kearney (2008) show 1) that residual inequality is about 30% higher in the March CPS than in the MORG CPS, and 2) that this measure of inequality grew between 1970 and the late 1990s in the March CPS but was relatively stable in the MORG CPS. Understanding why there should be such a substantial difference in residual inequality between the two CPS samples is important because they differ in their support for widely accepted theories of wage inequality. Drawing on detailed earnings information contained in the Medical Expenditure Panel Survey, I present results that suggest that performance pay is indeed playing a role in the discrepancy in residual inequality between the March and MORG CPS samples. The second paper examines whether employers that pay for performance learn more quickly about their workers' unobserved skill (such as ability). According to models of employer learning this is likely to be the case if paying for performance generates cleaner (less noisy) signals of worker productivity. Using job spells constructed from the Panel Study of Income Dynamics I show that faster learning occurs in performance pay jobs than in non-performance pay jobs. This result is in line with Lemieux, MacLeod, and Parent's (2009) finding that performance pay tends to be more closely linked to unobserved measures of skill than pay that is not based on performance. The third paper investigates whether more risk-loving workers sort themselves into jobs that pay for performance and, whether this plays any part in the observed positive relationship between performance pay and uncertainty in output - a relationship which agency theory predicts should be negative. If more risk-loving workers are sorting into performance-pay jobs, then failing to control for heterogeneity in risk preferences will lead to a positive performance pay-output uncertainty relationship. Results obtained using data from the Panel Study of Income Dynamics and Compustat North America show that, although more risk-loving workers are more likely to be found in performance pay jobs, this sorting behaviour only plays a small role in the positive relationship between performance pay and output uncertainty. / L'usage de paiements à la performance pour compenser les salariés non-cadres aux Etats-Unis a largement augmenté depuis les années 1980. Cette dissertation présente trois études qui examinent les implications empiriques de ces structures compensatoires sur le marché du travail Américain. La première étude enquête si une plus grosse quantité de paiements à la performance dans les mesures de salaire de l'échantillon de Mars du Current Population Survey (CPS) que dans celles de l'échantillon Merged Outgoing Rotation Group (MORG) du CPS contribue au niveau plus élevé et aux tendances divergentes dans l'inégalité salarial résiduelle entre les deux échantillons. Lemieux (2006) et Autor, Katz, et Kearney (2008) démontrent que, non seulement l'inégalité résiduelle dans le CPS de Mars est approximativement 30% plus élevée que dans le MORG CPS, mais aussi que malgré la croissance de cette mesure d'inégalité entre 1970 et la fin des années 1990, elle était relativement stable dans le MORG CPS. Il est important de comprendre l'origine de cette large différence dans l'inégalité résiduelle entre ces deux échantillons vu qu'ils diffèrent dans leur soutien des théories de l'inégalité salariale. Par le biais d'information détaillée sur les gains, contenue dans le sondage Medical Expenditure Panel Survey, je présente des résultats qui suggèrent que le paiement à la performance joue en effet un rôle dans l'écart dans l'inégalité résiduelle entre les échantillons de Mars et du MORG CPS. La deuxième étude examine si les employeurs payant à la performance apprennent plus rapidement les compétences non observées de leurs travailleurs (comme la capacité). Selon les modèles d'apprentissage des employeurs, ceci est probable si le paiement à la performance engendre des signaux plus clairs quant a la productivité des travailleurs. En utilisant les périodes d'emplois construites à partir du Panel Study of Income Dynamics I, je démontre que l'apprentissage est plus rapide dans les emplois rémunérés à la performance. Ceci est cohérent avec les résultats de Lemieux, MacLeod et Parent (2009) selon lesquels le paiement à la performance est plus étroitement lie aux compétences non observées que le paiement non basé sur la performance. La troisième étude examine si les travailleurs avec préférence pour le risque se trient dans les emplois qui paient à la performance et si cela joue un rôle dans la relation positive observée entre le paiement à la performance et l'incertitude dans la production – une relation que la théorie de l'agence prédit négative. Si les travailleurs ayant plus de préférence pour le risque se trient dans les emplois rémunérés à la performance, ne pas contrôler pour l'hétérogénéité dans ces préférences conduira à une relation positive entre le paiement à la performance et l'incertitude dans la production. Les résultats obtenus à travers le Panel Study of Income Dynamics et Compustat North America démontrent que, bien que les travailleurs préférant le risque sont plus probablement dans des emplois payes à la performance, ce triage ne joue qu'un rôle mineur dans la relation positive entre le paiement à la performance et l'incertitude dans la production.

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This dissertation contributes to a strand of literature on the economic integration of immigrants in Canada's labour market. My first essay examines the economic return to human capital acquired abroad using an improved identification strategy of foreign education and work experience. My second essay examines whether education-job mismatches, on the part of immigrants, possibly explain their poor labour market outcomes. My final essay provides new evidence on the economic assimilation of U.K. immigrants in Canada over the late 19th and early-20th-century.In my first essay I exploit the enhanced details on education attainment provided in the Survey of Labour and Income Dynamics (SLID) to decompose aggregate human capital variables into more precise measures of foreign and Canadian locations than those employed in related Census-based studies. I find that measurement error associated with using imprecise measures exaggerates the portability (in terms of economic returns) of foreign schooling and the degree of immigrant wage assimilation. However, the virtually zero returns to foreign work experience, commonly found in the literature, cannot be attributed to measurement error. Thus, this dimension of human capital receives virtually no recognition for immigrants and it is mainly responsible for the substantial estimated wage gaps in the standard human-capital-adjusted earnings function.The contribution of my second essay is an investigation of the importance of education-job mismatches in explaining the poor labour market outcomes observed for immigrants to Canada. Immigrants have a modestly lower incidence of working in jobs related to their education than do the Canadian-born, and there is a sizable wage penalty for working in unrelated jobs. The lower incidence of matching, found among immigrant workers, can explain a sizable portion of their lower returns to foreign education credentials, and also the immigrant-native wage gap among university educated workers. By contrast, foreign education and work experience acquired abroad is not discounted in the Canadian labour market for immigrants who are successfully matched.My final essay examines the economic assimilation of pre-war U.K. immigrants using recently digitized samples of the 1901 and 1911 censuses. These nationally representative samples allow for a more comprehensive examination of immigrant assimilation than existing published evidence which is limited to cross-sectional samples of Montréal and Toronto. Estimates of within-cohort earnings growth show that these newcomers, despite their cultural similarities with the Canadian-born, experienced sizable earnings disadvantages upon arrival coupled with slow subsequent earnings growth. However, most immigrant cohorts achieved earnings parity with comparable Canadian-born workers over their working life unlike that found for Montréal and Toronto. Thus, although the government's desire was to attract the most industrious and hard working immigrants, arrivals from the British Isles may have been negatively selected in terms of unobservable labour market characteristics. / Cette thèse contribue à la littérature qui examine l'intégration des immigrants au marché de travail Canadien. Le premier essai étudie le retour au capital humain acquis à l'étranger sur le marché de travail Canadien utilisant des stratégies améliorées d'indentification de ce dernier. Mon deuxième essai examine des conséquences économiques de l'absence de la correspondance parfaite des professions que les immigrants au Canada peuvent obtenir avec leurs disciplines d'études. Mon troisième essai produit des faits stylisés nouveaux au sujet de l'intégration des immigrants de provenance du Royaume-Uni au Canada durant la fin du 19ème au début du 20ème siècle.Dans mon premier essai j'exploite des détails améliorés de l'Enquête sur la dynamique du travail et du revenu à fin de décomposer le capital humain a des portions acquises à l'étranger et des portions acquises au Canada. Je trouve que l'erreur de mesure associée à l'emploi des indicateurs imprécis avait causé la sous-estimation de l'écart entre le retour sur le capital humain acquis à l'étranger et celui acquis au Canada dans les études précédentes. Je trouve, en revanche, que le capital humain acquis à l'étranger reçoit un retour nul au Canada et cela explique la quasi-totalité de l'écart de revenu entre les immigrants et les natifs.Mon deuxième essai examine l'importance de la correspondance imparfaite entre les disciplines d'études et la profession des immigrants au Canada pour expliquer leurs performances économiques inferieures. Je trouve que cette correspondance imparfaite est un peu plus fréquente chez les immigrants et qu'elle a cependant des conséquences négatives non-négligeables sur le salaire. Cette probabilité plus faible que des immigrants puissent travailler dans un domaine proche de leurs disciplines d'étude explique une portion considérable de l'écart de salaire entre les immigrants et les natifs comparables ainsi que leurs retours du capital humain plus bas. Mon troisième essai porte un regard nouveau sur la question d'intégration des immigrants de provenance du Royaume-Uni durant la fin du 19ème siècle au début du 20ème siècle en utilisant des données récemment numérisées des recensements de l'époque. L'échantillon que j'utilise dans cette recherche représente la distribution nationale de ces immigrants contrairement aux échantillons auparavant utilisés qui portaient seulement sur les immigrants résidant au Québec et en Ontario. Mes estimations montrent que ces immigrants, malgré leur similarité culturelle avec les natifs, ont subi un écart du salaire considérable ainsi qu'un taux de croissance du salaire plus bas en comparaison avec les natifs. Cependant, je trouve que la plupart de ces immigrants ont ultimement arrivé à un salaire équivalent aux natifs comparables durant leurs vies professionnelles. Je trouve aussi que le gouvernement, malgré son intention, a échoué d'attirer les immigrants industrieux et entreprenants en raison des facteurs inobservables conduisant à une sélection peu efficiente de ces immigrants.

Typescript. / Thesis (Ph. D.)--University of Hawaii at Manoa, 1977. / Bibliography: leaves 98-103. / Microfiche. / vii, 103 leaves

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