Best Selling Books by Alan B. Krueger

We re-examine recent cross-state evidence on the employment effect of the minimum wage. A re-evaluation of the data used in Neumark and Wascher''s (1992) study of the minimum wage provides no support for their conclusion that the minimum wage has an adverse effect on teenage employment. Neumark and Wascher''s findings are shown to be due to an inadvertent mistake in the definition of their school enrollment variable. In addition, Neumark and Wascher''s coverage-weighted relative minimum wage index is shown to be negatively correlated with average teenage wages. We also re-analyze the experiences of individual states following the April 1990 increase in the Federal minimum wage, allowing for a full year lag in the effect of the law and controlling for changes in (properly measured) enrollment rates. These changes actually strengthen Card''s (1992a) conclusion that the 1990 increase in the Federal minimum had no adverse employment effect. Lastly, we find that subminimum wages are rarely used, casting doubt on the claim that subminimum wage provisions temper any employment losses attributable to the minimum wage

This paper re-examines the effect of the 1992 New Jersey minimum wage increase on employment in the fast-food industry. We begin by analyzing employment trends using a comprehensive new data set derived from the Bureau of Labor Statistics''s (BLS''s) ES-202 data file. Both a longitudinal sample and a repeated-cross-section sample drawn from these data indicate similar or slightly faster employment growth in New Jersey relative to eastern Pennsylvania after the rise in New Jersey''s minimum wage, consistent with the main findings of our earlier survey. We also use the ES-202 data to measure the effects of the 1996 increase in the federal minimum wage, which raised the minimum wage in Pennsylvania but not in New Jersey. We find no indication of relative employment losses in Pennsylvania. In light of these findings, we re-examine employment trends in the sample of fast-food restaurants assembled by the Employment Policies Institute (EPI) and David Neumark and William Wascher. The differences between this sample and both the BLS data and our earlier sample are attributable to a small set of restaurants owned by a single franchisee who provided the original Pennsylvania data for the 1995 EPI study. We also find that employment trends in the EPI/Neumark-Wascher sample are strikingly different for firms that reported their data on a weekly, biweekly or monthly basis, possibly because of seasonal factors. Controlling for the systematic effects of the varying reporting intervals, the combined EPI/Neumark-Wascher sample shows no difference in hours growth between New Jersey and Pennsylvania

This paper has three goals; first, to place U.S. job growth in international perspective by exploring cross-country differences in employment and population growth. This section finds that the U.S. has managed to absorb added workers -- especially female workers -- into employment at a greater rate than most countries. The leading explanation for this phenomenon is that the U.S. labor market has flexible wages and employment practices, whereas European labor markets are rigid. The second goal of the paper is to evaluate the labor market rigidities hypothesis. Although greater wage flexibility probably contributes to the U.S.''s comparative success in creating jobs for its population, the slow growth in employment in many European countries appears too uniform across skill groups to result from relative wage inflexibility alone. Furthermore, a great deal of labor market adjustment seems to take place at a constant real wage in the U.S. This leads to the third goal: to speculate on other explanations why the U.S. has managed to successfully absorb so many new entrants to the labor market. We conjecture that product market constraints contribute to the slow growth of employment in many countries

This paper examines the properties and prevalence of measurement error in longitudinal earnings data. The analysis compares Current Population Survey data to administrative Social Security payroll tax records for a sample of heads of households over two years. In contrast. to the typically assumed properties of measurement error, the results indicate that errors are serially correlated over two years and negatively correlated with true earnings (i.e., mean reverting). Moreover, reported earnings are more reliable for females than males. Overall, the ratio of the variance of the signal to the total variance is .82 for men and .92 for women. These ratios fall to .65 and .81 when the data are specified in first-differences. The estimates suggest that longitudinal earnings data may be more reliable than previously believed.

This study examines the extent and influence of occupational licensing in the U.S. using a specially designed national labor force survey. Specifically, we provide new ways of measuring occupational licensing and consider what types of regulatory requirements and what level of government oversight contribute to wage gains and variability. Estimates from the survey indicated that 35 percent of employees were either licensed or certified by the government, and that 29 percent were fully licensed. Another 3 percent stated that all who worked in their job would eventually be required to be certified or licensed, bringing the total that are or eventually must be licensed or certified by government to 38 percent. We find that licensing is associated with about 14 percent higher wages, but the effect of governmental certification on pay is much smaller. Licensing by multiple political jurisdictions is associated with the highest wage gains relative to only local licensing. Specific requirements by the government for a worker to enter an occupation, such as education level and long internships, are positively associated with wages. We find little association between licensing and the variance of wages, in contrast to unions. Overall, our results show that occupational licensing is an important labor market phenomenon that can be measured in labor force surveys.

Between 1970 and 1973 priority for military service was randomly assigned to draft-age men in a series of lotteries. Many men who were at risk of being drafted managed to avoid military service by enrolling in school and obtaining an educational deferment This paper uses the draft lottery as a natural experiment to estimate the return to education and the veteran premium. Estimates are based on special extracts of the Current Population Survey for 1979and 1981-85. The results suggest that an extra year of schooling acquired in response to the lottery is associated with6.6 percent higher weekly earnings. This figure is about 10 percent higher than the OLS estimate of the return to education in this sample, which suggests there is omitted-variable bias in conventional estimates of the return to education. Our findings are robust to a variety of assumptions about the effect of veteran status on earnings.

Abstract: parental income or education affects state-level rates of return.

This chapter examines the labor supply effects of social insurance programs. We argue that this topic deserves separate treatment from the rest of the labor supply literature because individuals may be imperfectly informed as to the rules of the programs and because key parameters are likely to differ for those who are eligible for social insurance programs, such as the disabled. Furthermore, differences in social insurance programs often provide natural experiments with exogenous changes in wages or incomes that can be used to estimate labor supply responses. Finally, social insurance often affects different margins of labor supply. For example, the labor supply literature deals mostly with adjustments in the number of hours worked, whereas the incentives of social insurance programs frequently affect the decision of whether to work at all. The empirical work on unemployment insurance (UI) and workers'' compensation (WC) insurance finds that the programs tend to increase the length of time employees spend out of work. Most of the estimates of the elasticities of lost work time that incorporate both the incidence and duration of claims are close to 1.0 for unemployment insurance and between 0.5 and 1.0 for workers'' compensation. These elasticities are substantially larger than the labor supply elasticities typically found for men in studies of the effects of wages or taxes on hours of work. The evidence on disability insurance and (especially) social security retirement suggests much smaller and less conclusively established labor supply effects. Part of the explanation for this difference probably lies in the fact that UI and WC lead to short-run variation in wages with mostly a substitution effect. Our review suggest that it would be misleading to apply a universal set of labor supply elasticities to these diverse problems and populations