Low-Wage Labor Markets

Summer Research Workshops

IRP holds an annual summer research workshop on the problems of the low-income population that regularly includes studies of the labor market. It serves two purposes. It is both a venue for the presentation and discussion of innovative econometric, technical, and economic approaches to the study of poverty and welfare, and it is a forum for enhancing research skills, especially of young scholars.

IRP Discussion Papers and Reprints

Mexican Immigration and Self-Selection: New Evidence from the 2000 Mexican Census
Pablo Ibarraran and Darren Lubotsky

The authors use data from the 2000 Mexican Census to examine how the educational and socioeconomic status of Mexican immigrants to the United States compares to that of nonmigrants in Mexico. Migrants tend to be less educated than nonmigrants, a finding consistent with the idea that the wage gain to migrating is proportionately smaller for higher-educated Mexicans than it is for lower-educated Mexicans. (DP 1308-05)

Can We Improve Job Retention and Advancement among Low-Income Working Parents?
Harry J. Holzer and Karin Martinson

This paper reviews the evidence on four approaches to improving job retention and advancement among low-income working adults: (1) financial incentives and supports; (2) case management and service provision, often by labor market intermediaries; (3) skill development strategies; and (4) employer-focused efforts, such as sectoral strategies and career ladder development at private firms. Within each category, we find at least some evidence of positive effects on retention or advancement. (DP 1307-05)

Job Sprawl, Spatial Mismatch, and Black Employment Disadvantage
Michael A. Stoll

The author examines the relationship between job sprawl and the spatial mismatch between blacks and jobs, controlling extensively for metropolitan area characteristics and other factors. He finds a significant and positive effect of job sprawl on mismatch conditions faced by blacks that is particularly important in the Midwest and West, and in metropolitan areas where blacks' share of the population is not large and where blacks' population growth rate is relatively low. (DP 1304-05)

The Effects of an Employer Subsidy on Employment Outcomes: A Study of the Work Opportunity and Welfare-to-Work Tax Credits
Sarah Hamersma

Employer subsidies such as the Work Opportunity Tax Credit (WOTC) and the Welfare-to-Work Tax Credit (WtW) are designed to encourage employment by reimbursing employers for a portion of wages paid to certain welfare and food stamp recipients, among other groups. The author develops a simple dynamic search model of employment subsidies and then test the model's implications for the employment outcomes of WOTC- and WtW-subsidized workers, and finds that the WOTC and WtW have limited effects on the labor market outcomes of the disadvantaged population. (DP 1303-05)

The Effects of Welfare-to-Work Program Activities on Labor Market Outcomes
Andrew Dyke, Carolyn J. Heinrich, Peter R. Mueser, and Kenneth R. Troske

This research uses administrative data on welfare recipients in Missouri and North Carolina to obtain separate estimates of the effects of participating in subprograms of each state's welfare-to-work program. Focusing on assessment, job readiness, and job search assistance, and on more intensive programs designed to augment human capital skills, the authors found that the impacts of program participation were negative immediately following that participation but improved over time. More intensive training was associated with greater initial earnings losses but also greater earnings in the long run. (DP 1295-05)

Taking a Couples Rather than an Individual Approach to Employment Assistance
Rachel A. Gordon and Carolyn J. Heinrich

The paper presents evaluation results for an employment program in which both partners in a couple relationship simultaneously participate. The authors suggest directions for future couples-oriented employment programs based on couples interventions in other fields and encourage program developers to consider the range of mechanisms associated with a focus on couples, including potential unintended consequences. (DP 1294-05)

Geographic Skills Mismatch, Job Search, and Race
Michael A. Stoll

This paper examines whether a geographic skills mismatch exists between the location of less-educated minorities, in particular African Americans, and high-skill job concentrations, and if so, whether it contributes to the relatively poor employment outcomes of this group. It explores these questions by examining data on the recent geographic search patterns of less-educated workers in Los Angeles and Atlanta from the Multi-City Study of Urban Inequality, combined with employer data from the concurrent Multi-City Employer Survey. (DP 1288-04)

Declining Employment among Young Black Less-Educated Men: The Role of Incarceration and Child Support
Harry J. Holzer, Paul Offner, and Elaine Sorensen

The authors explore the extent to which the continuing decline in employment and labor force participation of black men aged 16 to 34, with a high school education or less, is linked to two fairly new developments: (1) the dramatic growth in the number of young black men who have been incarcerated and (2) strengthened enforcement of child support policies. Their results indicate that both factors have contributed to the decline in employment activity among young black less-educated men in the last two decades, especially among those aged 25-34. (DP 1281-04)

Escaping Low Earnings: The Role of Employer Characteristics and Changes
Harry J. Holzer, Julia I. Lane, and Lars Vilhuber

This paper analyzes the extent to which escape from or entry into low earnings among adult workers is associated with changes in their employers and firm characteristics. Results indicate that job changes are an important part of the process by which workers escape or enter low-wage status, and that changes in employer characteristics help to account for these changes. (DP 1269-03)

Employer Demand for Ex-Offenders: Recent Evidence from Los Angeles
Harry J. Holzer, Steven Raphael, and Michael A. Stoll

We investigate employer demand for ex-offenders using a recent employer survey taken in Los Angeles in 2001. We find that employers stated willingness to hire ex-offenders, as well as their actual hiring of such workers, is very limited. The implications of these findings for the employment opportunities of ex-offenders and for policy are discussed. (DP 1268-03)

Employers in the Boom: How Did the Hiring of Unskilled Workers Change during the 1990s?
Harry J. Holzer, Steven Raphael, and Michael A. Stoll

We present evidence on how a wide range of employer attitudes and hiring behaviors with respect to unskilled workers changed over the decade of the 1990s, using a unique source of data: a set of cross-sectional employer surveys administered over the period 1992-2001. (DP 1267-03)

Minimum Wage Effects on Labor Market Outcomes under Search with Bargaining
Christopher J. Flinn

Building upon a continuous-time model of search with Nash bargaining in a stationary environment, we analyze the effect of changes in minimum wages on labor market outcomes and welfare. By incorporating a limited amount of information from the demand side of the market, we are able to obtain credible and precise estimates of all primitive parameters, including bargaining power. (DP 1266-03)

Labor Specialization, Ethnicity, and Metropolitan Labor Markets
F. D. Wilson

This paper provides an empirical assessment of the extent to which co-ethnic workers are under- or overrepresented in industry and occupation-based employment sectors based on the characteristics of workers themselves, attributes and resources of ethnic groups in which workers are affiliated, and characteristics of metropolitan areas. (DP 1261-03)

Perceived Criminality, Criminal Background Checks, and the Racial Hiring Practices of Employers
H. J. Holzer, S. Raphael, and M. A. Stoll

This paper analyzes the effect of employer-initiated criminal background checks on the likelihood that employers hire African-Americans. Employers who check criminal backgrounds are more likely to hire African-American workers, especially among men. Our results suggest that, in the absence of criminal background checks, employers discriminate statistically against black men and that this discrimination appears to contribute substantially to observed employment and earnings gaps between white and black young men. (DP 1254-02)

The Decline of Male Employment in Low-Income Black Neighborhoods, 1950-1990: Space and Industrial Restructuring in an Urban Employment Crisis
L. Quillian

This paper tabulates male employment trends in 49 metropolitan areas from 1950 to 1990 and models causes of these trends, especially the marked decline in the employment of working-age black men. (DP1248-02)

Trends in Employment Outcomes of Young Black Men, 1979-2000
H. Holzer and P. Offner

In the 1980s and the 1990s, the employment and labor force participation rates of less-educated young black men declined more strongly than rates among other less-educated young men; the decline also stands in sharp contrast to the improving employment rates of young black women during the 1990s. Although several factors (such as rising school enrollment rates and the shrinkage of blue-collar jobs in the labor market) appear to have contributed, much of this decline in employment is still unexplained. (DP 1247-02)

Will Employers Hire Ex-Offenders? Employer Preferences, Background Checks, and Their Determinants
H. Holzer, S. Raphael, and M. Stoll

Using data from the Multi-City Study of Urban Inequality (1992-94), we analyze employer preferences in the hiring of ex-offenders and the extent to which they check criminal backgrounds in light of the very imperfect information about the job applicants they consider. We also consider the extent to which such demand changed over the 1990s. (DP 1243-02)

Why Are Black Employers More Likely than White Employers to Hire Blacks?
M. Stoll, S. Raphael, and H. Holzer

Using data from the Multi-City Employer Survey (1992-94), this paper finds that black employers are more likely to hire blacks because they receive applications from blacks and hire them out of the applicant pool at higher rates than do white employers. (DP 1236-01)

Measuring Employment and Income for Low-Income Populations with Administrative and Survey Data
V. J. Hotz and J. K. Scholz

The authors discuss the strengths and weaknesses of national surveys, unemployment insurance wage records, and tax returns for understanding the incomes and employment of low-skilled workers. They present recommendations for research that might help fill the gaps they have identified. (DP 1224-01)

Interpreting Minimum Wage Effects on Wage Distributions: A Cautionary Tale
C. J. Flinn

Using a simple model, the author characterizes the relationship between minimum wage levels, labor market outcomes, and the welfare of labor market participants. The analysis illustrates that well-specified models are required to evaluate the impact of institutional constraints on the welfare of labor market participants. (DP 1214-00)

Employer Demand for Welfare Recipients by Race
H. J. Holzer and M. A. Stoll

The authors find a fairly high demand by employers for welfare recipients in four metropolitan areas. Hiring of minority welfare recipients, however, is less than predicted and may be affected by employers' location and by discriminatory employer preferences. (DP 1213-00)

Metropolitan Labor Markets and Ethnic Niching: Introduction to a Research Project
F. Wilson

This study investigates labor market niching of 102 ethnic groups in 216 metropolitan areas in 1990; about 12 percent of the labor force in these areas was employed in ethnic niches. Ethnic niching emerges from economic competition resulting from changes in the relative number and sizes of ethnic populations in conjunction with the expansion/contraction of employment opportunities in local labor markets. (DP 1204-00)

Youth Living Arrangements, Economic Independence, and the Role of Labor Market Changes: A Cohort Analysis from the Early 1970s to the Late 1980s
R. Haveman and B. Knight

Labor market deterioration between the late 1960s and early 1990s led young workers, especially the low-skilled, to shift away from living arrangements with significant financial responsibility, such as living with a spouse and children, and toward arrangements with less responsibility, such as living with one's parents or living alone. (DP 1201-99)

Patterns of Foregone Potential Earnings among Working-Age Males, 1975-1992
R. Haveman, L. Buron, and A. Bershadker

RPT 830 (Working Time in Comparative Perspective. Volume 1: Patterns, Trends, and the Policy Implications of Earnings Inequality and Unemployment, ed. G. Wong and G. Picot [W.E. Upjohn Institute for Employment Research, 2001], pp. 145-169).

We use a new statistical indicator, foregone potential earnings (FPE), to measure the extent to which the prime-age male population underutilizes its human capital. FPE is the gap between an individual's actual earnings and his potential earnings and is thus an indicator of the underutilization of human capital. We use our indicator to examine trends in human capital underutilization for the entire population of working-age males, and for various population subgroups, during the 1975-1992 period.

The Growth in U.S. Male Earnings Inequality: Changing Wage Rates or Working Time?
R. Haveman and L. Buron

RPT 813 (Journal of Income Distribution, Vol. 8 [1998], pp. 255-276).

Increasing earnings inequality among working-age males since the early 1970s has been documented in several studies, some of which have also apportioned the change due to the inequality in wage rates and working time. This study finds that increases in the inequality of working time account for at least 30 percent and perhaps as much as 60 percent of the increase in earnings inequality.

Migration and the Employment and Wages of Native and Immigrant Workers
F. Wilson and G. Jaynes

RPT 807 (Work and Occupations, Vol. 27, no. 2 [May 2000], pp. 135-167).

This article assesses the association between migration (both international and internal) and the employment status and earnings of young non-college-educated native White, Black, Hispanic, Asian, and immigrant white-collar and blue-collar workers in the United States during the decade from 1980 to 1990. The authors present results that only partly support the claim that internal migrants and immigrants are substitutes for native workers.