April 2006 (No. 14)
Editor: Terence K. Huwe
Contributors: Elizabeth del Rocío Camacho, Janice Kimball


IIR News & Events
IIR Hosts Immigration Conference
IIR Colloquium Series:   April Presenters
Working Paper Series:   Recent Additions
Industrial Relations Journal:   New Issue

IIR Unit News
Labor Center News
California Public Employee Relations News
Center for Culture, Organizations and Politics
Center for the Study of Child Care Employment News
Institute of Industrial Relations Library
Labor Project for Working Families


Campus Events
Bay Area Latin American Forum
Center for Chinese Studies
Center for Latin American Studies
Economics Department
Graduate School of Journalism
Haas School of Business
Sociology Department



IIR NEWS & EVENTS


IIR Hosts Immigration Conference

Irene Bloemraad and the Immigration Workshop are sponsoring the following event, which will be held at IIR.  Full information, please see the IIR Web in mid-April.

Conference Title:
Spotlight on Immigration: Interdisciplinary Perspectives on Newcomers and their Children
Friday April 21, 2006.



IIR Colloquium Series:   April Presenters

The seminars are held in the Directors Room, Light Lunch Provided
RSVP Myra Armstrong, 643-3012, zulu2@berkeley.edu

April 17, 2006
PETER EVANS
Professor of Sociology, UC Berkeley
Title To Be Announced

April 24, 2006
MICHAEL GREENSTONE
Visiting Scholar, Economics, M.I.T.
Reassessing the Efficacy of Workplace Safety Regulations: Evidence from Random OSHA Inspections



Working Paper Series:   Recent Additions
All Papers may be found at http://repositories.cdlib.org/iir


Kathy Baylis and Jeffrey M. Perloff
Trade Diversion from Tomato Suspension Agreements

Abstract: Trade barriers can cause trade to be diverted to other countries and into other products.  We study the voluntary price restraint (VPR) on Mexican tomato exports entering the United States. The diversion effects of the VPR were found to be significant – representing nearly three quarters of the direct effects of the trade barrier. When the VPR was binding, Mexico exported more tomatoes to Canada, while Canada and the Rest of the World increased their exports to the United States. The VPR also caused fresh tomatoes in Mexico to be diverted into paste production, which was exported to the United States.


Knut Gerlach, David Levine, Gesine Stephan, Olaf Struck
The Acceptability of Layoffs and Pay Cuts: Comparing North America with Germany

Abstract: Substantial evidence shows that North Americans are generally more accepting of the market than Europeans and attribute market outcomes to a larger degree to effort or skill. Thus, we expect North Americans to be more accepting of layoffs and pay cuts than Germans and that Germans will be more sensitive to the procedures and conditions under which pay cuts and layoffs occur. The empirical results from our quasi-experimental study are largely in line with our hypotheses.  These results may help explain and be explained by the different labour market institutions in the different regions.


Rui Huang, Jeffrey M. Perloff and Sofia B. Villas-Boas
Effect of Sales on Brand Loyalty

Abstract:   Although many theoretical industrial organization models are based on the existence of a critical mass of exogenously “brand loyal” consumers, we find little empirical evidence supporting these assumptions in the orange juice retail market. There are very few loyal consumers. More importantly, the frequency with which stores conduct sales affects the share of loyal types so that loyalty is endogenous rather than exogenous. Households’ demographics have statistically significant but economically minor effects on switching behavior. Switching across frozen and refrigerated states is very common, leading to more complicated substitution patterns and less loyalty than one observes looking at each state separately.


Larry Karp
Non-constant discounting in continuous time.

Abstract:   This note derives the dynamic programming equation (DPE) to a differentiable Markov Perfect equilibrium in a problem with non-constant discounting and general functional forms. Beginning with a discrete stage model and taking the limit as the length of the stage goes to 0 leads to the DPE corresponding to the continuous time problem. The note discusses the multiplicity of equilibria under non-constant discounting, calculates the bounds of the set of candidate steady states, and Pareto ranks the equilibria.


Larry Karp. and Thierry Paul
Friction and the Multiplicity of Equilibria

Abstract:   In familiar models, a decrease in the friction facing mobile factors (e.g., lowering their adjustment costs) increases a coordination problem, leading to more circumstances where there are multiple equilibria. We show that a decrease in friction can decrease coordination problems if, for example, a production externality arises from a changing stock of knowledge or a changing environmental stock. In general, the relation between the amount o friction that mobile factors face and the likelihood of multiple equilibria is non-monotonic.


Jeffrey M. Perloff, Valerie Y. Suslow, and Paul J. Seguin
Higher Prices from Entry:   Pricing of Brand-Name Drugs

Abstract:   When a new firm enters a market and starts selling a differentiated product, the prices of existing and new products may be higher than the first product’s original price due to a better match between consumers and products so that the average price rises. We find support for our theory–a rise in prices in response to entry–in the anti-ulcer drug market between 1977 and 1993, when brand-name entry occurred.


Marko Tervio
Career-Hopping:   Learning and Turnover in an Imperfect Labor Market

This paper studies a two-sector model of learning-by-doing that is partially transferable between sectors.  There is a potential efficiency gain from intersectoral turnover when the sectors have different complementary production costs or learning curves of different steepness.  If workers are liquidity restrained then there is a bias toward increased intersectroal turnover, resulting in socially inefficient career patterns.  Excess turnover can even result in lower average productivity of workers in both sectors.  If individual productivity is decreasing toward the end of the career, then a liquidity restraint on the young workers will also cause retirement to be delayed beyond the socially efficient retirement age.






Industrial Relations Journal:   April 2006 Issue
Volume 45 Issue 2

Metropolitan Wage Levels of Less-Educated Workers: 1986 to 1999
TODD EASTON

This work investigates determinants of metropolitan wage levels for workers with a high school education or less. It estimates their wage levels as a function of four factors: labor demand, industry mix, unionization, and the minimum wage. Labor demand and union strength influence wage levels most. The minimum wage and industry mix play smaller roles, although the minimum wage is the second most influential factor for men and women who did not complete high school. From 1990 to 1999, metropolitan wage levels exhibit considerable persistence, though persistence declines over this period.


The Wage Structure of Latino-Origin Groups across Generations
RICHARD FRY and B. LINDSAY LOWELL

We analyzed in detail the wages of Latinos of Mexican origin, Central/South Americans, and Puerto Ricans. The wage structure facing second and third- and higher-generation Latinos is very similar to the wage structure of third- and higher-generation White workers. Unlike African American workers, more than half of the native Latino/White wage gap can be accounted for by the lower educational attainment and potential experience of native Latino workers.


A Note on the Changes in the Relative Wages of LEP Hispanic Men between 1980 and 2000
MARIE T. MORA and ALBERTO DÁVILA

Using the Juhn-Murphy-Pierce (1993) wage decomposition technique, we analyzed changes in the earnings differential between Hispanic and non-Hispanic white men in the United States between 1980 and 2000. The empirical findings, based on decennial census data, indicate that limited-English-proficient (LEP) Hispanic men gained in their relative earnings position compared to English-fluent Hispanics during the 1990s. Our interpretation is that the relative demand for LEP Hispanic workers has risen in recent years.


Output Pay and Ethnic Wage Differentials: Canadian Evidence
TONY FANG and JOHN S. HEYWOOD

Using the Workplace and Employee Survey, we are the first to examine the association between payment method and ethnic wage differentials in Canada. Following earlier theory, we hypothesize that output pay tying earnings to productivity makes it more difficult for employers to discriminate. The empirical estimations show that non-Europeans in Canada paid by time rates receive lower earnings than Europeans paid by time rates. Yet, non-Europeans paid by output pay receive virtually identical earnings to their European counterparts.


Minimum Wage Impacts from a Prespecified Research Design: Canada 1981–1997
MICHELE CAMPOLIETI, MORLEY GUNDERSON, and CHRIS RIDDELL

Neumark (2001) used the novel methodology of a prespecified research design to estimate the employment effect of minimum wage changes. We conducted our analysis in the "spirit" of this methodology based on Canadian data from 1981 to 1997. Our minimum wage elasticities are substantial, typically in the range of −0.14 to −0.44, with −0.30 being a reasonable point estimate, and with the effects being larger after lagged adjustments.


Teams, Autonomy, and the Financial Performance of Firms
JED DEVARO

I estimate a structural model of teams, autonomy, and financial performance, using a cross section of British establishments. My findings suggest that team production improves financial performance for the typical establishment but that autonomous teams do no better than closely supervised or nonautonomous teams. I find that unobserved factors increasing the propensity to adopt teams are positively correlated with unobserved determinants of financial performance, and that unobserved factors increasing the propensity to grant teams autonomy are negatively correlated with unobserved determinants of financial performance when teams are adopted.


Revisiting General and Specific Union Beliefs: The Union-Voting Intentions of Professionals
HEEJOON PARK, PATRICK P. MCHUGH and MATTHEW M. BODAH

We examine how general and specific beliefs about unions influence the union-voting intentions of professional employees. Previous research, mainly on nonprofessionals, has found that both beliefs are significant in predicting voting behavior, but that specific beliefs have the stronger effect. Using a structural equation model, we found a causal relationship between general and specific beliefs, and that the total effect of general beliefs is nearly three times as strong as that of specific beliefs.