Why are Wages Cyclical in the 1970's?

This paper investigates cyclicality in real wages between 1969 and 1982, using 14 years of data from the Panel Survey of Income Dynamics. First, it investigates the extent to which movements in and out of the labor market created apparent wage cyclicality. Second, it investigates whether cyclical movements of workers between heterogeneous wage sectors within the labor market created cyclicality. Little evidence of the first effect is found. The second effect is much more important, and cyclicality clearly occurs in the movement of workers between different labor market sectors. However, sector selection is not correlated with wage determination. Thus, individual wage change estimates of cyclicality need to control for sector location, but need not account for sector selection. The third conclusion of the paper is that cyclicality is present in real wages even within sectors over this time period, and is the result of both cyclicality in overall wage levels (cyclicality in the constant term in wage equations), as well as in the coefficients associated with particular worker characteristics.

An Overview of Welfare-to-Work Efforts

Workfare, Wohlfahrtstheorie, Vereinigte Staaten, Welfare economics, United States

When Can Public Policy Makers Rely on Private Markets? The Effective Provision of Social Services

The privatization of social services is being increasingly discussed. The social services market is characterized by multiple market failures, including informational asymmetries, agency problems, externalities, and distributional concerns. Consumers may care as much or more about quality of services than about price. If quality is readily observable, the government can regulate private providers to assure standards are met. But when standards are difficult to observe or when the recipient is not the agent who makes the decisions, government ownership may be preferable. This paper categorizes the market situations in which the government provision of social services is likely to be most versus least attractive.