The Efficiency of Collective Bargaining in Public Schools

This paper develops a bargaining model of wage and employment determination for the public sectror. The solution to the model generates structural wage and employment equations that are estimated using data from New York State teacher-school district collective bargaining agreements. An advantage of this approach is that the major collective bargaining models (monopoly union, right to manage, efficient contracting, and inefficient contracting) are nested in the structural equations based on flexible functional forms and these models can be empirically tested as restrictions on estimated model parameters. The empirical results suggest that the allocation of resources generated by collective bargaining in New York State public schools is, by and large, not Pareto efficient. Furthermore, it is possible to estimate separate measures of union bargaining power over wages and employment. Empirically, it appears that union bargaining power over wages is around 0.53, while bargaining power over employment is around 0.71. In addition, the paper demonstrates the importance of controlling for the nature of the collective agreement when measuring the level of public services that flow to a community in the presence of a unionized public sector work force. Nous proposons un modèle de négociations collectives sur les salaires et l'emploi dans le secteur public. La solution de ce modèle implique des équations structurelles de détermination des salaires et d'emploi qui sont estimées à partir de données provenant des conventions colléctives des écoles publiques de l'état de New York. Notre approche a l'avantage d'englober tous les modèles majeurs de la littérature sur les négociations collectives (syndicat monopole, droit à gérer, négociations efficaces et négociations inefficaces) et de relier chaque modèle à une restriction d'égalité sur un ou plusieurs paramètres estimés. Nos résultats suggèrent que l'allocation des ressources spécifiée dans les conventions collectives des enseignants de l'état de New York n'est, en générale, pas efficace. De plus, notre approche nous permet d'estimer le pouvoir de négociationsur les salaires et sur l'emploi séparément. Nous trouvons un pouvoir de négociation sur les salaires de 0.53, et sur l'emploi de 0.71. Finalement, nous démontrons l'importance de contrôler le caractère endogène des salaires lors de l'analyse des flux des services publics dans un marché syndicalisé.Collective Bargaining, Efficient Contracting, Public Sector Union, Education, Négociations collectives, contrats efficaces, syndicat du secteur public, éducation

High-Wage Workers and High-Wage Firms

We study a longitudinal sample of over one million French workers and over 500,000 employing firms. Real total annual compensation per worker is decomposed into components related to observable characteristics, worker heterogeneity, firm heterogeneity and residual variation. Except for the residual, all components may be correlated in an arbitrary fashion. At the level of the individual, we find that person-effects, especially those not related to observables like education, are a very important source of wage variation in France. Firm-effects, while important, are not as important as person-effects. At the level of firms, we find that enterprises that hire high-wage workers are more productive but not more profitable. They are also more capital and high-skilled employee intensive. Enterprises that pay higher wages, controlling for person-effects, are more productive and more profitable. They are also more capital intensive but are not more high-skilled labor intensive. We also find that person-effects explain 92% of inter-industry wage differentials

High Wage Workers and High Wage Firms

We study a longitudinal sample of over one million French workers and over 500,000 employing firms. Real total annual compensation per worker is decomposed into components related to observable characteristics, worker heterogeneity, firm heterogeneity and residual variation. Except for the residual, all components may be correlated in an arbitrary fashion. At the level of the individual, we find that person-effects, especially those not related to observables like education, are the most important source of wage variation in France. Firm-effects, while important, are not as important as person-effects. At the level of firms, we find that enterprises that hire high-wage workers are more productive but not more profitable. They are also more capital and high-skilled employee intensive. Enterprises that pay higher wages, controlling for person-effects, are more productive and more profitable. They are also more capital intensive but are not more high-skilled labor intensive. We also find that person-effects explain 92% of inter-industry wage differentials.

Welfare and Labor Earnings: An Evaluation of the Financial Gains to Work

In this paper, we estimate the difference in long-run after-tax and transfer income from employment and from non-employment available in January 1998 to families in France that received the Guaranteed Minimum Income (RMI) in December 1996. Based on estimated wages we compute potential increases in disposable income (without accounting for opportunity costs such as child care or transportation). The observed wages received by welfare recipients are very low because of a high probability of part-time work, including for men. Based on the wage distribution, and supposing that the adult in the household with the highest potential earnings is the one employed, we find that 74% of welfare households would have an increase in disposable income if they were to be employed, relative to their disposable income in the absence of employment, and that the median gain would be around 198 euros per month. Very low gains are frequent however. In addition, single mothers are the group for which the fewest number of households (43%) would gain from employment. The share of households that would have in increase in income grows to 96% when we focus exclusively on couples and consider both members working. As the wage distribution used is very atypical, we build an upper bound estimate, using a representative survey of the working population in 1998. This is equivalent to assuming that RMI beneficiaries do not differ from the rest of the population in terms of their unobserved heterogeneity. The share of households that have an increase in disposable income from working goes from 74% to 89%, with the shares for single mothers still the lowest

Unemployment insurance, job search and informal employment

This paper analyses the potential impacts of introducing unemployment insurance (UI) in middle income countries using the case of Malaysia, which today does not have such a system. The analysis is based on a job search model with unemployment and three employment sectors: formal and informal wage employment, and self employment. The parameters of the model are estimated to replicate the structure of the labor market in Malaysia in 2009 and the distribution of earnings for informal, formal and self employed workers. The results suggest that unemployment insurance would have only a modest negative effect on unemployment if benefits are not overly generous. The main effect would be a reallocation of labor from wage into self employment while increasing average wages in the formal and informal sectors

Firm Heterogeneity and Worker Self-Selection Bias Estimated Returns to Seniority

I develop a model under which workers with different marginal productivities self-select into firms based on the firm's seniority reward policy. I show how this may bias upwards the estimates of returns to seniority in cross-sectional and even some longitudinal studies, when differences in workforce composition are ignored. I develop a new estimator of true returns to seniority and empirically test the implications of the model. I show how several previous estimation strategies over-estimate returns to seniority, particularly in firms that offer zero or negative returns to job seniority, using a large longitudinal sample of French firms and workers. Dans ce papier je décris un modèle d'embauches où les individus avec des productivités marginales hétérogènes se trouvent par autosélection, dans les entreprises avec des politiques de rémunération d'ancienneté différentes. Je montre comment ceci peut induire un biais positif dans les estimateurs de rendement de l'ancienneté basés sur les données en coupe transversales et même certains estimateurs basés sur les données longitudinales. Je décris un nouvel estimateur du vrai rendement de l'ancienneté, que j'utilise pour tester les implications du modèle. Je montre comment certaines autres approches surestiment les rendements de l'ancienneté, surtout dans les firmes qui rémunèrent très peu l'ancienneté, en utilisant une grande base de données longitudinales des employeurs et employés français.Hiring model; Seniority reward policy, Modèle d'embauche ; Rémunération d'ancienneté

Cohort Effects and Returns to Seniority in France

We examine empirically returns to seniority in France and estimate cohort effects in both firm specific compensation policies and returns to job seniority. We demonstrate the biases in several estimators of returns to seniority and show that allowing firm specific compensation policies and returns to seniority to vary by entry cohort uncovers patterns of variance within firm and within cohort in estimated intercepts and slopes that can be explained by no single theory. Nous examinons les rendements d'ancienneté en France et nous estimons les effets de cohorte, à la fois dans la politique de rémunération de l'entreprise et dans son rendement d'ancienneté. Nous soulignons les biais présents dans plusieurs estimateurs de rendement d'ancienneté et nous montrons que la flexibilité introduite par l'estimation des effets de cohorte nous permet de découvrir des variations à travers les cohortes et à travers les entreprises qui ne sont pas cohérentes avec aucune des théories de rémunération trouvées dans la littérature.Returns to Seniority, Worker Heterogeneity, Firm Heterogeneity, Cohort Effects, rendement d'ancienneté, hétérogénéité des travailleurs,hétérogénéité des entreprises, effets de cohort

High-Wage Workers and High-Wage Firms

We study a longitudinal sample of over one million French workers and over 500,000 employing firms. Real total annual compensation per worker is decomposed into components related to observable characteristics, worker heterogeneity, firm heterogeneity and residual variation. Except for the residual, all components may be correlated in an arbitrary fashion. At the level of the individual, we find that person-effects, especially those not related to observables like education, are a very important source of wage variation in France. Firm-effects, while important, are not as important as person-effects. At the level of firms, we find that enterprises that hire high-wage workers are more productive but not more profitable. They are also more capital and high-skilled employee intensive. Enterprises that pay higher wages, controlling for person-effects, are more productive and more profitable. They are also more capital intensive but are not more high-skilled labor intensive. We also find that person-effects explain 97% of inter-industry wage differentials. Nous étudions un échantillon de données longitudinales sur plus de un million de travailleurs français à l'emploi de plus de 500 000 entreprises. La rémunération annuelle totale par travailleur, en chiffres réels, est divisée en composantes reliées aux caractéristiques observables, à l'hétérogénéité des travailleurs, à l'hétérogénéité des entreprises et à la variation résiduelle. ¸ l'exception du résidu, toutes les composantes peuvent être corrélées de façon arbitraire. Sur le plan des travailleurs, nous trouvons que les effets individuels, notamment les effets reliés à des caractéristiques observables comme le niveau d'études, sont une source très importante de dispersion des salaires en France. Les effets propres à l'entreprise, même s'ils sont importants, ne sont pas aussi importants que les effets individuels. Sur le plan des entreprises, nous trouvons que les entreprises qui embauchent des travailleurs à salaire élevé sont plus productives0501s non plus rentables. Elles se caractérisent également comme des entreprises à forte intensité de capital et en travailleurs hautement qualifiés. Les entreprises qui paient des salaires plus élevés, compte tenu des effets individuels, sont plus productives et plus rentables. Elles ont aussi une plus forte intensité en capital,0501s n'utilisent pas proportionnellement plus de travailleurs hautement qualifiés. Nous trouvons enfin que les effets individuels expliquent 97 pour cent des différences de salaires entre industries.Compensation ; Wage variation ; Productivity, Rémunération ; Dispersion des salaires ; Productivité