Search Results

Author: Altonji, Joseph G.
Resulting in 19 citations.
1. Altonji, Joseph G.
Bharadwaj, Prashant
Lange, Fabian
Changes in the Characteristics of American Youth: Implications for Adult Outcomes
NBER Working Paper No. 13883, National Bureau of Economic Research, March 2008.
Also: http://www.nber.org/papers/w13883
Cohort(s): NLSY79, NLSY97
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Education; Ethnic Differences; Gender Differences; I.Q.; Intelligence; Labor Market Outcomes; Racial Differences; Skill Formation; Skills; Test Scores/Test theory/IRT; Transition, School to Work

We examine changes in the characteristics of American youth between the late 1970s and the late 1990s, with a focus on characteristics that matter for labor market success. We reweight the NLSY79 to look like the NLSY97 along a number of dimensions that are related to labor market success, including race, gender, parental background, education, test scores, and variables that capture whether individuals transition smoothly from school to work. We then use the re-weighted sample to examine how changes in the distribution of observable skills affect employment and wages. We also use more standard regression methods to assess the labor market consequences of differences between the two cohorts. Overall, we find that the current generation is more skilled than the previous one. Blacks and Hispanics have gained relative to whites and women have gained relative to men. However, skill differences within groups have increased considerably and in aggregate the skill distribution has widened. Changes in parental education seem to generate many of the observed changes
Bibliography Citation
Altonji, Joseph G., Prashant Bharadwaj and Fabian Lange. "Changes in the Characteristics of American Youth: Implications for Adult Outcomes." NBER Working Paper No. 13883, National Bureau of Economic Research, March 2008.
2. Altonji, Joseph G.
Bharadwaj, Prashant
Lange, Fabian
Changes in the Characteristics of American Youth: Implications for Adult Outcomes
Presented: Washington, DC, Bureau of Labor Statistics Conference Center, NLSY97 Tenth Anniversary Conference, May 29-30, 2008.
Also: http://harrisschool.uchicago.edu/Research/conferences/NLSYConf/pdf/altonji.pdf
Cohort(s): NLSY79, NLSY97
Publisher: U.S. Department of Labor
Keyword(s): Armed Forces Qualifications Test (AFQT); Current Population Survey (CPS) / CPS-Fertility Supplement; Education; Ethnic Groups; Ethnic Studies; Gender; Labor Market Outcomes; Racial Studies; Skills; Test Scores/Test theory/IRT; Transition, School to Work

We examine changes in the characteristics of American youth between the late 1970s and the late 1990s, with a focus on characteristics that matter for labor market success. We reweight the NLSY79 to look like the NLSY97 along a number of dimensions that are related to labor market success, including race, gender, parental background, education, test scores, and variables that capture whether individuals transition smoothly from school to work. We then use the re-weighted sample to examine how changes in the distribution of observable skills affect employment and wages. We also use more standard regression methods to assess the labor market consequences of differences between the two cohorts. Overall, we find that the current generation is more skilled than the previous one. Blacks and Hispanics have gained relative to whites and women have gained relative to men. However, skill differences within groups have increased considerably and in aggregate the skill distribution has widened. Changes in parental education seem to generate many of the observed changes
Bibliography Citation
Altonji, Joseph G., Prashant Bharadwaj and Fabian Lange. "Changes in the Characteristics of American Youth: Implications for Adult Outcomes." Presented: Washington, DC, Bureau of Labor Statistics Conference Center, NLSY97 Tenth Anniversary Conference, May 29-30, 2008.
3. Altonji, Joseph G.
Bharadwaj, Prashant
Lange, Fabian
Changes in the Characteristics of American Youth: Implications for Adult Outcomes
Journal of Labor Economics 30,4 (October 2012): 783-828.
Also: http://www.jstor.org/stable/10.1086/666536
Cohort(s): NLSY79, NLSY97
Publisher: University of Chicago Press
Keyword(s): Education; Ethnic Differences; Gender Differences; I.Q.; Labor Market Outcomes; Racial Differences; Skills

We examine changes in the characteristics of American youth between the late 1970s and the late 1990s, with a focus on characteristics that matter for labor market success. The current generation is more skilled than the previous one. Blacks and Hispanics have gained relative to whites, and women have gained relative to men. However, the skill distribution has widened overall. Shifts in parental education generate many of the observed changes. We also provide speculative estimates suggesting that if recent trends in technology and the supply of human capital continue, wage inequality will increase substantially by 2025.
Bibliography Citation
Altonji, Joseph G., Prashant Bharadwaj and Fabian Lange. "Changes in the Characteristics of American Youth: Implications for Adult Outcomes." Journal of Labor Economics 30,4 (October 2012): 783-828.
4. Altonji, Joseph G.
Cattan, Peter
Ware, Iain
Identifying Sibling Influences on Teenage Risky Behavior
Presented: Washington, DC, Bureau of Labor Statistics Conference Center, NLSY97 Tenth Anniversary Conference, May 29-30, 2008
Cohort(s): NLSY97
Publisher: U.S. Department of Labor
Keyword(s): Behavior; Risk-Taking; Siblings

Bibliography Citation
Altonji, Joseph G., Peter Cattan and Iain Ware. "Identifying Sibling Influences on Teenage Risky Behavior." Presented: Washington, DC, Bureau of Labor Statistics Conference Center, NLSY97 Tenth Anniversary Conference, May 29-30, 2008.
5. Altonji, Joseph G.
Cattan, Sarah
Ware, Iain
Identifying Sibling Influence on Teenage Substance Use
Journal of Human Resources 52,1 (Winter 2017): 1-47.
Also: http://jhr.uwpress.org/content/52/1/1.abstract?sid=bee89e0a-f629-43bd-be46-cddff8697c80
Cohort(s): NLSY97
Publisher: University of Wisconsin Press
Keyword(s): Behavior; Family Influences; Heterogeneity; Siblings; Substance Use

We assess the extent to which the large sibling correlations in substance use are causal. Our primary approach is based on a joint dynamic model of the behavior of older and younger siblings that allows for family specific effects, individual specific heterogeneity, and state dependence. We use the model to simulate the dynamic response of substance use to the behavior of the older sibling. Overall, we find that substance use is affected by the example of older siblings but only a small fraction of the sibling correlation is causal.
Bibliography Citation
Altonji, Joseph G., Sarah Cattan and Iain Ware. "Identifying Sibling Influence on Teenage Substance Use ." Journal of Human Resources 52,1 (Winter 2017): 1-47.
6. Altonji, Joseph G.
Cattan, Sarah
Ware, Iain
Identifying Sibling Influence on Teenage Substance Use
NBER Working Paper 16508, National Bureau of Economic Research, National Bureau of Economic Research, October 2010.
Also: http://www.nber.org/papers/w16508
Cohort(s): NLSY97
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Behavioral Problems; Drug Use; Family Studies; Heterogeneity; Risk-Taking; Siblings; Substance Use

A number of studies have found substantial correlations in risky behavior between siblings, raising the possibility that adolescents may directly influence the actions of their brothers or sisters. We assess the extent to which correlations in substance use and selling drugs are due to causal effects. Our identification strategy relies on panel data, the fact that the future does not cause the past, and the assumption that the direction of influence is from older siblings to younger siblings. Under this assumption along with other restrictions on dynamics, one can identify the causal effect from a regression of the behavior of the younger sibling on the past behavior and the future behavior of the older sibling. We also estimate a joint dynamic model of the behavior of older and younger siblings that allows for family specific effects, individual specific heterogeneity, and state dependence. We use the model to simulate the dynamic response of substance use to the behavior of the older sibling. Our results suggest that smoking, drinking, and marijuana use are affected by the example of older siblings, but most of the link between siblings arises from common influences.
Bibliography Citation
Altonji, Joseph G., Sarah Cattan and Iain Ware. "Identifying Sibling Influence on Teenage Substance Use." NBER Working Paper 16508, National Bureau of Economic Research, National Bureau of Economic Research, October 2010.
7. Altonji, Joseph G.
Dunn, Thomas Albert
An Intergenerational Model of Earnings, Hours and Wages
Working Paper, Center for Urban Affairs and Policy Research, Northwestern University, 1990
Cohort(s): Mature Women, Older Men, Young Men, Young Women
Publisher: Center for Urban Affairs and Policy Research, Northwestern University, now Institute for Policy Research
Keyword(s): Earnings; Family Influences; Fathers; Intergenerational Patterns/Transmission; Labor Market Outcomes; Mothers; Pairs (also see Siblings); Parental Influences; Sons; Wages

Permission to reprint the abstract has not been received from the publisher.

In this paper, the authors measure the extent to which the parental and family characteristics that drive wage rates and work hours independently of wage rates are responsible for similarities among family members in labor market outcomes. A factor model is developed for the earnings, hours and wages of young men and young women which then dictates the linkages among the covariances of these variables and those of their parents and their siblings. In the model, a young man's or woman's wage depends on the permanent component of father's wage, the permanent component of mother's wage, a sibling component which captures background characteristics that are common to siblings and are independent of the parents, and an idiosyncratic component. The young man's annual hours depend on his wages and his preferences which are composed of four independent elements--his father's preference factor, his mother's preference factor, and sibling and idiosyncratic factors. Lastly, his earnings are determined by his wages and his hours choice. The authors fit the model using auto- and covariances of earnings, hours and wages estimated from data on matched sibling and parent-child pairs from the NLS. The results indicate that the wages of young men and young women are quite responsive to the wage components of their fathers and mothers, and that there are important family links among the labor supply preferences as well. It was also found that wages play a small role in labor supply determination for young men, young women, and older men, and a larger role for mature women. Detailed decompositions of the variance of earnings, hours, and wages are provided.
Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "An Intergenerational Model of Earnings, Hours and Wages." Working Paper, Center for Urban Affairs and Policy Research, Northwestern University, 1990.
8. Altonji, Joseph G.
Dunn, Thomas Albert
An Intergenerational Model of Wages, Hours and Earnings
NBER Working Paper No. 4950, National Bureau of Economic Research, December 1994.
Also: http://nber.nber.org/papers/W4950.pdf
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Benefits, Fringe; Demography; Earnings; Economics of Discrimination; Economics of Gender; Economics of Minorities; Gender Differences; Intergenerational Patterns/Transmission; Job Tenure; Job Training; Labor Economics; Labor Market Outcomes; Labor Supply; Modeling; Parental Influences; Schooling; Training, Occupational; Wage Differentials; Wage Levels; Wages; Work Hours

In this paper we develop and estimate a factor model of the earnings, labor supply, and wages of young men and women, their parents and their siblings. We estimate the model using data on matched sibling and parent-child pairs from the National Longitudinal Survey of Labor Market Experience. We measure the extent to which a set of unobserved parental and family factors that drive wage rates and work hours independently of wage rates lead to similarities among family members in labor market outcomes. We find strong family similarities in work hours that run along gender lines. These labor supply responses to family similarities in wages. The wage factors of the father and mother influence the wages of both sons and daughters. A "sibling" wage factor also plays an important role in wage determination. We find that intergenerational correlations in wages substantially overestimate the direct influence of fathers, and especially mothers, on wages. This is because the father's and mother's wage factors are positively correlated. The relative importance for the variance in earnings of the direct effect of wages, the labor supply response induced by wages, and effect of hours preferences varies by gender, and by age in the case of women. For all groups most of the effect of wages on earnings is direct rather than through a labor supply response. (COPYRIGHT: This record is part of the Abstracts of Working Papers in Economics (AWPE) Database, copyright (c) 1995 Cambridge University Press) Full-text available on-line: http://nberws.nber.org/papers/W4950.pdf
Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "An Intergenerational Model of Wages, Hours and Earnings." NBER Working Paper No. 4950, National Bureau of Economic Research, December 1994.
9. Altonji, Joseph G.
Dunn, Thomas Albert
An Intergenerational Model of Wages, Hours, and Earnings
Journal of Human Resources 35,2 (Spring 2000): 221-258.
Also: http://www.jstor.org/stable/146324
Cohort(s): Mature Women, Older Men, Young Men, Young Women
Publisher: University of Wisconsin Press
Keyword(s): Earnings; Gender; Intergenerational Patterns/Transmission; Parental Influences; Siblings; Sons; Wage Effects; Wages

We develop a model in which a set of unobserved parental and sibling factors drives wages and work preferences. These factors lead to similarities within families in wages, work hours, and earnings. We estimate the model using data on parents and siblings in the National Longitudinal Surveys. We find that parental and sibling wage factors influence the wages of both sons and daughters. We also find strong similarities in work hours that run along gender lines and are due primarily to linkages in preferences. The effect of wages on earnings is direct rather than through a labor supply response.
Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "An Intergenerational Model of Wages, Hours, and Earnings." Journal of Human Resources 35,2 (Spring 2000): 221-258.
10. Altonji, Joseph G.
Dunn, Thomas Albert
Effects of Parental Characteristics on the Returns to Education and Labor Market Experience
Working Paper, Center for Urban Affairs and Policy Research, Northwestern University, 1990
Cohort(s): Young Men, Young Women
Publisher: Center for Urban Affairs and Policy Research, Northwestern University, now Institute for Policy Research
Keyword(s): Educational Attainment; Educational Returns; Family Background and Culture; I.Q.; Modeling, Fixed Effects; Pairs (also see Siblings); Parental Influences; School Characteristics/Rating/Safety; Sons; Wages; Work Experience

Permission to reprint the abstract has not been received from the publisher.

Many studies have found strong influences of parental characteristics and family on the educational attainment of children. Few, however, have looked at the influence of these factors on the rate of return to education or rate of return to experience. The authors measure the extent to which the education profile of wages and the experience profile of wages are influenced by the child's IQ, parents' educations, and the index of family background variables, school characteristics, and personal characteristics that predict years of schooling completed. The presence of sibling pairs in the NLS is exploited in estimating the effects of parental characteristics and background variables on the education slope of wages and the experience slope of wages. The authors use ordinary least squares regression procedures and include a family fixed effect to capture omitted family variables that might otherwise bias the slope estimates. It was found that the child's IQ, parents' educations, and the index of personal, family and school characteristics that predict the child's educational attainment have only a weak influence on the relationships between education and wages and labor market experience and wages. It seems unlikely that the effect of family background on the education slope of wages is responsible for more than a small fraction of the powerful effect of family background on the years of schooling completed.
Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "Effects of Parental Characteristics on the Returns to Education and Labor Market Experience." Working Paper, Center for Urban Affairs and Policy Research, Northwestern University, 1990.
11. Altonji, Joseph G.
Dunn, Thomas Albert
Family Background and Labor Market Outcomes
NLS Discussion Paper No. 92-13, U.S. Bureau of Labor Statistics, Washington DC, June 1990.
Also: http://stats.bls.gov/ore/abstract/nl/nl900030.htm
Cohort(s): Mature Women, Older Men, Young Men, Young Women
Publisher: U.S. Department of Labor
Keyword(s): Children; Educational Returns; Family Influences; Gender Differences; Labor Market Outcomes; Pairs (also see Siblings); Parental Influences; Racial Differences; Siblings

Also: Final Report, U.S. Department of Labor, Bureau of Labor Statistics, 1990.

This report is a compilation of the following three papers abstracted elsewhere in this bibliography: (1) "Relationships Among the Family Incomes and Labor Market Outcomes of Relatives"; (2) "An Intergenerational Model of Wages, Hours and Earnings"; and (3) "Effects of Parental Characteristics on the Returns to Education and Labor Market Experience."

Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "Family Background and Labor Market Outcomes." NLS Discussion Paper No. 92-13, U.S. Bureau of Labor Statistics, Washington DC, June 1990.
12. Altonji, Joseph G.
Dunn, Thomas Albert
Relationships Among the Family Incomes and Labor Market Outcomes of Relatives
Research in Labor Economics 12 (1991): 269-310.
Also: http://www.econ.yale.edu/~jga22/website/research_papers/altonji_dunn.pdf
Cohort(s): Mature Women, Older Men, Young Men, Young Women
Publisher: JAI Press, Inc.
Keyword(s): Collective Bargaining; Earnings; Family Income; Fathers; Income; Intergenerational Patterns/Transmission; Job Productivity; Labor Market Outcomes; Mothers; Pairs (also see Siblings); Sons

This paper examines the links between the labor market outcomes of individuals who are related by blood or by marriage using panel data on pairs of matched family members from the NLS. The authors examine the intergenerational and sibling correlations among a broad set of labor market variables using time average, method of moments, and regression techniques designed to reduce the biases introduced by transitory and measurement errors. They also show that family data can be exploited to investigate theories of job turnover, labor supply, and the industry structure of wages. The primary findings follow. First, there are strong correlations between the family incomes of relatives. The method of moments estimates are .38 for brother pairs, .73 for sister pairs, and .56 for brother-sister pairs. The intergenerational family income correlations are .36 for father-son pairs, .48 for father-daughter pair, and .56 for mother-daughter and mother-son pairs. These estimates, except for the father-son result, are large compared to those in the literature for the U.S. Second, strong correlations were found in the wages and earnings of relatives. Wage correlations vary around .40 for all family member pairs, and earnings correlations vary around .35. Work hours of family members of the same sex are also fairly strongly related. Fourth, strong correlations were found in the earnings of "in-laws" that may support a theory of assortive mating in which parental earnings have value. Also provided was evidence that job turnover rates depend on family characteristics and are negatively correlated with labor market productivity. Further, it was shown that young men whose fathers work in high wage industries tend themselves to work in high wage industries and that a father's collective bargaining coverage has a strong positive influence on his son's collective bargaining status.
Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "Relationships Among the Family Incomes and Labor Market Outcomes of Relatives." Research in Labor Economics 12 (1991): 269-310.
13. Altonji, Joseph G.
Dunn, Thomas Albert
Relationships Among the Family Incomes and Labor Market Outcomes of Relatives
NBER Working Paper No. w3724, National Bureau of Economic Research, June 1991.
Also: http://www.nber.org/papers/w3724
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Collective Bargaining; Family Income; Fathers and Sons; Intergenerational Patterns/Transmission; Labor Market Outcomes; Labor Productivity; Mothers and Daughters; Siblings

This paper examines the links between the labor market outcomes of individuals who are related by blood or by marriage using panel data on pairs of matched family members from the National Longitudinal Survey of Labor Market Experience. We examine the intergenerational and sibling correlations among a broad set of labor market variables using time average, method of moments and regression techniques designed to reduce the biases introduced by transitory and measurement errors. We also show that family data can be exploited to investigate theories of job turnover, labor supply. and the industry structure of wages. Our primary findings follow. First, there are strong correlations between the family incomes of relatives. Our method of moments estimates are .38 for brother pairs, .73 for sister pairs. and .56 for brother-sister pairs. The intergenerational family income correlations are .36 for father-son pairs, .48 for father-daughter pairs, and .56 for both mother-son and mother-daughter pairs. These estimates, except for the father-son result, are large compared to those in the literature for the U.S. Second, we find strong correlations in the wages and earnings of relatives. Wage correlations vary around .40 for all family member pairs, and earnings correlations vary around .35. Work hours of family members of the same sex are also fairly strongly related. Fourth, we find strong correlations in the earnings of "in-laws" that may support a theory of assortive mating in which parental earnings have value. We also provide evidence that job turnover rates depend on family characteristics and are negatively correlated with labor market productivity. Further, we show that young men whose fathers work in high wage industries tend themselves to work in high wage industries. Lastly, we find that a father's collective bargaining coverage has a strong positive influence on his son's collective bargaining status.
Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "Relationships Among the Family Incomes and Labor Market Outcomes of Relatives." NBER Working Paper No. w3724, National Bureau of Economic Research, June 1991.
14. Altonji, Joseph G.
Dunn, Thomas Albert
The Effects of Family Characteristics on the Return to Education
Review of Economics and Statistics 78,4 (November 1996): 692-704.
Also: http://www.jstor.org/stable/2109956
Cohort(s): Young Men, Young Women
Publisher: Harvard University Press
Keyword(s): Education; Educational Returns; Family Background and Culture; Family Characteristics; Labor Market Outcomes; Pairs (also see Siblings); Panel Study of Income Dynamics (PSID); Schooling; Siblings; Wage Effects; Wage Equations

Permission to reprint the abstract has not been received from the publisher.

The role of parental education in the human capital production function is examined by estimating the effects of parental education on the education profile of wages. The analysis uses sibling pairs from the Panel Study of Income Dynamics and the National Longitudinal Surveys of Labor Market Experience of Young Men and Young Women. Mixed evidence on whether parental education raises the return to education is obtained. (ABI/Inform)
Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "The Effects of Family Characteristics on the Return to Education." Review of Economics and Statistics 78,4 (November 1996): 692-704.
15. Altonji, Joseph G.
Dunn, Thomas Albert
The Effects of School and Family Characteristics on the Return to Education
NBER Working Paper No. 5072, National Bureau of Economic Research, March 1995.
Also: http://nber.nber.org/papers/W5072.pdf
Cohort(s): Young Men, Young Women
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Educational Returns; Family Background and Culture; Family Characteristics; High School Completion/Graduates; Mothers, Education; Pairs (also see Siblings); Panel Study of Income Dynamics (PSID); School Characteristics/Rating/Safety; School Quality; Siblings; Wage Models

We measure the effects of parental education on the education profile of wages. The analysis uses sibling pairs from the Panel Study of Income Dynamics and the National Longitudinal Surveys of Labor Market Experience of Young Men and Young Women. We also use the variance across siblings in school characteristics to estimate the effects of school inputs on wages holding family background constant. We obtained mixed evidence on whether parental education raises the return to education. We find that teacher's salary, expenditures per pupil, and a composite index of school quality measures have a substantial positive effect on the wages of high school graduates. Full-text available on-line: http://nber.nber.org/papers/W5072.pdf
Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "The Effects of School and Family Characteristics on the Return to Education." NBER Working Paper No. 5072, National Bureau of Economic Research, March 1995.
16. Altonji, Joseph G.
Dunn, Thomas Albert
Using Siblings to Estimate The Effect of School Quality on Wages
Review of Economics and Statistics 78,4 (November 1996): 665-671.
Also: http://www.jstor.org/stable/2109953
Cohort(s): Young Men, Young Women
Publisher: Harvard University Press
Keyword(s): Education; Educational Returns; Family Background and Culture; Family Characteristics; High School Students; Labor Market Outcomes; Pairs (also see Siblings); Panel Study of Income Dynamics (PSID); School Characteristics/Rating/Safety; School Quality; Schooling; Siblings; Wage Effects; Wage Equations; Wage Models

Permission to reprint the abstract has not been received from the publisher.

The variance across siblings in school characteristics is used to estimate the effects of school inputs on wages. The analysis uses sibling pairs from the National Longitudinal Surveys of Labor Market Experience of Young Men and Young Women. It is found that teachers' salary, expenditures per pupil, and a composite index of school quality indicators have a substantial positive effect on the wages of high school graduates. (ABI/Inform)
Bibliography Citation
Altonji, Joseph G. and Thomas Albert Dunn. "Using Siblings to Estimate The Effect of School Quality on Wages." Review of Economics and Statistics 78,4 (November 1996): 665-671.
17. Altonji, Joseph G.
Pierret, Charles R.
Employer Learning and Statistical Discrimination
NLS Discussion Paper No. 97-36, U.S. Bureau of Labor Statistics, Washington DC, November 1997.
Also: http://stats.bls.gov/ore/abstract/nl/nl970020.htm
Cohort(s): NLSY79
Publisher: U.S. Department of Labor
Keyword(s): Armed Forces Qualifications Test (AFQT); Discrimination, Employer; Education; Educational Attainment; Educational Returns; Fathers, Influence; Labor Market Demographics; Racial Differences; Siblings; Wage Equations; Wage Growth; Work Experience

We provide a test for statistical discrimination or "rational" stereotyping in environments in which agents learn over time. Our application is to the labor market. If profit maximizing firms have limited information about the general productivity of new workers, they may choose to use easily observable characteristics such as years of education to "statistically discriminate" among workers. As firms acquire more information about a worker, pay will become more dependent on actual productivity and less dependent on easily observable characteristics or credentials that predict productivity. Consider a wage equation that contains both the interaction between experience and a hard to observe variable that is positively related to productivity and the interaction between experience and a variable that firms can easily observe, such as years of education. We show that the wage coefficient on the unobservable productivity variable should rise with time in the labor market and the wage coefficient on education should fall. We investigate this proposition using panel data on education, the AFQT test, father's education, and wages for young men and their siblings from NLSY. We also examine the empirical implications of statistical discrimination on the basis of race. Our results support the hypothesis of statistical discrimination, although they are inconsistent with the hypothesis that firms fully utilize the information in race. Our analysis has wide implications for the analysis of the determinants of wage growth and productivity and the analysis of statistical discrimination in the labor market and elsewhere.
Bibliography Citation
Altonji, Joseph G. and Charles R. Pierret. "Employer Learning and Statistical Discrimination." NLS Discussion Paper No. 97-36, U.S. Bureau of Labor Statistics, Washington DC, November 1997.
18. Altonji, Joseph G.
Pierret, Charles R.
Employer Learning and Statistical Discrimination
Quarterly Journal of Economics 116,1 (February 2001): 313-350.
Also: http://qje.oxfordjournals.org/content/116/1/313.abstract
Cohort(s): NLSY79
Publisher: MIT Press
Keyword(s): Discrimination, Employer; Education; Racial Differences; Wages

We show that if firms statistically discriminate among young workers on the basis of easily observable characteristics such as education, then as firms learn about productivity, the coefficients on the easily observed variables should fall, and the coefficients on hard-to-observe correlates of productivity should rise. We find support for this proposition using NLSY79 data on education, the AFQT test, father's education, and wages for young men and their siblings. We find little evidence for statistical discrimination in wages on the basis of race. Our analysis has a wide range of applications in the labor market and elsewhere. See also: http://mitpress.mit.edu/catalog/item/default.asp?sid=3D348EF6-21E0-4F3D-BC20-894E50FBE564&ttype=6&tid=567
Bibliography Citation
Altonji, Joseph G. and Charles R. Pierret. "Employer Learning and Statistical Discrimination." Quarterly Journal of Economics 116,1 (February 2001): 313-350.
19. Altonji, Joseph G.
Pierret, Charles R.
Employer Learning and the Signaling Value of Education
NLS Discussion Paper No. 97-35, U.S. Bureau of Labor Statistics, Washington DC, November 1997.
Also: http://stats.bls.gov/ore/abstract/nl/nl970030.htm
Cohort(s): NLSY79
Publisher: U.S. Department of Labor
Keyword(s): Discrimination, Job; Education; Educational Attainment; Educational Returns; Wage Equations

If profit maximizing firms have limited information about the general productivity of new workers, they may choose to use easily observable characteristics such as years of education to "statistically discriminate" among workers. The pure credential value of education will depend on how quickly firms learn. To obtain information on employer learning, we work with a wage equation that contains both the interaction between experience and a hard to observe variable that is positively related to productivity and the interaction between experience and a variable that firms can easily observe, such as years of education. The time path of the coefficient on the unobservable productivity variable provides information about the rate at which employers learn about worker productivity. Using data from the NLSY we obtain preliminary estimates of the rate at which employers learn about worker quality and use these, along with some strong auxiliary assumptions, to explore the empirical relevance of the educational screening hypothesis. We show that even if employers learn relatively slowly about the productivity of new workers, the portion of the return to education that could reflect signaling of ability is limited.
Bibliography Citation
Altonji, Joseph G. and Charles R. Pierret. "Employer Learning and the Signaling Value of Education." NLS Discussion Paper No. 97-35, U.S. Bureau of Labor Statistics, Washington DC, November 1997.