NBER Reporter: Summer 2002

Labor Studies

    The NBER's Program on Labor Studies met in Cambridge on April 12. Program Director Richard B. Freeman, and Lawrence F. Katz, both of Harvard University, organized this program:

    Robert A. Margo, NBER and Vanderbilt University, "The North-South Wage Gap, Before and After the Civil War"

    Chinhui Juhn, NBER and University of Houston, and Kevin M. Murphy and Robert H. Topel, NBER and University of Chicago, "U.S. Unemployment in Historical Perspective"

    David Card, NBER and University of California, Berkeley, and Lara D. Shore-Sheppard, NBER and Williams College, "Using Discontinuous Eligibility Rules to Identify the Effects of the Federal Medicaid Expansions"

    Alan B. Krueger, NBER and Princeton University, and Alexandre Mas, Princeton University, "Strikes, Scabs, and Tread Separations: Labor Strife and the Production of Defective Bridgestone/Firestone Tires"

    Roundtable Discussion of Policies Related to 401(K) Plans, ESOPs, and Employer-Provided Retirement Benefits:

    Douglas L. Kruse, NBER and Rutgers University

    David Laibson, NBER and Harvard University

    Olivia S. Mitchell, NBER and University of Pennsylvania

    Edward N. Wolff, NBER and New York University

    Using data for a variety of occupations, Margo documents that the Civil War occasioned a dramatic divergence in the regional structure of wages: in particular, wages fell sharply in the South Atlantic and South Central states relative to the North after the War. The divergence was immediate, being apparent as early as 1866. It was persistent: for none of the occupations that Margo examined did the regional wage structure return to its ante-bellum configuration by century's end. The divergence cannot be explained by the changing racial composition of the Southern wage labor force after the War but does appear consistent with a sharp drop in labor productivity in Southern agriculture. He also uses previously neglected data to argue that the South probably experienced a decline in the relative price of non-traded goods after the War.

    After two decades of increase, the unemployment rates for prime-age males fell in the 1990s to low levels comparable to those of the late 1960s. Using the March Current Population Survey, Juhn, Murphy, and Topel examine whether trends identified during that period of rising employment have continued or been reversed in the 1990s. They find that labor market participation declined in spite of falling unemployment, leaving the overall employment of prime-age males unchanged between the business cycle peaks of 1988-9 and 1999-2000. They also find that long jobless spells continue to be important, with average durations of both unemployment and non-employment rising in the 1990s. These trends reflect both the low real wages in the 1990s relative to historical standards and the less stringent eligibility rules governing the disability insurance program. While some trends have continued, the decades-long rise in wage inequality finally has run its course and actually reversed in the 1990s. The data on joblessness broadly reflect these changing wage trends, with employment improving the most for the least skilled group.

    Card and Shore-Sheppard exploit the discrete nature of the eligibility criteria for two major federal expansions of Medicaid to discern the effects of the expansions on Medicaid coverage, overall health insurance coverage, and coverage by private and other non-Medicaid sources. Using data from the Survey of Income and Program Participation, the authors examine the "133 percent" program, which covered children under the age of six in families with incomes up to 133 percent of the poverty line, and the "100 percent" program, which covered children in poor families born after September 30, 1983. Graphical and conventional differences-in-differences methods suggest that the 100 percent program led to a 10 to 15 percentage point rise in Medicaid coverage among the targeted group, with a small decline in non-Medicaid coverage and a rise in the incidence of dual coverage. The newly covered group includes children in families further from the AFDC income cutoffs and closer to the poverty line than the traditional Medicaid caseload, and includes more children in dual-headed families. By comparison, the authors are unable to find much evidence that the 133 percent program had any effect on Medicaid coverage of children in families with incomes from 100 to 133 percent of the poverty line. This negative finding is confirmed in data from the March Current Population Survey.

    Krueger and Mas study the effect of labor relations on product quality. They consider whether a long, contentious strike and the hiring of permanent replacement workers by Bridgestone/Firestone in the mid-1990s contributed to the production of an excess number of defective tires. Using several independent data sources, they find that labor strife in the Decatur plant coincided closely with lower product quality. Their models based on two datasets of tire failures by plant, year, and age show significantly higher failure rates for tires produced in Decatur during the labor dispute than before or after the dispute, or than at other plants. Also, an analysis of internal Firestone engineering tests indicates that P235 tires from Decatur performed less well if they were manufactured during the labor dispute compared with those produced after the dispute, or compared with those from other, non-striking plants. Monthly data suggest that the production of defective tires was particularly high around the time wage concessions were demanded by Firestone in early 1994 and when large numbers of replacement workers and permanent workers worked side by side in 1996.

NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us