Wage Insurance Research Articles

The Economic Returns of a Community College Education

The authors review the literature on the economic benefits of a college education in general and a community college education specifically and describe efforts undertaken in several states to examine postcollege earnings of former community college students using unemployment insurance wage records. They include the results of research designed to analyze wage earnings of 841,952 students enrolled in 103 California community colleges who either completed a certificate or degree program during the 1991-92 academic year or left during that academic year after completing some course units. After adjusting earnings to 1995 dollars, the authors report percent changes in median annual earnings. Findings indicated that a positive relationship existed between number of units completed and percent change in annual earnings in the third year out of a community college. On average, associate's degree completers experienced a 59% earnings increase three years after graduating from community college.

Linkages to the world of employment

AbstractResearchers can use unemployment insurance wage and related files to describe and compare students' workplace status before, during, and after enrollment.

Government Incentives for a Profit Sharing System: A Case for Subsidy through Pay Insurance

These macroeconomic benefits, however, are in the nature of an externality to the firm and workers operating under a profit sharing system, implying that the decision-making parties gain only a fraction of the total benefits accruing to society. Therefore, because most of the benefits are not received by the employer and employees, they do not have an incentive to introduce a system where profit is shared. This existence of external benefits makes a classic case for government intervention. Thus, Weitzman (1984: chap. 9) and H.G. Grubel and Z.A. Spindler (1984) argue that the government should subsidize profit sharing by taxing the profit sharing portion of workers' pay at a lower rate until the system becomes widely accepted in the economy. Weitzman has re-emphasized the tax reduction proposal in his recent testimony before the House of Commons employment and immigration committee studying proposals of the Forget Commission to reform the unemployment insurance system (see Halifax Herald, 1987). The purpose of this paper is to contend that if the government wants to encourage profit sharing through a subsidy, the objective would be better fulfilled by spending the same amount of money to insure against the downside of workers' income risk rather than by lowering the tax rate on their income. The reason for this is that a major impediment to the adoption of profit sharing may arise from the perception by workers that their income would fluctuate more under a profit sharing system. Indeed, this perception may account for the observed preference for fixed wage contracts.2 But when flexible wages in the form of profit sharing are being sponsored on grounds of social benefits, the wage insurance can be provided by the government instead of the firm. Given the amount of money the government is willing to pay in the form of a subsidy, a scheme that also reduces the workers' income risk will be preferred by them, creating a greater incentive to accept the profit sharing system.

Optimal Severance Pay with Incomplete Information

This paper contrasts optimal employment contracts in a world of full information and in a world in which the worker's alternative employment possibilities cannot be observed by the firm. The difference between income and severance pay-that is, the opportunity cost of separating-will be higher in more productive states of nature. With complete wage insurance no longer possible, we therefore have an explanation of higher-ability individuals receiving high wages in the short run in long-term contracts. The explanation does not rely, as past explanations have done, on the imperfections in bonding arrangements or in loan markets.

Efficient risk sharing, non-marketable labor income and fixed-wage contracts

This paper seeks to explain fixed-wage labor contracts. The traditional rationale that fixed wages represent an implicit sale of ‘wage insurance’ by risk-neutral firms to risk-averse workers is rejected as being incompatible with the fact that firms are owned by risk-averse investors. Instead, it is shown that fixed-wage contracts might arise from the non-marketability of labor income. When human capital is not marketable, it becomes optimal to shift all the risk in production onto the firm, since trading in equity markets enables efficient allocation of the uncertainty. The fixed-wage contract shifts the risk to equity owners and in fact replicates the first-best equilibrium that would emerge if individuals were paid their realized marginal product and allowed to trade shares in human capital.

Job Matching with Finite Horizon and Risk Aversion

The consequences of introducing risk-averse workers with a known, finite retirement age into a simple job-matching framework are explored. The job-matching model includes two jobs. In the "primary" job, workers and firms learn about the worker's productivity by observing his output over time. In the "secondary" job, productivity of any worker is known with certainty at the outset. Workers start off in the primary job but, based on their observed performance, may choose to switch to the secondary job. The model is developed in two stages. First, the finite retirement age is introduced while the usual assumption of risk-neutral workers is retained. In this model it is shown that all workers who achieve at least a certain cumulative output record, denoted r*, by a certain age, denoted T, will thereafter remain in the primary job until retirement. Those who do not achieve r* by age T switch to the secondary job at or before age T and remain there. Second, risk aversion is introduced along with finite retirement age. Here the turnover aspects of the equilibrium are similar to the risk-neutral case, but firms provide workers with wage insurance. This takes the form of wages that are downward rigid. As a result, it may be optimal ex ante for workers to delegate the job choice decision to the employer, and, ex post, not all separations will be voluntary for the work r.

Wage Contracts When Output Grows Stochastically: The Roles of Mobility Costs and Capital Market Imperfections

The paper considers an industry in which individual output follows a stochastic growth process with a cumulative effect. It analyzes the roles of labor mobility and capital market conditions in the determination of wage contracts. Positive costs of mobility are shown to be necessary for the provision of wage and employment insurance when workers have no access to the capital market. When insurance is provided, wages grow less than average productivity. If the capital market is perfect, wage insurance will be provided even in the absence of costs of mobility. In this case, wages grow faster than average productivity.

The Rise and Fall of Real Wage Insurance

Industrial Relations: A Journal of Economy and SocietyVolume 19, Issue 1 p. 64-73 The Rise and Fall of Real Wage Insurance DANIEL J. B. MITCHELL, DANIEL J. B. MITCHELL *Director, Institute of Industrial Relations, and Professor, Craduate School of Management, University of California, Los Angeles.Search for more papers by this author DANIEL J. B. MITCHELL, DANIEL J. B. MITCHELL *Director, Institute of Industrial Relations, and Professor, Craduate School of Management, University of California, Los Angeles.Search for more papers by this author First published: January 1980 https://doi.org/10.1111/j.1468-232X.1980.tb00153.xAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Volume19, Issue1January 1980Pages 64-73 RelatedInformation

Offering Family Planning at the Work Site

The past 10 years may be thought of as the development decade of organized family planning services in the U.S. with infusions of public funds and supportive legislation stimulating the involvement of a network of some 3000 public and private agencies in provisions of services to low-income women. The Planned Parenthood Federation of America designed a pilot project in mid-1973 to evaluate the potential of family planning clinics in industrial settings. Clinics were initiated at the Newark Home office of the Mutual Benefit Life Insurance Company and at the Hoffman-La Roche pharmaceutical company in Nutley New Jersey. The objectives were to discover: whether women employees would utilize a personal service such as a family planning at their places of employment; whether such clinics are cost-effective; and whether the clinics would provide women with an opportunity to initiate contraception or to upgrade their method. The findings of these experiments showed that the viability of a work site family planning clinic depend on: the age of female employees and their ability to obtain alternative family planning care; employees access to private physician care; wage levels and insurance coverage. The work site family planning clinic is helped by: existing medical facilities at a work site; managements cooperation; permission for inhouse publicity prior to the clinic opening and uring the early months of operation (the content of communications should focus on information rather than motivation); and along with contraception the associated health care aspects of the clinic should be stressed with emphasis on Pap smears breast examinations VD tests and medical referrals. To meet the family planning needs of employees there are also used: 1) the companys medical and support staff; 2) the family planning clinic at a site convenient to employees of a number of firms; 3) meetings of Planned Parenthood representatives with workers in various industries to discuss health issues (in 1974 Planned Parenthood of Essex County met with workers of various industries in Greater Newark area).

Pressures and transformations of the Turkish welfare regime

The state, the family and the market are the main pillars of welfare regimes that have different configurations from one country to another. In Turkey, these mechanisms are under increasing pressure today. The family seems unable to extend protection beyond the nuclear household. In addition to that, support to rural employment and urban housing, deployed through clientele networks, decline. Wage insurance, as a way of accessing the social protection system, is also challenged by the characteristics of the labour market. We argue that the structure of employment is increasingly incompatible with the existing welfare system framework, which is mainly centred on formal workers insurance. In this context, will the current pensions and health reforms lead to a better articulation between employment forms and the social protection system? The first part of the article analyzes the evolution of the labour market since the 1990s. Recent adjustments of this market take place in the context of structural changes in the regulation of labour relations and of the economic model. The second part of the article examines social protection reforms. We analyse first parametric adjustments in the case of pensions (retirement age, period of contribution and replacement rates), and secondly, measures adopted to ensure universal access to health care and services. We argue that other forms of insurance and/or assistance might be necessary to increase the scope and depth of coverage. The last section explore three possible transformations of the Turkish welfare regime: increased labour market flexibility, a more important role of private insurance and the scope of social assistance mechanisms.

The Development of Social Insurance and Minimum Wage Legislation in Great Britain: A Study of British Social Legislation in Relation to a Minimum Standard of Living. Helen Fisher Hohman

<i>The Development of Social Insurance and Minimum Wage Legislation in Great Britain: A Study of British Social Legislation in Relation to a Minimum Standard of Living</i>. Helen Fisher Hohman

The development of social insurance and minimum wage legislation in Great Britain. Helen Fisher Hohman

<i>The development of social insurance and minimum wage legislation in Great Britain</i>. Helen Fisher Hohman

Book Review: The Development of Social Insurance and Minimum Wage Legislation in Great Britain

Book Review: The Development of Social Insurance and Minimum Wage Legislation in Great Britain