Employer-provided health insurance decreased by an average of almost 0.6 percentage points per year for adults aged 18 to 64 who were working full-time in the private sector between 1983 and 2007. Most of this decline was among non-union workers. This study reports estimates that suggest the decrease was caused by a decline employers faced in the threat of being unionized, as measured by the drop in state-level private-sector union density over the 25 years and across the 50 states. The author hypothesizes the decline in union density caused some non-union employers to decide not to offer health insurance. The study shows the importance of accounting for measurement error in union density when estimating the declining threat effect of unionization on non-union employer-provided health insurance coverage.

Much of the empirical research on CEO pay is based on agency theory and has studied the incentives executives have to make decisions that benefit shareholders. This study takes a different look at CEO success by focusing on the quality of the match between the CEO and the firm’s needs. Compared to lower quality matches, highly productive matches are characterized by executives that have long tenures as CEOs and better per period firm performance over their time as CEO. A simple modification of a widely used Bayesian model of learning (DeGroot 1970) is proposed where the board of directors dismiss a CEO when they conclude the probability true firm-CEO match quality falls below a critical match quality threshold is greater than a threshold probability. This separation decision rule means CEOs are positively selected on match quality. The empirical results confirm this prediction; a statistically and economically significant relationship between the total time an executive serves as CEO (completed tenure) and monthly stock returns is found. We also find that stock returns in period t are correlated with completed tenure for CEOs that survive to period t. These results suggests investors are making valid judgments about firm-CEO match quality and boards of directors are making CEO retention decisions as they learn about CEO productivity in the firm. The results are inconsistent with models that predict long tenured CEOs become entrenched in their positions at the expense of shareholders.

This paper estimates the trade-off between salary and health insurance costs using data on Illinois school teachers between 1991 and 2008 that allow us to address several common empirical challenges in this literature. Teachers paid about 17 percent of the cost of individual health insurance and about 46 percent of the cost of their family members' plans through premium contributions, but we find no evidence that teachers' salaries respond to changes in insurance costs. Consistent with a higher willingness to pay for insurance, we find that premium contributions are higher in districts that employ a higher-tenured workforce. We find no evidence that school districts respond to higher health insurance costs by reducing the number of teachers.

Who chooses what type of pay? The costs and benefits of “flexible” and “cafeteria-style” benefit plans have been discussed for some time. Additionally, many papers have considered the potential costs and benefits of certain types of pay plans (e.g. salaries versus piece rates). In this paper, we use detailed data from a specific firm that annually set the total compensation level for each of its employees but then did something extremely unusual. At the start of each pay year, the firm set an exchange rate for the dollar trade-off between cash pay and stock option pay. It then gave every employee nearly complete choice over the fraction of their pay that was contingent (stock options, bonus) versus guaranteed (salary). There are several empirical findings. There is substantial variation in the choice of contingent pay with some workers choosing almost all base pay and others choosing almost entirely stock options. Younger employees, more experienced employees, higher paid employees, and male employees are more likely to allocate a larger fraction of their total compensation to atrisk alternatives. The robustness of these results varies somewhat depending on the empirical specification and set of covariates used.

The United States is in the throes of a public-policy debate about public-sector unionism and collective bargaining. The ostensible trigger of this debate is the fiscal crises that state and local governments have been experiencing since 2008. The debate largely centers on the extent to which public employee unions have contributed to this crisis through the pay and benefits they have negotiated for public employees. The role of government as employer is connected in this debate to the role of government as a taxing authority and provider of public services. These roles are often claimed to be in conflict with one another — that is, governments as employers are seen as not exercising the same due diligence in setting pay and benefits as private-sector employers. The research evidence indicates, however, that these claims about public employment are based on incomplete and in some cases inaccurate understanding.

This paper is a description and summary of existing questions and sources of data on stock options with an emphasis on two issues; what are the issues surrounding stock options in the national accounts and what value do employees place on stock options? We survey many existing data sources and outline some of the ways these data can be used to answer questions about the use and impact of employee stock options. The data sources include administrative records from individual firms, survey data of employee perceptions, disclosure filings with the SEC and other government, nonprofit, and international sources. We explore ways to investigate the value of options to employees and their cost to the firms using data on employee exercise decisions. Finally, we discuss the implications of our findings for public policy, the reporting of stock options, and how options are considered in the national accounts.

EXECUTIVE SUMMARY A review of four academic units has been initiated under the auspices of " Stewarding Excellence " at the University of Illinois. The review includes a central set of questions regarding whether the consolidation or merger of small units into larger units would generate increased administrative efficiencies. This report provides a systematic method for answering such a question by comparing four small units with 18 comparison departments over a nine year period. The analysis offers clear conclusions on this matter. The overarching finding is that two of the four small units (Media and Social Work) are presently more efficient than comparable departments embedded in larger units, so consolidation would not be expected to generate any savings; one of the units (Labor and Employment Relations) could generate modest savings from consolidation ($51,000-$92,000) and one unit (Library and Information Sciences) would have no savings associated with non-faculty reductions, but could realize substantial savings in faculty efficiencies relative to other comparable departments by increasing class sizes (a change that could be made without consolidation). The specifics of the analysis are as follows: 1. This report presents the results of a statistical analysis of teaching costs and productivity for 22 academic units at the University of Illinois-Urbana/Champaign for nine academic years beginning with AY2000-2001. The sample of units include four units (College of Media, and Schools of Library and Information Science, Labor and Employment Relations and Social Work) that have been identified as small units on campus that might be consolidated into larger units and 18 departments with connections to the social sciences that are already located in three different colleges (business, LAS & ACES). These 18 departments were chosen because their locations in larger colleges provides a comparison group of departments for estimating what might be saved by consolidating one or more of the small units. The statistical analysis of data from the 18 departments and the four small units is used to derive estimates of the specific economic savings that might be gained by consolidation. Most of the discussion focuses on the cost per "instructional unit" (Cost/IU) and "instructional units" per total FTE, per Faculty FTE and per academic professional and civil service FTE. Most of the data used in the analysis is posted on the "Campus Profile" web page (www.dmi.illinois.edu/cp/) for each of the 22 units. 2. The economic savings to the campus from consolidating one or more of …

This study empirically investigates the value employees place on stock options using information from the option exercise behavior of individuals. Employees hold options for another period if the value from holding them and reserving the right to exercise them later is higher than the value of exercising them immediately and collecting a profit equal to the stock price minus the exercise price. This simple model implies the hazard describing employee exercise behavior reveals information about the value to employees of holding options another time period. We show the parameters of this model are identified with data on multiple option grants per employee and we apply this model to the disposition of options received in the 1990s by a sample of over 2000 middle-level managers from a large, established firm outside of manufacturing. Exercise behavior is modeled using a random effects probit model of monthly exercise behavior that is estimated using simulated maximum likelihood estimation methods. Our estimates show there is substantial heterogeneity (observed and unobserved) among employees in the value they place on their options. Our estimates show most employees value their options at a value greater than the option's Black-Scholes value.

Compensating wage theory predicts that workers receiving more generous fringe benefits are paid a lower wage than comparable workers who prefer fewer fringe benefits. This study tests this prediction for employer‐provided health insurance by modeling the wages of married women employed full‐time in the labor market. Husband's union status, husband's firm size, and husband's health coverage through his job are used as instruments for his wife's own employer health insurance benefits. The estimates suggest wives with own employer health insurance accept a wage about 20% lower than what they would have received working in a job without benefits.

This study presents new evidence on the relationship between high school inputs measured at thetime male respondents attended high school and the earnings of these same individuals when they were intheir mid-thirties. To accomplish this task, we matched newly coded data on the characteristics ofWisconsin high schools in 1954--57 to the Wisconsin Longitudinal Survey. Our estimates show asignificant relationship between the characteristics of teachers and the earnings of their students 17...

This study investigates the performance effects of two industry-specific human resource management innovations that dramatically changed the way professional baseball teams selected and trained ballplayers. In the early part of this century major league clubs developed and refined two player development practices based on “reserve team” and “farm team” systems. We use a panel data set of the win/lose records for the population of 16 major league clubs for the seasons from 1919 through 1940 to test hypotheses about the effect of human resource practices on organizational performance. The results suggest the reserve team practice had no significant impact on organizational performance. In contrast, the more complex farm team system, pioneered by Branch Rickey of the St. Louis Cardinals, improved organizational performance and diffused rapidly throughout the league. Four years after creating a farm team system, we estimated that it improved a team’s win rate by .068 points relative to non-adopters of the farm team system and teams with less than four years of prior experience with a farm team system. The results also show the farm team effect was not confined to St. Louis but was also experienced by later adopters. These results contribute to the growing literature showing a positive effect of human resource policies on organizational performance. The results also illustrate the important role the external environment plays in shaping this relationship (e.g., legal restrictions to labor mobility).

The authors examine the sensitivity of wage setting in two federal pay systems—the General Schedule (GS) system, covering white-collar workers, and the Federal Wage System (FWS), covering blue-collar workers—to local wages and cost-of-living. In 1978 and 1980, the years of the data, FWS wages were designed to reflect local labor market wage levels, while GS wages were intended to be responsive to national wage trends, independent of local wage levels. The authors find that FWS wages were closely tied to local external market conditions, as intended. However, GS wages, both for new hires and for longer-tenure employees, were also responsive to those conditions (though less so than FWS wages). To circumvent policies designed to screen out local labor market effects, GS administrators apparently employed such pactices as assigning new employees to higher grade levels than were formally warranted.

Health insurance in the USA for most of the non-aged population is provided as a fringe benefit that is received by an adult family member as part of his or her compensation package. In husband and wife households health insurance is more likely to be part of the husband's compensation package than the wife's compensation package. However, when a husband does not have employer-provided health insurance, his wife may seek health insurance through an employer. Because health insurance through one's employer typically requires that a worker is a full-time employee, spousal health insurance coverage for wives is predicted to influence their labour supply decisions. Parametric and semiparametric statistical models using March 1993 CPS data show wives without spousal health benefits are more likely to work full-time than those who do have spousal health benefits. © 1998 John Wiley & Sons, Ltd.

In final offer arbitration the decision of the arbitrator provides the parties with information about the preferences of the arbitrator that is not available prior to the award. Using data from Wisconsin teacher negotiations from 1977 to 1986, the authors find that the information contained in an award altered the parties' expectations about the arbitrator's preferences and influenced the subsequent negotiated settlement. The negotiated settlement following an award was higher when the union's final offer was selected than when the employer's offer was selected. In the round following an award, the variance in negotiated settlements declined, and the wage structure toward which the settlements converged was one that conformed with the arbitrator's views of fairness.

This article discusses why it is difficult to measure the effects of management practices on organizational performance. In spite of these difficulties, a collage of evidence suggests that innovative workplace practices can increase performance, primarily through the use of systems of related practices that enhance worker participation, make work design less rigid, and decentralize managerial tasks, A majority of U.S. businesses have adopted some innovative work practices, However, only a small percentage of businesses have adopted a full system of innovative practices, We outline several constraints on the diffusion of new work practices, and suggest directions for future research.