Abstract This paper updates and refines the estimates of age-earnings profiles provided in William E. Even and David A. Macpherson (2018). Relative to the earlier work, the estimates provided here use more recent data, improve the controls for the impact of the labor market on earnings, and provide both sex-specific and sex-neutral estimates of age-earnings profiles by education.

Using data from the Program for the International Assessment of Adult Competencies, this paper compares the earnings premium and employment share of jobs in Science, Technology, Engineering and Mathematics (STEM) across 11 member countries of the Organisation for Economic Co-operation and Development. The results reveal that the STEM wage premium is higher in the United States than in any of the other comparison countries, despite the fact that the U.S. has a larger share of workers in STEM jobs. We also find evidence that the premium varies significantly across STEM sub-fields and education levels, and that the premium tends to be higher in countries with lower unionization rates, less employment protection, or a larger share of employment in the public sector.

Using records from a large public university, we examine the impact of Greek life on academic performance and salaries. To isolate the causal effect of Greek life, we exploit a university policy prohibiting students from joining a Greek organization during their first semester and a minimum GPA for subsequent eligibility. Regression discontinuity and panel methods reveal that Greek affiliation reduces student grades by 0.1-0.3 standard deviations. Greek effects are largest during the semester of pledging, semesters of increased social activities, and for males. We find no evidence of a Greek salary premium and rule out even modest positive effects.

This study uses employment data on California county-industry pairs (CIPs) between 1990 and 2016 to test whether minimum wage increases caused employment growth to slow most in the CIPs with a large share of low wage workers. Evidence supports the hypothesis, and we use the estimates to simulate the effect of a 10% increase in the minimum wage. The simulations suggest that a 10% increase could cause a 3.4% employment loss in the average CIP in California. The job loss is projected to be concentrated in two industries: accommodation and food services, and retail. While the most populated counties of California are expected to incur the largest employment loss in terms of the number of workers, the smaller counties generally experience a larger percentage point loss in employment due to the lower wages and the greater number of workers that would be affected by the minimum wage hike. Moreover, there is substantial variation across counties in terms of the percentage of jobs lost within a given industry.

Abstract This study examines the importance of incorporating age-earnings profiles into the estimation of future earnings. Using data from the 2000 Census of the Population and the 2001-2015 American Community Surveys, we estimate age-earnings profiles for seven different education groups after controlling for period and cohort effects. We compare estimates of the loss in future earnings using the age-earnings profiles versus two popular alternatives: assuming a constant rate of earnings growth across the life-cycle or using cross-sectional data for age groups to estimate wage growth for various age ranges. Our results imply that a failure to incorporate the age-earnings profile into estimates of earnings losses can lead to significant over- or under-statement of losses depending on the age at which the damages begin and the educational attainment of the injured party.

If enacted into law, the Fair Calculations Act would require forensic economists to ignore an injured party's gender when forecasting the loss in future earnings. We discuss how this would affect the size of awards for men and women, and some of the issues that would arise if the law is enacted. Of particular interest is the extent to which gender differences in earnings, earnings growth, and worklife expectancy are the result of sex discrimination in labor markets as opposed to sex differences in preferences. We present evidence that gender differences in human capital characteristics explain a large share of gender differences is in labor market outcomes, though there is considerable disagreement about how to interpret these results. We also show that gender differences in earnings are diminishing over time, but it is not likely that the gap will disappear in the near future. Finally, we discuss how forensic economists may have to rely on additional information when forecasting earnings if they are no longer allowed to use gender.

This study tests whether the employer mandate under the Affordable Care Act (ACA) increased involuntary part-time (IPT) employment. Using data from the Current Population Survey between 1994 and 2015, the authors find that IPT employment in 2015 exceeded predictions based on economic conditions and the structure of the labor market. Of greater importance, using difference-in-difference methods, they find that the increase in the probability of IPT employment since passage of the ACA was greater in occupations with a larger share of workers affected by the mandate. The authors’ estimates suggest that approximately 700,000 additional workers without a college degree are in IPT employment as a result of the ACA employer mandate.

Unions can have either positive or negative effects on risk-adjusted returns in pension plans. On the positive side, a union can improve monitoring of pension advisors and asset managers. On the negative side, the union may sacrifice returns by making investments that promote union goals. This paper discusses how the structure of the pension plan affects the union's ability and willingness to sacrifice returns to promote union goals. Using panel data on over 38,000 pension plans drawn from IRS Form 5500 filings between 1988 and 2008, we find the lowest performing plans are unionized multi-employer plans. Among defined contribution plans, the underperformance of multi-employer union plans disappears when the pension is controlled by individual participants. (JEL J32, J51)

According to federal law in 2013, employers can take a credit of up to $5.12 for tips received by workers in satisfying the minimum-wage requirement of $7.25. This article uses interstate variation in laws regarding tip credits and minimum wages to identify the effects of reducing or eliminating the tip credit on employment, hours, and earnings in the U.S. restaurant industry. Using data from the Quarterly Census of Employment and Wages and the Current Population Survey, we find that a reduction in the tip credit increases weekly earnings but reduces employment in the full-service restaurant industry and for tipped workers. The results are robust to controls for spatial heterogeneity in employment trends and are supported by a series of falsification tests.

According to federal law in 2012, employers can take a credit of up to $5.13 for tips received by workers in satisfying the minimum wage requirement of $7.25. This study uses interstate variation in laws regarding tip credits and minimum wages to identify the effects of reducing or eliminating the tip credit on employment and earnings in the U.S. restaurant industry. Using data from the Quarterly Census of Employment and Wages and the Current Population Survey, we find that a reduction in the tip credit increases weekly earnings but reduces employment in the full services restaurant industry and for tipped workers. The results are robust to controls for spatial heterogeneity in employment trends and are supported by a series of falsification tests.

This study shows that the wage premium paid by large firms fell over the past 20 years and that the decline in the size premium has been most pronounced among the least educated work force. Empirical evidence supports several explanations for the decline in the size premium. First, there has been a convergence in the returns to worker characteristics at large and small firms over time. Second, there has been a convergence in the types of workers employed at small and large firms. Particularly important have been changes in the distribution of workers across industries and the greater rate of decline in unionism at large firms.

Using data from IRS Form 5500, this study examines the causes and consequences of the shift toward participant direction of investments in defined contribution plans. The analysis reveals that collective bargaining and pension investments in employer stock reduce the chance of a switch to participant direction, whereas below average returns increases the chance. Also, a switch to participant direction increases employee contributions to the pension and reduces the share of assets invested in employer securities.

This paper uses simulation methods to determine the optimal mix of assets in a pension plan that has half of its assets in company stock. The optimal share is shown to vary with workers' risk aversion, non-pension wealth, and the financial characteristics of the underlying stock. Relative to a strategy that blends company stock with all bonds, there are substantial efficiency gains from optimizing the mix of stocks and bonds—particularly for workers with lower levels of risk aversion and substantial non-pension wealth holdings. The gains from optimizing also differ substantially depending upon the company stock's mix of systematic and idiosyncratic risk.

SUMMARYThis study examines the consequences of a pension fund investing in the stock of the sponsoring firm. Using a merger of data on pension asset holdings from IRS Form 5500 filings and financial data on the company's stock from CRSP, two broad questions are addressed: first, what factors influence the extent of a pension fund's investments in the employer's stock? Second, when a pension invests in the employer's stock, how much is lost as a result of poor diversification? The empirical results suggest that investments in employer stock are responsive to non-diversification costs, tax consequences, and the employee's ability to absorb risk. There is also evidence that employers and employees weight these factors differentially in their decision of how much employer stock to include in the pension. Using actual return data on pension plans, we also find that concentrated investments in employer stock substantially reduce risk-adjusted return performance. However, modest holdings of employer stock have negligible effects on pension performance.

Over the past 20 years, the defined benefit (DB) plan has been replaced by the defined contribution (DC) plan as the most popular form of pension plan. This study examines the likely consequences of this transformation for both the level and distribution of future pension wealth using a sample of DB and DC plans from the Survey of Consumer Finances. The results reveal that the shift from DB to DC plans is likely to simultaneously increase the level and inequality of pension wealth at retirement. The evidence also suggests that the shift to DC plans may result in less pension wealth at retirement for low-income workers, women, and minorities.

This paper investigates trends in pension coverage rates with a focus on the source of low coverage rates among workers at small firms. An important finding is that, over the past 15 years, pension coverage rates rose most at small firms, primarily because the earnings of workers grew most among those at small firms. The study also examines how firm size relates to the changes in the type and generosity of pension plans over time. While small firms are less likely to offer pension coverage, particularly a defined benefit plan, the generosity of the pensions offered compares quite favorably to those at much larger firms.