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lecture5_Sept19_slides (1)

lecture5_Sept19_slides (1) - Institutional Explanations for...

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Institutional Explanations for  Institutional Explanations for  Declining Wages of Low-Skill  Declining Wages of Low-Skill  Workers  Workers  1
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Institutional Forces Institutional Forces 1. Unions IDEA: Use collective bargaining to increase wages FACTS: Union membership has declined dramatically RESEARCH EVIDENCE: Explains some of the reduction  in wages of low-skilled men (no effect on women) 2
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3 Union Membership as a percent of Employment Source: Mayer (2004), Union Membership Trends in the United States
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Institutional Forces Institutional Forces 2. Minimum Wage Laws IDEA: Props up wages of low-income workers FACTS: real value has fallen over time, particularly during  1980s. RESEARCH EVIDENCE: Explains a large share of  increased wage inequality… During the 1980s At the low end of the wage distribution Particularly among less experienced workers 4
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Relative Importance of These Factors? Relative Importance of These Factors? Skill-biased technological change  largest effect Decline in minimum wage and unions modest to substantial effects International trade small, but may be increasing over time Immigration  small, but somewhat larger for African-Americans Education  no significant long-term effect 6
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Family Composition,  Family Composition,  Demographics, and Education Demographics, and Education 7
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8 Poverty by family type
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9 Poverty rates by family type
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Poverty Trends by Family Structure  Poverty Trends by Family Structure  10
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11
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12 Source: National Vital Statistics Reports
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13 Birth Rates by race and marital status Birth Rates by race and marital status
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Percent of Births to Unmarried Women Percent of Births to Unmarried Women 14 BR U - probability an unmarried woman has a baby BR M -probability a married woman has a baby U - number of unmarried women M - number of married women = BR U × U BR U × U + BR M × M women married to births women unmarried to births women unmarried to births + =
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Percent of Births to Unmarried Women Percent of Births to Unmarried Women Percentage of births to unmarried women can rise  when there is: Increase in birth rate among unmarried women Decrease in birth rate among married women Decline in proportion of married women in society 15 P U B = BR U × U BR U × U + BR M × M
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Decline in Marriage Decline in Marriage What caused the decline in marriage? 1. Increased opportunities for women 2. Decreased opportunities for low-skilled men 3. Decreased benefits of specialization 4. Changing social norms  (Cohabitation and Shotgun Weddings) 5. Generosity of welfare benefits 17
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Reasons for the Decline in Marriage Reasons for the Decline in Marriage 1. Increasing opportunities for women
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