Econ113Lect4F - ECON 113: AMERICAN ECONOMIC HISTORY Lecture...

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ECON 113: AMERICAN ECONOMIC HISTORY Lecture 4
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Agenda Articles: Carter & Savoca, Jacoby, and James Discussing homework #2
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Homework #2 Question: What accounts for disequilibrium in the 19th century U.S. labor market? In your essay, define this disequilibrium and provide evidence that the labor market did not clear. In addition, discuss the strengths and weaknesses of the works of this week’s authors as they relate to your thesis. Yesterday: We looked at wage differentials and discussed the roles of information and transportation in Rosenbloom (1990) Today: Looking at turnover rates in Carter and Savoca (1990)
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Carter and Savoca (1990) Many believe that “stable” or “long-term” employment was a post WWI development Brief jobs were thought to be caused by “drive system” of labor management Workers’ allegiance to non-industrial work cultures Limited power of unions Shifts in geographic locus of opportunity
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Carter and Savoca (1990) Points of this paper: Brief jobs suggest a perfectly competitive market which clears rapidly as workers respond readily to wage disparities Explicit/Implicit contracts which lead to relatively sluggish wage responses to varying market conditions Long-term jobs are also consistent with models which stress the importance of community notions of “fairness” or reputation in limiting the downward movement of wages, thus leading to involuntary unemployment
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Carter and Savoca (1990) What does a turnover rate of 100% per year mean? May mean that 10% of population changes jobs 10 times per year So some workers’ jobs may be extremely stable
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Carter and Savoca (1990) Average job in the 19 th century lasted about 8 years.
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Carter and Savoca (1990) Data: Use job tenure data from a sample of non-union male workers employed in San Francisco in 1892, author estimates a continuous time model of job duration. weigh effects of personal and industry traits on job durations calculate effects of these variables on the expected length of time a worker will remain on his current job
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Carter and Savoca (1990) Model They estimate a continuous time model of job duration. h(t) = hazard rate = probability that a worker will leave his job in time t+dt h(t) = НЋ t Ћ -1 where Н = exp(Z Ќ ), Z = exogenous variables that influence termination Ћ >1 positive duration dependence Ћ =1 no dependence
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Carter and Savoca (1990) Can we determine which factors cause a worker to quit? Previously: Historians say problems are on the labor supply side: Some immigrants “never adjusted to factory life” Others have accidents Others stay home complaining of ailments On the demand side: Unions and foremen dismissed workers Carter and Savoca nail down factors which cause quitting.
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This note was uploaded on 02/06/2012 for the course ECON 100A taught by Professor Woroch during the Fall '08 term at University of California, Berkeley.

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Econ113Lect4F - ECON 113: AMERICAN ECONOMIC HISTORY Lecture...

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