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This paper provides both a theoretical and an empirical investigation into the impact of job skill types on the black/white pay differentials. The theoretical analysis derives that the more intensively ‘soft’/’hard’ skills are used in an occupation, the greater/smaller the black/white pay differential is there in that occupation. Moreover, in response to the differential pay gaps across jobs requiring different levels of ‘soft’/’hard’ skills, blacks are more likely to self-select themselves into the jobs that use ‘hard’ skills more intensively, ceteris paribus. Using NLSY [National Longitudinal Survey of Youth] data, we find consistent empirical evidence to our theoretical predictions. Hence, the paper bridges the existing literature on racial pay gaps and cognitive vs. non-cognitive skills by explicitly testing the impact of job skill types on racial pay gaps.

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We analyse the effects of government-sponsored training for the unemployed conducted during East German transition. For the microeconometric analysis, we use a new, large and informative administrative database that allows us to use matching methods to reduce potential selection bias, to study different types of programmes, and to observe interesting labour market outcomes over eight years. We find that, generally, all training programmes under investigation increase long-term employment prospects and earnings. However, as an important exception, the longer training programmes are on average not helpful for their male participants. At least part of the explanation for this negative result is that caseworkers severely misjudged the structure of the future demand for skills.

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This paper investigates the relationship between the gender wage gap, the choice of training occupation, and occupational mobility. We use longitudinal data for young workers with apprenticeship training in West Germany. Workers make occupational career choices early during their careers and women and men pursue very different occupational careers. We reconsider whether through occupational segregation women are locked in low wage careers (Kunze, 2005) or whether they can move up to higher wage paths through mobility. We furthermore investigate whether patterns have changed across cohorts during the period 1975 and 2001 and whether effects vary across the distribution. The main results are: first, while there exists a persistent gender wage gap over experience, the gap has decreased over time; second, in the lower part of the wage distribution, the gap is highest and it increases with experience; third, occupational mobility is lower for women than for men and the wage gains due to occupational mobility are higher for men than for women, especially in the lower part of the wage distribution. We conclude that occupational mobility has reduced the gender wage gap, but lock-in effects are still stronger for women compared to men.

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This paper develops a theoretical model of optimal schooling levels where ability and family background are the central explanatory variables. We derive schooling demand and supply functions based on individual wealth maximization. Using NLSY79 [National Longitudinal Survey of Youth 1979] data we stratify our sample into one-year ‘FTE’ [full-time equivalent] work experience cohorts for 1985-1989. Mincer’s (1974) ‘overtaking’ cohort (the years of work experience at which individuals’ observed earnings approximately equal what they would have been based on schooling and ability alone) corresponds to 13 FTE years of work experience yielding on average a rate of return of 9.6 per cent and an average (optimal) 11.4 years of schooling.

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Transition patterns from school to work differ considerably across OECD countries. Some countries exhibit high youth unemployment rates, which can be considered an indicator of the difficulty facing young people trying to integrate into the labor market. At the same time, education is a time-consuming process, and enrolment and dropout decisions depend on expected duration of studies, as well as on job prospects with and without completed degrees. One way to model entry into the labor market is by means of job search models, where the job arrival hazard is a key parameter in capturing the ease or difficulty in finding a job. Standard models of job search and education assume that skills can be upgraded instantaneously (and mostly in the form of on-the-job training) at a fixed cost. This paper models education as a time-consuming process, a concept which we call time-to-educate, during which an individual faces the trade-off between continuing education and taking up a job.

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In this paper we estimate the rate of return to firm investments in human capital in the form of formal job training. We use a panel of large firms with unusually detailed information on the duration of training, the direct costs of training, and several firm characteristics such as their output, workforce characteristics and capital stock. Our estimates of the return to training vary substantially across firms. On average it is 7% for firms not providing training and 24% for those providing training. Formal job training is a good investment for many firms and the economy, possibly yielding higher returns than either investments in physical capital or investments in schooling. In spite of this, observed amounts of formal training are very small.

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Based on unique administrative data, which has only recently become available, this paper estimates the employment effects of the most important type of public sector sponsored training in Germany, namely the provision of specific professional skills and techniques (SPST). Using the inflows into unemployment for the year 1993, the empirical analysis uses local linear matching based on the estimated propensity score to estimate the average treatment effect on the treated of SPST programs starting during 1 to 6, 7 to 12, and 13 to 24 months of unemployment. The empirical results show a negative lock-in effect for the period right after the beginning of the program and significantly positive treatment effects on employment rates of about 10 percentage points and above a year after the beginning of the program. The general pattern of the estimated treatment effects is quite similar for the three time intervals of elapsed unemployment considered. The positive effects tend to persist almost completely until the end of our evaluation period. The positive effects are stronger in West Germany compared to East Germany.

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This paper tests whether school-to-work (STW) programs are particularly beneficial for those less likely to go to college in their absence - often termed the ‘forgotten half’ in the STW literature. The empirical analysis is based on the NLSY97 [National Longitudinal Survey of Youth 1997], which allows us to study six types of STW programs, including job shadowing, mentoring, coop, school enterprises, tech prep, and internships/apprenticeships. For men there is quite a bit of evidence that STW program participation is particularly advantageous for those in the forgotten half. For these men, specifically, mentoring and coop programs increase post-secondary education, and coop, school enterprise, and internship/apprenticeship programs boost employment and decrease idleness after leaving high school. There is less evidence that STW programs are particularly beneficial for women in the forgotten half, although internship/apprenticeship programs do lead to positive earnings effects concentrated among these women.

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We study a set of programs implemented in Philadelphia high schools that focus on boosting post-secondary enrollment. These programs are less career oriented than traditional school-to-work programs, but are consistent with the broadening of the goals of school-to-work to emphasize post-secondary education. The Philadelphia Longitudinal Educational Study (PELS) data set that we examine contains an unusually large amount of information on individuals prior to placement in STC [school-to-career] programs. We use the detailed information in the PELS to study the process of selection into these programs and to examine their impact on a set of mainly schooling-related outcomes during and after high school, although we also consider their impact on non-academic outcomes. The data point to positive effects of these programs on high school graduation and on both academic and non-academic awards in high school, and similar negative effects on dropping out of high school. The results also suggest positive effects on aspirations for higher education and on college attendance. In addition, there is some evidence that these programs are more effective in increasing college attendance and aspirations among at-risk youths.

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This paper shows that increasing product market competition can have a direct impact on the employment relationship and on wage inequality. I develop a simple model in which an increase in product market competition increases returns to skill through the effect of competition on the sensitivity of profits to cost reductions. I then show empirically that relative wages increase with competition using a large panel of United Kingdom workers with complete work histories. I identify the impact of competition on returns to skill in the panel, using two exogenous measures of competition provided by two quasi-natural experiments. Quantile regressions indicate that increased competition also raised returns to unobserved ability.

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