Scholarly Publications

Peer-reviewed articles and books from affiliated faculty and IRLE Center staff.


2008
Tipping and the Dynamics of Segregation
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Quarterly Journal of Economics, 123(1):177-218. February 2008.

Abstract
Schelling (“Dynamic Models of Segregation,” Journal of Mathematical Sociology 1 (1971), 143–186) showed that extreme segregation can arise from social interactions in white preferences: once the minority share in a neighborhood exceeds a “tipping point,” all the whites leave. We use regression discontinuity methods and Census tract data from 1970 through 2000 to test for discontinuities in the dynamics of neighborhood racial composition. We find strong evidence that white population flows exhibit tipping-like behavior in most cities, with a distribution of tipping points ranging from 5% to 20% minority share. Tipping is prevalent both in the suburbs and near existing minority enclaves. In contrast to white population flows, there is little evidence of nonlinearities in rents or housing prices around the tipping point. Tipping points are higher in cities where whites have more tolerant racial attitudes.
Down and Out: Economists Assess the Teacher Pay Disadvantage
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California Public Employee Relations Journal, 128:13-21. February 2008.

Abstract
As public employees, elementary and secondary school teachers have the enormous responsibility of educating our youth,and much hinges on their success.Teacher quality is the most important input schools contribute to the academic success of their students.1 The ability of school officials to recruit and retain highly effective classroom teachers is a struggle in many school districts throughout the United States. For decades now, a small and declining fraction of the most cognitively skilled graduates choose to become teachers,2 while rigorous national standards and school-based accountability for student performance have pushed the demand for talented teachers to an all-time high.

Prolific career opportunities have made it increasingly difficult to attract the best and the brightest into the profession. Professional women, historically afforded limited choices outside of teaching, have increasingly diverse career prospects. Attractive pay and compensation structures are part of the appeal of these ever- expanding opportunities. For this reason, it is important to ask whether teacher pay has kept up with that of other professions available to college graduates today. This article presents empirical evidence from several sources that documents relative teacher pay in a present and historical context.

2007
Racial Segregation and the Black-White Test Score Gap
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Journal of Public Economics, 91(11-12):2158-2184. December 2007.

Abstract
Racial segregation is often blamed for some of the achievement gap between blacks and whites. We study the effects of school and neighborhood segregation on the relative SAT scores of black students across different metropolitan areas, using large microdata samples for the 1998-2001 test cohorts. Our models include detailed controls for the family background of individual test-takers, school-level controls for selective participation in the test,and city-level controls for racial composition, income, and region. We find robust evidence that the black-white test score gap is higher in more segregated cities. Holding constant family background and other factors, a shift from a highly segregated city to a nearly integrated city closes about one- quarter of the raw black-white gap in SAT scores. Specifications that distinguish between school and neighborhood segregation suggest that neighborhood segregation has a consistently negative impact while school segregation has no independent effect, though we cannot reject equality of the two effects. Additional tests indicate that much of the effect of neighborhood segregation operates through neighbors’ incomes, not through race per se. Data on enrollment in honors courses suggest that within-school segregation increases when schools are more highly integrated, potentially offsetting the benefits of school desegregation and accounting for our findings.
The Economic Impacts of a Citywide Minimum Wage
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Industrial and Labor Relations Review 60(4):522-543. July 2007. Cornell University, School of Industrial & Labor Relations.

Abstract
This paper presents the first study of the economic effects of a citywide minimum wage— San Francisco’s adoption of a minimum wage, set at $8.50 in 2004 and $9.14 by 2007. Compared to earlier benchmark studies by Card and Krueger and by Neumark and Wascher, this study surveys table-service as well as fast-food restaurants, includes more control groups, and collects data for more outcomes. The authors find that the policy increased worker pay and compressed wage inequality, but did not create any detectable employment loss among affected restaurants. The authors also find smaller amounts of measurement error than characterized the earlier studies, and so they can reject previous negative employment estimates with greater confidence. Fast-food and table-service restaurants responded differently to the policy, with a small price increase and substantial increases in job tenure and in the proportion of full-time workers among fast-food restaurants, but not among table-service restaurants.
2006
Good Principals or Good Peers: Parental Valuation of School Characteristics, Tiebout Equilibrium, and the Incentive Effects of Competition Among Jurisdictions
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American Economic Review, 96(4):1333-1350. September 2006.

Abstract
School choice may improve productivity if parents choose well-run schools, but not if parents primarily choose schools for their peer groups. Theoretically, high income families cluster near preferred schools in housing market equilibrium; these need only be effective schools if effectiveness is highly valued. If it is, “effectiveness sorting” will be more complete in markets offering more residential choice. Although effectiveness is unobserved to the econometrician, I test for an observable implication of effectiveness sorting. I find no evidence of a choice effect on sorting, indicating a small role for effectiveness in preferences and suggesting caution about choice’s productivity implications.
Basic Family Budgets: Working Families: Incomes Often Fail to Meet Living Expenses Around the United States
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International Journal of Health Services 36(3):443–454. 2006.

Abstract
The ability of families to meet their most basic needs is an important measure of economic stability and well-being. While poverty thresholds are used to evaluate the extent of serious economic deprivation in our society, family budgets—that is, the income a family needs to secure safe and decent-yet-modest living standards in the community in which it resides—offer a broader measure of economic welfare. Basic family budgets take into account differences in both geographic location and family type. In total, this report presents basic budgets for more than 400 U.S. communities and six family types (either one or two parents with one, two, or three children). That the budgets differ by location is important, since certain costs, such as housing, vary significantly depending on where one resides. This geographic dimension of family budget measurements offers a comparative advantage over using poverty thresholds, which only use a national baseline in their measurements.
Race, Income, and College in 25 Years: The Continuing Legacy of Segregation and Discrimination
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American Law and Economics Review, 8(2):282-311. Summer 2006.

Abstract
In Grutter v. Bollinger, Justice O’Connor conjectured that in 25 years affirmative action in college admissions will be unnecessary. We project the test score distribution of black and white college applicants 25 years from now, focusing on the role of black–white family income gaps. Economic progress alone is unlikely to narrow the achievement gap enough in 25 years to produce today’s racial diversity levels with race-blind admissions. A return to the rapid black–white test score convergence of the 1980s could plausibly cause black representation to approach current levels at moderately selective schools, but not at the most selective schools.
2005
2004
College Performance Predictions and the SAT
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Journal of Econometrics, 121(1-2):297-317. July-August 2004.

Abstract
The methods used in most SAT validity studies cannot be justified by any sample selection assumptions and are uninformative about the source of the SAT’s predictive power. A new omitted variables estimator is proposed; plausibly consistent estimates of the SAT’s contribution to predictions of University of California freshman grade point averages are about 20% smaller than the usual methods imply. Moreover, much of the SAT’s predictive power is found to derive from its correlation with high school demographic characteristics: The orthogonal portion of SAT scores is notably less predictive of future performance than is the unadjusted score.
2003
Living Wage Ordinances in California
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In The State of California Labor 2003, Ruth Milkman, ed. 199-226. Cleveland: Brothers Printing Company. 2003.

Abstract
Living wage mandates legislate minimum hourly wages that are considerably higher than minimum wage rates. Since 1994 living wage ordinances have been passed and, in varying degrees, implemented in over ninety-five local governmental entities in the United States; among them are twenty-one California cities. The author presents a summary of the living wage ordinances in California, including their wage mandate levels and their coverage. He discusses how the minimum wage and the federal poverty standard have failed to keep up with increased living costs, especially in California’s cities, and reviews arguments for and against living wage policies. The author also surveys older academic studies on minimum wage and living wages and then discusses a new generation of research studies on the impacts of living wages. This new set of studies, which includes detailed analyses of Los Angeles and San Francisco, provides a more careful and complete understanding than was previously available. Using before-and-after surveys of employers and workers and more sophisticated methodology, they reveal that living wage policies increase pay for their intended beneficiaries without creating disemployment effects. Living wage policies also reduce employee turnover and absenteeism and improve worker performance, thereby creating some employer savings in the short run and generating incentives for productivity growth in the long run. The policies’ costs to employers and taxpayers are considerably smaller than some have projected. The author concludes by discussing recent developments in living wage campaigns that may lead to greater impacts in the future.
Living Wages and Economic Performance: The San Francisco Airport Model
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Institute of Industrial Relations, University of California, Berkeley. March 2003.

Abstract
In response to low pay for workers and low service quality for taxpayers, about 100 local governmental entities in the United States have instituted living wage ordinances. Generally, these ordinances apply wage and benefits mandates for employees of contractors conducting services for a municipal government. Some of the ordinances also apply to employers who conduct business on government-owned property.

An innovative and far-reaching living wage ordinance has been implemented at San Francisco International Airport (SFO). Nearly two years before September 11, 2001, SFO adopted a Quality Standards Program (QSP), which was designed to improve safety and security at SFO as well as improve the conditions of the SFO labor market. The program went well beyond the FAA regulations in place at the time, establishing compensation, recruitment and training standards for a wide range of airport employees whose performance affects airport safety and security. Two additional policies in San Francisco in 2000 also restructured the labor market at SFO: a Labor Peace/Card Check Rule and a Minimum Compensation Ordinance (MCO), which places living wage mandates into airport leases and service contracts not covered by the QSP.

In this study we examine the determinants of low-wage labor markets at the airport, the scope of the new policies at SFO, and the impacts of those policies on workers, employers, consumers and taxpayers, with special attention to the effects on airport safety and security. This study constitutes the first examination of the impacts of the policies. In this summary of our findings, we focus on the main findings of our study. The document that follows provides our full report.

To conduct the study, we carried out detailed surveys of airport employers and workers in the summer and fall of 2001, and we interviewed labor, management and airport officials. We also drew upon government documents and census datasets, the airport’s own security badge data, and FAA data on security at major U.S. airports.

2001
A Small Raise for the Bottom
and   –  Scholarly Publications

InThe State of California Labor 2001, Paul M. Ong and James R. Lincoln, eds. 123-148. Cleveland: Brothers Printing Company. 2001.

Abstract
Despite the longest economic boom in California’s history, a large and increasing number of low-paid workers are not sharing in its prosperity. Indeed, from the mid-1970s to the mid-1990s real hourly wages fell steadily for most workers, by around 25 percent for the lowest fifth of the California workforce and 20 percent for the median worker, and rose only for the top fifth of the workforce. As a result, wage inequality in California is now at record levels and much higher than in the rest of the U.S.

For the vast majority of California wage earners, real hourly pay began to grow again only in 1996, at the beginning of the most recent round of minimum wage increases. By 1999 pay at the tenth percentile reached $6.04, 12.1 percent higher than in 1995, while pay at the fiftieth percentile grew by 2.8 percent, to $13 and pay at the ninetieth percentile grew 9.2 percent, to $32.61. As a result, the rate of growth in wage inequality has slowed. This timing suggests that the 1996-98 minimum wage increases may have played a part in a “small raise for the bottom.”

In this chapter, we first discuss the size and growth of low-wage employment in California since 1980 and then examine rising wage inequality in the state in the same period. We go on to present a sustained examination of the 1996-98 California minimum wage increase, which raised the state minimum by 35 percent, from $4.25 to $5.75, or $.60 above the national minimum.

We focus on the extent to which the 1996-8 minimum wage increases can be given credit for the reduction in wage inequality that occurred in the late 1990s. We find that the minimum wage increases did not negatively affect the strong employment growth over the period. At the same time it did benefit large numbers of low-wage workers. Through a series of statistical tests, we also find evidence that the minimum wage increases did reach the lowest income workers and households and did not spill over to high-paid workers.

We pay particular attention to the impacts of the policy on low-wage sectors of the economy. Precisely because minimum wages target the lowest paid in the labor market, we need to be careful that it does not lead to the displacement of the most vulnerable workers. Compared to the 1988 increases, the employment and wage
effects of the increases were both more benign and more durable.

Finally, we discuss the potential impact of increasing the minimum wage further, to $8 (which is the 1968 level in 1999 dollars). The effects of the latest round of increases provide a useful basis from which to assess the likely effects of a further increase.

An Empirical Analysis of Homosexual/Heterosexual Male Wage Differentials: Unmarried And Unequal?
and   –  Scholarly Publications

ILR Review, 54(3):631-646. April 2001.

Abstract
Using data from the 1990 U.S. Census (PUMS 5%), the authors present the first large-scale study of wage differentials between heterosexual and homosexual men. The homosexual sample, consisting of gay men in unmarried partnered relationships, are estimated to have earned 15.6% less than similarly qualified married heterosexual men, and 2.4% less than similarly qualified unmarried partnered heterosexual men. The authors interpret these two figures as upper- and lower-bound estimates of the differential between homosexual and heterosexual men. The dual comparison enables the authors to disentangle the penalty to being unmarried from other determinants of the wage differential; estimated at 14.1%, this variable appears to be the main source of the wage gap.