Unions
- “What Do Unions Do? Incentives and Investments,” by Vojislav Maksimovic and Liu Yang. SSRN Working Paper no. 4565288, September 2023.
Unionization efforts at Amazon.com and recent strikes by autoworkers and movie and television actors and writers raise questions about the effects of unions on worker productivity, compensation, and job security. To answer those questions, this paper examines plant-level data from 2010 to 2017 from the Census of Manufacturers and the Annual Survey of Manufacturers.
It finds that wages are higher at unionized plants, but controls for location, industry, and firm characteristics reduce the premium. Union plants, on average, pay 7.5 percent more in hourly wages to production workers and have 17.8 percent higher benefit costs. But unionized plants have lower wage growth and higher closure rates. Taking those characteristics into account, the net present value of the wage premium for unionized workers is only 3.6 percent over five years and becomes negative over 10 years.
Why do union wages grow more slowly and unionized plants close? Unionized plants experience a productivity loss ranging from 3 to 8 percent compared to their non-unionized counterparts after controlling for industry and location fixed effects as well as firm characteristics. Even within firms, unionized plants are less productive than non-union plants. And unionized plants have 3 percent less capital investment controlling for industry, location, firm size and age, and labor force education.
Criminal Convictions and
Employment
- “Labor Market Impacts of Reducing Felony Convictions,” by Amanda Agan, Andrew Garin, Dmitri Koustas, et al. SSRN Working Paper no. 4606702, October 2023.
Previously in Regulation, law professors J.J. Prescott and Sonja B. Starr described a Michigan program that allowed criminal convictions to be expunged. (“The Power of a Clean Slate,” Summer 2020.) Those who received expungements experienced a wage increase of 23 percent within a year of expungement.
California Proposition 47, implemented in 2014, reclassified certain theft and drug possession felonies to misdemeanors. About 1 million Californians were eligible. This paper examines the effects of that law in San Joaquin County, where, unlike Michigan, eligible individuals did not have to apply to have their convictions altered; instead, public defenders could initiate the reductions without consulting the defendants. The ordering of these reductions basically was random for a large subset of defendants, allowing for the study of resulting employment and wage effects. In addition, the study implemented a randomized trial to notify a random subset of individuals who received public defender–initiated reductions of their record.
The paper found no effects on employment or incomes, and the outcomes for those who were notified of their change in status did not differ from those who were not notified. These results suggest the positive Michigan effects stemmed from the non-random population of those who initiated expungement.
Cash Transfers and Low
Birthweight Infants
- “The Long-Term Effects of Income for At-Risk Infants: Evidence from Supplemental Security Income,” by Amelia A. Hawkins, Christopher A. Hollrah, Sarah Miller, et al. NBER Working Paper no. 31746, September 2023.
University of Chicago economist James Heckman has demonstrated that early childhood social and educational interventions among disadvantaged families promote increased later-life success: better health and employment with higher earnings. This paper extends Heckman’s research by examining the effect of cash transfers to the families of low birthweight infants.
Infants with birthweights of less than 1,200 grams (approximately 2.6 pounds) qualify for disability payments under the federal Supplemental Security Income (SSI) program. Those eligible receive, on average, an additional $146 per month in SSI benefits during their first year of life, $141 per month at ages 1 and 2, and $33 per month between ages 3 and 10, compared to infants with birthweights just above this threshold. These transfer amounts are large relative to family income, representing an increase of about 27 percent compared to average pre-birth income at ages 0 through 2, and an increase of about 6 percent at ages 3 through 10. Benefits total more than $8,000, or approximately 129 percent of pre-birth income in the sample.
Using administrative data that avoid the misreporting of information in surveys, the study finds no differences in outcomes for those eligible for the transfers because their birthweight is just under 1,200 grams versus those ineligible because their birthweight is just above 1200 grams. There were no effects on the number of days hospitalized after birth, emergency department visits, infant mortality, high school grade point average, enrollment in gifted and talented programs, enrollment in math or science courses, Advanced Placement course completion, college attendance, college degree receipt, earnings, adult transfer program use, or mortality in early adulthood (up until age 29).
