Search Results

Copyright of Monthly Labor Review is the property of US Department of Labor and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Participation in school-to-work programs; profile of work activity; initiation into the labor market; relationship between work, education, and labor market outcomes; and differences among racial groups.

The NLSY79 is an excellent source of data for conducting research on self-employment and entrepreneurship. The wealth of information available in the survey allows one to build rich empirical models of the entrepreneurial process. Measures of previous wage and salary, self-employment, and unemployment experience can be created, and the NLSY79 contains several uncommon variables, such as those associated with detailed asset categories, family background information, data on criminal activities, Armed Forces Qualification Test (AFQT) scores, and psychological characteristics. Furthermore, a plethora of measures of the dynamics of self-employment may be extracted from the longitudinal data in the survey. For example, measures of transitions to and from self-employment, number of years of self-employment, and whether an individual ever tries self-employment can easily be created. Finally, the returns to self-employment, measured as earnings, job satisfaction, net worth, or other outcomes, can be estimated. Changes over time in labor market status can be used to identify the effects of self-employment, potentially removing biases created by unobserved heterogeneity across individuals. Given these advantages, it is somewhat surprising that more researchers have not used the NLSY79 to study self-employment. In the sections that follow, this article presents estimates of self-employment from the NLSY79, reviews findings from previous studies that used the survey, and discusses some of the merits of the data sets making up the survey.

How individuals obtain their skills and how they are paid for the use of those skills are concepts that are fundamental to the field of labor economics. Productive skills are often referred to as "human capital." The basic idea of human-capital theory is that workers invest in their own skills in order to earn higher wages, much as persons invest in financial or physical assets to earn income. Although this idea goes back at least to Adam Smith, modern human-capital research was originated in the late 1950s by economists Theodore Schultz, Jacob Mincer, and Gary Becker. Their ideas, focusing on investments in and returns to education and training, have provided the theoretical and empirical basis for decades of ensuing research.

Much of the empirical research on the topic of human capital has analyzed the relationship between education and wages. This focus on education is due to the abundance of high-quality data sources with information on both education and wages. For example, analysts using cross-sectional data from the Current Population Survey (CPS) have found that individuals in the United States receive earnings that are approximately 10 percent higher for every additional year of schooling they have completed. Kenneth I. Wolpin's article on education in this special edition of the Monthly Labor Review shows that, over the 15-year period between ages 25 and 39, a male college graduate earns 80 percent more than a male high school graduate without any college, and a male high school graduate earns 57 percent more than a high school dropout.

However, empirical research on training—the other key component of human capital--has lagged research on the economics of education. The human-capital model yields straightforward predictions about the relations hip of on-the-job training to wages, wage growth, and job mobility; still, as will become clear, testing these predictions requires good longitudinal microdata.

There is extensive literature on the processes that influence the occupational choices of workers. However, less attention is devoted to examining the rate at which workers move from one occupation to another. Fortunately, the availability of panel data sets makes it possible to measure the extent that workers shift jobs within the occupational distribution over time. This study explores recent trends in occupational mobility among full-time wage and salary workers in the United States as they move from young labor market entrants to their approach to mid-career. Our objective is to determine if their occupational mobility rates changed over time, and then to compare occupational mobility rates by gender.

The results of our analysis can provide an additional perspective on the recent increase in wage disparities between high- and low-income workers, an increase that has been well documented. In terms of equity, the recent increase in earnings inequality is generally viewed with concern among policymakers. However, several studies have suggested that an increase in labor-market mobility may actually counterbalance the growth in earnings inequality. This argument asserts that flexible labor markets provide ample opportunity for upward (and downward) mobility. Consequently, if an increase in the propensity of low-wage workers moves into higher-paying occupations, lifetime earnings inequality may be reduced in spite of increases in annual cross-sectional measures of labor-market inequality.

DO WOMEN AND MEN ENCOUNTER unequal employment prospects across occupations, given their personal characteristics? Empirical evidence presented in this article indicates that gender differences in occupational distributions remained stable during the 1990s at levels comparable to those of the 1980s. The multinomial logit model of occupational attainment set forth here also detected a significant shift of women across occupational categories if their characteristics are evaluated according to the men's occupational structure. These shifts did not change significantly throughout the 1990s and are similar to comparable estimates from the late 1970s and 1980s. A more detailed examination of the occupational shifts occupational distribution predicts a movement of women from white-collar to blue-collar jobs. This is unlikely, however, especially in light of recent literature on occupational employment patterns and choice by gender. Thus, U.S. women in their thirties and forties do not appear to encounter significant levels of involuntary segregation across broad occupational categories. Although gender differences in occupational attainment persist, they apparently result from voluntary choices of men and women and from long-term changes in labor markets, such as the simultaneous growth of white-collar occupations and women's labor force participation rates.

Designed as a longitudinal survey, the NLSY97 follows the lives of these young men and women as they make pivotal decisions as to whether they should continue their education after high school or choose an occupation and enter the world of work. We follow the progression of their lives as they become independent adults, settle into careers, form relationships, and make decisions about cohabitation, marriage, and the formation of families.

One phenomenon that has received considerable scrutiny is the persistent, voluntary job mobility of young workers. In the mid 1970s, economists began using search-theoretic models to explain why information costs compel workers to systematically "shop" for a better job. The idea is that workers cannot immediately locate firms where their skills are valued the most highly, so upon accepting a job offer they continue to search for an even better outside opportunity. Workers might also learn over time that their current job is not as productive as they initially predicted. New information regarding outside offers or the current job is predicted to lead to a worker-initiated job separation. Empirical researchers have used longitudinal data to determine which theoretical models are supported by the data and to identify the contribution of "job shopping" to life-cycle wage growth.

A related issue of long-standing concern is the effect of job immobility on wage growth. Human capital models predict that wages rise with job seniority when workers "lock in" and invest in firm-specific skills. Because these skills cannot be transferred to a new job if a separation occurs, workers and firms agree to share the costs and benefits of the investment--and the worker's return on the shared investment takes the form of within-job wage growth above and beyond any gains due to the acquisition of general (transferable) skills. A variety of agency models provide alternative explanations for upward sloping wage-tenure profiles. In these models, employers defer wages as a means of discouraging workers from quitting or shirking; stated differently, they require workers to "post a bond" as an incentive to sustain the employment relationship. Longitudinal data have proved to be essential for assessing the merits of these theoretical models and identifying the effect of tenure on wages.

The central problem of longitudinal surveys is attrition. The National Longitudinal Survey of Youth in 1979 (NLSY79), which this issue of the Monthly Labor Review features, is the gold standard for sample retention against which longitudinal surveys are usually measured. However, we cannot understand how the NLSY79 has done so well without considering what was done differently in the other cohorts of the NLS and what we have learned by formal evaluations of attrition aversion measures that evolved over a quarter century of field work. The lessons here are hard-won and, to some, unconventional.

Background
The NLS began in 1965 at the urging of an Assistant Secretary of Labor, Daniel Patrick Moynihan. He believed that although the Current Population Survey provided crucial snapshots of the Nation's labor force and labor market, the Nation needed a data source that was more dynamic and capable of tracking the long-run evolution of careers. The task of starting the study went to Howard Rosen at the Department of Labor, who enlisted Herb Parnes from Ohio State University, to assemble a team, design the surveys, and analyze the data. This team comprised representatives from the Census Bureau, Ohio State University, and the Department of Labor.

The original plan was to follow the cohorts for 5 years to study some of the pressing questions of the time—the shrinking labor force participation rate of older men, the problem of youth unemployment and the transition from school to work, and the growing labor force participation of women whose children were entering school, leading to steady growth in the number of working mothers. Childcare was an important issue along with the problem of how the family would pay for a college education for the children of the baby boom.

This issue of the Monthly Labor Review celebrates the 25th anniversary of the National Longitudinal Survey of Youth, 1979 Cohort (NLSY79). The National Longitudinal Surveys (NLS) program, of which the NLSY79 is the flagship survey, is a bit of an anomaly among the Bureau of Labor Statistics many data collection efforts. None of the Bureau's key economic indicators relies on NLS data. Only a couple of the more than one hundred press releases the Bureau publishes each year involve data collected by the NLS program. It is doubtful that financial markets ever will react strongly to the release of NLS data. And unlike the current employment statistics, the inflation statistics, or the unemployment rate, measures from the NLSY79 are not likely to be discussed in everyday conversation or even in the business news.

Yet, the NLSY79 has been extremely influential. Over the last 25 years, it has provided the data for thousands of Ph.D. dissertations, working papers, journal articles, and books that have shaped theory and knowledge in disciplines such as economics, sociology, education, psychology, and health sciences. The survey's primary constituency includes hundreds of researchers within universities, think tanks, and government agencies both in the United States and abroad. Because of its quality, breadth, and thoroughness, the NLSY79 has become probably the most analyzed longitudinal data set in the social sciences. Almost every issue of leading labor economics and demography journals contain at least one article that uses NLSY79 data.

The first part of this article compares the employment of today's youth with that of a youth cohort from nearly 20 years ago. It asks whether 15- and 16-year-olds are, in fact, more likely to work today and examines whether the likelihood of a young person's being employed while attending school varies across youths with different demographic characteristics. Also examined in this part is how the distribution of hours of work of 16-year-olds varies across the two cohorts. Data come from the first round of a new survey of youth -- the National Longitudinal Survey of Youth 1997 (NLSY97) -- and from the National Longitudinal Survey of Youth 1979 (NLSY79). In the first round of each survey, 15- and 16-year-olds answered similar questions about their current employment status and hours of work. In addition, many demographic measures that may be associated with youths' decisions to work are similar across the two surveys.

In 1965, at the prompting of the Assistant Secretary of Labor, Daniel Patrick Moynihan, individuals from the Department of Labor (DOL) and Ohio State University designed the National Longitudinal Surveys of Labor Market Experience. At the time, the participants did not realize that they were creating one of the premier, large scale national longitudinal surveys in the United States. Initially funded for 5 years by the Department of Labor, the "Parnes" data, as the Original Cohorts were called, continued for 37 years, with the last scheduled fielding of the women samples in 2003.1 The success of the Original Cohorts led to the creation of the National Longitudinal Survey of Youth (NLSY79).

Researchers' use of education measures found in the NLSY79 spans several social science disciplines, particularly economics and sociology, and, to a lesser extent, psychology. A large number of articles using NLSY79 education measures have appeared in major general audience and specialty journals. (See table 1.) In economics, there were 8 such journals, totaling 78 published articles, and in sociology, 6 journals with 47 articles. In psychology, one journal specializing in child development published five articles, and one medical science journal also published five.

A remarkable design aspect of the National Longitudinal Survey of Youth 1979 (NLSY79) is the availability of longitudinal data on all children born to women in the original NLSY79 sample. The resulting data from the Children of the NLSY79 provide a resource that is unique in many respects. Perhaps not surprisingly, these data have been used by researchers across a wide range of disciplines, including child development, demography, economics, epidemiology, family studies, social policy, and sociology. Much of the usefulness of these data stem from two key factors: they can be linked to the rich longitudinal data for the NLSY79 mothers, and the child and young adult surveys are themselves longitudinal, covering a wide range of ages from early childhood and adolescence through the young adult years.

Sample design
As noted in other articles in this issue of the Monthly Labor Review, the main respondents in the NLSY79 are a nationally representative sample of individuals aged 14–22 in 1979, with surveys conducted annually through 1994 and biennially since 1996. The child sample—consisting of offspring aged 14 or younger—was begun in 1986, while the young adult sample—consisting of offspring aged 15 or older—was begun in 1994, with both the child and young adult samples fielded biennially since initial data collection.1 The survey instruments differ substantially in the child and young adult surveys, as reviewed below. Because of the longitudinal design of the child and young adult samples, offspring are interviewed initially in the child sample, and then in the young adult sample as they reach adolescence. Thus by design, sample sizes in the two samples will vary from wave to wave, but as of the 2002 wave, the child sample contained 11,340 children, and the young adult sample contained 4,648 young adults.

Education is clearly linked to these employment processes. In high school, youths learn mainly general skills. These include not only hard skills such as literacy and numeracy, but soft skills such as punctuality, dependability, and following directions. Because of their youth, those seeking jobs just after high school may know less about the world of work and be less committed to a particular occupation. Likewise, employers of these youths have less information about their skills. Both employer and employee may look at entry-level jobs as a learning process by which each can evaluate the long-term potential of their "match." College graduates, on the other hand, invest more in specific skills and may acquire a greater knowledge of the job market within their field. They can match their interests to skills and reject potential career paths before entering the labor market. Employers of new college graduates have potentially greater knowledge of the particular skills of their new hires, and, because of the higher wages they must pay, more incentive to find a good match. For these reasons, matches between new college graduates and their employers may be expected to last longer than those between new high school graduates and employers. Youths who have left school without a high school degree are doubly disadvantaged; they lack both general and job-specific skills, and they face employers who have low expectations and little incentive to invest in their matches. Consequently, schooling choices may dictate the speed and ease of the school-to-work transition.