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Open Access Publications from the University of California

The Institute for Research on Labor and Employment’s (IRLE) mission is to conduct and support research on labor and employment at UC Berkeley. Our goal is to bridge the gap between academic research and the policy world. To achieve this goal, IRLE supports policy-relevant and policy engaged research; disseminates the latest research from our centers, affiliated faculty, and scholars to a wide audience of policymakers, academics and the public; and educates California’s labor, business, and community leaders. IRLE is a research unit at the University of California, Berkeley. We stand apart from individual academic departments under the Vice Chancellor for Research and support research on the entire range of labor and employment issues across campus.

Sandra Susan Smith
Interim Director
Institute for Research on Labor and Employment
University of California, Berkeley
2521 Channing Way
Berkeley, CA 94720-5555
http://irle.berkeley.edu/
(510) 643-8140
irle@berkeley.edu

Cover page of Productivity, Profits, and Pay: A Field Experiment Analyzing the Impacts of Compensation Systems in an Apparel Factory

Productivity, Profits, and Pay: A Field Experiment Analyzing the Impacts of Compensation Systems in an Apparel Factory

(2018)

Factory worker pay in global value chains remains a contentious issue. In this paper, we evaluate a two-year field experiment in an apparel factory to analyze altered compensation systems designed to increase worker pay while supporting factory goals around productivity and profitability. Using a quasi-experimental design, with unique data on wages, hours, productivity, quality, and worker engagement, we estimate the impact of three altered compensation systems on pay, productivity, and factory profits. The compensation systems can be described as: 1) an improved productivity-based scheme, 2) a scheme that brings quality and waste reduction into the calculation; and 3) a “target wage” scheme. Overall, the treatments raised wages by 4.2-11.6% and increased productivity by 7-12%-points. Management reported significant financial benefits from the experiment, including increased profits for five of six lines, and avoided costs and productivity losses due to decreased turnover. The factory workers, through focus-group interviews before, during, and after the intervention, reported improved relations with team members and managers. This study demonstrates altered factory compensation can support better factory performance and a better paid workforce, indicating a path towards advanced supply chains with improved wages.

Cover page of Long-Term Gains from Longer School Days

Long-Term Gains from Longer School Days

(2018)

This paper examines whether additional time in school affects labor market outcomes and educational attainment in adulthood. We leverage within and across city and cohort variation covering a large-scale reform that increased the Chilean elementary and secondary school day by 30 percent between 1997 and 2010. Exposure to full-day school increases educational attainment and earnings when students are in their 20s and 30s. In addition, we find evidence of delayed childbearing among women, and some occupational upskilling. These labor market effects are not concentrated in any particular subgroup, but are widespread throughout the population. JEL classification: I26; I25; J24; H52

Cover page of The Effect of Selective Public Research University Enrollment: Evidence from California

The Effect of Selective Public Research University Enrollment: Evidence from California

(2018)

What are the benefits and costs of attending a selective public research university instead of a less-selective university or college? This study examines the 2001-2011 Eligibility in the Local Context (ELC) program, which guaranteed University of California admission to students in the top four percent of California high school classes. Employing a regression discontinuity design, I estimate that ELC pulled 8 percent of marginally-admitted students into four “Absorbing” UC campuses from less-competitive public institutions in California. Those ELC compliers had lower SAT scores and family incomes than their eventual peers; almost half were under-represented minorities (URM), and 65 percent came from the state’s bottom SAT quartile of high schools. Nevertheless, marginally eligible students became more than 20 percentage points more likely to earn a university degree within 5 years, though URM and lessprepared students became less likely to earn STEM degrees. Students’ net expected earnings conditional on university completion, major, and gender substantially increased across subgroups, and linked state employment records suggest an increase in URM students’ average early-career earnings.

Cover page of The Effects of California’s Public Policy on Jobs and the Economy Since 2011

The Effects of California’s Public Policy on Jobs and the Economy Since 2011

(2017)

Between 2011 and 2016, California enacted a set of 51 policy measures addressing workers’ rights, environmental issues, safety net programs, taxation, and infrastructure and housing. This paper labels these policies as the California Policy Model (CPM), and assesses some of the claims of critics and supporters regarding their impact on the state’s economy. It analyzes arguments made by critics that contend the CPM would reduce employment and slow economic growth. The paper also evaluates supporters’ arguments that the CPM would raise wages for low-wage workers, increase access to health insurance, and lower wage inequality. It finds results that suggest the CPM did in fact lead to increased wage growth and health insurance access and decreased wage inequality without reducing employment or economic growth.

Cover page of Who Profits from Patents? Rent-Sharing at Innovative Firms

Who Profits from Patents? Rent-Sharing at Innovative Firms

(2017)

This paper analyzes how patent-induced shocks to labor productivity propagate into worker compensation using a new linkage of US patent applications to US business and worker tax records. We infer the causal effects of patent allowances by comparing firms whose patent applications were initially allowed to those whose patent applications were initially rejected. To identify patents that are ex-ante valuable, we extrapolate the excess stock return estimates of Kogan et al. (2017) to the full set of accepted and rejected patent applications based on predetermined firm and patent application characteristics. An initial allowance of an ex-ante valuable patent generates substantial increases in firm productivity and worker compensation. By contrast, initial allowances of lower ex-ante value patents yield no detectable effects on firm outcomes. On average, workers capture 29 cents of every dollar of patent-induced operating surplus. This share is larger for men, employees who are listed as inventors, and firm stayers present since the year of application. Patent allowances lead firms to increase employment, but we find minimal evidence of quality upgrading or selection bias in workforce composition. Surprisingly, entry wages are insensitive to patent decisions, suggesting that the large earnings responses of incumbent workers may reflect performance pay.

Cover page of Labor Platforms and Gig Work: The Failure to Regulate

Labor Platforms and Gig Work: The Failure to Regulate

(2017)

Since 2012, the platform economy has received much academic, popular, and regulatory attention, reflecting its extraordinary rate of growth. This paper provides a conceptual and theoretical overview of rapidly growing labor platforms, focusing on how they represent both continuity and change in the world of work and its regulation. We first lay out the logic of different types of labor platforms and situate them within the decline of labor protections and the rise of intermediated employment relations since the 1970s. We then focus on one type of labor platform—the ondemand platform—and analyze the new questions and problems for workers and the political problem of labor regulation. To examine the politics of regulating labor on these platforms, we turn to Uber, which is the easiest case for labor regulation due to its high degree of control over work conditions. Because Uber drivers are atomized and ineffective at organizing collectively, their issues are most often represented by surrogate actors—including plaintiffs’ attorneys, alt labor groups, unions, and even Uber itself—whose own interests shape the nature of their advocacy for drivers. The result of this type of politics, dominated by concentrated interests and surrogate actors, has been a permissive approach by regulators in both legislative and judicial venues. If labor regulation has not occurred in this “easy” case, it is unlikely to occur for gig work on other labor platforms.

Cover page of Inequality of Educational Opportunity? Schools as Mediators of the Intergenerational Transmission of Income

Inequality of Educational Opportunity? Schools as Mediators of the Intergenerational Transmission of Income

(2017)

Chetty et al. (2014) show that children from low-income families achieve much better adult outcomes, relative to those from higher-income families, in some places than in others. I use data from several national surveys to investigate whether children’s educational outcomes (educational attainment, test scores, and non-cognitive skills) mediate the relationship between parental and child income. Commuting zones (CZs) with stronger intergenerational income transmission tend to have stronger transmission of parental income to children’s educational attainment, as well as higher returns to education. By contrast, the CZ-level association between parental income and children’s test scores is only weakly related to CZ income transmission, and is stable across grades. There is thus little evidence that differences in the quality of K-12 schooling are a key mechanism driving variation in intergenerational mobility. Access to college plays a somewhat larger role, but most of the variation in CZ income mobility reflects (a) differences in marriage patterns, which affect income transmission when spousal earnings are counted in children’s income; (b) differences in labor market returns to education; and (c) differences in children’s earnings residuals, after controlling for observed skills and the CZ-level return to skill. This points to job networks or the structure of the local labor and marriage markets, rather than the education system, as likely factors influencing intergenerational economic mobility.

Cover page of Alignment at Work: Using Language to Distinguish the Internalization and Self-Regulation Components of Cultural Fit in Organizations

Alignment at Work: Using Language to Distinguish the Internalization and Self-Regulation Components of Cultural Fit in Organizations

(2017)

Cultural fit is widely believed to affect the success of individuals and the groups to which they belong. Yet it remains an elusive, poorly measured construct. Recent research draws on computational linguistics to measure cultural fit but overlooks asymmetries in cultural adaptation. By contrast, we develop a directed, dynamic measure of cultural fit based on linguistic alignment, which estimates the influence of one person’s word use on another’s and distinguishes between two enculturation mechanisms: internalization and selfregulation. We use this measure to trace employees’ enculturation trajectories over a large, multi-year corpus of corporate emails and find that patterns of alignment in the first six months of employment are predictive of individuals downstream outcomes, especially involuntary exit. Further predictive analyses suggest referential alignment plays an overlooked role in linguistic alignment.

Cover page of Taking a Pass: How Proportional Prejudice and Decisions Not to Hire Reproduce Sex Segregation

Taking a Pass: How Proportional Prejudice and Decisions Not to Hire Reproduce Sex Segregation

(2017)

We propose and test a theory of how decisions not to hire reproduce sex segregation through what we term proportional prejudice. We hypothesize that employers are less likely to hire anyone when the applicant pool contains a large proportion of gender atypical applicants – that is, applicants from a different gender than the typical job holder – because they view this as a signal of a poor quality applicant pool. Analyses, of over seven million job applications for over 700,000 jobs by over 200,000 freelancers on an online platform for contract labor support our contention. A survey experiment isolates the mechanism: Applicant pools with a larger proportion of gender atypical applicants were perceived as less likely to contain people who “seemed skilled enough for the job.” We conclude by demonstrating how our theory explains the mixed findings as to whether gender atypical job seekers are disadvantaged in the hiring process.