Low-educated workers in the United States and Canada: Essays in job mobility and self-sufficiency

Helen C Connolly, Boston College

Abstract

This dissertation contains three essays concerning issues of low-educated workers in the labor market. Each essay covers a distinct topic within the common theme. The first paper evaluates the effect of a minimum wage increase on low-educated workers. Where conventional wisdom suggests that an increase in the minimum wage will result in a more-productive and, thus, more-educated workforce, this paper argues that higher education need not imply higher productivity in the minimum wage sector. My empirical results from the Survey of Income and Program Participation (SIPP) indicate that, for males, the conventional wisdom appears to hold--higher minimum wages are associated with a better-educated male workforce. For females, however, there is little change in the educational mix. The second paper explores the wage and job dynamics of less-skilled workers by estimating a structural model of job search, which extends the basic model by including expected wage growth and an indicator of the distribution from which future offers will come. This model shows that the probability of leaving an employer depends both on the slope and intercept of the current and offered jobs and the probability of gaining access to the dominant wage offer distribution. Using SIPP, we find that wage offer distributions vary systematically with the slope and intercept of wages in the current job. The final chapter looks at the effect of wage subsidies on job search and job choice. We provide an analytical framework that identifies the key causal links between earnings subsidies and wage growth. We find that the subsidy will have no effect on within-job wage growth if the transformation is linear. The subsidy is predicted to affect between-job wage growth, but the direction of the effect cannot be signed. Using an experimental data set of Canadian welfare recipients, we find that, as predicted, within-job wage growth is not affected by the presence of a subsidy. However, between-job wage growth is significantly higher for those offered the subsidy than for those who are not.

Recommended Citation

Helen C Connolly, "Low-educated workers in the United States and Canada: Essays in job mobility and self-sufficiency" (January 1, 2002). Boston College Dissertations and Theses. Paper AAI3048299.
http://escholarship.bc.edu/dissertations/AAI3048299