My colleague, Prof. Craig Olson, passed away on Monday. He was one of the nation's leading labor economists. In tribute, I share some of his research.
Lesson 1: Higher Pay for High School Teachers
Correlates to Higher Earnings for Students 17 Years After Graduation
Olson, C.
A., & Ackerman, Deena. (2000). High school inputs and labor market outcomes
for male workers in their mid-thirties: new data and new estimates from
Wisconsin. Madison: University of Wisconsin--Madison, Institute for Research on
Poverty.
This
study presents new evidence on the relationship between high school inputs
measured at the time male respondents attended high school and the earnings of
these same individuals when they were in their mid-thirties. To accomplish this
task, we matched newly coded data on the characteristics of Wisconsin high
schools in 1954–57 to the Wisconsin Longitudinal Survey. Our estimates show
a significant relationship between the characteristics of teachers and the earnings
of their students 17 years after graduation. Specifically, a 1 percent increase
in the average teacher salary in a district increases the earnings of students
by 0.33 percent. The magnitude of this effect is larger than estimates
reported in previous research and many times larger than the impact of
increasing parents’ income by a comparable amount. https://www.irp.wisc.edu/publications/dps/pdfs/dp120500.pdf
Implication: Higher pay for teachers is a long-term investment in
America’s human capital.
Lesson 2: Women Accept a 20% Discount in Wages to Take Jobs with
Health Insurance Benefits
Olson, C.
A. (2002). Do workers accept lower wages in exchange for health benefits?
Journal of Labor Economics, 20(2).
This study tests this prediction for employer-provided health
insurance by modeling the wages of married women employed full-time in the
labor market. Husband’s union status, husband’s firm size, and husband’s health
coverage through his job are used as instruments for his wife's own employer
health insurance benefits. The estimates suggest wives with own employer
health insurance accept a wage about 20% lower than what they would have
received working in a job without benefits. Implication: Women who are married to men who
have no union or no health insurance accept a 20% wage discount compared to
women in the same jobs who are married to union members or men in nonunion
firms with no health insurance.
Lesson 3: Teams That Were Early Adopters of Farm Systems Won More
Games Than Nonadopters
Olson, C.
A., & Schwab, Andreas. (2000). The performance effects of human resource
practices: The case of interclub networks in professional baseball, 1919-1940.
Industrial Relations, 39(4), 553-577. https://doi.org/10.1111/0019-8676.00184
We use a
panel data set of the win/lose records for the population of 16 major league
clubs for the seasons from 1919 through 1940 to test hypotheses about the
effect of human resource practices on organizational performance. The results
suggest that the reserve team practice had no significant impact on
organizational performance. In contrast, the more complex farm‐team
system, pioneered by Branch Rickey of the St. Louis Cardinals, improved
organizational performance and diffused rapidly throughout the league. We
estimate that by 4 years after its creation, the farm‐team
system improved a team's win rate by 0.068 points relative to nonadopters of
the farm‐team system and teams with less than 4 years
of prior experience with a farm‐team system. The results also show that the
farm‐team effect was not confined to St. Louis but
also was experienced by later adopters.
Implication: Investing extra money, and more money than your
competitors, to develop talent pays off in the long-run.
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