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The first Research in Labor Economics (RLE) volume was published in 1977. Its founding editor, Ronald Ehrenberg, saw the need for high quality substantive research papers in the labor/human resource area. Each volume was to contain “original contributions comparable (or exceeding) those found in leading journals.” The articles were of three genres: (1) results from ongoing or completed important research endeavors, (2) critical survey articles, and (3) symposia on policy related topics (RLE, Vol. 1, p. vii). In 1995, Solomon Polachek took over as series editor. Beginning in 2007 RLE affiliated with the Institute for the Study of Labor (IZA), an international network of about 1,100 labor economists spanning more than 40 countries. Konstantinos Tatsiramos became the IZA coeditor in 2008 after taking over from Olivier Bargain. Finally in 2011 RLE established an editorial board consisting of Orley C. Ashenfelter, Francine D. Blau, Richard Blundell, David Card, Ronald G. Ehrenberg, Richard B. Freeman, Daniel S. Hamermesh, James J. Heckman, Alan B. Krueger, Edward P. Lazear, Christopher A. Pissarides, and Klaus F. Zimmermann. Two are Nobel Laureates and all are top labor economists.
In this paper, we define a tractable procedure to measure worker incomplete information in the labor market. The procedure, which makes use of earnings distribution…
In this paper, we define a tractable procedure to measure worker incomplete information in the labor market. The procedure, which makes use of earnings distribution skewness, is based on econometric frontier estimation techniques, and is consistent with search theory. We apply the technique to 11 countries over various years, and find that incomplete information leads workers to receive on average about 30–35% less pay than they otherwise would have earned, had they information on what each firm paid. Generally, married men and women suffer less from incomplete information than the widowed or divorced; and singles suffer the most. Women suffer more from incomplete information than men. Schooling and labor market experience reduce these losses, but institutions within a country can reduce them, as well. For example, we find that workers in countries that strongly support unemployment insurance (UI) receive wages closer to their potential, so doubling UI decreases incomplete information and results in 5% higher wages. A more dense population reduces search costs leading to less incomplete information. A more industrial economy disseminates wage information better, so workers exhibit less incomplete information and higher wages. Finally, we find that foreign worker inflows increase incomplete information, and at the same time reduce average wage levels, at least in the short run.