This article presents a policy-oriented microeconomic model of college selecAbstract tion bv undergraduates. The data base is detailed information on 1.008 college students. College choice is explained as demandfor a multifaceted comrnodity bundle which is the institution. Demand is afunction of the student's ability, family income, and the prices and aid offers of the schools in the student's opportunity set. The sample was stratified hy income class to test for the stability of coefficients across income groups. The model yields predictions concerning the elfects'ofrecentfederallegislation and ofthe Carter educational finance initiative on college attendance. Direct student aid isfound to befar less effective than price cuts in increasing the range ofschoolsfinancially accessible to lower-and middle-income students._ Empirical studies of college-going decisions have yielded • a good deal of information about the economic determinants of the high school graduate's choice between enrollment in college and entry into the labor force.' The effort to predict a student's choice of a school has been less successful for three reasons. First, many studies have failed to separate the enrollment decision from the choice of a particular school, not recognizing that the opportunity and direct costs are different for each decision. Second, the effect of direct student aid on demand has not been measured. This omission results in demand equations which are incorrectly specified. Third, other studies have not adequately accounted for the many features which distinguish one school from another.This article presents an empirical microeconomic model of college selection which is designed to remedy these problems. The
Given the similarity of the two countries and their interconnections, one would expect Canadian employers to act much like their American counterparts, especially since firms from both countries often compete in the same markets using similar technologies (Verma and Thompson 1988). The similarities in the two countries and their integration through trade make it likely that the policy experiences of one have relevance for the other (Gunderson, Hyatt, and Pesando 1996). This chapter provides an introduction to some of the conceptual issues concerning compensation risk bearing by workers in labor markets. The following discussion provides background and is more abstract than the other chapters, which discuss the evidence concerning changes in risk bearing in particular aspects of compensation. This chapter provides a framework for thinking about some of the issues raised in the more applied chapters, and it concludes with an overview of the remainder of the book. COMPENSATION RISK BEARING IN LABOR MARKETS Conceptual Issues Risk is an element of all aspects of employee-employer relationships, including pay rates, working time, and employment security. The allocation of risk bearing determines the extent to which risks are borne by workers, by firms and their stockholders, and by government. Labor market risks may pose serious problems for some workers. Many workers have mortgages and large financial commitments for rearing and educating children. Fixed financial commitments become problems for workers who face decreases in income due to unemployment or decreased work hours, or increases in expenses due to medical bills not covered by health insurance. Employers face risks affecting their demand for labor due to changes in their factor markets, technology, exchange rates, international competition, domestic competition, the legal environment, tax policy, and macroeconomic conditions affecting demand for their product. Other demand-side factors that may affect workers' risk include
Given the similarity of the two countries and their interconnections, one would expect Canadian employers to act much like their American counterparts, especially since firms from both countries often compete in the same markets using similar technologies (Verma and Thompson 1988). The similarities in the two countries and their integration through trade make it likely that the policy experiences of one have relevance for the other (Gunderson, Hyatt, and Pesando 1996). This chapter provides an introduction to some of the conceptual issues concerning compensation risk bearing by workers in labor markets. The following discussion provides background and is more abstract than the other chapters, which discuss the evidence concerning changes in risk bearing in particular aspects of compensation. This chapter provides a framework for thinking about some of the issues raised in the more applied chapters, and it concludes with an overview of the remainder of the book. COMPENSATION RISK BEARING IN LABOR MARKETS Conceptual Issues Risk is an element of all aspects of employee-employer relationships, including pay rates, working time, and employment security. The allocation of risk bearing determines the extent to which risks are borne by workers, by firms and their stockholders, and by government. Labor market risks may pose serious problems for some workers. Many workers have mortgages and large financial commitments for rearing and educating children. Fixed financial commitments become problems for workers who face decreases in income due to unemployment or decreased work hours, or increases in expenses due to medical bills not covered by health insurance. Employers face risks affecting their demand for labor due to changes in their factor markets, technology, exchange rates, international competition, domestic competition, the legal environment, tax policy, and macroeconomic conditions affecting demand for their product. Other demand-side factors that may affect workers' risk include
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