Labor in the Public and Nonprofit Sectors

Labor in the Public and Nonprofit Sectors

Copyright Date: 1975
Pages: 284
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    Labor in the Public and Nonprofit Sectors
    Book Description:

    Originally presented at a Conference on Labor in Nonprofit Industry and Government held at Princeton University, these studies are the first to provide an economic discussion of the public sector labor market.

    Melvin Reder examines the effect of the absence of the profit motive on employment and wage determination in the public sector. Orley Ashenfelter and Ronald Ehrenberg estimate the elasticities of demand for various types of labor employed by state and local governments. Theoretical ideas about behavior in nonprofit industries are employed by Richard Freeman to study the higher education industry.

    John Burton and Charles Krider try to predict the incidence of strikes in the public sector, while Donald Frey presents a model of the behavior of school boards in hiring faculty. The magnitude of the extra wage received by unionized public employees is compared by Daniel Hamermesh to that of private unionized workers in the same occupation.

    Originally published in 1975.

    ThePrinceton Legacy Libraryuses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

    eISBN: 978-1-4008-7201-5
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
    (pp. ix-xiv)

    The studies in this book were presented at a Conference on Labor in Nonprofit Industry and Government held at Princeton University on May 7-8, 1973. The Industrial Relations Section of Princeton University and the Manpower Administration of the U.S. Department of Labor, under Grant Number 21-34-73-27, sponsored the conference jointly. The points of view or opinions stated in these papers do not necessarily represent the official position or policy of the Department of Labor or the Industrial Relations Section. The Princeton University Conference Office helped in planning the conference.

    The rise in government’s share of total expenditure and employment has...

  4. The Theory of Employment and Wages in the Public Sector
    (pp. 1-48)

    Since no later point will be convenient, at the outset I should like to contrast the quality of the recent work in the area of this conference with the early pioneering efforts at analyzing interindustry wage differentials in the immediate post-World War II period. In theoretical conception, econometric technique, and wealth of data analyzed, the work to which I shall refer is incomparably superior to the efforts of only a quarter century ago. However, my role is not to dwell on how far we have come, but on how far we have still to go.

    I propose to organize my...

    (pp. 49-54)

    Professor Reder prefaced his presentation by saying that he had been asked to write a broad, speculative “think piece” on the question of employment and wages in government. I think he has succeeded admirably in performing that function. His paper is very interesting, as it provides both a general framework for examining the theory of labor in the public sector and a number of interesting observations about specific aspects of the functioning of this labor market. The paper is replete with theoretical conjectures that call out for empirical testing and with descriptive empirical observations that undoubtedly can be synthesized into...

  6. The Demand for Labor in the Public Sector
    (pp. 55-78)

    Increased interest in the determinants of the demand for labor in the state and local sector has followed on the heels of the dramatic growth in government employment in this sector during the postwar period from around 8 percent to almost 15 percent of total payrolls. Simultaneously has come interest in both the problems and the special programs geared to these problems in the state and local sector. For example, the Emergency Employment Act of 1971 sets up a specific framework of federal grants-in-aid to state and local governments for the purpose of increasing employment in this sector. Aside from...

    (pp. 79-84)

    This is a bold, ambitious research conception. Orley Ashenfelter and Ronald Ehrenberg (A and E) have posed a problem—to build a predictive model of the demand for labor in the state and local government sector. They have constructed such a model, and they have tested it. They are moderately encouraged by their findings, but they emphasize the need for “more analysis” before their “numerical estimates can be taken as anything more than preliminary guides . . . .”

    My comments apply primarily not to their numerical estimates but to their model, that is, to the likelihood that this model...

  8. Demand for Labor in a Nonprofit Market: University Faculty
    (pp. 85-129)

    The allocation of resources and setting of wages in markets where employers are nonprofit institutions has received considerable professional and public attention. In what ways do nonprofit factor demands and wage policies differ from those of for-profit enterprises? How do “nonprofit labor markets” compare to for-profit markets? This paper investigates these issues, with special reference to the college and university system. Section I is a theoretical analysis of nonprofit demand for labor (or other inputs) in which administrators make the key budgetary and employment decisions and sell at least some outputs in the market. The analysis is applicable to a...

    (pp. 130-134)

    Freeman has explored a variety of questions associated with the analysis of nonprofit firms in general and academic institutions in particular. This is a huge subject, and it seems in retrospect very odd that labor economists have not focused on the general issues before. There are so many individual points made in Freeman's paper that I will be selective in my comments, discussing only three out of a potential of about twenty.

    The first is the question of the reaction of the nonprofit firm to changes in prices in the short run. Freeman makes the interesting point that, whereas the...

  10. The Incidence of Strikes in Public Employment
    (pp. 135-177)

    The rapid growth of unions in the public sector probably has been the most significant development of the last decade in American industrial relations. The most obvious manifestation of the development has been the increasing reliance by public employees on strikes as a method of improving their working conditions. Despite nearly universal illegality, the number and notoriety of public-sector strikes has swelled.

    This paper examines the incidence of strikes in the local government, noneducation sector. The first section presents some historical comparisons between strikes in the entire economy and those in the government sector. The second and third sections review...

    (pp. 178-182)

    In few areas of public policy have the “experts” had so little influence as in the statutory treatment of strikes in public employment. Most labor specialists oppose a blanket prohibition of strikes by government employees; yet almost all states with laws regulating collective bargaining in public employment have such a prohibition. Acceptance of compulsory arbitration as a way of resolving disputes in public employment is growing, even though it is not favored, except perhaps for police and firefighter disputes, by most labor specialists including experienced arbitrators. The Burton-Krider paper helps explain this gap between the so-called experts and the makers...

  12. Wage Determination in Public Schools and the Effects of Unionization
    (pp. 183-219)

    School administrators and other public officials have in recent years been confronted by increasingly militant, organized teachers. Some estimate of the impact of collective bargaining on teachers’ wages is mandatory for any serious educational planning. To determine whether collective bargaining has raised teachers’ wages requires an explicit theory of the determination of wages and employment in school districts. In Section I a formal model of wage determination in public education is presented; in Section II the sources of data required for an empirical test of the model are reviewed, and in Section III statistical results that tend to confirm the...

    (pp. 220-226)

    The stimulating paper by Professor Frey represents another step forward in the process of understanding the impact of collective bargaining in the public sector. His study makes a number of interesting and useful contributions. The major one, it seems to me, is his attempt to tie together the wage impact of unionization with the quantity and quality of public services, in this case education. Research on the wage effects of public-sector unions is interesting, and Frey adds to the dozen or so studies in that area, but such studies assume greater importance when they go beyond the factor market to...

  14. The Effect of Government Ownership on Union Wages
    (pp. 227-255)

    Economists have long recognized that government regulation often aids unions in achieving higher compensation and greater control over employment. (See Friedman, 1951; Lewis, 1951; and for a specific example, Lurie, 1960.) Only recently, with the rapid growth of militant public-sector unionism, has it been argued (Wellington and Winter, 1971) that unions in government inherently have more power than in the private sector. The demand for services provided by government is often quite inelastic, so they claim, and wage setting there is inextricably involved in political decision making. (This latter point is quite consistent with Reder’s argument in this volume.) The...

    (pp. 256-263)

    Using a novel approach, Hamermesh has presented some convincing evidence that the union wage effect isnotsubstantially greater in the public sector than in the private. If we are prepared to accept the balance of power existing in the private sector as appropriate for the public sector, there appears to be no need for additional policy restraint on public-sector unions at this time. The inference that follows, however, is that relaxation of present policy restraints on public-sector unions (particularly as regards the right to strike) would upset this power parity.

    For reasons more ideological than empirical, I am predisposed...

    (pp. 264-272)
  17. Back Matter
    (pp. 273-273)