Economic Implications of Public-Sector Comparable Worth: The Case of San Jose, California

This study evaluates the wage and employment effects of comparable worth in San Jose, California, one of the first cities in the United States to implement comparable worth wage adjustments. The empirical evidence indicates that, contrary to the predictions of many economists, females posted large employment gains in jobs targeted by comparable worth adjustments. Male employment in these jobs was stagnant. The increasing percentage female in the targeted jobs is attributable to the combined effects of comparable worth and pro-female hiring policies. No overall decrease in employment appears to have occurred in the city of San Jose, nor is there any indication of substitution from targeted to nontargeted jobs.     

Escaping Volatile Inflation

Why has inflation been so stable in developed economies since the early 1990s? In this paper, we answer that the United States and other countries may have escaped from a volatile inflation equilibrium. Our argument builds on the story proposed by Tom Sargent in The Conquest of American Inflation, where the fall in inflation in the 1980s was attributed to changing government beliefs. To explain the escape in inflation volatility, we unwind one of Sargent's simplifications and allow the government to react to some of the shocks in the economy. In this case, when government beliefs turned against the Phillips curve in the 1980s they not only led to an escape from high inflation, but also stopped government using changes in inflation to offset shocks. Inflation and inflation volatility therefore escaped in tandem. Our analysis also sheds some light on why the escape in inflation occurred at the time it did.