Labor Studies Program.

The NBER's Program on Labor Studies held its fall meeting in Cambridge on November 5. Program Director Richard B. Freeman and Lawrence F. Katz, both of NBER and Harvard University, organized this program:

Brigitte C. Madrian, NBER and University of Chicago, and Dennis Shea, University of Chicago, "The Power of Suggestion: Inertia in 401(K) Participation and Savings Behavior"

David H. Autor, NBER and MIT, "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment"

Chinhui Juhn, NBER and University of Houston; Dae-ll Kim, Seoul National University; an Francis Vella, Rutgers University, "The Expansion of College Education in the United States, 1940-90: Is There Evidence of Declining Cohort Quality?"

Edward P. Lazear, NBER and Stanford University, "Educational Production" (NBER Working Paper No. 7349)

Jeffrey Grogger, NBER and University of California, Los Angeles, and Charles Michalopoulos, Manpower Development Research Corp., "Welfare Dynamics under Time Limits" (NBER Working Paper No. 7353)

John DiNardo, NBER and University of California, Irvine, and Mark P. Moore, University of California, Irvine, "The Phillips Curve Is Back? Using Panel Data to Analyze the Relationship between Unemployment and Inflation in an Open Economy" (NBER Working Paper No. 7328)

Madrian and Shea examine how both economic and noneconomic factors affect people's savings decisions. Using data from a large U.S. company, they show that 401(K) participation and other investment decisions vary tremendously with the way that the options are presented. For example, 401(K) participation is much higher when participation, rather than nonparticipation, is the default. A substantial fraction of 401(K) participants stick to the default contribution rate and fund allocation, although very few employees who are forced to choose among the full menu of options would have picked this particular outcome. The authors' results have important implications for the optimal design of 401(K) savings plans as well as for any type of Social Security reform that includes personal accounts over which individuals have some amount of control.

Between 1979 and 1995, the temporary help supply (THS) industry grew at 11.2 percent annually, over five times more rapidly than U.S. nonfarm employment. During these same years, courts in 45 states adopted exceptions to the common law doctrine of employment at will, thereby limiting employers' discretion to terminate workers...