Labor market policies succeed or fail at least in part depending on how well they reflect or account for behavioral responses. Insights from behavioral economics, which allow for realistic deviations from standard economic assumptions about behavior, have consequences for the design and...

Using data on collectively bargained outcomes in Pennsylvania schools in 1983–89, the authors find a strong relationship between the returns to education and tenure and the distribution of those attributes in the bargaining unit. For instance, the higher the median level of teacher tenure...