Knowledge that Transforms

"The seven-fold increase, since 1920, in the labor force participation rate of married women [in the United States] was not accompanied by a substantial increase in average work experience among employed married women. Two data sets giving life-cycle labor-force histories for cohorts of women born from the 1880s to 1910s indicate considerable (unconditional) heterogeneity in labor-force participation. Employed married women had substantial attachment to their jobs; increased participation brought in women with little prior work experience. Average work experience among cross sections of employed married women increased from 9.1 to 10.5 years over the 1930-50 period. Implications for 'wage discrimination' are discussed."

Despite an extensive literature examining the effects of unions on wages, little attention has been paid to the resultant aggregate employment consequences of this change in the relative cost of unionized labor. This article uses 1983 Current Population Survey data to estimate the effects of union strength on the probability of employment and labor force participation. Union strength, which reflects both union coverage and the union wage differential, is found to decrease employment and increase unemployment by a small but significant amount. These effects are concentrated primarily among females and young males, while little impact is found on prime-age males.

The simplest economic theories of crime predict that profit-maximizing firms should follow strategies of minimal monitoring with large penalties for employee crime. We investigate possible reasons why firms actually spend considerable resources trying to detect employee malfeasance. We find that the most plausible explanations for firms' large outlays on monitoring of employees-legal restrictions on penalty clauses in contracts and the adverse impact of harsh punishment schemes on worker morale-are also consistent with the payment of premium (rent-generating) wages by cost-minimizing firms.

This study involves an empirical analysis of the effect of social security wealth on wealth accumulation. My analysis takes as its point of departure a study by Feldstein and Pellechio on this subject. Their study used the same data source as analysed in this paper. Feldstein and Pellechio found strong support for the notion that increases in social security wealth caused families to reduce their wealth accumulation. My resuts indicate the strong conclusions reached by Feldstein and Pellechio are not robust. In particular, first, when I excluded a group, of farmers from our sample increases in social security wealth did not result in families reducing their wealth accumulation. Second, Feldstein and Pellechio calculated social security wealth using income measures from a single year. When I applied their methodlogy to income measures from a different year results were markedly affected.

William Morgan, John Mutti, Mark Partridge, A Regional General Equilibrium Model of the United States: Tax Effects on Factor Movements and Regional Production, The Review of Economics and Statistics, Vol. 71, No. 4 (Nov., 1989), pp. 626-635

A model of consumption of residential energy in dwellings is developed, distinguishing between attributes of housing that provide direct benefits to consumers and attributes that serve as inputs in the production of final goods, for example, the thermal comfort of dwellings. Empirical estimates are made of the mode, based upon the Annual Housing Survey, and the results are used to calculate the effects of changes in energy prices on the consumption of housing, residential energy, and other goods. The analysis suggests that the adjustment process within the housing market permits a great deal of substitution in response to energy price changes. Copyright 1989 by MIT Press.

In recent months, the governors of several states have suffered major political embarrassments because actual revenues fell, substantially short of the predictions in their respective budgets. Such episodes focus attention on the question of whether states do a good " job of forecasting revenues. In modern economics, forecasts are evaluated on the basis of whether or not they are rational " do the forecasts optimal] y incorporate all information that is available at the tune they are made? This paper dr:vel ops a method for testing the rat i.onal t.y of state revenue forecasts, and applies it. to the aria lysi s of data from New Jersey, Massachusetts, arid Maryland. (ne of our main findtri'i; u,; that in all three states, the I orerats of own revenues are yystematically biased dowriward

The relative importance of amenity and productivity differences in explaining wage differentials across metropolitan areas is estimated by utilizing the land and labor market clearing conditions for locational equilibrium of household and firms. Estimates of equilibrium wages and rents, along with estimates of households' budget shares and national income to land and labor rations, are used to identify amenity and productivity components of wages for each metropolitan area in the sample. While both components are found to be important, the productivity component, on average, accounts for a larger share of the intermetropolitan wage differentials. Copyright 1989 by MIT Press.

It has been hypothesized that when the decrease in the steady-state proportion of income class i is large enough the percentage of children in the class will fall despite increased fertility. However the mathematical model developed in this article demonstrates that in spite of a potential reduction in the relative proportion of steady-state population born to that class will always increase and moreover will increase the most. As a direct consequence the possible decrease in the steady-state proportion of income class i is limited. Through the use of matrix algebra rather than differential calculus upper and lower bounds for the relative change in the proportion of the steady-state population of any income class can be derived. The diagonal matrix F gives the income-specific net reproductive rates while M represents the intergenerational mobility matrix. The analysis also refutes the hypothesis that if the percent children in any income class increases then the proportion of the population after intervention of mobility decreases. Apparently decreased inflows can never outweigh increased inflows. It should be noted that the results of this analysis hold without any restrictions on the mobility matrix; thus they are simply properties of the model.

economic policy ; unemployment