Knowledge that Transforms

THE effects of factor mobility on the regional differences in factor returns and on regional growth have been central to the theoretical analysis of regional' growth. Those who believe that economic growth of a region is dependent on the growth of inputs (either because aggregate demand for the region's output is not a constraint as in the neoclassical growth models or because a demand type model of the post-Keynesian variety is not sufficient to explain the growth of an open region) cannot ignore the role played by factor mobility. The interest in the effects of factor mobility on regional growth through its effect on the rates of growth of inputs is more than academic. Appropriate regional growth policies cannot be designed without prior determination of the role played by input growth and the variables which influence those growth rates. Yet,' empirical studies of these issues are scarce. So far only three studies have investigated the relationships between input growth and regional growth, and factor returns and input growth. The seminal work has been that of Borts and Stein (1964), who studied the response of factor mobility to factor price differentials and the relationship between output and the aggregate capital-labor ratio. However, empirical results are inconsistent with standard neoclassical growth theorems... (Smith, 1974, p. 166). These inconsistencies are attributed by Smith (1974, 1975) to the use of data on one sector (nonagriculture) without considering the possibility of intersectoral factor movements. Smith has argued that one can either consider total regional output and ignore intersectoral factor movement (1974), or consider sectoral output and allow for intersectoral factor mobility (1975). Although the empirical results reported by Smith (1974) for his two sector model are interesting,they are of limited value for our purpose since the parameters estimated and tested are those of the reduced form and no indication of the explanatory power of those equations are reported. From those results one cannot assess the contribution of factor mobility to regional growth nor the value of the model in explaining the variations in growth rates among states. The coefficients of determination are reported in the second study (1975) for the reduced form equations; however, the same limitations on the value of the results are encountered. Furthermore, the explanatory power of the reduced form equations are distressingly low. In this article we report on the results of estimating a simple neoclassical model of regional growth. The estimated model is validated by comparing its simulations with observed values of the variables and their rates of growth between 1963 and 1973. We then use the model to derive the long run implications with respect to growth rates of output, output per worker and the level of output per worker. These are obtained from the dynamic simulation of the model over a period of time. The results of these simulations reveal a strong tendency for the rates of growth output and output per worker to converge. No such convergence is obtained for the level of output per worker.

ECONOMIES of ship size have in recent years been held up as the salient feature in modern shipping. The size of ships has been increasing very rapidly, leading many students of shipping to believe that no limit exists for the optimal size and that there are only exogenous constraints, such as restricted port depths, etc. This paper presents a model of production and costs of the ship and empirical estimates of both economies and diseconomies to ship size. The approach taken in specifying production and cost relationships is the engineering approach, which seems particularly suitable because of certain basic technological (geometric, in fact) principles. The values of the parameters derived through these technological relationships are confirmed by an empirical estimate of data on production and costs. Unlike industrial plants where plant size is indicative of output capacity, for ships a distinction must be made between two output capacities-the handling capacity and the hauling capacity. Our main conclusion is that while there are economies of ship size in the hauling operations, there are diseconomies to size in the handling operation. The latter factor is the main check on ship size and explains the existence of a wide range of ship sizes currently in service.

Virginia State Corporation Commission

This paper (1) presents estimates of minimum wage effects on employment of teenagers 14-15, 16-17 and 18-19 years, and (2) decomposes these estimates into scale and substitution components for calculating effects of differential minima. In 1972 the House of Representatives approved an amendment to the Fair Labor Standards Act calling for a youth differential, but one was not included in the Senate version. These bills died when the House refused to submit to conference. In 1973 the Administration proposed another amendment containing a youth differential, but the amendment passed by Congress later that year eliminated it. Although attempts to enact a youth differential have failed,it is clear that support for these measures comes from a consensus concerning the relatively adverse effects of existing minima on teenage employment. It is also likely that the question of differential minima is not dead and it would be nice to have estimates of what effects might be if a differential were enacted. The point of departure for all minimum wage studies has been that those most adversely affected are those who in the absence of the minimum would have earned the lowest wage. In comparing teenagers to adults, there is fairly consistent evidence that minimum wages reduce teenage-adult employment ratios.' But there is less evidence among groups of teenagers themselves. The Labor Department Survey (1970) contrasted males and females, white and non-white, for employment of those 16-17 and for those 18-19. Results are mixed. For white males, estimates conform to expectations of more adverse employment effects for younger workers, but results for white females are inconclusive and there is no relationship for non-white teenagers. Jacob Mincer (1976) and Nori Hashimoto and Mincer (1970) combine all ages 16-19 into one group but distinguish whites from non-whites and find more adverse effects for non-whites. Similarly, Marvin Kosters and Finis Welch (1972) treat ages 16-19 as a single class and distinguish employment by sex and race. More adverse effects are reported for non-whites than for whites and for females than for males. Each of these studies uses time series estimates of teenage employment from Current Population Surveys. These data contain large sampling errors especially for age, sex, and race partitions.2 Students and part-time workers are not distinguished, wages are not available and because the data are for national aggregates, state minimum wage laws are ignored. Here, the data are from the 1 in 100 Public Use Sample of the 1970 Census and refer to teenage employment in the week before the Census was taken. Individual observations are aggregated to state totals. Nationally, students account for half of total teen employment but only one-third of hours worked and females work 95% as many hours as males. Aggregation weights reflect these differences in hours worked. The Census does not contain reliable wage information, and as is true of all previous studies, there is a problem in estimating legislative effects on costs of teenage employment. Cross-state observations enable us to include state wage laws in our estimates of these costs. Section II describes our procedure for inferring legislative effects on teenage employment costs and provides estimates of associated changes in employment. Section III provides empirical results for a decomposition of estimated effects into scale and substitution components and gives estimated effects of a 20% youth differential extended first to those 14-15 and then to those 14-17 year old. A summary follows. Received for publication July 2, 1976. Revision accepted for publication March 4, 1977. * University of California, Los Angeles, and The Rand Corporation. We are grateful to Ernst Stromsdorfer for suggesting this topic and Dennis DeTray and James P. Smith for their helpful comments. Support for this project was provided by a contract from ASPER/USDOL. 'See, for example, the paper by Mincer (1976) and the Labor Department Survey (1970). 2See Welch (1974), the comment by Siskind (1977) and reply by Welch (1977) for discussions of some of the peculiarities of these data.

Donald W. Green, Capital Formation in the USSR, 1959-1974: An Econometric Investigation of Bureaucratic Intervention in the Process of Capital Construction, The Review of Economics and Statistics, Vol. 60, No. 1 (Feb., 1978), pp. 39-46

The growth-accounting approach is used to see what economic growth the seven major Latin American countries have experienced and which experiences are common. The purpose is to determine which economic policies are conducive to growth. Statistics for the 1940 to 1974 period are presented on gross domestic product (GDP), the share of labor in terms of gross input (employment) and the quality component, and capital input. A comparison of these statistics shows a relationship between the rates of change in GDP and the total inputs in that countries experiencing extremely high or low rates of GDP growth had corresponding rates of capital-labor inputs. Labor quality was an important component in most countries in contrast to capital quality. 34 references.

HIS article gives estimates of household demand for money and savings functions for four centrally planned economies (CPEs). The data are post-war annual time series for Czechoslovakia, the GDR, Hungary, and Poland. The estimation of these functions characterizing the demand side of the consumption goods market is a part of the empirical component of our research into macroeconomic equilibrium in CPEs. The supply side of the consumption goods market is analysed in a separate paper (Portes and Winter, 1977), and we are currently carrying out disequilibrium estimation (Goldfeld and Quandt, 1975) in a model using the demand and supply function specifications developed in these papers. It is conventional wisdom that since the early 1950s, the CPEs have suffered chronically from some significant degree of excess demand (repressed inflation), i.e., that buyers have faced quantity constraints (informal or formal rationing) on the markets for goods and labour (e.g., Bush, 1973; Garvy, 1975; Schroeder, 1975). When authors think it necessary to give empirical justification, this is in the form of reference to queues, shortages, hidden price increases, quality deterioration, excess liquidity and forced saving, and some data on prices in the small free market sectors of these

T HE location of industrial employment is a critical factor in virtually all models of urban spatial structure. However, most theoretical and empirical models of the urban economy say little about the determinants of industrial location. In the extreme, all employment is assumed to be centrally located (e.g., Muth, 1969, or Mills and Mackinnon, 1973), but, even when this assumption is relaxed as in transportation and land use studies (see Brown et al., 1972) or the recent vintage of urban simulation models (e.g., Ingram et al., 1972), employment location remains exogenously determined.' Theoretical analyses of industrial location have provided few specific insights into the underlying behavioral relationships, and existing empirical work has failed to identify much more than aggregate trends in employment dispersal. This paper develops a conceptual framework for analyzing the dynamic changes in industrial location and presents tests of several major hypotheses about the determinants of employment location. The empirical analysis models the spatial structure of employment for three selected industries in the Boston metropolitan area for the period 1947 through 1968.