Knowledge that Transforms

The purpose of this paper is to present new evidence on employer search to fill a position. The study is based on data for recent hires collected in the 1980 Employer Opportunity Pilot Project (EOPP) survey of employers. The paper investigates the effect of factors such as training, employer size, and labor market conditions on employer search. Employer search is measured by the number of applicants interviewed prior to an employment offer and the average number of hours spent by an employer recruiting, screening, and interviewing per applicant interviewed. The paper also documents the relationship between employer search and wages.

This paper investigates the effect of shifts in output composition on the slowdown of productivity growth in the United States between 1947-67 and 1967-76. I employ a Leontief input-output framework and a Divisia index of aggregate productivity growth to separate the effects of changes in sectoral rates of technical progress from the effects of changes in output composition and interindustry flows on the change in overall productivity growth. Of the approximately 2 percentage point decline in overall total factor productivity growth, 17% to 22% was due to compositional effects and the remainder to other factors. T HE importance of shifts in input or output composition in explaining the recent productivity slowdown in the United States has been a source of some controversy. Estimates of such effects vary considerably. For example, Gollop (1982) calculated that resource shifts were actually an offset to the slowdown in productivity growth; Kutscher, Mark, and Norsworthy (1977) estimated that employment shifts had no effect on productivity growth; Thurow (1979) ascribed half of the slowdown between 1965-72 and 1972-77 to employment shifts; and Nordhaus (1972) attributed 77% of the decline from 1948-55 to 1965-71 to employment shifts. In a related paper, the possible reasons for these disparate results were discussed at length (see Baumol and Wolff, forthcoming). Briefly, these differences stem primarily from the use of different concepts and measures. Actually, three different concepts are used in the literature. The first is a resource or equilibrating shift which measures the increase in productivity that can result from a more efficient allocation of resources (cf. Denison (1979a, 1979b, and 1984); Norsworthy, Harper, and Kunze (1979); and Gollop (1982)). While interesting in itself, this resource reallocation effect is a somewhat limited notion, measuring the movement toward the efficient frontier instead of the outward movement of the frontier over time. The second concept is the so-called level which assesses the effect of resource shifts on overall productivity growth by holding constant the productivity levels of the various sectors of the economy (cf. Nordhaus (1972); Kutscher, Mark, and Norsworthy (1977); and Thurow (1979)). This measure was found to be quite arbitrary, depending on the (arbitrary) choice of base year used in the computation. The third is the so-called effect, which assesses the effect of shifts in resources by holding constant sectoral rates of productivity growth (cf. Nordhaus (1972); Baily (1982), and Gollop (1982)). All three authors found that the rate effect had a negligible influence on the productivity slowdown. This measure is the most theoretically sound of the three, and my measure will fall in this category, though differ in significant ways from previous formulations, and show a greater effect on overall productivity growth from compositional changes. I shall first develop a general model to measure such shifts or composition effects from a Leontief input-output framework (sections I and II). Results for the U.S. economy over the 1947-76 period will then be reported, with particular emphasis on accounting for the productivity slowdown after 1967 (sections III, IV, and V). Conclusions and a comparison with other results will be discussed in section VI, VII and VIII. I. The Standard Model Following the work of Peterson (1979), let us define: X,= (column) vector of gross output by sector at time t Y, = (column) vector of final demand by sector at time t at= matrix of inter-industry technical coefficients at time t It = (row) vector of labor coefficients at time t, showing employment per unit of output kt = (row) vector of capital stock coefficients at time t, showing the capital stock required per unit of output p,= (row) vector of prices at time t, showing the price per unit of output of each industry. Received for publication June 27, 1983. Revision accepted for publication October 19, 1984. * New York University. I would like to express my appreciation to Wassily Leontief, William Baumol, M. I. Nadiri, Mark Schankerman, Martin Baily, and Andrew Sharpe for helpful comments and to the Division of Information Science and Technology of the National Science Foundation for financial support.

This paper develops a methodology that uses microeconomic data from individual tax returns to test for the presence of tax evasion. The test is then applied to a large sample of taxpayers drawn from the U.S. Treasury tax file for 1977. The frequency of evasion indicated by the test is significantly greater than zero and within the wide range that other evidence suggests is the extent of evasion. The associations between evasion and characteristics of the taxpayer such as marginal tax rate, income, age, and marital status are also investigated and compared to the findings of earlier studies.

Jere Behrman, Paul Taubman, Intergenerational Earnings Mobility in the United States: Some Estimates and a Test of Becker's Intergenerational Endowments Model, The Review of Economics and Statistics, Vol. 67, No. 1 (Feb., 1985), pp. 144-151

A bstract-Residential electricity consumption is an example of a good for which it is costly to determine marginal price, since price changes with the quantity purchased according to multistep block rate schedules. This paper investigates the effect of the price information problem on consumers' price perceptions. An alternative hypothesis of average price perception is tested against the marginal price postulate which assumes wellinformed consumers. The model, which includes a price perception variable, allows the estimation of the price to which consumers actually respond. The empirical results support the hypothesis that consumers respond to average price perceived from the electricity bill.

The transactions cost approach developed by Coase and Williamson provides a coherent framework for investigating determinants of vertical integration in different industries. Empirical implications are developed and then tested using a cross section of firm level data pooled over different time periods. The results tend to confirm hypotheses regarding internal costs of management, small numbers bargaining problems and notion of firm as suited to adaptive sequential decision making under conditions of uncertainty. IT rHILE there exists an extensive literature on VY theoretical rationales for vertical integration, surprisingly little is known about importance of different theories.' The empirical literature includes two types of studies. Case studies test applicability of a particular theory to a single firm or industry (e.g., Armour and Teece (1980), Perry (1980) or Monteverde and Teece (1982a)). They are susceptible to bias in their choice of industry and generality of their results cannot be established. Another category of studies examines a broad base of industries to determine relationship between vertical integration and such variables as industry concentration, average firm size and sales growth (e.g., Adelman (1955), Gort (1962) and Tucker and Wilder (1977)). The link between these studies and theories of vertical integration is generally left unclear.2 This study will adopt strategy of investigating a broad base of industries, but, unlike earlier studies of this type, will test empirical implications following from transactions cost approach.3 This approach as developed by Coase (1937) and Williamson (1975, 1979) provides a coherent framework for investigating determinants of vertical integration over different industries. Furthermore, Williamson has persuasively argued that transactions cost considerations underlie such prominent reasons for vertical integration as elimination of monopoly distortions, technical complementarities, supply reliability and economies in acquisition of information. The transactions cost approach is summarized and implications are developed in first section of this paper. The implications are tested using firm level data pooled over time. The empirical model is presented in second section and results are presented in third section. The model incorporates variables not included in previous studies of vertical integration, such as measures of market risk and organizational structure. The results tend to confirm hypotheses regarding internal costs of management, small numbers bargaining problems and notion of firm as an institution suited to adaptive sequential decision making. A summary of results and conclusions are contained in final section. I. The Transactions Cost Approach Arrow (1969) has defined transactions costs as the cost of organizing economic system. In attempting to translate this idea into a framework for explaining organization of economic activity, Williamson and others have focused on role of opportunism and limited capability of individuals in processing information. The choice of institutional alternative depends on minimizing costs which arise in presence of transaction-specific investments and uncertainty. While a wide variety of institutional alternatives exist, a simple dichotomy is adopted here for sake of tractability. Following Coase, transactions are classified according to whether they take place in firm or across markets. Market alternatives become hazardous in recurring exchanges involving transaction-specific capital and efficient information processing. The firm then provides a Received for publication November 21, 1983. Revision accepted for publication December 3, 1984. *Rutgers University. This paper is based on my dissertation. I would like to thank my committee, Armen Alchian, Harold Demsetz, David Mayers, Fred Weston and my chairman, Benjamin Klein, for their helpful comments. Recent versions of paper also benefited from comments made by K. Chung, D. Carlton, D. Kaserman and anonymous referees. I would also like to thank participants of Transactions Cost Workshop at University of Pennsylvania. The usual disclaimer applies. 1 Recent summaries of theoretical literature on vertical integration are in Warren-Boulton (1978) and Kaserman (1978). See Levy (1981, 1984) for discussion of this problem. 3Earlier studies by Armour and Teece (1980) and Monteverde and Teece (1982(a, b)) have successfully employed transactions cost approach to examine vertical integration in particular industries. This study differs in that it adopts transactions cost approach to test implications across industries.