Knowledge that Transforms

T HE present study estimates the effects of trade unions, Hitler's regime, and codetermination on relative wages in Germany. I Each of these establishments is considered to have had important implications for Germany's labor market. Moreover, a thorough understanding of their effects can be valuable for comparative purposes. Following a brief discussion of these phenomena and their hypothesized effects on wages, the analytical model is developed in section II. The empirical results are reported in section III and section IV contains the summary and conclusions. The extensive literature on the relative wage effects of trade unions has focused almost exclusively on the union impact in North America2 and, more recently, in Great Britain.3 Since the German institutions of industrial and labor relations differ considerably from their AngloAmerican counterparts4 and often have been studied as a successful (possibly superior) system which might be adopted by others, it is worthwhile exploring the magnitude of the union wage effect in the German institutional setting. In particular it has been argued that, compared to their American and British counterparts, the continental unions tend to place more emphasis on political and social, rather than economic achievements.5 If this hypothesis is correct, then, ceteris paribus, the estimated relative wage effect of German unions ought to be smaller than that found in the United States and Great Britain. With the advent of Hitler's regime in 1933 there was a dramatic transformation of the existing political and economic institutions. Trade unions, which in 1932 represented over 40% of the industrial labor force, were promptly abolished6 and replaced by a government-operated Front.7 Strikes and lockouts were forbidden and wages were determined centrally.8 While the effects of these changes on the cultural, political and social life have been well documented, few economic studies attempted to analyze the effect of Hitler's regime on wages and incomes. Moreover, those that did, used a qualitative or only a loose quantitative approach, partially as a result of the lack of a systematic wage series prior to 1934.9 W. Krelle (1962, p. 17) has shown, for example, that labor income Received for publication July 30, 1979. Revision accepted for publication May 1, 1980. Cornell University. I would like to thank Orley Ashenfelter, Albert Rees and two anonymous referees for helpful comments. I have also benefited from discussions with J. S. Butler, William Greene, Louis Phlips and Katherine Terrell. Any remaining errors are, of course, my own. This research was in part supported by a grant to the Princeton University Economics Department from the Sloan Foundation. I The term codetermination refers to the German participatory system of management, as it was originally established in the Federal Republic by the 1951 Codetermination Act and the 1952 Works Constitution Act. 2 The most important work and collection of references on the subject is still Lewis (1963). Among the later studies in the private sector are Ashenfelter (1972), Ashenfelter and Johnson (1972), Bloch and Kuskin (1978), Boskin (1972), de Menil (1971), Rosen (1969) and Schmidt and Strauss (1976). Public sector studies are summarized by Lewin (1977). X See especially Pencavel (1974), Mulvey (1976) and Metcalf (1977). 4 Needless to say there are important differences between the U.S. and British systems of industrial and labor relations. They exhibit considerable homogeneity, however, when compared to the systems in continental Europe. Historically, the relatively most salient features of the German system have been (1) trade union affiliation with political parties and/or religioiis organizations, (2) industrial unionism. (3) governmental interference in industrial and labor relations, and (4) paternalistic management. World War II led to the unification of the formerly splintered unions in the Deutsches Gewerkschafts Bund (DGB), close collaboration with the Social Democratic Party (SDP) and the establishment of codetermination. For institutional references see Almanasreh (1977), Fiirstenberg (1969, 1977), Schregle (1978) and Vollmer (1976, 1979). 5 See Kassalow (1969, 1980) and Windmuller (1969). 6 Employers associations followed their lead in 1934. 7 The Labor Front included all employees and employers. It represented the Nazi government in the factories and possessed broad powers over its member subjects. 8 In fact, the entire economy underwent considerable centralization as Hitler proclaimed his first Four Year Plan in 1933 and a second one in 1936. 9 Among the most thorough and informative of these conventional studies is that of Bry (1960). For a discussion of the data see Gerss (1977).

Sanford V. Berg, Philip Friedman, Impacts of Domestic Joint Ventures on Industrial Rates of Return: A Pooled Cross-Section Analysis, 1964-1975, The Review of Economics and Statistics, Vol. 63, No. 2 (May, 1981), pp. 293-298

Various aspects of the school enrollment-labor supply decision have been examined in earlier studies, including those of Bowen and Finegan (1969), Cohen, Rea, and Lerman (1970), Duncan (1965), Katz (1973), Korbel (1966) and Lerman (1972). Although these authors were aware of the joint nature of the school-work decision, typically, they used an ordinary least squares (OLS) framework with dichotomous dependent variables to analyze enrollment conditional on the labor supply decision or labor supply conditional on enrollment. Several more recent studies, such as Antos and Mellow (1978), Stephenson (1978), and Ehrenberg and Marcus (forthcoming) use multinomial logit to analyze the joint determination of labor supply and enrollment. Mallar (1976) uses a bivariate probit model to deal with the simultaneous relation between school and work. But none of these studies considers both the wage offers and job availability. There is still available no single set of estimates which considers the roles of both job availability and the wage on the joint enrollment-labor supply decision. Consider what the interrelation between wages and job availability implies for estimation of the labor force participation-school enrollment decision. To the extent that downwardly rigid wages prevent the youth labor market from clearing, one would expect both wages and job availability to influence labor supply. If one of these measures is not included in explaining labor supply, the coefficient estimated for the other measure may, for reasons well known, be biased. For example, if the wage is omitted but the unemployment variable included, and if wages and unemployment are negatively correlated, then the magnitude of the coefficient of the unemployment variable will be increased. It is also unclear on a priori grounds how job availability affects school enrollment. On the one hand, if jobs are readily available to young people, youth from poor families may be able to enroll in school, supporting themselves through part-time work. With no jobs available, some may be unable to afford school expenditures and may drop out (Bowen and Finegan, 1969, p. 404). On the other hand, readily available employment opportunities for youth may simply raise the probability of dropping out of school and working full-time. Our findings will help to determine how young people react to this influence and to other influences of the market. From the viewpoint of public policy, there are a number of reasons why it is important that the enrollment-labor supply decisions be understood, and that the separate responses to wage and job availability be isolated. For one thing, there is a tendency to discount the welfare importance of unemployment or poor labor participation for young people enrolled in school (Feldstein and Ellwood, 1979). However, the joint nature of the enrollment-labor supply decisions suggests that a high enrollment rate may not be simply a cause of low participation rates, but may be an additional symptom of adverse labor market conditions. Indeed, our results for nonwhite males support an interpretation of this kind. Second, the joint nature of the decisions also implies that public programs such as the Received for publication January 31, 1980. Revision accepted for publication December 11, 1980. * Both authors are with Dartmouth College and the National Bureau of Economic Research. The research reported here was supported by the Division of Technical Systems in the Office of Technical and Analytic Systems, Office of the Assistant Secretary for Planning and Budget, U.S. Department of Education and is part of the NBER's research program in Labor Studies. Any opinions expressed are those of the authors and not those of the National Bureau of Economic Research or of the Department of Education. We would like to thank Gary Fields, Meir Kohn, Robert Plotnick, Martin Segal and participants in the labor seminars at Harvard and at Cornell for their helpful comments.

The purpose of this paper is to examine demographic and socioeconomic determinants of migration for both employed and unemployed. Hypotheses concerning effects of age education and public services are developed and tested using data on interstate migration of U.S. labor force from 1965 to 1970. For individuals at-risk to either primary or repeat migration age and education selectivity of migration were in general confirmed. However for unemployed potential primary migrants education selectivity was not observed. It was also found that the provision of welfare services have little or no impact on migration decision of unemployed....However unemployment was shown to significantly affect role played by educational quality and training accessibility within migration decision. (EXCERPT)

THE impact of unionism on relative wage rates is a topic of long-standing interest in labor economics. Over the years researchers have used a variety of approaches to estimate the wage advantage associated with union membership. Initially, researchers compared the average wages of union and nonunion workers in specific sectors, such as an industry.' This approach has the obvious limitation of not accounting very well for the various quality or productivity differences that exist among workers-differences that command compensating wage payments. More recent studies have used cross-section wage regressions to control for these other determinants of wages and thereby improve estimates of the union wage effect. Using large microeconomic data files containing detailed information on characteristics of individual workers, numerous studies have estimated wage regressions that include controls for worker characteristics (education, experience, etc.) and a dichotomous variable indicating union membership status as explanatory variables.2 The coefficient of the union membership variable in these regressions is taken as an estimate of the average impact that unionism has on wage rates, controlling for measured differences in characteristics among workers. Unfortunately, the wage regression approach does not completely resolve the problem of standardizing the union-nonunion wage comparison for differences in worker quality. Even with detailed microdata on the characteristics of individual workers, it is simply not possible to specify a set of variables that completely captures all worker-specific differences in productive ability. Some aspects of human capital are too subtle to be operationally specified and included in a wage regression, although they are recognized and paid for by employers. To the extent that these unmeasured worker-specific differences are correlated with union membership, the wage regression will incorrectly attribute a relative wage impact to unionism.3 An alternative measurement approach that has several advantages over the wage regression is to compare the wage received by the same worker as a union and nonunion member. In the past, data limitations have prevented researchers from making such a comparison. Since only a small portion of workers change union status in a given period, an unusually large longitudinal file is needed to yield a sufficient number of observed changes for a meaningful analysis.4 Recently, however, large longitudinal data files on individuals participating in the Current Population Survey have become available. This paper uses these data to estimate the impact a change in union status has on the worker' s wage. The

The model of short-run residential demand for electricity combines price-schedule information obtained from the Federal Energy Regulatory Commission with household-specific data from the 1972-73 Consumer Expenditure Survey to determine the household's level of electricity consumption and relate it to the household's demographic profile and appliance stock. The overall short-run price-elasticity estimate of -0.550 supports existing findings that short-run residential electricity demand is price inelastic. However, the variation in elasticities across end-use categories suggests that the overall response is made up of a complex set of responses that vary substantially and significantly across appliances. This implies that it may be more efficient to tailor conservation policies to the stock configuration of the population. 17 references, 6 tables.

This paper reports on an empirical study of the effects of interest rates and inflation on aggregate consumption in the United States. Empirical evidence, based on quarterly U.S. data from the postwar period, is first presented in support of the hypothesis that the real rate of interest varies inversely with the rate of inflation, at least in the short run. Regression estimates of an aggregate consumption function for the United States, also based on quarterly data from the postwar period, are then presented. These estimates indicate that the propensity to consume varies inversely with interest rates and directly with the rate of inflation.

Q UALITY of service has been neglected in empirical studies of air travel. Travel demand depends on travel time as well as the usual price and activity variables. Travel time includes not only average en route time, but delay. Following Douglas-Miller (1974a,b), frequency delay is the gap between one's desired and the nearest offered departure time, while stochastic delay is time lost due to the nearest offered departure being unavailable. Their sum, schedule delay, is the major element in air service quality. Despite its theoretical importance, no empirical study of air travel demand has incorporated it.' This one does.2 A second novel feature of this study is that it models demand on a service segment rather than passenger origin-destination demand. From the carriers' point of view, this is the relevant market demand. Much air travel is done in several segments rather than non-stop. Ideally, segment demand should be modelled based on passenger origin-destination demand, with service segment demand built up from all the possible routings using the segment under study. In practice this is impossible, since the origin-destination passenger data contain no information on routings. This is why previous demand studies, based on origin-destination data, have been unable to incorporate consideration of delay. The third novel feature of this study is that it is based on time series estimation embedded in a simultaneous equations model of service segment markets. Elsewhere (Anderson-Kraus, 1980), we have reported on the supply side of the model. The time chosen is 1973-76 (48 monthly observations), when fares were set according to the CAB formula, and flight scheduling rivalry dominated carrier competition. The results below indicate that segment demand can be successfully modelled with these methods. It is notable that price elasticities in excess of one in absolute value are found even in a number of business markets. It is dangerous to draw general conclusions from a specific instance of success, but the results do support further attempts to model demand incorporating delaybased quality of service. Many markets are characterized by significant waiting costs and competition over the reduction of these costs. Where feasible, the results below indicate that even crude measures of delay have a significant payoff. Part I lays out the model of demand and service quality and embeds it in the model of market equilibrium. Part II presents the results.