Widely used "purchasing power parity" comparisons of per capita GDP are not true quantity indexes and are subject to systematic substitution bias. This bias may distort measurement of convergence and divergence. Extending Varian's nonparametric construction of a true index gives the set of true indexes, including the new Ideal Afriat Index. These indexes are utility-consistent and independent of arbitrary reference price vectors. We establish bounds on the dispersion of true multilateral indexes, hence bounds on convergence. International price indexes understate both true GDP dispersion and, where prices are converging over time, the rate of true quantity convergence.

The apparent convergence of OECD income levels since 1950 is subjected to rigorous testing which suggests that there has occurred a systematic process of catching up in levels of total factor productivity. An econometric model of relative economic growth exhibits parameter stability over three decades, including the period after 1973, and statistical robustness, particularly with respect to sample selection. A reassessment is made of OECD comparative economic growth performance.

The response of union utility to labor-saving innovation is analyzed within a framework of oligopolistic competition in the product market, taking account of wage bargaining under several alternative structures of industrial relations. Conditions are established under which wages and employment will rise or fall in response to innovation. Union opposition tends to occur when union preferences are weighted in favor of jobs and labor demand is perceived to be inelastic. Thus opposition is more likely with industry- or craft-based union organization in noncompetitive industries and is less likely with enterprise unionism in competitive industries.

This paper estimates the role of insider power in wage determination in a unionized industry, examining the direction and magnitude of biases that may arise through failure to control for variation in both hours of work and the composition of the labor force and through failure to control for the endogeneity of measured profits. Furthermore, by examining the extent to which rent-sharing is related to exogenous demand shocks rather than to potentially endogenous productivity, the authors provide a test of the bargaining and pure efficiency wage models, finding that the majority of the insider weighting can be explained by the bargaining model. Copyright 1994 by MIT Press.

We present theory and evidence to suggest that, in the context of analyzing global poverty, the EKS approach to estimating purchasing power parities yields more appropriate international comparison of real incomes than the Geary-Khamis approach. Our analysis of the 1996 and 2005 International Comparison Project data confirms that the Geary-Khamis approach substantially overstates the relative incomes of the world's poorest nations, and this leads to misleading comparisons of poverty across regions and over time. The EKS index of real income is much closer to being a true index of economic welfare and is therefore preferred for assessment of global poverty.