Knowledge that Transforms

Models of wage determination suggest a positive association between monopoly power and the ability of employers to discriminate. Past research on this issue has confused the influence of race, unionization, and market structure. This study measures racial wage differentials for four market structure-union status groups: union members employed in low- and high-concentration industries and nonmembers employed in low- and high-concentration industries. There is modest, but persistent evidence of larger racial wage differentials in high-concentration industries for nonunion workers. Market structure does not, however, influence racial wage differentials for union members. Copyright 1994 by MIT Press.

The purpose of this note is to propose a decomposition of the Gini index of inequality into within and between subpopulations using the Lerman-Yitzhaki covariance method. The present method suggests that once the population is arranged in ascending order of income and assigned ranks, the same ranks will be used to calculate total as well as between inequality. In this way, it differs from the one suggested by Jacques Silber (1989) in the measurement of between inequality and, thereby, in the interaction term. Copyright 1994 by MIT Press.

Keun Huh, Robin C. Sickles, Estimation of the Duration Model by Nonparametric Maximum Likelihood, Maximum Penalized Likelihood, and Probability Simulators, The Review of Economics and Statistics, Vol. 76, No. 4 (Nov., 1994), pp. 683-694

Charles W. Howe, Byung-Joo Lee, Lynne L. Bennett, Design and Analysis of Contingent Valuation Surveys Using the Nested Tobit Model, The Review of Economics and Statistics, Vol. 76, No. 2 (May, 1994), pp. 385-389

The effect of changing prices on the supply of physicians' services has important policy implications. In this note, a correction of previous work on supply by the author in this shows that with aggregate data the price elasticity of supply is zero. However, using individual physician data in the context of a utility-maximizing model of supply, it is found that the price elasticity of supply is about -0.2. This result could portend serious problems ahead for recently enacted Medicare pricing strategies to contain physician spending. Copyright 1994 by MIT Press.

A Bayesian seminonparametric approach to ARCH models is developed with the advantage that small sample results are obtained even when the likelihood function is subject to nonlinear inequality constraints (as in the ARCH models used in this paper). The seminonparametric nature of the approach allows for the relaxation of the assumption of normal errors. An application and a small Monte Carlo study indicate that the methods the author advocates are both feasible and necessary. Copyright 1994 by MIT Press.

Money demand plays a central role in recent models of rapid inflation and stabilization which are highly relevant to the Israeli economy. This paper uses co-integration analysis to estimate money demand in Israel. We find that money demand shifted at the beginning of the 1980s, probably as a result of increased use of liquid indexed assets which provide protection against high inflation. In the previous two decades the equation was a fairly conventional 'U.S.-type' logarithmic function. In the last decade the equation has had a lower constant and has exhibited less sensitivity to interest rate changes. In both periods the nominal rate of interest and real private consumption have been co-integrated with real M1 balances, and interest elasticity has been less than unity. Copyright 1994 by MIT Press.

This study simultaneously estimates the likelihoods that a worker receives advance notice of a plant closing and that a notified worker quits the job before its scheduled end. The author finds that fear of early attrition is a significant determinant of a firm's decision to provide advance notice. Explicit consideration of employer's concerns may significantly improve prediction of advance notice. Copyright 1994 by MIT Press.

This paper proposes a method for measuring the effects of substitutions in the timing of recreational use on people's willingness to pay for nonmarketed resources. Using the three markets (peak, pre-peak, and post-peak) for weekly rentals of vacation properties along the Outer Banks of North Carolina, we are able to control for changes in the mix of site characteristics selected at different times and estimate the effects of temporal substitution on tradeoffs between other characteristics. Proximity to the ocean was found to be a significant determinant of temporal substitution between the peak and pre-peak seasons with ocean front properties having 1.9 percent to 4.7 percent smaller discounts for preseason rentals relative to other properties. Copyright 1994 by MIT Press.

Sunk cost models of new trade theory have demonstrated that large, unanticipated swings in currency values can have permanent effects on trade flows by altering market structure in imperfectly competitive markets. The author tests an implication of these models using panel data on export unit values from Germany and Japan to a number of foreign markets, including the United States. He finds weak evidence in support of the thesis that U.S. product markets became more competitive as a result of the large dollar appreciation of the 1980s, although the results vary by industry and comparison country. Copyright 1994 by MIT Press.