Knowledge that Transforms

The U.S. economy has expanded rapidly in recent years, with total factor productivity (the source of growth most closely identified with technological gains) rising sharply since the mid-1990’s (see e.g., Bureau of Labor Statistics, 1999; William Gullickson and Michael J. Harper, 1999; Mun S. Ho et al., 1999; Daniel E. Sichel, 1999). This strong aggregate performance and the well-documented explosion of investment in computers and other high-tech equipment have led many to believe that the United States has experienced a permanent, technology-led growth revival. It is essential, however, to disaggregate estimates of economic growth to the industry level to understand the new trends in the U.S. economy. Productivity growth, the ability to produce more outputs from the same inputs, differs widely among industries. For the economy as a whole, negative productivity growth in one industry can offset positive productivity growth in another, and Jorgenson (1990) shows that a measure of productivity based solely on aggregate data is valid only under very stringent conditions. We avoid the limitations of an aggregate measure of productivity by decomposing U.S. growth across industries for the period 1958–1996. By breaking down the U.S. economy into 37 industries (35 private industries, private households, and general government), we identify the contribution of each industry to aggregate productivity growth. This enables us to isolate the underlying sources of gains in productivity and provides a better understanding of the forces driving the U.S. economy. Economy-wide productivity from an aggregate production function increased 0.45 percent per year during 1958–1996, while methodology developed by Evsey Domar (1961) for aggregating over industries yields an aggregate estimate of 0.48 percent. Over the same period, however, industry productivity growth ranged from 1.98 percent in Electronic and Electric Equipment to 20.52 percent in Government Enterprises, highlighting fundamental differences in technology and productivity growth across industries. These results show that the aggregate production function provides a reasonable estimate of productivity trends over long periods but also masks important differences among industries.

Per-capita income in many sub-Saharan African countries, such as Chad and Niger, is less than 1/30th of that of the United States. Most economists and social scientists suspect that this is in part due to institutional failures that stop these societies from adopting the best technologies. A particularly interesting historical example comes from the di®usion of railways in the nineteenth century. While railways are regarded as a key technology driving the industrial revolution, there were large lags in its di®usion. For example, in 1850 the United States had 14,518km of track, Britain 9,797km and Germany 5,856km, in the Russian and Hapsburgh Empires there were just 501km and 1,357km, respectively (all data from Mitchell, 1993). Why do societies, as in this example, fail to adopt the best available technologies? One answer is that existing powerful `interest groups ' block the introduction of new technologies in order to protect their economic rents, and societies are able to make technological advances only if they can defeat such groups. Economic monopolies may be one example. A monopolist might wish to block the intro-

Can Downstream Waste Disposal Policies Encourage Upstream "Design for Environment"? by Paul Calcott and Margaret Walls. Published in volume 90, issue 2, pages 233-237 of American Economic Review, May 2000

This paper develops a theory of inequality and the social contract aiming to explain how countries with similar economic and political “fundamentals” can sustain such different systems of social insurance, fiscal redistribution, and education finance as those of the United States and Western Europe. With imperfect credit and insurance markets some redistributive policies can improve ex ante welfare, and this implies that their political support tends to decrease with inequality. Conversely, with credit constraints, lower redistribution translates into more persistent inequality; hence the potential for multiple steady states, with mutually reinforcing high inequality and low redistribution, or vice versa.

This paper develops a unified growth model that captures the historical evolution of population, technology, and output. It encompasses the endogenous transition between three regimes that have characterized economic development. The economy evolves from a Malthusian regime, where technological progress is slow and population growth prevents any sustained rise in income per capita, into a Post-Malthusian regime, where technological progress rises and population growth absorbs only part of output growth. Ultimately, a demographic transition reverses the positive relationship between income and population growth, and the economy enters a Modern Growth regime with reduced population growth and sustained income growth.

The growth of nonmarital fertility, together with greatly increased divorce rates and an increased proportion of children living in femaleheaded households, has provoked considerable alarm about the demise of the traditional family and concern about potentially harmful effects on the well-being of women and children. In this paper, I briefly summarize recent attempts by myself and others to develop a coherent theoretical framework to integrate economic theories of fertility and marriage in order to better understand why the same men who play the breadwinner role within marriage may fail to support their children following a divorce or who, despite the “gains to marriage,” may prefer to father children out of wedlock rather than within marriage. I argue that such behaviors of men can be understood within a framework that takes into account the selfinterests of both men and women as they interact within a given sexual or marital match and as they interact in a broader “market” for sexual and marriage partners. At the level of a given match, the theory provides hypotheses about the determinants of voluntary child support by fathers who are divorced from or have never married the mother. It also suggests reasons why voluntary child support is likely to be inadequate and, consequently, provides some insight about the role of laws and administrative procedures designed to establish paternity, determine the size of childsupport awards, and enforce collection of awards. At the level of the market, under certain circumstances, theory produces results similar to those emphasized by William Wilson and Katherine Neckerman’s (1987) theory of outof-wedlock childbearing among the underclass.

From page 100 -- "A distinctive feature of the procedures recently adopted by inflation-targeting central banks is their forward-looking character. Forecasts of the economy’s future evolution conditional upon alternative policies play a central role in the banks’ deliberations, to an extent that the procedures adopted are sometimes characterized as “forecast targeting.” This emphasis upon the future consequences of policy is unsurprising in an approach that tries to maintain as transparent as possible a relation between the banks’ decisions and the ultimate goals of monetary policy; after all, current decisions can still affect the future, but not the past. Nonetheless, common descriptions of how inflation targeting is or should be practiced go too far, in proposing purely forward-looking procedures. I shall argue instead that an optimal framework for the conduct of monetary policy must generally be history-dependent in ways precluded by these simple proposals. This follows from a general feature of the optimal control of a forward-looking system, which is to say, one in which the private sector’s expectations about future policy are an important determinant of the effects of monetary policy."

Optimal Income Taxation: An Example with a U-Shaped Pattern of Optimal Marginal Tax Rates: Comment by Momi Dahan and Michel Strawczynski. Published in volume 90, issue 3, pages 681-686 of American Economic Review, June 2000

Charlotte Perkins Gilman's (1898) and Economics stands as a landmark in the feminist economic analysis of gender relations and increasingly is also recognized as a pioneering work of American institutionalist economics (see Mary Ann Dimand, 1995). Because it stands out so strongly as a major contribution, and Economics has been perceived as an isolated work, apart from links to Lester Ward's sociology and parallels with the contemporary writings of Thorstein Veblen. This paper, however, views and Economics as the culmination of four decades of American feminist economic thought, beginning with Caroline Dall and Virginia Penny, and draws attention to Gilman's connection with that tradition through Helen Campbell. This tradition is so little known that the names of these four women do not even appear in Dorothy Ross's (1991) excellent Origins of American Social Science, even though Dall founded the American Social Science Association (ASSA), referred to by Ross (1991 p. 63) as the mother of associations, including the American Economic Association, and even though Campbell won a prize from the American Economic Association for Wage-Earners (Campbell, 1893), which was published with an introduction by Richard T. Ely. Caroline Wells Healey Dall (1822-1912) first became interested in feminism in 1837-1838 as a result of Harriet Martineau's (1837) chapter on The Political Non-existence of Women in the United States and an address on women's rights given at the Boston Lyceum by Amasa Walker, an underground railway activist soon to become professor of political economy at Oberlin. In 1841, Dall (then Caroline Healey) attended a series of ten weekly conversations led by the feminist author Margaret Fuller, publishing her notes of these conversations more than half a century later. While teaching school in Georgetown in the early 1840's before her marriage, she undertook the first census of free blacks in the District of Columbia, in order to organize schools for them, and in the early 1850s, while living in Toronto (where her husband was a Unitarian minister), she acted as Canadian agent for a society aiding fugitive slaves. Dall remained in her native Boston with her two children when her husband sailed to India as a missionary (where he stayed for the remaining 30 years of his life). She reported to a women's rights convention in Boston in 1855 on the legal status of women, following with a series of annual reports on that status, and with organization of the New England Rights Convention in Boston in 1859. A precursor of Charlotte Perkins Gilman among American feminists, Dall went beyond the suffrage question and unequal laws on property rights to a critique of the economic role of women in a series of three public lectures in Boston in November 1859, published as Woman's Right to Labor; or Low Wages and Hard Work (1860). Together with two series of lectures on women's right to education and rights under the law, this series was incorporated in Dall's major work, College, the Market, and the Courts; or Women's Relation to Education, Labor, and the Law (1867). Dall (1867 [1972 p. 179]) attributed women' s discontent to restricted opportunities for paid employment, for it was no longer the case that every woman found, in spinning, weaving, and sewing in the active life of a ... household, full employment for time and thought. In moving from a survey of women's unequal legal status to a critique of women' s repressed economic role, Dall followed the same path as the British activist Barbara Bodichon (whose 1859 pamphlet, and Work, appeared in a revised American edition in 1959) and, later, Jeanne Chauvin (1892) in France. * Department of Economics, Brock University, St. Ca tharines, Ontario L2S 3A1, Canada (e-mail: dimandCc adam.econ.brocku.ca).