Knowledge that Transforms

Inflation has become, the 1970's, an important economic phenomenon that must be taken into account analyzing the determinants of labor supply trends. Traditional labor supply theory has focused on the overriding importance of real wage growth as a primary determinant of both the long-run secular decline hours of work and the postwar increase the labor force participation rate of married women. Within this context, any labor supply effects of price level changes have been subsumed under the overall effect of real wages. However, despite unusually rapid price increases as well as stagnation the growth of productivity and real wages the last decade, the growth women's labor force participation has continued and, if anything, accelerated the last decade. Thus it is clear that, today, factors other than real wage growth must lie behind this continuing upward trend. Inflation is well worth exploring as a possible independent influence on labor supply, because of both its growing visibility and the frequency with which one hears comments along the lines of in these inflationary times, a family needs two salaries to make ends meet. Our objective this paper is to explore the possible effects of inflation on women's labor supply trends. As a first step this direction, we present some empirical results, relating changes the labor force participation rates of women various age groups to inflation as well as other independent variables, covering the period 1956-77. Inflation clearly appears to have an effect on labor force participation rates above and beyond the effect it generates through reducing the real wage. By next examining the primary sources of women's labor force growth the last decade and their implications for long-run labor supply, we suggest the likely importance of inflationary expectations sustaining the long-term growth of women's labor supply, particularly the prime age group.

It is suggested that the ethical notion of social contract can be formally modeled using the well-studied concept of the core of a game. This provides a mathematical technique for studying social contracts and theories of justice. The idea is applied to Rawlsian justice here. (This abstract was borrowed from another version of this item.)

The literature on the determinants of good performance has been largely devoted to empirical measurement. A complete review of the publications in this area would require at least an entire issue the size of this journal. Yet, it is virtually impossible to discover attempts to derive hypotheses about the determinants of good from explicit models of behavior. This has led researchers into the trap of exploring only the empirical determinants of good performance. Typically, the results of student evaluations are correlated with affective personality traits of the teachers, with peer evaluations of psychological compositions, or even with the results of various psychological tests. Examples are the works of Robert Isaacson et al., Frank Costin et al., and Wilbert McKeachie et al. In most of these studies, no substantive conclusions are reached regarding the determinants of effective teaching. In the few studies which do contain significant findings, the independent variable in question is difficult to explain as a direct determinant of effectiveness. For example, Isaacson et al. find that virtually the only statistically significant determinant of effective is the personality characteristic which they label culture. This may imply that simply wearing a tweed jacket and taking up pipesmoking is sufficient to improve teaching.' This paper takes a somewhat different approach to the analysis of teaching. Assume that the individual in question wishes to maximize effectiveness. Clearly, there are constraints on this maximization process. One must necessarily be the time budget constraint. A second constraint, however, adds a good deal of interest to the model. This constraint is best described as the bundle of characteristics available to the individual. These characteristics could be termed the components of the individual's personality. Such attributes include physical appearance, psychological makeup, speaking ability, and a myriad of other variables. Thus, this model bears a resemblance to the standard economic models of monopolistic competition (see A. Michael Spence). Before proceeding to a formal statement of the problem, a philosophical issue must be addressed. What is meant by teaching effectiveness? Generally, this is interpreted as maximizing student evaluations of teachers. However, this is clearly not always equivalent to maximizing student learning. Unfortunately, the latter variable is difficult (but not impossible) to measure. (Preand posttesting with standardized tests is becoming increasingly accepted, for example). The meaning of effectiveness in this paper must, unfortunately, remain ambiguous. Some teachers (concerned, perhaps, with obtaining tenure) will interpret good as obtaining good evaluations, the criterion by which they are judged. Others may take a more eclectic viewpoint. Since the problem below is an individual maximization problem, the precise definition of effective may simply vary from individual to individual (see W. R. Allen). Formally, this problem is exactly analogous to one first addressed by Kelvin Lancaster. He assumes that the consumer attempts to maximize satisfaction through purchase of bundles of attributes. Each commodity is possessed of certain of these characteristics. By consuming various combinations of these commodities, the consumer is *Assistant professor, department of economics, and Director, Center for Economic Education, California State University-Hayward. I would like to thank Alex Cassuto, Nancy Sanders, and an anonymous referee for helpful discussion. 'In a previously unreported experiment in the department of economics, California State UniversityBakersfield, faculty members were required to wear coats and ties in classes. It was subsequently observed that evaluations improved. Unfortunately, no detailed statistical results of this experiment are available for analysis.

The slowdown in productivity growth during the 1970's continues to puzzle neoclassical economists. As Edward Denison concludes, what happened is, to be blunt, a mystery(p. 4). This mystification should not seem particularly surprising, since neoclassical economists pay so little attention to the operations of the process of production. In contrast, Marxist economists have recently placed high priority on analyses of production relations in capitalist economies (see Herbert Gintis; and Michael Reich and James Devine). Although not yet applied to studies of aggregate labor productivity, this work should nonetheless provide fruitful guidelines for Marxian investigations of the productivity slowdown. Among other suggestions, the recent literature emphasizes the importance of both external and internal mechanisms of labor Where would these clues guide our initial explorations of the productivity puzzle? The external effect seems clearly to point in the wrong direction. Labor markets have become relatively looser during the 1970's. This heightened labor market competition ought to have pushed workers harder and, other things equal, to have increased labor productivity. In contrast, the clues about internal control mechanisms seem more promising. Many corporations have been complaining about worker performance, while both absenteeism and worker dissatisfaction have been rising (see Graham Staines). Pursuing these clues, I develop and empirically test in this paper a formal Marxian model of aggregate labor productivity which pays special attention to both the emergence and erosion in the postwar U.S. economy of a vast internal corporate apparatus of control. (See Richard C. Edwards for definition and elaboration.) The analysis is very provisional, but the results reported here nonetheless provide strong support for a single central conclusion: The declining effectiveness of the postwar system of bureaucratic control appears to explain almost all of the recent slowdown in productivity growth. Viewed from the Marxian perspective, the productivity slowdown seems no more mysterious than any other contradiction of capitalist economies.

In an earlier paper we proposed a technique for making income comparisons across various household sizes. In this paper we employ a modified version of that method to convert nominal income to some real equivalent comparable across families of a given size but with one or two family earners. We begin with a discussion of some of the conceptual difficulties involved in making cross-family size or structure comparisons in income. We then describe spending pattern differences between one- and two-earner families. The final section discusses our effort to convert nominal income into comparable real income units. We conclude that nominal income differences between two and one- earner families far overstate differences in standards of living. (excerpt)

Central to the notion of money as the medium of exchange is the concept that all transactions are conducted using money balances. This notion, expounded most explicitly by Robert Clower (1967, 1970), has led to the development over the past decade of interesting models of the transactions and precautionary demand for money.' These have examined optimal behavior of the economic agent in steady state. Although there has been much gained by examining money balance behavior in this way, money demand models so far have ignored the behavior of money during periods of disequilibrium. An adequate understanding of total money balances is possible only by incorporating both equilibrium and disequilibrium behavior into an overall view. In this regard, Michael Darby (1972) is exceptional in explicitly treating disequilibrium money demand behavior. Darby's paper is mainly empirical, but it contains an interesting intuitive discussion of money's role as a during periods of disequilibrium. In the present study, we address both the theoretical foundation and empirical importance of the shock absorber effect. We construct a model of optimal behavior by the economic agent, showing the necessary conditions for the existence of partial adjustment and indicating how the intensity of adjustment behaves over time and in response to changes in economic variables. This appears to be the first such attempt in the money demand literature, although there is related work in the investment literature on the flexible accelerator. We test the model on U.S. quarterly data to estimate the existence and magnitude of partial adjustment. We find a significant but small effect for both Ml and M2; furthermore, the effect dies out within one and two quarters for the respective definitions of money. The results thus support, but disagree in magnitude, with those of Darby (1972), who found a larger and longer-lasting partial adjustment effect. Our finding of so short an effect is especially important in light of Robert Barro's (1978) paper which relies on Darby's long-lasting effect to explain price behavior.