This paper develops a model of the nursing home industry to investigate the quality effects of policies that either raise regulated reimbursement rates or increase local competition. Using data from Pennsylvania, I estimate the parameters of the model. The findings indicate that nursing homes increase the quality of care, measured by the number of skilled nurses per resident, by 8.7% following a universal 10% increase in Medicaid reimbursement rates. In contrast, I find that pro-competitive policies lead to only small increases in skilled nurse staffing ratios, suggesting that Medicaid increases are more cost effective in raising the quality of care.

Congress pursues externalities one at a time. The resulting legislation embodies the same sequential approach, instructing regulatory agencies to set and enforce standards for a single problem. Rarely, if ever, are agencies instructed or even permitted to account for contradictions with other federal legislation and rulemaking.

Few economists are aware of a wonderful problem. While climatologists claimed it first, the twists and turns make- the problem appear almost as if it were devised to show off the tools and controversies of microeconomics. Even more astounding is the fact that such an abstract, long-term problem excites the interest of the general public and media, and even politicians who desire more resources 1O be spent on research.

This paper analyzes the interaction between the real and monetary sectors via the balance-of-payments adjustment mechanism. An explicit theoretical model is developed and its coefficients are estimated (using two-stage least squares) for the United States during the period 18791914. The model is then synthesized to evaluate the views of Phillip Cagan, Milton Friedman and Anna Schwartz on one hand, and Jeff rey Williamson, Robert Mundell, and Moses Abramovitz on the other. The period 1879-1914 in American economic history is of particular interest as it provides an excellent testing ground for theories pertaining to balance of payments and money supply. In this era the U.S. economy developed rapidly under a gold standard regime with little direct government intervention. There are conflicting interpretations of the events of this period with regard to the interaction between the monetary and real sectors. Cagan and Friedman and Schwartz regard the variations in the money supply as independent of the changes in the real sector. Their view can be best summed up in the following passage from Friedman and Schwartz:

The pool of women with highly specialized trainiing is increasing and the tolerance of such women for accepting occupational seg,regationi and narrow views of their career potentials is dimiiinishinig. It is crucial that we understand the differences between lab-or markets for men anid women at professionial levels, the resulting differellces in career patterns, and how barriers to full career development for women impinge on occupational rewards. Only then can we plani effcctively for the generation of younig womento come. Particularly important at this time is analysis of the market for h-elds anid occupations that are atypical for women. Overall societal attitudes toward the proper role of women are evolving, yet on the demand side employers' perceived differences as to the employability of women (whether real or imaginary) result in barriers that vary in intensity by occupation. Economics, a stereotypically male profession, has relatively intense barriers for women on the demand side over and above variations in aggregate demand.1 The demand-side barriers are different from those associated with stereotypically female occupations. On the supply side, barriers to full career development for women are likely to be those common to all professional occupations plus the effect of women's perceptions of the intensity of the demand-side barriers for the particular profession (i.e., any lack of support of male colleagues, professional isolation and lack of access to information network, or employers' lack of perception of the women's career potential). One group of supply-side barriers includes presence of children, husband's unfavorable attitudes, guilt feelings of the women related to a high sense of responsibility for monitoring consumption at home, and poor earlier education choices based on limited perception of career possibilities. In addition, the two probably most important are geographic mobility or immobility, related to demands of family, and lack of the on-the-job-training, caused by either gaps in the women's career patterns or diminished opportunities for investment in human capital for women when working. The purposes of this paper are to use preliminary data from the Committee on the Status of Women in the Economics Profession (CSWEP), American Economic Association (AEA) 1974-75 Survey of Economists to test a model showing that two supply curves exist for economists, instead of one, with the division related to nonpecuniary returns for women, and then consider whether more than two supply curves should be formulated to allow for whether workers are major earners in the family, equal earners, or secondary earners.2 The model used as a starting point, * Professor of economics, Southern Methodist University. I wvant to thank Patricia Kirby and Anna Fay IFriedlander for help in computing and prograimming. 1 For a qualitative discussion of such barriers, see Kenneth E. Boulding and Barbara B. Reagani. 2 Informationi on the sampling and survey procedure anid qualityof sample may be obtained from the author.