Research using U. S. manufacturing data finds that job destruction fluctuates more over time than job creation, but some new data indicate that this behavior is not shared in growing sectors, where job creation varies more. An explanation for this finding based on the interaction between (S,s)-type adjustment and trend employment growth delivers some tight predictions for the relationship between trend growth and the volatility of creation relative to destruction. Although it scores some notable successes, the simple (S,s)-based model augmented with a low-frequency trend cannot fully account for the strength of the empirical relationship between relative gross-flow volatility and trend growth across one-digit industries.

This paper attempts to provide microfoundations for the knowledge production function in an idea-based growth model. Production of new ideas is made a function of newly reconfigured old ideas in the spirit of the way an agricultural research station develops improved plant varieties by cross-pollinating existing plant varieties. The model shows how knowledge can build upon itself in a combinatoric feedback process that may have significant implications for economic growth. The paper's main theme is that the ultimate limits to growth lie not so much in our ability to generate new ideas as in our ability to process an abundance of potentially new ideas into usable form.

This paper develops a framework for analyzing transactions that transfer a company's controlling block from an existing controller to a new controller. This framework is used to compare the market rule, which is followed in the United States, with the equal opportunity rule, which is used in many other countries. The market rule is superior to the equal opportunity rule in facilitating efficient transfers of control but inferior to it in discouraging inefficient transfers. Conditions under which one of the two rules is overall superior are identified; for example, the market rule is superior if existing and new controllers draw their characteristics from the same distributions. Finally, the rules' effects on surplus division are analyzed, and this examination reveals a rationale for mandatory rules.

This paper attempts to demonstrate how “diversity theory” can be applied to the analysis of real-world conservation policies. The specific example chosen to serve as a paradigm concerns preservation priorities among the fifteen species of cranes living wild throughout the world. The example is sufficiently actual to show how diversity theory can be used operationally to frame certain critical conservation questions and to guide us toward answers by providing informative quantitative indicators of what to protect. At the same time the cranes example is rich enough that it illustrates nicely some broad general principles about the economics of diversity preservation.

This paper investigates the effect of increased import competition on U. S. manufacturing employment and wages, using data for a panel of manufacturing industries over the 1977–1987 period. The empirical analysis uses previously unavailable industry import price data and an instrumental variables estimation strategy. The estimates suggest that changes in import prices have a significant effect on both employment and wages. The dramatic appreciation of the dollar between 1980 and 1985 is estimated to have reduced wages by 2 percent, and employment by 4.5–7.5 percent on average in this sample of trade-impacted industries.

An oft-repeated goal in many contexts is the "preservation of diversity." But what is the diversity function to be optimized? This paper shows how a reasonable measure of the "value of diversity" of a collection of objects can be recursively generated from more fundamental information about the dissimilarity-distance between any pair of objects in the set. The diversity function is shown to satisfy a basic dynamic programming equation, which in a well-defined sense generates an optimal classification scheme. A surprisingly rich theory of diversity emerges, having ramifications for several disciplines. Implications and applications are discussed.

A model of growth is developed in which finite-lived individuals invest in human capital, investments have a positive external effect on the human capital of later cohorts, and labor with more human capital produces higher-quality goods. Stationary growth paths are analyzed, paths along which human capital and the quality of goods grow at a common, constant rate. It is also shown that if a small open economy is either very advanced or very backward relative to the rest of the world, then its rate of investment in human capital is lower under free trade than under autarky.

Job market segmentation refers to the idea that there tends to be a correlation among high wages, high productivity, high capital intensity, high value added, few quits relative to layoffs, and low labor turnover. This paper develops a model of wage dispersion and job market segmentation based on the very sparse assumption that the only departure from a strictly orthodox neoclassical world consists of wages being sticky in the short run. Implications of the model are explored and discussed.

A canonical price-normalized form is proposed as a generalization of the ordinary consumer's surplus expression commonly used to evaluate changes in economic welfare. This familiar-looking formula, it is proved, can be rigorously interpreted as representing the first- and second-order terms of a Taylor-series expansion for the equivalent-variation or willingness-to-pay function of a single consumer. In principle, the lowly consumer's surplus triangle-and-rectangle methodology can be rigorously defended as an exact approximation to a theoretically meaningful measure as long as prices are appropriately deflated. The appropriate price deflator is derived, and some implications are discussed.

Even when only labor is scarce, the validity of a labor theory of value depends on reducing all labor to a homogeneous equivalent. The various implicit or explicit efforts of Smith, Ricardo, and Marx to do so are shown to fail on more counts than previously recognized. The labor theory is also shown to fail when laborers are not indifferent among alternative occupations.