Knowledge that Transforms

tional attainments suggests the usefulness of special training programs for unskilled immigrants. Further, the persistence of racial differentials underscores the importance of the enforcement of anti-bias employment regulations to protect non-white immigrants. Recent changes in immigration law under the Refugee Act of 1980 will increase uncertainty regarding the composition of future immigration waves. It is likely, however, that the proportion of immigrants for whom specialized training and anti-bias regulation enforcement can hasten the traditional catch-up process which has historically characterized the immigrant economic experience will continually increase. Additional research using more recent data will allow both the efficacy of the recommendations advanced and the persistence of the observed patterns to be tested.

Ahstract-The usual treatment of consumer demand theory assumes a solution to the demand equations with positive quantities of all commodities. This paper characterises a class called hierarchic demand systems for which only a subset of commodities are in the purchased set. The hierarchic linear expenditure svstem is used to illustrate interesting properties of such systems. The empirical section shows how the number of commodities purchased expands with total expenditure both in aggregate and for commodity groups. The data clearly establish the empirical importance of corner solutions and of the purchase decision in demand studies.

The hedonic travel cost method is a technique which reveals how much users are willing to pay for the individual characteristics of outdoor recreation sites. The prices of recreation attributes are estimated by regressing travel costs on the bundles of characteristics associated with each of several potential destination sites. The demand for site characteristics on site quality is then revealed by comparing the site selection of users facing different attribute prices. The technique is applied to value steelhead fish density in Washington State streams.

Regressions containing dummy variables are easily estimated by the familiar expedient of dropping out one of the categories but the result is often awkward to interpret. Since coefficients of dummy variables are determined only up to an additive constant, however, the equation can be transformed into a more easily interpretable form by adding on an appropriately chosen constant to each coefficient. For most regressions the constants should be chosen to force the mean of the transformed coefficients to equal 0. For logarithmic regressions the constants should be chosen to force the sum of the antilogs of the coefficients to equal 1. With logarithmic demand curves fitted to monthly data the resulting antilogs become monthly seasonal indexes. The technical procedure by which dummy variables are used to capture the influence of categorical variables in regression equations is generally familiar (see Goldberger (1964), Kmenta (1971), Johnston (1960), or, to go back near the beginning of things, Suits (1957)). In many cases, particularly where only two classes of observation are involved, results presented in the usual way involve no special problems of interpretation. For example, use of a dummy variable to distinguish pre-war from post-war behavior, or to measure the shift in a relationship during the period of a strike is readily understood by any reader. But where a set of several dummy variables is employed to measure the variation in behavior among a number of classes-regions, education groups, age brackets, and the like-there is often an important difference between the purely mechanical problem of fitting the regression and the quite different problem of presenting the results in the most effective fashion. The purpose of this paper is to call attention to this distinction, and to illustrate by simple examples.

This paper presents a detailed examination of the effect of piece rates and other forms of incentive compensation on individual employee earnings. The study examines the impact of incentives on the earnings of over 100,000 employees in 500 firms within the footwear and men's and boys' clothing industries. Two distinct incentive effects are observed. First, incentive workers' earnings are more disperse than identical time workers' earnings within both firms and occupations. This greater variance is maintained with the addition of controls for heterogeneity of individual characteristics between the two sectors. Second, incentive workers receive an earnings premium, in part to compensate for the greater variation in their income, and partially as a result of an incentive- effort effect. The incentive earnings premium averages 14%, controlling for individual characteristics, occupational classification, and individual firms. Subsequent decomposition of the incentive-earnings premium reveals that the compensating differential for variation in earnings accounts for a minority of the incentive earnings premium. This supports the view that increased effort by incentive employees leads to relatively greater earnings.

This paper deploys the Granger method to determine the directions and patterns of causality between national income and total as well as various components of public expenditure. Empirical results based on the data for India (1950-81) suggest that while at the disaggregate level the causal process is rather diverse, it is essentially feed back-type at the aggregate level. It neither confirms the Wagnerian (Income Public Expenditure) nor the Keynesian (Public Expenditure National Income) view. The paper recommends that two variables be treated as jointly-dependent in both the public finance and macroeconometric studies.

In this paper we present a specification test for the Tobit model. Specifically, we test the Tobit model against the alternative of a two-part model in which one set of parameters determines the probability of a limit observation while a second set of parameters determines the distribution of the non-limit observations. An advantage of our test is that it is easily calculated from the Tobit residuals.

5. This finding may reflect both the fact that, relatively speaking, manufacturing industries do not "import" much R&D (though they "export" a lot to non-manufacturing industries) and that at the more disaggregated levels used by us Scherer's estimates are based on smaller samples and may be subject to more significant errors in variables problems.On the first point, see Scherer (1982b, p. 233).

A hstract-Estimates of the demand for the characteristics contained in a differentiated product such as housing can be based on hedonic regressions. However, previous studies have not dealt with several potential problems in such estimation. A more appropriate framework for the estimation is provided in this paper. Also data from a number of cities are used to eliminate the identification problem, and the endogeneity of the marginal prices derived from non-linear hedonic equations is considered in the estimation. The results on own and cross price elasticities, expenditure elasticities, and the effects of socio-economic vafiables accord well with expectations.