Knowledge that Transforms

DESPITE the importance of wage rates in our understanding of economic activity, there are almost no wage data available appropriate for studying changes in the wages received by different race, sex, age, and education groups in the labor force. The only official data on hourly wages, those published in Employment and Earnings, are disaggregated by industry, but not by the personal characteristics of the wage-earners. Data on annual incomes and earnings by personal characteristics are available from the Current Population Survey, but they are not suitable for the calculation of hourly wage rates. As a result of this substantial defect in the wage statistics of the Federal Government, the recent controversy about the changes in the last decade in the relative economic well-being of blacks and whites was carried out in the absence of any information about changes in their wage rates. This study uses the 1967 Survey of Economic Opportunity (SEO), a new source of data, and the 1960 Census 1/1000 Sample in a comparison of wage rates in 1959 and 1967. Estimates of wages of individuals in 1959 are obtained by making use of additional data which were unavailable to previous investigators.' Using 1967 wage rates, recorded directly in the SEO, and the improved estimates of 1959 wage rates, average wages by race and sex are found in each of the two years. The variation of individual wages by characteristics such as age, race, sex and education is then estimated in both years, so that changes in wages can be calculated when hours worked by age, race, sex and education are held constant. This gives Laspeyres and Paasche indices of wage rates. In the final part of the paper, the structure of wage rates by personal characteristics in each of the years is studied. We found that average wage rates of blacks increased considerably more than those of whites between 1959 and 1967. Part of the increase of blacks' wages can be attributed to changes in the composition of the labor force, (mainly to an increase in average education). Even when the 1959 composition is used to calculate 1967 wages, so that changes in the level of education are eliminated, blacks had substantially greater increases in wages than whites. The average wage of blacks was still much lower than that of whites in 1967. Wages differentials by education were almost the same in both years, especially for whites. Wages of older workers declined relative to those of prime-aged workers. There was no consistent pattern in the changes of wages of young workers relative to wages of 35-44-yearold workers: young white females had higher relative wages; young white males had almost the same relative wages; young black females had generally higher relative wages; wages of black males aged 18-24 increased but wages of black males aged 16-17 decreased relative to wages of prime-aged black males. In both periods wages were, in general, lower in the South and higher in the West than in the rest of the country. Relative wages in the South and West increased during the period, so that by 1967 wages in the West were substantially higher than the average nationwide wage rates.

A UNIQUE feature of the Kennedy Round of the General Agreement on Tariffs and Trade (GATT) Negotiations (1964-1967) was the use of the technique of reducing tariffs. Under a linear approach each participant agrees to make a uniform across-theboard percentage cut in import duties, subject only to a bare minimum of exceptions and to the condition that the country achieves overall reciprocity. This approach was adopted in an effort both to reduce the time and effort involved in traditional item-by-item negotiations and to achieve a deeper average duty-cut for all participants. In prior negotiations under the GATT, the bargaining technique was essentially bilateral. Request and offer lists were exchanged between all pairs of countries and bargaining then proceeded on a two-by-two basis. In order to make this type of negotiation feasible, the so-called principal supplier rule was followed. A country's offer list to another country covered only those items for which the other country was the principal or at least, a very important import supplier.1 This procedure minimized the problem of conducting simultaneous negotiations on the same item by different country teams. At times during the negotiations, however, information concerning concessions tentatively agreed upon in the independent bilateral negotiations was made available to all pair-wise teams so that each might evaluate the indirect effects of the other negotiations on its bilateral balance of concessions. Finally, when each pair of countries had reached a mutually satisfactory balance of concessions, the list of offers by a country to each other country was combined into a single tariff reduction list that applied to all countries. Just what constituted a satisfactory balance of concessions or reciprocity was never openly defined, but it came to mean that a country would achieve an approximately equal increase in exports from the concessions it obtained as the increase in imports from the concessions it granted.2 The main concern of negotiators was to achieve this reciprocity on the total trade of their country with the rest of the world. However, since the negotiations were conducted mainly on a bilateral basis, the notion of reciprocity also tended to dominate the pair-wise negotiations between countries. As became increasingly apparent through successive GATT negotiating rounds, following the principal supplier rule and imposing a condition of approximate bilateral balance for changes in the volume of trade considerably limited the set of feasible total increases in exports and imports. The early hopes of many Kennedy Round negotiators that most of the difficulties connected with the item-by-item, bilateral negotiating technique would be eliminated by following a linear-cut rule proved to be much too optimistic. Some industrial countries, namely Canada and Australia, as well as all the less developed countries did not accept the linear rule. More disappointing, however, was the reluctance of most major countries to cut agricultural duties on a linear basis and the insistence of the European Economic Community (EEC) on a special rule to handle significant disparities in tariff rates of various countries on the same item.3 Lists of exceptions for certain countries also proved to be larger than was hoped for initially. Once it became apparent that reciprocity could not be achieved by bargaining on a

W HILE the subject of racial discrimination has enjoyed considerable attention in the literature, a careful distinction between discrimination based on color and discrimination based on economic status of one's parents continues to be a rare event. This paper attempts to render that distinction more explicit by examining the relative socio-economic achievements of black and white children who were reared in families receiving public assistance. An examination of those achievements leads to the suggestion that the educational and early occupational handicaps imposed upon these lower class youths by reason of their impoverished economic origins are of the same kind and perhaps quantitatively as important as those handicaps attributable to racial discrimination. Thus, class discrimination is seen to be potentially as potent a force as is racial discrimination in limiting the attainments of poor youth. The basic data employed here are taken from a national sample of families who had received Aid to Families with Dependent Children (AFDC) up until the beginning of 1961.' The immediate focus of this inquiry is on the 1,653 male offspring of those families who were at least 16 years of age at the time of the interview (January-March 1961). Nearly all of these have completed their education and already embarked upon their occupational careers. Estimates of the relative impacts of class discrimination and racial discrimination are obtained by contrasting these educational and early occupational achievements of the white and black AFDC sons both to each other and to a representative cross section of the entire male population in the United States.

ECONOMETRIC studies of production at the aggregate and semiaggregate levels have concentrated largely on the relation between capital and labor inputs, on the one hand, and some measure of real gross value added on the other. Studies that have gone beyond this scope to include a larger number of inputs have been confined to a highly restrictive class of production functions. Input-output studies using fixed production coefficients and studies in the agricultural field using CobbDouglas functions fall within this category.' A growing number of important economic questions, however, cannot be answered within the traditional models, but require instead a framework that allows a richer specification of the substitution possibilities among factors of production. The question of whether there are differences in the extent of substitutability or complementarity between capital and different skill categories of labor, which has been considered by Bowles [4], Cook [6], and Griliches [8], is one example where a more general production model is required. In addition, it is likely that the estimation of production parameters, in particular the elasticity of substitution (ES) between capital and labor, is biased when factors other than capital and labor are ignored. This paper presents the results of an econometric investigation of these problems using time-series data for Swedish manufacturing for the period 1870-1950. Section II presents some simple evidence that shows the extent of variation in factor output ratios in the data. Variation in these ratios is not consistent with the conditions under which the use of a valueadded production function can be justified. Section III then presents a general production model that allows the measurement of the price responsiveness of factor utilization, and section IV discusses the results of estimating the model. Finally, in section V the results of the general model are compared with the results obtained using the alternative gross value added framework and using direct production functions.

unemployment rates quoted in table 1; however, a fuller statement is available on request from the author. The United Kingdom figures for 1960 onward are based on a letter to the author (dated 28/1/71) revising [7]. For earlier years the official statistics have been raised by a percentage based on the revised BLS information. Percentage adjustments have also been made to the French (Institut National de la Statistique et des Etudes Economiques) and German (registration series from the ILO Yearbook of Labour Statistics) figures in similar fashion, except that the 1958 German figure was supplied by the BLS. The Swedish figures for 1953-1961 come from [3]. The Italian figures for 1954-1958 are based on the irregular ISTAT surveys adjusted for seasonality and for comparability with United States definitions (the latter on an absolute basis) on the basis of experience since 1959. The 1953 figure, for reasons described in the supplementary statement, is the average for 1954-1956. The Australian unemployment rates for 1964 and 1965 are those of the Commonwealth Statistician, while those for 1958-1963 are based on an upward percentage adjustment of the Department of Labour and National Service's registration series. The Belgian figures throughout are based on the percentage reductions indicated by [10] and [11]. The Dutch rates are those contained in the ILO Yearbook, since [10] and [11] indicated slight adjustments in conflicting directions.