"January, 1961."

Обсуждаются следующие темы: чистая теория производства, функциональное распределение дохода, технический прогресс, источники международных конкурентных преимуществ. Анализируются эластичность замещения между трудом и капиталом в обрабатывающей промышленности; производственные функции различного типа.

T HERE is general agreement that nineteenth century was unparalleled in growth of large-scale production. However, fate of scale of production in twentieth century seems to be lost in a limbo of uncertainty. One investigator comments that the movement towards large-scale production is largely a nineteenth century phenomenon and had run its course by i890. 1 Another commentator holds that size is growing with great rapidity. 2 Yet again we read that long-term, general and pervasive increase in plant size throughout most industries has come to an end. I It is purpose of this paper to present some empirical evidence on changes in scale of production in United States manufacturing industry. By scale of production we refer to size of plant rather than size of firm. The very notion of scale of production implies a relationship between volume of output and unit costs. Where economies of scale bear upon questions of monopoly, problem is one of control of output. Hence, scale of production is measured in this paper by physical output per establishment. Indexes of physical output are available for United States manufacturing industry, permitting construction of indexes of scale of production as measured by an index of output per establishment.4 To measure scale by number of employees would tend to underestimate industrial expansion linked with labor-saving innovations.5 Similarly, trends in ratio of value-added or capital per establishment may diverge significantly from movement of scale. In addition, data from which indexes of value-added can be constructed are not available for a sufficient period of time to be useful while records of capital value are flagrantly unreliable in that they are subject to judgment of person making estimate and to vagaries of longand short-term fluctuations in prices. The interpretation of long-term movements in indexes of output per establishment as changes in optimal plant size need not be vitiated by assumption of an optimum range of output rather than an optimum point

(e) Net interest paid by government. The national income net interest total comprises total interest accruing to United States persons and governments less the total interest paid by United States governments to persons, governments, and businesses. The personal income interest total is obtained by adding to the national figure the excess of interest payments by governments over their interest receipts. Thus it measures total interest paid to United States persons.3 The share of the national total attributable to any one state is extremely difficult, if not impossible, to estimate by direct means, if this were desired. But allocation can be made more easily, although the method rests upon the same sort of fundamental and hazardous assumptions as in the case of allocating corporate income. Figures are availalble from the Department of Commerce of private interest received by residents of Texas and the United States. The Texas state income component of United States net interest paid by governments was obtained by applying the ratio obtained from the private interest figures to the United States net government interest total. The assumption here, of course, is that Texas residents' entitlement to a share of the national total of net government interest was the same as their entitlement to a share of the national total of private interest, as reflected in the payments actually made or imputed. The method also, as in the corporate income case, has the merit of conforming to the conceptual framework which emphasizes the wherereceived measure. TABLE 4.-GOVERNMENT AND BUSINESS TRANSFER PAYMENTS, TEXAS, I950-58 ($ million)

IT is widely believed that for some individuals saving may be negatively related to the rate of interest. The argument is usually put in terms of a person's desire to have a particular sum (or an annuity of a particular size) available at some future date. In such a circumstance a rise in the rate of interest will make easier (in terms of present abstention from consumption) the attainment of that particular future sum (or annuity). Therefore, the argument continues, the rise in the interest rate will reduce saving.' We do not wish to question the proposition that such perverse reaction to changes in the interest rate may adequately describe the behavior of some individuals; however, we do propose to criticize the extension of the proposition about individuals to the body of consumers in aggregate. This paper takes issue with those who contend that the aggregate saving-interest rate function for households may be perverse. 2 Our purpose is threefold. First, we wish to demonstrate that the use of the saving-for-a-fixedfuture-sum argument as support for the hypothetical negative relation between aggregate personal saving and the interest rate has unacceptable implications. In particular, it will be shown that it implies that aggregate personal saving is non-positively associated with aggregate real income.3 Second, we shall argue that a more general way to discuss a negative relation between saving and the rate of interest is in terms of the price elasticity of demand for future goods. Saving for a fixed future sum is a special case of this more general phenomenon. But third, we shall demonstrate that if the aggregate saving-interest rate relation is perverse, then the implied reaction of consumers to changes in expected future money prices would also be perverse.4 We shall treat these matters in turn after introducing the geometric tools

COLLECTIVE bargaining results in the periodic negotiation of a structure of wage rates and of other conditions of employment. Variation in the structure may be thought of as a step function through time constant between the effective dates of bargained changes and rising or falling discretely on those dates. As illustrated below, the level of wages shifts at times t, t + I, and t + 2 and is otherwise constant. It is these shifts that economists Wage_Iordinarily think of as changes in the price of labor to the employing t t + I t + 2 firm. Time Because average earnings data are more readily available than are wage rate data, students of wage problems have often been forced to rely upon earnings as a measure of the price of labor. This measure, of course, reflects not only changes in basic wage rates but also changes in the distribution of workers throughout a given wage structure. For example, if at some time an industry increases its employment of highly paid, skilled workers, average hourly earnings will rise. But is such a rise to be interpreted as a rise in the price per unit of labor? The answer would appear to be no, if we rely upon deductions from the theory of the firm. Starting from an equilibrium situation, a firm that increases its employment of a factor is most likely responding to a rise in the derived demand for that factor's services. The derived demand may have risen because of changes in marginal physical product, the price of the product, the prices of other factors, and so forth.' Just as a change in the proportion of more highly paid workers will cause a rise in average hourly earnings while basic rates of pay remain unchanged, so, too, will other variations in the composition of the work force. Studies of the Bureau of Labor Statistics 2 cite the following additional influences that tend to raise earnings: increases in the proportion of workers who are male, who work in high-wage regions (e.g., the North and the Northwest), who are employed in more densely populated urban areas, who work at premium rates, and who are paid according to an incentive or piece-rate system. Variations in some of these influences are not so easily interpreted by applying microeconomic theory as is an increase in the employment of a single factor, assumed homogeneous. Thus, for example, if a firm opens a plant in the low-wage area of the country, thereby decreasing the average earnings of all its workers, should this be interpreted as an increase in the average supply of labor as a whole or as an increase in the demand for labor of a particular grade? Or is this the discovery of a resource that justifies our speaking of a different production function? We may say that the answers to these questions depend in part upon what was in the mind of the entrepreneur who decided on opening the new plant. But this does not carry our analysis far until we know what was in his mind. Fortunately, for the purposes of this paper we need not define unequivocally the theoretical meaning of such changes as those discussed. It is enough to remark that many investigators of wage movements have found it necessary to * I am indebted to Leonard S. Rhynus, Susan Crittenden, and Terry Allen for help in assembling materials for this study. The companies and unions included here were generous in answering detailed questions about their negotiations. Financial aid was received from Wesleyan University and from the Research Committee for Public Affairs at Wesleyan, a committee charged with allocating funds from a Ford Foundation grant. Philip Brown processed the data for the wage rate index. William Barber, Harry Douty, Melvin Lurie, and several economists in industry offered valuable comments on an earlier draft of this paper. Any errors in the work are, of course, my own. 1 While the foregoing is thought to be a fair general interpretation of employment changes, it is not meant to preclude the cases wherein union work rules can compel an increase in demand. In such cases, indeed, supply (pressure) creates its own demand! 2 Harry Douty, Union and Nonunion Wages, in W. S. Woytinsky and Associates, Employment and Wages in the United States (New York, I953), 493-50I