Lack of explicit markets and associated data have impeded measurement of nonpecuniary rewards in the workplace. Most of the published literature employs hedonic models that permit estimation of market-clearing prices, but do not allow for identification of demand schedules. In an alternative approach, used successfully by environmental economists, the author develops quasi-market data and uses it to estimate demand for the nonpecuniary rewards associated with leadership. In addition to price responsiveness, individuals exhibit tastes for the amenities of leadership that differ substantially, and in expected directions, with their personal and professional characteristics. Copyright 1991 by MIT Press.

A central question in industrial organization is why profit rates differ so dramatically across firms and industries. One of the many explanations offered for this phenomenon is the failure of conventional accounting methods to adjust for intangible capital stocks, i.e., it is argued that profit rates do not differ dramatically when capital stocks are correctly calculated to include intangible R&D and advertising capital. To test this hypothesis individual advertising capital stocks are calculated for firms in the toys, distilled beverages, cosmetics, and pharmaceuticals industries, and R&D stocks are calculated for the pharmaceuticals firms. The adjustments do not eliminate the wide dispersion in profit rates. Copyright 1991 by MIT Press.

The authors use Census-based data on the state distribution of the undocumented-alien population in analyzing the relationship between that population and unemployment among youth and minority workers. Regression results from their two-equation models do not support commonly expressed fears that undocumented immigration has caused any substantial increases in joblessness among these presumably vulnerable groups, although small amounts of displacement are indicated. A sizable reverse effect is evident: undocumented immigrants tend to concentrate in states where labor markets for these marginal groups are most favorable. Copyright 1991 by MIT Press.

Jeffrey C. Fuhrer, Kenneth J. Weiller, A Multivariate Posterior Odds Approach to Assessing Competing Exchange Rate Models, The Review of Economics and Statistics, Vol. 73, No. 1 (Feb., 1991), pp. 113-124

This paper proposes criteria for classifying time-series forecasts of inflation as weakly, sufficiently, strongly, and strictly rational. Forecasts taken from the ASA-NBER surveys, some well-known one-step-ahead forecasting techniques, and a novel variable length autoregressive moving average model are tested against these criteria. None of the forecasts series meets the criteria for strict rationality nor, even, the less demanding criteria for strong rationality. While agents forecast as best they can, their forecasts are not likely to meet stringent rationality criteria suggested by econometricians. Copyright 1991 by MIT Press.

This paper devises an empirical methodology for discriminating between the median voter model and the oligarchy choice model when applied to the collective provision of a public good. In particular, an empirical methodology is engineered so that a nested test procedure can evaluate competing models. The authors apply this methodology to examine the demand for military activities of ten members of the NATO alliance. A two-stage least squares procedure, corrected for autocorrelation, is used to estimate the demand equations. Test results vary: some allies abide by the median voter model, others by the oligarchy model, and still others by neither. Copyright 1991 by MIT Press.

Cletus C. Coughlin, Joseph V. Terza, Vachira Arromdee, State Characteristics and the Location of Foreign Direct Investment within the United States, The Review of Economics and Statistics, Vol. 73, No. 4 (Nov., 1991), pp. 675-683