Knowledge that Transforms

David J. Smyth, William J. Boyes, Dennis E. Peseau, The Measurement of Firm Size: Theory and Evidence for the United States and the United Kingdom, The Review of Economics and Statistics, Vol. 57, No. 1 (Feb., 1975), pp. 111-114

provide a criteria for rejecting the importance of substitution in ERP calculations. In addition, it is no less restrictive to assume a priori that all industries have the same value for a, whether it be 0.5, 2.0 or the traditional value of zero. It has been pointed out elsewhere that the realistic case to consider is what happens to the rankings when different industries have different values for a'.3 A meaningful approach would involve answering the question of what is the highest and lowest ranking an industry could obtain under any combination of different hypothetical values for o-. The data for the 135 industries in the investigation indicate that applying these criteria creates scope for the rank correlations to be somewhat less than the observed figures of 0.99, but the author's contention of a high correlation still stands. Nevertheless this result, while being interesting and useful, can however be misleading if applied as a general case. There is in fact considerable scope for variation in industry rankings when there is a wide disparity in the magnitude of the calculated ERP across the industries. This is the experience of some countries4 and it is also the case when, for a variety of practical purposes, industries are classified in smaller groups according to the intensity of their protection. For the group of highly protected industries, for example, there is traditionally a wide spread in the magnitude of the ERP and therefore considerable scope for variation in industry rankings. The result being that in the study under discussion for the 10 most highly protected industries there are 9 industries that could fill the top 4 positions and 7 industries that could fill the bottom 2 positions in the industry rankings.5

THE market for new law school graduates has undergone considerable change in recent years, with starting salaries increasing rapidly following the enormous increase in rates of the major New York firms in 1968' and enrollments into law programs skyrocketing in the late 1960's. What explains these and earlier developments in the market for new lawyers? Does the influx of students reflect economically responsive supply behavior with respect to salary and other labor market incentives? What factors underly changes in the salaries of starting lawyers? This paper investigates these questions with a variant of the recursive model of the market for highly-trained workers originally used to analyze engineering shortages and surpluses (Freeman, 1971). Application of the model to a profession which differs substantially from engineering and related sciences but has a similar fixed time delay in producing new specialists provides a test of its general validity, as well as insight into the operation of the legal labor and education markets. This paper begins with a brief description of the empirical phenomenon under study -patterns of change in the number of law students, legal salaries, and activity in the profession. Section II develops a recursive cobweb-type model to explain these developments. Section III presents estimates of the supply and salary equations of the model. The final section examines the endogenous cyclic fluctuations in the market and summarizes the major findings.

IN a recent paper investigating the efficiency of earnings retentions, Baumol, Heim, Malkiel and Quandt (1970) (hereafter BHMQ) estimate the rate of return on earnings retentions, debt and new equity for a large cross section of firms. They find new equity earns considerably higher returns than the ploughback of profit and depreciation, with the returns on new debt falling between. BHMQ do not explain these striking results, beyond suggesting a lack of market discipline on the reinvestment of internal funds. In their concluding remarks, they pose a number of open questions for future research and analysis

A serious impediment to the design of appro,A-IL priate public policies with regard to the ''energy crisis is the lack of general agreement concerning the determinants of energy demand. This paper considers the determinants of residential demand for electric energy. The results indicate that the long-run own-price elasticity of demand is equal to at least unity, contrary to the common assumption that demand is not responsive to price.

T HE overall impact of poor health on earnings is large the average disabled man aged 18 to 64 years suffers a 37% reduction in yearly earnings. This loss is the result of the effects of poor health on all the components of earnings: labor force participation, weeks worked per year, hours worked per week, and earnings per hour. In each case there is a substantial effect of health, not just when a comparison is made between well and sick persons, but also when adjustments are made to account for the different socio-economic characteristics of the two groups. This analysis not only provides estimates of the effect of health on each component of earnings, but also the aggregate earnings loss attributable to long term disability 23 billion dollars in 1966. The first section outlines some of the previous analyses concerning the effects of health on the various components of earnings and briefly describes the data and method used in this study. The effects of health are usually measured by comparing the status of persons who are well with those who are disabled. The second and third sections offer this comparison as well as the true effects of health which are based on the difference between the current status of the disabled and their estimated status, based on how they would have behaved had they been well, taking into account the different socioeconomic characteristics of the well and disabled groups. The first of these two sections provides the comparisons for each of the components of earnings. As the analysis is carried out for subsamples of men and women, and blacks and whites, it is possible to examine the different ways in which disability affects different groups. The second section of the pair continues the analysis in terms of a more aggregate measure the overall loss of earnings to the economy within a year. A final section provides a brief summary and an outline of the major findings and conclusions.

ONE of the most important stages of the process of technological change is diffusion. Since the rate of diffusion is the rate at which a new technique is actually put into use, it is a critical determinant of the rate of growth of productivity. If certain types of firms and industries are quicker to diffuse a new, more efficient technique, they are quicker to attain the resulting increases in productivity. It would certainly seem useful, particularly from the point of view of public policy, to develop convincing empirical evidence concerning the characteristics of such firms and industries. Previous studies have provided a sound foundation for studying diffusion.' This article attempts to build on this foundation by observing the diffusion of one of the twentieth century's most important manufacturing innovations numerically controlled machine tools in ten industries. One purpose of this study is to provide a further test of the usefulness of the model of the imitation process developed by Mansfield (1961, 1968). In particular, we are interested in seeing how well his model can explain the increase over time in the percentage of new machine tools purchased that have numerical controls. This involves a different measure of the rate of diffusion than the measures investigated to date by other researchers. Also, we look at the effects on the rate of diffusion of an industry's market structure and the extent of its investment in R&D. Although previous studies have touched on these factors, this study goes further in measuring their effects than any previous work. Further, we investigate how the characteristics of the early users of numerical control (NC) differed from those that were slower to use it, and we study the determinants of the intrafirm rate of diffusion.