Knowledge that Transforms

This paper uses a survey of private establishments to examine the determinants of the firm's relative demand for partand full-time workers. The elasticity of substitution of part-time for full-time workers is about 1.5, considerably lower than previous estimates with aggregate data. The results indicate that the quasi-fixed labor costs have a negative impact on the proportion of part-timers in a firm's work force.

Data are used for thirteen industrialized countries to investigate convergence of labor productivity levels in individual manufacturing industries over the 1963-82 period. The authors find convergence in virtually every manufacturing industry. Among these countries, the co efficient of variation of industry labor productivity declined in all but one of twenty-eight industries. However, productivity convergenc e is stronger for all manufacturing than within individual industries, especially heavy and high-technology industries. Also, variation in employment mix among countries plays little role in explaining cross-country differences i n aggregate manufacturing productivity, nor have changes in employment mixes been an important source of convergence.

A specialized survey of Maine households' responses to information about the risks associate d with radon concentrations in their homes and water supplies was use d to evaluate how they form risk perceptions. The findings support a modified form of a Bayesian learning model to describe how individual s used the information to revise their risk perceptions. Moreover, in dividuals who took some mitigating actions reported lower risk percep tions after that action. The overall results are potentially importan t to the use of information programs as policy instruments for risk r eduction because they indicate that new information can affect risk p erceptions in a systematic way.

This study demonstrates that the mixed diffusion-jump process is superior to the stable laws or a mixture of normals as a model of exchange rate changes for the British pound, French franc, and the We st German mark relative to the United States dollar. The parameter value s for the mixed diffusion-jump process are dependent on the monetary policy regime in force in the United States, with the estimates for the franc and mark being intertemporally similar but different from the pound.

The debt crisis that began in 1982 forced a number of developing countries that had relied on external financing into rapid adjustment of their current account positions. In many of these countries external adjustment mainly took the form of import reduction, or what has been termed 'import compression,' to generate trade balance surpluses necessary to service the existing stock of foreign debt. While the effects of import compression on consumption and growth have been discussed in the literature, there has been little concern expressed with regard to the direct effects such a policy can have on export performance. This paper develops a model that takes explicit account of the feedbacks between imports and exports that arise through the effects of imported inputs on exports and the availability of foreign exchange on imports. Empirical tests of this model for 34 developing countries tend to confirm both these hypotheses. These results point clearly for additional foreign financing to reduce the need for import compression and its attendant-negative effects on the supply of exports.

Jacques van der Gaag, Wim Vijverberg, A Switching Regression Model for Wage Determinants in the Public and Private Sectors of a Developing Country, The Review of Economics and Statistics, Vol. 70, No. 2 (May, 1988), pp. 244-252

Private transfer payments are modeled as outcomes of a constrained social choice pro blem facing donors. The approach is applied to a large household leve l data set for Java and hypotheses are tested concerning the performa nce of the "moral economy" as a social security system. Transfer be havior is found to be very different between rural and urban areas. W hile transfer receipts and outlays are income inequality reducing in rural areas, this is not the case in urban areas. There is also evidence of transfers being targeted to disadvantaged households such as the sick, elderly, and (for urban areas) the unemployed.

Catherine Morrison, Quasi-fixed Inputs in U.S. and Japanese Manufacturing: a Generalized Leontief Restricted Cost Function Approach, The Review of Economics and Statistics, Vol. 70, No. 2 (May, 1988), pp. 275-287

Labor supply functions for married men and women are formulated as a dynamic simultaneous equations system , which is estimated using panel data. Controlling for fixed individu al effects allows marginal labor supply responses to be disentangled from permanent patterns in hours worked due to assortative mating. Th e results suggest that the labor supply of husbands and wives without preschool children is not jointly determined in the short run, while families with young children exhibit strong interactions in work hou rs and negative cross-earnings effects. Neither the joint utility mod el of family labor supply nor an ad hoc "traditional family" model is supported by these results.