Knowledge that Transforms

This article considers the representativeness of the Panel Study of Income Dynamics (PSID) over its 14-year history from 1968 to 1981 given the dynamics of entry and exit from the panel. By 1981, 40% of the original members had left the sample and were replaced by new entrants who joined either existing households or new households being formed by members of the original sample. We consider the distribution of demographic characteristics and earnings equations over time, and we compare the PSID with the Current Population Survey (CPS). By either approach we find little evidence that the PSID has become unrepresentative.

This article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions. The empirical evidence then shows that the most frequently used search methods (i.e., friends and relatives and direct applications without referral) are also the most productive in generating offers and acceptances. The number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs. Specific methods are chosen in a manner that generates positive average effects on outcomes for those using them. Copyright 1988 by University of Chicago Press.

A current trend among oil-producing nations with private oil sectors is to move toward tax systems that are based upon pr ofits rather than production. The authors present a case study of wha t can go wrong with profit-based tax schemes. They study the implemen tation of the net profit share leasing system in the United States in the early 1980s. They conclude that the information requirements of the scheme are heavy, perhaps prohibitive, and that the net profit sh are system can easily backfire if the informational requirements can not be met. The authors also show that the U.S. government misused th e limited amount of information that was available to it. Copyright 1988 by MIT Press.