Knowledge that Transforms

Separability between parents' and children's consumption is a necessary assumption in any attempt to impute the intrafamily allocation of goods. This assumption implies an estimation procedure where the observed effect of demographic variables on the marginal propensity to consume adult goods is used as a key for identifying the rule governing the distribution between children's and parents' consumption. Using the U.S. 1972 Consumption Expenditure Survey, I found that white and black families tend to allocate three-quarters of their consumption to parents and one-quarter to children. Tests for robustness, for selectivity bias, and of the separability assumption itself uphold these findings.

The influence of birth order and childhood family size on future achievement is discussed. Two major empirical findings are presented by the author. "First, neither birth order nor childhood family size significantly influences the level or growth rate of wages, a result that is consistent with previous research. Second, family size is both a statistically and economically significant determinant of women's employment status: women from small families work less than women from large families when they are young and more than women from large families when they are more mature." The geographical focus is on the United States.

The authors present survey data challenging the assumption implicit in analyses of labor supply that, all else being equal, workers prefer declining over increasing wage profiles. The authors test several explanations for their results, including that (1) there is something special about wages (e.g., their association with productivity), as opposed to other types of payments, that induces the preference for increasing wages; (2) utility depends not only on absolute levels of consumption, but also on changes in consumption over time; and (3) respondents who prefer increasing wage profiles are irrational and would change their behavior if the rationale for preferring declining wages were explained. Copyright 1991 by University of Chicago Press.

This article is concerned with the determinants of English-language fluency among immigrants and the effects of fluency on earnings. Using special survey data on a sample of over eight hundred aliens, the analysis shows the importance of certain variables not previously available, speaking fluency at migration and English reading fluency. English speaking and reading fluency both increase with duration in the United States, and the increase with duration is greater for those with more schooling and who are not Hispanic. The article shows that reading fluency is more important than speaking fluency as a determinant of earnings. Copyright 1991 by University of Chicago Press.

This article examines the properties and prevalence of measurement error in longitudinal earnings data. The analysis compares matched Current Population Survey data to administrative Social Security payroll tax records. In contrast to typically assumed properties of measurement error, the results indicate that errors are serially correlated over two years and negatively correlated with true earnings (i.e., mean reverting). In a cross section, the ratio of the variance of the signal to the total variance is 0.82 for men and 0.92 for women. These ratios fall to 0.65 and 0.81 when the data are specified in first differences. Longitudinal earnings data may be more reliable than previously believed. Copyright 1991 by University of Chicago Press.

ECONOMIC DEVELOPMENT is a field in search of itself. Within the last few years several surveys have appeared, ranging from article length to the definitive two volume Handbook of Economic Development with its 33 chapters and 1700 pages., 2 Even the World Bank's 1991 World Developmnent Report is devoted for the first time to a review of the fundamentals of the subject, rather than its customary analysis of specific problems like human resources, agriculture, industry, etc. This industry of self-reflection thrives from a conjunction of two circumstances. One is the disturbing reality of the lost decade of the 1980s which saw negative per capita economic growth for the countries of Africa and Latin America, even while positive results were being realized in most parts of Asia. for the first time in the postwar period, the presumption of continual

CHARLES BABBAGE deserves full membership in the club of mathematicians who have made significant contributions to economics, a club which began with Daniel Bernoulli (1738) and reaches at least to John von Neumann (1944). It is appropriate that Babbage's contributions were wholly nonmathematical, for his talents were richly varied and his behavior wonderfully eccentric. The invention of those ancestors of the modern computer, the Difference Machine and the Analytical Machine, is of course his greatest claim to fame: they are prodigies of both theoretical creativity and mechanical implementation. The Difference Machine was designed to produce and print mathematical tables by the use of finite differences. By 1822 Babbage had a small working model and was promising soon to produce logarithmic tables as cheap as potatoes. In building a large machine-which continually grew in power and complexity-he encountered and overcame innumerable analytical and mechanical problems. The work on the machine ground to a halt about 1832, after the Treasury refused to add to its previous grants of E12,000. Soon Babbage turned to the Analytical Machine, which consisted of two parts: