Knowledge that Transforms

The authors decompose annual earnings into hours of work and hourly earnings and analyze male-female differences in earnings inequality using Canadian data. Their results indicate that the larger female inequality in earnings is due to a greater inequality in the distribution of hours of work. The distributions of wages for men and women are either statistically indistinguishable or more equal for women. The authors compare two data points, 1988 and 1981, and find the same structure in the gender comparisons. Also, changes between 1988 and 1981 in earnings inequality are generated from movements in the hours distributions. Copyright 1996 by MIT Press.

This paper examines the relationship between organizational structure and operation and outage durations at nuclear power plants in the United States. It empirically examines Aoki's (1990) proposition that (1) hierarchical control increases productivity in situations that are very stable or very uncertain and (2) horizontal coordination increases productivity in intermediate situations. It describes a model of continuous production in which management chooses an organizational structure that minimizes the ratio of the hazard rates for operation and outage. And proposes an index of hierarchy based on measures of plant-level organization. Parameter estimates support the proposition that less hierarchy is associated with higher productivity through longer periods of operation. Copyright 1996 by MIT Press.

The estimation of censored probit models can result in an estimated correlation between the disturbances approaching [plus]1.0 or -1.0 when most of the observations are selected into the sample and the outcomes are unequally distributed. Outcomes of 0 can induce an estimated correlation of -1.0, and outcomes of 1 can induce an estimated correlation of [plus]1.0. This paper analyzes the population problem, derives corresponding sample conditions, proposes a solution to the problem, and offers a computer program. Copyright 1996 by MIT Press.

Jinook Jeong, G. S. Maddala, Testing the Rationality of Survey Data Using the Weighted Double-Bootstrapped Method of Moments, The Review of Economics and Statistics, Vol. 78, No. 2 (May, 1996), pp. 296-302

Jeffrey A. Miron, J. Joseph Beaulieu, What Have Macroeconomists Learned about Business Cycles from the Study of Seasonal Cycles?, The Review of Economics and Statistics, Vol. 78, No. 1 (Feb., 1996), pp. 54-66

This paper investigates the income effects on the trade balance with particular attention to the distinction between permanent and transitory disturbances for the United States, Japan, Germany, and the United Kingdom. In all four countries, movements in the trade balance have mostly been associated with transitory changes in income. The latter also are negatively associated with the trade balance. In marked contrast, permanent changes in income have little to do with the trade balance. These results are examined in light of intertemporal models and real business cycle models. Copyright 1996 by MIT Press.

We study the relationship of non-quantitative news to bond prices. We select a set of major news events based solely on their significance as judged by historians, and examine the corresponding bond price movements. We find strong evidence that news has some influence on bond price movements, but we find no evidence that news can explain more than a small fraction of those movements.

Risk aversion plays an important role in explaining why antitrust cases settle instead of going to trial. Using a jointly estimated model of settlement and trial outcome, the authors find that a one percent increase in the probability that the plaintiff wins at trial raises the probability of a settlement by 0.13 percent. They also find that reputation effects are not a significant factor for defendants, so the risk aversion of the defendants does not play a dominant role in determining whether the parties settle. Plaintiffs are more likely to win in certain jurisdictions, which encourages venue shopping by plaintiffs. Copyright 1996 by MIT Press.

This paper uses a logit analysis to develop a new index for measuring occupational segregation by race and gender. The authors use the 'L Index' to decompose race and gender segregation into two components: the 'race' and 'gender' components, and the components attributable to the race-gender distribution of residence, education, age, and public-sector employment. They present results for the 1970s and 1980s. The authors' analysis suggests that gender-based occupational segregation increased within occupational categories in the 1980s and that within gender groups, black men were more segregated by race than black women in the 1980s. Copyright 1996 by MIT Press.

The authors search for a long-run cointegrating relationship among real money balances, real income, and interest rates, extending the work of Steve Ambler and Algin Paquet (1990), who explore this issue in the Canadian context employing the methods of Robert F. Engle and Clive W. Granger (1987). First, they uncover parameter estimates of the cointegrated relationships using three different methods of estimation. Second, the authors employ the Hansen (1992) procedure to search for structural instability in cointegrating relationships with unknown break points. They find empirical support for a stable cointegrating relationship among real M1, real income, and short-term interest rates in Canada for the period 1953:1-1990:4. Copyright 1996 by MIT Press.