Knowledge that Transforms

Jean-Michel Cousineau, Robert Lacroix, Danielle Bilodeau, The Determination of Escalator Clauses in Collective Agreements, The Review of Economics and Statistics, Vol. 65, No. 2 (May, 1983), pp. 196-202

T HE Heckscher-Ohlin (H-O) theory suggests international trade is determined by relative resource supplies among countries. Prior empirical research, such as work on the determinants of U.S. comparative advantage in a single year, has concentrated on the static predictions of H-O theory. However, H-O theory also suggests changes over time in resource supplies will alter trade structure. The present paper investigates this aspect of H-O theory. Particular emphasis is given to the role of world resource changes as an explanation of changes in U.S. trade and of the increased international competition in manufactured goods faced by the United States. Some recent studies have examined the relationship between changes in resource endowments and trade. Heller (1976) examined changes in the factor content of Japan's trade between 1958 and 1968 and found the observed patterns-consistent with changes in Japan's physical and human capital endowments. Stern and Maskus (1981) investigated changing factor input determinants of U.S. trade by estimating annual cross-section regressions over 1958-77. They suggested U.S. net exports made less direct use of unskilled labor over time. Further, analysis of the factor content of U.S. trade suggested increased U.S. abundance in physical capital relative to human capital between 1958 and 1971. Balassa (1979), using a 1970 crosssection of countries, concluded that physical and human capital accumulation largely explained changing patterns of comparative advantage in manufactures. Although these studies made important contributions, a number of issues remain concerning the relationship between resources and trade. Stern and Maskus, in listing directions for further research, cite first an examination of How and why endowments of physical capital, human capital and labor have changed within the U.S. and our major trading partners. This paper reports a substantial data effort which addresses this topic. Another important consideration is that the direct effect of resource endowment variation on trade has yet to be determined. Previously, inferences about the effect of resource endowments on trade have been based primarily on results from industry cross-section regressions. Authors of such work indirectly infer the effect of resource variation on trade by assuming the coefficients from such regressions reflect resource abundance. However, Leamer and Bowen (1981) recently demonstrated that signs of coefficients from such regressions need not reflect a country's true resource abundance. Thus, the usual negative coefficient for the capital-labor ratio in an analysis of U.S. trade cannot be used to infer the scarcity of capital and thus cannot be used to infer the effect of an increase in capital endowment on U.S. trade. Similarly, Balassa's procedure of first regressing, for each of a sample of countries, industry trade on input intensity and then using the estimated coefficients as the dependent variable in a cross-country regression on resources is an inappropriate method for inferring the effect of resources on trade. This paper advances consideration of these issues by investigating aspects of the relationship between resources and trade. Section II examines changing patterns of resource supply among thirty-four countries over 1963-75. Section III investigates whether these resource changes are associated with altered comparative advantage in manufactured goods. Section IV uses cross-country regressions to estimate the resource endowment, as opposed to factor input, determinants of U.S. manufacturing trade and thereby the direct effect of resource variation on U.S. trade. The Received for publication April 23, 1981. Revision accepted for publication November 30, 1982. * New York University. This paper is an outgrowth of research in Bowen (1980a) and of further work conducted at UCLA under a Ford Foundation grant directed by Edward E. Leamer. An earlier version was presented at the 1980 Southern Economic Association meetings in Washington, D.C. Comments by C. Michael Aho, Robert Baldwin, Edward Leamer, Joseph Pelzman, Leo Sveikauskas and an anonymous referee are gratefully acknowledged. The author remains responsible for errors.

Frederick Carns, Raymond Lombra, Rational Expectations and Short-Run Neutrality: A Reexamination of the Role of Anticipated Money Growth, The Review of Economics and Statistics, Vol. 65, No. 4 (Nov., 1983), pp. 639-643

Also, I investigated various proxies for labor intensity other than average work-week, compared three methods of deseasonalization, tested the model with monthly and quarterly data, and tested the ability to forecast using models A and B. results of each of these inquiries are available from the author upon request. (Palo Alto, California: Stanford University Press, 1959). Berndt, Ernst R., Melvyn A. Fuss, and Leonard Waverman, Dynamic Adjustment Models of Industrial Energy Demands: Empirical A nalysis for U. S. Manufacturing 1947-1974 (Palo Alto, California: Electric Power Research Institute, 1980). Morrison, Catherine J., and Ernst R. Berndt, Short-Run Labor Productivity in a Dynamic Model, Journal of Econometrics 16 (Aug. 1981), 339-365. Nadiri, M. Ishaq, and Sherwin Rosen, Interrelated Factor Demand Functions, American Economic Review 59 (Sept. 1969), 457-471. , A Disequilibrium Model of Demand for Factors of Production (New York: National Bureau of Economic Research, 1974). Tinsley, P. A., An Application of Variable Weight Distributed Lags, Journal of the American Statistical Association 62 (Dec. 1967), 1277-1289. Treadway, Arthur B., The Globally Optimal Flexible Accelerator, Journal of Economic Theory 7 (1974), 17-39.

PLENTIFUL reasons exist for seeking information on the determinants of child health. While the potential improvement in children's health provides sufficient justification in itself, research in human capital investment has demonstrated the further important influence of health, particularly child health, on cognitive development, schooling, hours of work, and wages.' Poor child health is likely to detract from human capital accumulation during childhood years, and is frequently associated with poor adult health, both of which impair an individual's adult market performance. Further, child health status is a primary determinant of the demand for medical care for children, leading those economists estimating medical services demand to focus attention increasingly on the determinants of child health.2 The existing research in child health determination has highlighted some important family influences, but the results have been limited. The object of this study is to use sibling and adoption data to explore the effects of family background on child health. The results are compared to those of the usual multivariate regression analysis. Sibling and adoption data analysis involves many difficulties, but is potentially valuable for indicating which areas need further exploration if a more adequate understanding of child health is to be achieved. Sibling data were used in economics as early as 1932. The early studies, and more recent studies in the human capital literature, utilize sibling and twin data to partially control family effects on adult earnings, enabling the pure economic returns to education to be estimated.3 The focus of this study is on the identification of the variance in the child health measure which can be attributed to family influences, rather than on the magnitude of a particular regression coefficient. The use of adoption data may then yield insight into the relative importance of various components of the family effect. In section II, an economic model of the household production of child health is presented and the data set described. An error components model of child health using the natural siblings data is estimated in section III, and this estimate is compared to a multivariate regression. Section IV presents an examination of whether genetics is an important influence in child health determination and is followed by concluding comments in section V.

Haworth, Earnings, Productivity, and Changes in Discrimination During the Sixties, American Economic Review 65 (Mar. 1975), 158-168. Lazear, Edward, The Narrowing of Wage Differentials Is Illusory, American Economic Review 69 (Sept. 1979), 553-564. , Family Background and Optimal Schooling Decisions, this REVIEW 62 (Feb. 1980), 42-51. Long, James, Employment Discrimination in the Federal Sector, Journal of Human Resources 11 (1) (1976), 86-97. Welch, Finis, Black-White Differences in Returns to School, American Economic Review 63 (Dec. 1973), 893-907.