The slowdown in productivity growth in the U.S. economy during the 1970's has been a matter of great concern to policymakers, associated as it is with inflation, unemployment, and declining real wage growth. This paper examines the impact on productivity growth of government regulation, specifically worker health and safety regulation by the Occupational Safety and Health Administration (OSHA) and environmental regulation by the Environmental Protection Agency (EPA). Looking at data for 450 manufacturing industries between 1958 and 1978, the study finds a large, negative relationship between such regulation and productivity growth. Using these results, about 30 percent of the decline in productivity growth in manufacturing during the 1970's may be attributed to such regulation. Several previous studies have looked at the contribution of regulation to the productivity slowdown. Many of these have inferred that the contribution must be small, on the basis of the relatively small amount spent on complying with such regulations. Edward Denison (1979) estimates that only about 16 percent of the productivity slowdown in the 1972-75 period was due to regulation (.35 percentage points out of a slowdown of 2.17 percentage points). Paul Portney (1981) notes that little of GNP is spent on pollution control (under 2 percent), concluding that therefore pollution regulations could have little effect on productivity growth. Norsworthy et al. (1979) also find a small impact of pollution-abatement capital expenditures on productivity growth. Studies based on econometric estimation of the regulation-productivity relationship have found a wide range of results. Gregory Christainsen and Robert Haveman (1981) find regulation reduced labor productivity growth by .27 percentage points, using time-series data and measures of total federal regulation. Robert Crandall (1981) finds a strong relationship between pollution-abatement capital and productivity growth, but this relationship disappears when a measure of energy intensity is included. Robin Siegel (1979) observes a significant contribution (.5 percentage points) from pollution control expenditures to the productivity slowdown for 1965-73, but not for later years. Finally, Frank Gollop and Mark Roberts (1983) examine data for a set of electric utilities and find that regulation of emissions had a large impact on total factor productivity growth, lowering it for regulated firms by .59 percentage points. Many other factors might help to explain the productivity slowdown, including the rise in energy prices, the long and severe recession, and declines in research and development expenditures. There have been a variety of studies examining the contributions of each factor to the slowdown. They generally conclude that many factors contributed to the slowdown, but that a sizable fraction of the slowdown remains unexplained by the estimated contributions of all the factors considered

Reviews the book "The Historical Development and Operational Form of Corporate Reporting Regulation in Japan," by Jill McKinnon

This paper considers a multiperiod model of a regulated firm that has (stationary) private inf ormation, which may be revealed through performance. A "Fairness" arrangement is proposed in which the firm agrees not to quit if in future periods the regulator allows it to earn a nonnegative profit given the type it revealed in earlier periods. The properties of such arrangements are studied, and an example is presented in which both the firm and the regulator prefer a fairness arrangement to a policy feasible without commitment

The two most commonly used transfer pricing rules for tax purposes pursuant to Reg. Sec. 1.482 are the "resale price" method and the "cost plus" method. This paper analyzes the effects of each of these methods on the resource allocation decisions of multinational firms when the tax rate abroad is lower than in the U.S. We show that, relative to the resource allocation that would exist in the absence of taxation: (1) the resale price method can cause either an increase or decrease in imports, an overuse of domestic resources, and overproduction of the "most similar product"; and (2) the cost plus method causes a decrease in imports, a decrease in the use of domestic resources, and overproduction of the most similar product. These effects are reversed when the tax rate abroad is higher than in the U.S. In addition, we deal with the case where the MNE faces different transfer pricing regulations in the U.S. and the foreign country

The relationship between economic welfare and the number of firms in a quasi-Cournot market is examined. In the first place, we presuppose the existence of a strong (“first-best”) government that can enforce the marginal-cost principle to the firms along with regulating the number of firms. It is shown that there exist excessive number of firms at the free-entry quasi-Cournot equilibrium vis-à-vis the “first-best” welfare maximizing number of firms. The thrust of this result essentially survives even if we replace a Utopian “first-best” government by a “second-best” government that leaves the firms to pursue their respective profit maximization freely and engages solely in regulating the number of firms. It can be shown that the excess entry prevails again in this “second-best” world

Using an effort-regulation type of efficiency wage model, it is demonstrated that a firm may respond to slackening labor markets by acting to increase the intensity with which workers work. The magnitude of this work intensity effect depends on the structure of employment relations. Where long-term employment relations are prevalent, the effect of labor market slack on work intensity may be diminished. These propositions are tested empirically by estimating the effects unemployment and long-term employment have on productivity growth in two-digit manufacturing industries