Knowledge that Transforms

Previous research has found that union standard rate policies lower the dispersion of union wages and that unions indirectly raise nonunion wage levels, as firms weigh the probability of unionizing and wage costs. These two findings imply that unions lower the dispersion of nonunion wages since, for a given payroll, a nonunion firm can achieve the greatest reduction in the probability of unionism by giving raises to those who would benefit most from a union. This hypothesis is confirmed on Current Population Survey data: taking into account the endogeneity of unionism, ceteris paribus, nonunion wage dispersion is lower in more highly unionized industries. Copyright 1987 by MIT Press.

The economic consequences of debilitating illness are defined and then estimated for one such illness--multiple sclerosis. Economic losses are defined as the consumption losses to the affected household because of illness. These losses are measured as the change in earnings of all family members plus the increase in gross (not out-of-pocket) medical costs. Earnings models are specified and estimated, and gross medical costs calculated for multiple sclerosis. The average annual loss to the multiple sclerosis household is $5, 336 per year in 1976 dollars; the estimated aggregate decline in consumption for the year 1976 was $0.656 billion. Lifetime costs (discounting by 0.06) total $207, 200 per multiple sclerosis household and $25.50 billion for society as a whole for the current (1976) pool of multiple sclerosis patients, and $30.45 billion for all future multiple sclerosis patients. Copyright 1987 by MIT Press.

ABS'DtAC'l'For a country such as Bangladesh, a nested multinomial logit model is utilized to test whether female time allocation is inflexibly fixed by local customs and whether informal activity is an independent category in a woman's choice structure of work.The econometric analysis of cross-sectional women's time-use data from rural Bangladesh suggests that a woman's activity as an unpaid labor in a family enterprise is not a distinct category in her choice structure of work.The results support the alternative hypothesis, however, that women's time-use patterns are not exclusively fixed by the society, but are partially influenced by individual-, household-, and community-level economic constraints.

Timothy J. Bartik, Estimating Hedonic Demand Parameters with Single Market Data: The Problems Caused by Unobserved Tastes, The Review of Economics and Statistics, Vol. 69, No. 1 (Feb., 1987), pp. 178-180

Gas and electric services are provided in some locations by a single firm, in others by two firms. The loss of competition inherent in single-firm provision can be justified by the presence of both economies of scope and product-specific economies of scale for each output in multiproduct production. The estimation of a multiproduct, hybrid, translog cost function shows no evidence of such economies at the mean combination utility output vector. Copyright 1987 by MIT Press.

Despite the critical analysis of Pagan (1984) and several subsequent applied studies, empirical models characterized by expectations are often estimated with regressor proxies that are treated as ordinary nonstochastic This paper offers a Generalized Least Squares estimator designed to cope with the nonscalar disturbance matrix precipatated by generated The approach is designed as a natural extension of Pagan's analysis and the author demonstrates how it may be applied to multi-equation models. Experimentation with numerical examples reveals the potential severity of ignoring the problem. These results also suggest an easily calculated indicator of potential inference distortion in models that fail to account for regressors. Copyright 1987 by MIT Press.

Goedde, Alan G., U.S. Multinational Manufacturing Firms: Determinants and Effects of Foreign Investment, Ph.D. dissertation, Duke University (1978). Grubaugh, Stephen G., The Process of Direct Foreign Investment, working paper, Bentley College, Aug. 1986. Helpman, Elhanan, Simple Theory of International Trade with Multinational Corporations, Journal of Political Economy 3 (June 1984), 451-471. Horst, Thomas, Firm and Industry Determinants of the Decision to Invest Abroad: An Empirical Study, this REVIEW 54 (Aug. 1972), 258-266. ____,_ At Home Abroad: A Study of Domestic and Foreign Operations of the A merican Food-Processing Industry (Cambridge, MA: Ballinger, 1974). Hymer, Stephen H., The International Operations of National Firms: A Study of Direct Foreign Investment, Ph.D. dissertation, M.I.T. (published by M.I.T. Press, 1976). Judge, George G., R. Carter Hill, William E. Griffiths, Helmut Lutkepohl, and Tsoung-Chao Lee, Introduction to the Theory and Practice of Econometrics (New York: John Wiley and Sons, 1982). Macdougal, G. D. A., The Benefits and Costs of Private Investment from Abroad: A Theoretical Approach, Economic Record 36 (Mar. 1960), 13-35. Markusen, James R., Multinationals, Multiplant Economies, and the Gains from Trade, Journal of International Economics 3/4 (May 1984), 205-226. Pindyck, Robert S., and Daniel L. Rubinfeld, Econometric Models and Economic Forecasts, second edition (New York: McGraw-Hill, 1981). Rugman, Allen M., Inside the Multinationals: Economics of Internal Markets (New York: Columbia University Press, 1981). Vaupel, James W., and Joan P. Curhan, Making of Multinational Enterprise (Cambridge: Division of Research, Graduate School of Business Administration, Harvard University, 1969).

Gerard Anderson, Jane Erickson, Susan Feigenbaum, Examining the Relationship between Capital Investment and Hospital Operating Expenditures, The Review of Economics and Statistics, Vol. 69, No. 4 (Nov., 1987), pp. 709-713

The correlation between a real appreciation of the U.S. dollar and a decline in U.S. relative primary commodity prices does not imply that such an appreciation leads to a deterioration in the terms of trade of commodity producing LDCs. In fact, empirical results reported in this note suggest that the dollar appreciation has had a beneficial impact on these countries' terms of trade.