Knowledge that Transforms

James G. Beierlein, James W. Dunn, James C. McConnon, Jr., The Demand for Electricity and Natural Gas in the Northeastern United States, The Review of Economics and Statistics, Vol. 63, No. 3 (Aug., 1981), pp. 403-408

IN 1966, the Coleman Report provided compelling evidence of the importance of the home environment in determining children's cognitive skill levels. This evidence, coupled with doubts about the effectiveness of school-based compensatory education programs, has led policymakers to consider programs that aim at improving school achievement by providing additional resources to the families of low achieving children. Efforts to design such programs have been hindered, however, by a lack of knowledge concerning the key resources in the home that influence children's achievement. This paper reports the results of research that attempts to reduce this knowledge gap by examining the roles played by particular resources in the home in influencing children's achievement. This study extends previous work on home investments in children in two significant ways. First, the analysis focuses on black children living in low income, urban families. Most previous research has studied children in middle class families. Second, the stability of the results is examined by estimating the same model for two samples of children. Previous studies have reported results for a single sample. Differences in results across studies have raised questions concerning the stability of relationships between particular home resources and children's achievement. In this study, the stability issue is addressed directly. The central finding of our research is that the skills of the mother, measured by the extent of her formal schooling, are a critical resource in determining children's achievement. Our results demonstrate that these skills affect children through the mechanism of child care, and not simply through genetically transmitted endowments. Another key result is that goods inputs in the home do not appear to have consistent effects on children's learning. Thus, our findings support the results of other recent research that has emphasized the importance of human resources (such as mothers and teachers) rather than material inputs in determining children's achievement. These and other findings are discussed in detail later in the paper. The next section of the paper lists the hypotheses examined in this study. Section III describes the analytical framework within which these hypotheses were tested. Section IV describes the data. Section V describes the problem of interpreting correlations between attributes of the home environment and children's achievement. Section VI presents the results, and section VII discusses their implications.

T HE impact of unions on wages is likely to depend on the extent to which they organize workers in the relevant product market.1 As the organization in a market increases, the opportunity for substituting nonunion for union products will be reduced, lowering the elasticity of demand for organized workers and the potential loss of employment for a given wage increase. As a result, the wages of union workers are likely to be higher, all else the same, the greater the percentage organized. The wages of nonunion workers may also be influenced by the extent of organization, though the direction of the effect is not clear. On the one hand, union wage gains due to greater coverage may induce increases in nonunion wages because of the threat of organization and/or because of shifts in demand favoring nonunion producers brought about by the increased relative cost of union labor. On the other hand, the supply of labor to nonunion firms may increase as a result of reduced employment in the union sector, which would most likely depress nonunion wages. Whether the threat plus demand effect or the supply effect dominates is an empirical issue. The impact of the percentage organized on the union wage differential (the difference between the natural logarithms of union and of nonunion wages) depends on the relative magnitudes of the likely positive impact on union wages and the positive or negative impact on nonunion wages. This paper seeks to disentangle the relation between the percentage of workers organized in a product market and the wages received by union workers and by nonunion workers. In contrast to most of the literature on the union wage effect, which either relates some average of wages in an industry to the percentage organized or which relates the wages of individuals to their membership in a union, our analysis examines the impact of the percentage organized on the compensation of union labor and nonunion labor taken separately.2 By relating the wages of unionized workers to the percentage covered by collective bargaining in the relevant product market, we estimate directly the extent to which unionized workers in highly organized markets receive higher wages than unionized workers in less organized settings. By relating nonunion wages to the percentage covered, we provide direct estimates of the extent to which, as a result of threat, demand, and supply effects, nonunion workers in highly organized markets receive higher or lower wages than nonunion workers in less organized industries or areas. Two sets of data are used in the study: information on individuals from the 1973, 1974, and 1975 May Current Population Surveys (CPS), which contain data on usual weekly earnings, usual weekly hours, union membership status, and key personal characteristics; and information on establishments from the Bureau of Labor Statistics' 1968, 1970, and 1972 Expenditures for Employee Compensation Surveys (EEC), which contain data on the components of compensation, labor hours, collective bargaining coverage, and some relevant establishment characteristics. The availability of both individual and establishReceived for publication April 24, 1980. Revision accepted for publication May 27, 1981. * Harvard University. We have benefited from the comments of K. Abraham, C. Brown, H. G. Lewis, and L. Summers. We are most grateful to G. Bialecki, J. Fay, C. Ichniowski, L. Nelson, M. Van Denburgh, L. Wilson, and J. Zax for research assistance. The study has been supported by the National Science Foundation (Grant APR 77-16279) and the National Bureau of Economic Research (under its program for research on labor economics). Any opinions expressed are not necessarily shared by the individuals who have aided us, NSF, or NBER. I Throughout our theoretical discussion we refer to a product market, which is the appropriate unit of observation for an analysis of the relationship between percentage organized and wages. However, in the empirical work we focus on either a 3-digit Standard Industrial Classification or Census industry (in the manufacturing analysis) or a Current Population Survey state group (in the construction analysis). Unfortunately, the data used do not permit a closer correspondence between the theoretical and empirical parts of our study. 2 For an early attempt to disentangle this relation, using average wages in an industry and percentage organized, see Rosen (1969). For more recent related analyses, see (in alphabetical order) Donsimoni (1978), Hendricks (1975), Kahn (1978), and Lee (1978). For a trenchant treatment of the analysis, see Lewis (1980).

This article focuses on the effects of double-counting and expensing on the measured returns to R&D. The contribution of research and development (R&D) to economic growth has been measured in two general ways. The first is to compute total factor productivity in a growth accounting framework and to attribute this growth to R&D. The prevailing view is that, in the presence of double-counting, the measured contribution of R&D represents the return above and beyond the normal remuneration to traditional capital. Author demonstrate that this excess returns interpretation (ERI) is essentially correct in the growth accounting framework and that the resulting bias in the measured contribution of R&D to growth is large. In postwar U.S. manufacturing the measured residual is biased downward by as much as 30%. The expensing bias is downward and reinforces the excess returns bias in this case, and the total bias is large. In both the growth accounting and econometric contexts, the magnitude of the biases may vary across samples and over time. There is simply no substitute for properly measured variables.

Edwin Mansfield, Composition of R and D Expenditures: Relationship to Size of Firm, Concentration, and Innovative Output, The Review of Economics and Statistics, Vol. 63, No. 4 (Nov., 1981), pp. 610-615

POLITICIANS, academicians and the general public alike have perceived that the status quo tax and transfer legislation creates inequities among living units. Tax laws create numerous situations in which living units with seemingly equal abilities to pay are taxed quite different amounts. State-by-state differences in welfare eligibility rules, benefit schedules and administrative procedures, the general unavailability of cash welfare to childless, nonaged, healthy couples and single individuals, and other features of transfer programs similarly provide vastly different levels of income support to units with 'equal needs. ' Advocates of major tax and welfare reform have marshalled such evidence into a central argument in favor of their proposals. While there is wide agreement that the process of redistributing incomes abounds with inequities, there have been few attempts to quantify their extent.2 This paper develops a measure of horizontal inequity and illustrates its use. Section II discusses the concept of horizontal equity, then builds upon familiar Lorenz curve-Gini coefficient analysis to derive the inequity index. The third part considers some problems of implementing the measure and illustrates it. Section IV provides a short conclusion.

T WO recent studies have indicated on any given day about 3% to 4% of all workers do not report to their jobs. The Bureau of National Affairs (BNA) has reported absence data for a sample of several hundred establishments since January 1974. The median absence rate for the entire sample was 3.4% in 1974, 3.0% in 1975 and 1976, 2.8% in 1977, and 2.9% in 1978.1 Absence rates vary widely across establishments; in December 1978 they ranged from 0 to 23.0%. Recent changes in the Current Population Survey permit the computation of work time lost to absenteeism with household data. In May 1976 Hedges (1977) reported full time workers missed about 3.5% of scheduled hours for health and personal reasons. It is interesting to note in comparison in the same month (1) less than one-third of 1% of scheduled hours were lost to strikes, and (2) 3.4% of the labor force were out of work because they had lost their previous job. Economists have paid little attention to absenteeism despite the sizable number of man-hours involved and the probable impacts on productivity and income distribution. Most of the previous research on work attendance has been done by applied psychologists, who generally argue, according to a recent survey article by Steers and Rhodes (1978), that job dissatisfaction represents the primary cause of absenteeism.2 Another widely held view is absenteeism results from inadequate managerial concern for the problem. Countless authors of articles in personnel and business journals have argued any firm can control absenteeism by keeping adequate records, establishing guidelines for permissible absences, or rewarding workers who attend regularly. Given efficient markets for entrepreneurial expertise, it is unclear why such measures have not already been taken. The purpose of this paper is to suggest an alternate interpretation of absenteeism and to develop an empirical model to test various hypotheses about its incidence. Absences result when an individual decides to engage in nonwork activity throughout a scheduled work period. It will be argued below utility increments obtained by not reporting are likely to vary across individuals and the cost of absenteeism will not be identical across employers. Employers can reduce absenteeism in three ways. One option is to make it more costly to employees, e.g., through decisions regarding promotions, merit wage increases, dismissals, and the availability of sick leave and attendance bonuses. Another is to reduce the worker's demand for absences by making schedules more flexible. In cases where substitute workers are available at no extra cost, absenteeism is costly only when it is unexpected. Both the firm and the worker will then be better off if they agree to adjust the worker's schedule in advance. A final