Knowledge that Transforms

The persistently high unemployment rate of the Atlantic Region of Canada may be a symptom of importation into the region of inappropriately high wage levels from other Canadian regions. A theoretical explanation for the existence of such interregional wage spillover is offered. The hypothesis of spillover is empirically examined using data on the wage change provisions of individual contracts in the manufacturing sector. Possible econometric problems associated with contract data are examined and corrective measures taken. Results of the estimation support the hypothesis that wage spillover plays a role in the determination of Atlantic Region wages. Copyright 1987 by MIT Press.

The perspicacious peregrinator model of Solomon W. Polachek and Francis W. Horvath hypothesizes that individuals decide to migrate based on the size of potential gains. This model is tested using themigration decisions of Major League Baseball players between 1977 and1979. Potential gains are measure d as the differ-ence between earnings with and without migration. A distinction is made between players eligible for free agency and those ineligible so as to a ccount for differences in the level of competition for players' services in diff erent segments of this market. Migration is found tobe related to the expected gain from earnings for players eligible for free agency, but not for those ineli gible. Copyright 1987 by MIT Press.

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.

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