We present a model of the legislature as a union, where in some states the legislative wage is set in the constitution (the analogue to competition) and in others it is set by the legislators (monopoly). We test the implications of the model with respect to relative legislator wages in the two types of states and with respect to other aspects of the legislature as a union. All of the implications hold up quite well in empirical tests. Indeed, as expected, we find an astonishingly large impact of the legislative union on relative wages, that is, on the order of a 225 percent increase.
[This study presents new estimates of consumption functions based on aggregate U.S. time-series data. The results are striking: a variety of functional forms, estimation methods, and definitions of the real after-tax rate of return invariably lead to the conclusion of a substantial interest elasticity of saving. The implications of this result for the analysis of the efficiency and equity of the current U.S. tax treatment of income from capital are explored. In reducing the real net rate of return, current tax treatment significantly retards capital accumulation. This in turn causes an enormous waste of resources and redistributes a substantial fraction of gross income from labor to capital. Rough estimates of the loss welfare exceed 50 billion per year (a present value close to 1 trillion!) and of the redistribution from labor to capital exceed one-seventh of the capital's share of gross Income.It also suggests that the usual calculations of tax burdens by income class substantially overestimate both the progressivity of the income tax and the alleged regressivity of consumption taxes.]
This essay presents a model of a single market in which goods of different qualities are sold and sellers advertise. Sellers advertise noncooperatively, knowing rivals' outlays and buyers' behavior patterns. Buyers react plausibly but not optimally to experience gained by purchasing and to sellers' advertising. Various properties of equilibria are analyzed. For some parameter values, the lowest-quality brands have the largest equilibrium market shares, advertising budgets, and profits. This is especially likely if buyers' behavior indicates confidence that better brands spend more on advertising.
This paper presents the results of an evaluation of the role of real cash balances as a factor input for 11 two-digit SIC code industries over the period 1952-73. Using a four-factor translog cost function for each industry along with duality theory, it was possible to estimate the partial elasticities of substitution and the elasticities of demand for all factors. The substitution elasticities between real cash balances and production labor as well as with capital were found to be significantly different from zero. The interest elasticity of demand for each varies with industry and ranges from -.22 to -.41. The overall findings suggest that the neoclassical model offers considerable promise for modeling the firm's demand for money.
This paper is an analysis of the information content of sealed-bid market prices. Using sealed-bid prices, a simple expression is developed to estimate price lists and market shares in the sealed-bid market. Empirically, the estimates accurately reflect the firms' actual price lists. A means of detecting changes in the price lists is suggested. It is shown that price lists allocate market shares, and the market shares are estimated. In the industry studied, price lists were used to allocate market shares and limit price competition in the sealed-bid portion of the industry.
The relationship between population policy instruments and fertility levels in Hungary is analyzed with a simultaneous equation model. Both birth and abortion relationships are placed in a supply and demand perspective, permitting a distinction between desired and actual levels of births and abortions. Pronatalist and abortion policies are evaluated through the reduced forms of the structural equations. Effects of average earnings, income, value of time spent at home, and speed of adjustment to policy changes are also considered. The analytical method is thought to permit appraisal of the effects of population policy in both developed and developing countries
In this paper, the theory of covariance-stationary stochastic processes is used in order to investigate the sign and the significance of the relationship between employment and real wages. It is shown that when appropriate distributed lags are estimated the data suggest that employment and real wages are negatively correlated. The response appears to be non-contemporaneous and statistically significant.
The paper develops a natural measure of the amount of relative price variability. The variance of relative price change is shown to be correlated with the rate of change in the price level using data for consumer goods in both the Netherlands and the United States. This association has been noted in other data for a variety of countries. Using a multisectoral supply-and-demand framework, the paper goes on to show how changes in relative prices and ultimately the variance of relative price changes are related to supply conditions changes in real income and the amount of unanticipated inflation. The model is used as the basis for an analysis of movements in the prices of consumer goods in the United States for the period 1929-75. The amount of unanticipated inflation (measured as the difference between the actual rate and a time-series predictor) is a more important determinant of relative price variability than the rate of inflation.
This paper presents a simple analytical model of optimum pension size and funding practices for a local government. The criterion used is that the attainable frontier of labor-service purchases, for two periods, should be pushed out as far as possible given that there is a fixed endowment of tax revenues in each period. After the characteristics of the frontier are developed, the relationship between optimizing decisions and pension-funding practices is examined. Comparative-static results which may be fruitful for future empirical work are then derived.