Knowledge that Transforms

T HERE is general agreement that nineteenth century was unparalleled in growth of large-scale production. However, fate of scale of production in twentieth century seems to be lost in a limbo of uncertainty. One investigator comments that the movement towards large-scale production is largely a nineteenth century phenomenon and had run its course by i890. 1 Another commentator holds that size is growing with great rapidity. 2 Yet again we read that long-term, general and pervasive increase in plant size throughout most industries has come to an end. I It is purpose of this paper to present some empirical evidence on changes in scale of production in United States manufacturing industry. By scale of production we refer to size of plant rather than size of firm. The very notion of scale of production implies a relationship between volume of output and unit costs. Where economies of scale bear upon questions of monopoly, problem is one of control of output. Hence, scale of production is measured in this paper by physical output per establishment. Indexes of physical output are available for United States manufacturing industry, permitting construction of indexes of scale of production as measured by an index of output per establishment.4 To measure scale by number of employees would tend to underestimate industrial expansion linked with labor-saving innovations.5 Similarly, trends in ratio of value-added or capital per establishment may diverge significantly from movement of scale. In addition, data from which indexes of value-added can be constructed are not available for a sufficient period of time to be useful while records of capital value are flagrantly unreliable in that they are subject to judgment of person making estimate and to vagaries of longand short-term fluctuations in prices. The interpretation of long-term movements in indexes of output per establishment as changes in optimal plant size need not be vitiated by assumption of an optimum range of output rather than an optimum point.

Wesley J. Yordon, Jr., Industrial Concentration and Price Flexiblility in Inflation: Price Response Rates in Fourteen Industries, 1947-1958, The Review of Economics and Statistics, Vol. 43, No. 3 (Aug., 1961), pp. 287-294

I NTER-REGIONAL wage differences have traditionally constituted an important aspect of the analysis of the wage structure of the United States. But, despite continuing interest in the subject, there has been no comprehensive examination of the course of such differences since World War II.' The present paper attempts to fill this gap, at least partly. Specifically, the paper examines the changes in the pattern of regional wage differences in manufacturing between I947 and I954, and considers the major factors responsible for these changes. The wage statistics used are average hourly earnings of I93 so-called digit industries. These statistics were derived from the data on gross earnings of production workers and on manhours worked, published in the U.S. Census of Manufactures for I947 and I954. From these data I computed for each industry regional average hourly earnings in the four broad regions of the countryNortheast, North Central, South, and West.2 The Pearsonian coefficient of variation was used to measure the degree of difference of earnings among the four regions. Comparison of the I947 and I954 coefficients for each industry thus indicated the change in the interregional dispersion of average earnings. In terms of employment of manufacturing production workers the coverage of the study is quite large. The I93 industries for which it was possible to make a meaningful comparison of regional wage differentials in both years employed in I954 6,984,000 workers. This figure represents 56.5 per cent of all manufacturing workers in that year.3

i the proportion of T which is invested in the borrowing country j the proportion of T spent outside the borrowing country p = the proportion of T spent in the lending country (j>p). In the lending country the increase in income will amount to: p.T times the multiplier (allowing for foreign repercussions); (I) while the decline in the balance of payments surplus 3 will be: [T minus p * T plus MPM p T times the multiplier] minus [a secondary increase in export to the borrowing country whose income has gone up]. (2) In the borrowing country, income will rise by: i. T times the foreign trade multiplier (3) while the external deficit will decline by: [T j.T] [MPM.i.T times the foreign trade multiplier]. (4) It is evident from (2) and (4) that the transfer must exceed the foreign exchange requirements of the development program if it is to have a favorable effect on the external position of both nations. This is particularly true for the borrowing country. Provisions may also be made for spacing repayments over periods of inflation. This would reduce the external surplus in the paying country and the external deficit in the receiving country, while damping the inflation in both economies. A policy of countercyclical lending is subject to the same limitation as the use of public work programs in combatting recessions. By the time a foreign investment project gets under way the recession may be over, but work on the project cannot be stopped for the duration of the ensuing boom. (However, the two lags in the transmission of economic fluctuations from developed to underdeveloped countries would reduce some of this inflexibility.) This is another reason why the responsibility for such a policy must rest with a public body. Some useful investment projects can no doubt be found which are flexible in nature and adaptable to cyclical needs. The amount of the transfer should in any case exceed the immediate costs of these projects. Furthermore, the subject under discussion would not constitute the entire lending program, but only a small part of it. International transfers should be geared to development requirements and not to cyclical fluctuations. Nor can cycle policy be used to justify foreign lending. But inasmuch as lending programs are conducted to foster economic development, there is no reason why they should not be used in part to combat economic fluctuations and external imbalances. ing 1947-1958: Y = -0.225 + o.oo63 X 4o.II6; r= o.682. 'These adjustments are limited to the income effects and should be supplemented by changes in the terms of trade.

W HETHER or not shortages of highly educated and trained personnel, such as engineers and scientists, existed or were serious in recent years has been the subject of widespread discussion and indeed controversy.1 Typically, this discussion focuses on the question of whether there ought to be more engineers and scientists, in terms of our competition with the Russians, for example. It is not surprising then that controversy flourishes, since the answer to this question depends ultimately on one's value judgments, with respect to market and nonmarket variables. But more fundamentally, much of the disagreement over the issue stems from the variety of meanings attached to the term and the lack of empirical tests. To clarify the matter, Blank and Stigler in their recent book2 define and provide an empirical test for the existence of shortage. This paper re-examines some of the empirical evidence they submit and supplements it with additional evidence, part of which extends the analysis to more recent date. Briefly, here is summary of the BlankStigler approach and findings.3 They begin with this definition of shortage: a shortage exists when the number of workers available (the supply) increases less rapidly than the number demanded at the salaries paid in the recent past. Then salaries will rise, and activities which once were performed by (say) engineers must now be performed by class of workers who are less well trained and less expensive.4 (Italics in original.) Since I929, and more particularly since I939, they find that the earnings position of engineers has deteriorated substantially relative to all earners and to other professional earners. Although they note slight upturn in the relative earnings position of engineers since the beginning of the Korean WVar, this reversal is characterized as a minor cross-current in tide. Thus, the evidence leads them to conclude that there has been no but rather an increasingly ample supply of engineers. Furthermore, they predict that the downward trend in relative earnings position will continue.5

This study inquires into the reliability and general usability of Soviet statistics of the physical output of industrial commodities, with particular reference to the period beginning with the Five-Year Plans.

W RITING in I942 in the preface to his it monumental study, An Dilemma, Gunnar Myrdal stated . . not since Reconstruction has there been more reason to anticipate fundamental changes in race relations, changes which will involve a development toward the ideal.' How far has society gone since the time of Myrdal's statement toward achieving a basic element of that American ideal of which he wrote, the provision of equal job opportunities irrespective of race? Two recent major studies concerned with the economic impact of racial discrimination in the United States have given sharply conflicting answers. Professor Ginzberg found that:

T HE proposition has been advanced by Dobb that . . where wage-earners are strongly organized in trade unions, one might expect labour to succeed in obtaining a larger share of the product than elsewhere. ' While there are several alternative forms in which this hypothesis may be stated, only one such will be examined in this paper. Accordingly, the purpose of this study is to test the hypothesis that labor's relative share of the income produced by manufacturing industries in the United States is, in some significant sense, positively correlated with the degree of union organization or, alternatively, with changes in the degree of union organization. The principal finding is that no significant correlation can be established and, therefore, it is concluded that the hypothesis must be rejected. While the results of this study, as it turns out, do not differ substantially from those of other research more or less closely related to it,2 the methods and procedures used are believed to be different and to possess at least some general validity. It is contended, therefore, that more credibility can be attached to the results contained in this paper than to those of related studies. In particular, the research design employed here incorporates two principal innovations. First, the data are those of individual industries rather than of sectors of the economy or the nation as a whole. Since it is neither the nation nor arbitrary sectors of it that have been unionized, but rather concrete, identifiable, individual industries, the use of data flowing from the latter would seem to be appropriate if one is seeking to isolate the impact of unionism on distributive shares. Second, the method is essentially one of employing a simple trend analysis to determine the intra-industry behavior of labor's share over the long-run. This is in opposition to the currently popular, but potentially misleading, terminial-years approach. There is no reason to expect a priori that any set of results obtained from a mere comparison of two more or less widely separated end years will not be vitiated by analysis of the data from another set of end years. Only in the case where the deviations from the trend are consistently small does a terminal-years approach appear to serve the purpose as well as a trend analysis. But since the trend must first be ascertained in order to determine the extent of such deviations, there would not seem to be any advantage in working only with terminal years. Because almost any result, depending only on the choice of years to serve as bench-marks, can be obtained by using this method, it would appear that no general validity can be associated with any particular finding.3 A trend