Knowledge that Transforms

The objective of this paper is to examine empirically the determinants of the joint decision whether or not to adopt a new input and invest in technical knowledge. A log-linear probability model of the joint occurrence or nonoccurrence of adoption and information acquisition is estimated. The results suggest that information acquisition and adoption decisions are made jointly and that the influences of the determinants of adoption and information acquisition differ with the timing of adoption and the channels of information dissemination. Copyright 1993 by MIT Press.

Simon van Norden, Huntley Schaller, The Predictability of Stock Market Regime: Evidence from the Toronto Stock Exchange, The Review of Economics and Statistics, Vol. 75, No. 3 (Aug., 1993), pp. 505-510

Using longitudinal data for major league baseball players, this paper estimates the effects of eligibility for free agency or arbitration on compensation and contract duration. Becaus e eligibility is based on experience and better players are kept longe r, a fixed effects approach is used. Arbitration and free agency eligibility both raised annual compensation; however, only free agen cy raised contract duration. The free agency findings are consistent wi th Nash bargaining; however, additionally considering the arbitration results suggests the "winner's curse": duration rises only when a team might lose a player. The auction market is thus avoided. Copyright 1993 by MIT Press.

This paper uses a survey of British graduates to estimate the impact of employer-provided training on the earnings of men and women graduates. The results indicate that, although the training impact is reduced after controlling for endogeneity, some forms of training have a considerable impact. However, there are substantial gender differences in the earnings impact of various typ es of training. Moreover, men graduates are more likely to receive training than otherwise identical women. Copyright 1993 by MIT Press.

Technology is transferred across countries at some cost to the transferor and transferee. Rather than treating transfer costs as determined by a Leontief type cost function, the author examines the incentive of each party to invest resources in transferring technology. The theoretical model predicts that subsidiaries will receive greater resources than partially licensor-owned and independent firms. The empirical analysis confirms this prediction. This result favors multinational investment over direct licensing of technology to independent firms. Copyright 1993 by MIT Press.

Although the economic literature has analyzed some components of the headship decision, study of household formation has been primarily in the realm of demography. The authors expand the demographic model to include economic determinants of the decision to remain with parents or not and to live with a group or separately. They focus on measuring the effect of spatial variations in rental costs on the probability of forming a household. The authors' results, based on a sample of 2, 573 youths in their twenties, indicate that the cost of housing and potential labor earnings are important variables in explaining this probability. Copyright 1993 by MIT Press.

Developing countries often tax agriculture heavily, a practice that might affect the productivity as well as the quantity of resources allocated to agriculture. A variable-coefficient, cross-country agricultural production function is estimated, with past price expectations among the determinants of the production coefficients. Productivity's responsiveness to those expectations implies that had these developing economies eliminated price interventions, agricultural productivity would have increased on average by about a fourth. Copyright 1993 by MIT Press.

This paper tests the hypothesis that differential regulations reduced the rate of capital turnover in the electric utility industry, resulting in increased emissions of sulfur dioxide. Based on a sample of forty-four privately owned electric utilities operating over the period 1969-83, the authors' results indicate that (1) regulation increased the age of capital by an average of 3.29 years (24.6 percent); (2) increases in the age of capital have no statistically significant impact on emissions; and (3) in the absence of regulation, emissions would have increased by 3.79 tons per million kWhs (34.6 percent). Copyright 1993 by MIT Press.

In this paper we re-examine the purchasing power parity concept using data from the recent experience with floating exchange rates. In particular, we utilise the recently developed multivariate cointegration methodology to test for a long-run relationship between exchange rates and relative prices and also to test for the proportionality of the exchange rate with respect to relative prices. In contrast to much other research, we demonstrate that there is a long-run relationship between a number of bilateral U.S. dollar exchange rates and their corresponding relative prices. The proportionality of the exchange rate to relative prices does not, however, receive support from the data. This finding may be attributable to the use of measured price series rather than the "true" series.

Several poverty indices have been suggested to measure the intensity of poverty suffered by those below the poverty line. Because the indices are estimated on the basis of sample observations, we need to test whether the observed differences in their values are statistically significant. This paper provides distribution-free asymptotic confidence intervals and statistical inference for additive poverty indices. The methodology developed in the paper is applied to analyze poverty in Cote d'Ivoire from the data of the Living Standards Survey, 1985. Copyright 1993 by MIT Press.