Knowledge that Transforms

OME empirical studies on developments of wage differentials over time use measurements of relative wage dispersion as indicators for the movement of relative labor prices. This is obviously the case when a reduction movement of relative wage dispersion is explained by the growth of education, and when an increase of relative wage dispersion is explained by unskilled immigration.' The purpose of this paper is to show (i) that measurements of relative dispersion overestimate the (average) change of relative wage differentials;( 2 ) that measurements of relative differentials tend to underestimate the (average) change of relative labor prices; and (3) to suggest a method by which a consistent estimate for the (average) change of relative labor prices can be computed.

T HE Report of the Commission on Money and Credit' makes many excellent recommendations, particularly in the area of banking and financial institutions and monetary and fiscal policy. It is weak in some areas, particularly in the international sphere. This review consists mainly of a summary of some of the most important recommendations of the CMC (Section III), and an evaluation of them (Section IV). The first two sections discuss, respectively, the background and general nature of the CMC Report, and the policy goals stated by the CMC.

T HERE have been numerous recent analyses of the differences between the nature and development of trade in the igth century and that in the 2oth century. Some discussions have concentrated on the implications of these differences for the process of economic development; I others have provided prescriptions of policy for the less-developed countries. Prominent among the latter is a recent article by Raul Prebisch, setting forth a recommended commercial policy for these countries.2 Prebisch' position as Executive Secretary of the Economic Commission for Latin America makes his proposal of considerably more than academic interest, and it is the purpose of the present paper to examine critically the main line of argument, with particular attention to the points of difference between it and the tariff policy generally recommended in neo-classical economics.