Knowledge that Transforms

Explains the taxonomy of changing factor shares in a competitive industry as factor supplies (or prices) shift. Description of the neoclassical production function; Changes in factors that are related to the partial elasticities concepts; Duality relations that hold for the minimum-unit cost function. (Из Ebsco)

In his comment, Mark Ladenson contends that substantial differences in wages still exist between the North and the South even after accounting for differences in regional prices. We find his results objectionable on three grounds: a) his arbitrary exclusion of available data, b) his choice of a low budget cost of living as a deflator, and c) the possibility of heteroscedasticity which would render his testing procedure invalid. Ladenson objects to four of the five cities we used as our southern sample, all previous empirical work notwithstanding. These five cities were used in our analysis because they were the only five cities for which the necessary 1963 data were available. Similarly, the five cities included in our Northeast sample were the only Standard Metropolitan Statistical Areas (SMSA) for which complete 1963 data existed.' If we consider 1967 data, there are many more SMSAs in both regions than are utilized by Ladenson. (Our data sources are identical to Ladenson's: Census of Manufacturers 1967 and Handbook of Labor Statistics 1970.) In this study we use all the data available by: 1) examining wage differentials throughout the entire United States, 2) offering alternative definitions for the Northeast and South, and 3) using different deflators to measure differentials in the regional cost-of-living. The statistical techniques used are similar to those employed by Ladenson and in our previous paper, p. 934, except that we have added two additional dummy variables to account for the additional geographical regions, the North Central and western regions of the United States. Dummy variables, then, exist for the South, North Central, and West of the United States; consequently we are comparing wages in these regions to wages in the Northeast.2 Industry 21 of the Standard Industrial Classification

The 1973 Economic Report of the President devotes an entire chapter (ch. 4) to the economic role of women in the United States. In this chapter, the Report recognizes that economic discrimination against women exists and, by the length and thoroughness of the analysis describing its dimensions and consequences, implies that such discrimination constitutes a serious economic (and social) problem. The Report does not attempt to minimize the extent to which job segregation, earnings differentials, higher unemployment rates exist, and the lack of improvement in each component over the last few decades. As economists, we are particularly pleased to have the official imprimatur of an Economic Report on the view that discrimination does indeed exist. Some economists have the tendency to minimize the importance of nonpecuniary forces in influencing decisions made within the firm, and have been reluctant to admit the possibility of discrimination unrelated to real or perceived productivity differences. We believe that a proper analysis of discrimination is yet to come; such an analysis will have to fuse elements of economics, sociology, psychology, and history. Employers do refuse to hire women for certain occupations. Instead they hire men exclusively and pay them more than they would have to pay women of equal ability. The court records are now full of such cases,' but such data will never be explained on the basis of a model which includes in the objective function of the employer only monetary profits. Nor can models which assume that employers' decisions about hiring are based on inborn, unchanging, unexplained tastes do justice to the social forces, both internal and external to the firm, which bear on such decisions. Specifically, it is well known that the average woman college graduate who works full time all year ends up with about the same income as the average male high school dropout. The gross earnings differential works out to be between 35 and 57 percent, depending on the data base used to make the calculation. The Report puts the differential due to discrimination at about 20 percent, but this seems low. In a recent article, Isabel Sawhill reviewed seven econometric studies of male-female earnings patterns. In six of them,2 the differences which could be attributed to discrimination were above 29 percent and ranged up to 43 percent. The seventh study3 estimated the difference which might be attributable to discrimination as 12 percent, but arrived at this figure by classifying as nondiscriminatory the differences in the distribution of men and women among detailed occupations. Since

Many factors interact in subtle and complex ways to determine the size of an urban area. One important factor is transport congestion. Congestion means that the cost in time and comfort of travel to each traveler depends on the density of traffic, that is, on the ratio of the number of travelers to the amount of land used for transportation. In this paper we investigate the effect of congestion on the relation between the optimum size of the city's Central Business District (CBD) and the optimum size of its contiguous suburbs. The model with which this question is investigated has been developed by E. S. Mills and D. M. de Ferranti (M-F), followed by R. M. Solow and W. S. Vickrey. A recent related paper is by Solow. The layout of the model city is circular and it consists of a CBD surrounded by suburbs. The population of the city lives in the suburbs at a given density per unit of land and commutes to the CBD for employment. The density of workers per unit of land in the CBD is also given. Social costs of the urban area are taken to depend on transport costs and on the opportunity costs of land in alternative nonurban use, say, in agriculture. An allocation of land for transport and for housing and a specification of the boundaries of the CBD and the suburbs that minimize social costs are regarded as an optimum, or efficient, urban system. M-F have assumed that the size of the CBD is given and have consequently chosen to neglect the social costs within the CBD. We broaden their analysis to include these costs in order to determine the optimum boundary of the CBD.1 It should be noted that the M-F model is less general than Solow's in that it assumes that the population densities in the suburbs and in the CBD are unaffected by the allocation policy. The neglect of behavioral relations forming the basic structure was found necessary in order to make the problem tractable. Our analysis shows that, within a certain range, the optimum size of the CBD relative to the suburbs depends on the population densities in the CBD and in the suburbs and on the elasticity of congestion costs with respect to traffic density, but is independent of the population size. The analysis may thus be brought to bear upon the very important controversy concerning modern trends in the size of city centers relative to their surrounding suburbs, what is popularly termed the suburbanization process. Some writers, such as B. Chinitz, argue that, as the metropolitan population increases, diminishing returns to scale in the activities inside the CBD may require a decrease in its size relative to the suburbs. Critics have pointed at agglomeration effects, at transport costs, and at the opportunity costs of land as reasons to increase city centers relative to suburbs as the urban population increases. The simple model that underlies our analysis focuses on the congestion aspect alone, neglecting any other considerations. It may thus bring out an important feature of the problem, but it cannot pretend to provide a fully comprehensive analysis.