Knowledge that Transforms

Daniel H. Hill, Deborah A. Ott, Lester D. Taylor, James M. Walker, Incentive Payments in Time-of-Day Electricity Pricing Experiments: The Arizona Experience, The Review of Economics and Statistics, Vol. 65, No. 1 (Feb., 1983), pp. 59-65

Adelman, Irma, and Cynthia T. Morris, Growth and Social Equity in Developing Countries (Stanford: Stanford University Press, 1973). Braulke, Michael, Approximation to the Gini Coefficient for a Population Based on Sparse Information for Sub-Groups, Journal of Development Economics (forthcoming). Cowell, Frank A., and Anthony F. Shorrocks, Decomposition by Population Subgroups, London School of Economics Discussion Paper (Dec. 1980). Della Valle, Philip A., and Noriyoshi Oguchi, Distribution, the Aggregate Consumption Function, and the Level of Development: Some Cross-Country Results, Journal of Political Economy 84 (Dec. 1976), 1325-1334. International Labour Office, Yearbook of Labour Statistics (Geneva: ILO, various issues). Jain, Shail, Size Distribution of Income, Compilation of Data (Washington, D.C.: World Bank, 1975). Knight, John B., Explaining Distribution in Less Developed Countries: Framework and An Agenda, Oxford Bulletin of Economics and Statistics 38 (Aug. 1976), 161-177. Kuznets, Simon, Economic Growth and Inequality, American Review 45 (Mar. 1955), 1-28. Oshima, Harry T., The International Comparison of Size Distribution of Family Incomes with Special Reference to Asia, this REVIEW 44 (Nov. 1962), 439-445. Paukert, Felix, Income Distribution at Different Levels of Development: Survey of Evidence, International Labour Review 108 (Aug.-Sept. 1973), 97-125. Robinson, Sherman, A Note on the U Hypothesis Relating Inequality and Development, American Review 66 (June 1976), 437-440. United Nations, Compendium of Housing Statistics 19721974 (2nd issue) (New York: United Nations, 1976). , Yearbook of National Accounts Statistics (New York: United Nations, various issues). U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, Part 2 (Washington, D.C.: U.S. Government Printing Office, 1975). World Bank, World Tables 1976 from the Data Files of the World Bank (Baltimore: Johns Hopkins Press, 1976).

THIS paper presents estimates of hours equations based upon optimizing behavior of firms in a dynamic context. The order-stock distinction is the point of departure for this paper. Firms will be presumed here to produce to stock or to order. Hours equations will be derived which link hours worked to levels of inventories of finished goods or unfilled orders. Early work on the demand for labor ignored the effects of inventones and unfilled orders on the choice of labor input levels. However, some evidence on this subject was provided by the important and well-known work of Nadiri and Rosen (1973).1 Using a theoretical framework first studied by Lucas (1967), they estimate dynamic factor demand schedules for six quasi-fixed factors of production, i.e., factor inputs which are subject to adjustment costs. Among these six inputs are employment, hours per man and total inventories. It is well known that the accumulation of any input will then depend upon the gaps between desired and actual levels of all quasi-fixed factors. Thus the demand for hours per man is taken to depend, among other things, upon lagged hours, employment and total inventories. The cyclical interaction between inventories and the demand for labor arises through adjustment parameters attached to these lagged stocks. Completing the specification of the model by including the determinants of desired stocks (sales, the wage relative to capital costs and a time trend), they apply the model to industrial aggregate data. Their results provide little evidence that inventories are an important determinant of the demand for hours. Of the eighteen industries examined, only six produce negative and significant inventory coefficients. Further, relative factor prices are found to be significant in only six industries. Apart from aggregation bias issues, there are several misspecifications which could account for these results. There is no reason why the impact of each inventory stock should have an identical impact upon hours. For example, it is reasonable to suppose that if the firm holds excess finished goods relative to desired levels, it will reduce hours per worker. But if the firm holds stocks of materials which exceed desired levels, the firm may wish to increase hours so as to offset the output effects (through the production function) of declining stocks of materials. Similar comments can be offered about work in process inventories. Thus, disaggregating by stage of fabrication would appear to be appropriate to sort out inventory effects on hours demand. Second, Nadiri and Rosen ignore the impact of order backlogs upon hours. Following Belsley (1969), it is well known that many of the firms in these industries produce not to stock but to order. For firms producing goods requiring special attention, order backlogs replace finished goods as a buffer against fluctuations in demand. Thus order backlogs should appear directly in the hours equation. Finally, the dynamics of labor demand and factor prices may require a distributed lag representation to capture the response of labor demand to shifts in expected real wages. As suggested by Neftci (1978) in a different context, the effects of real wages on hours may be captured if allowance is made for a distributed lag relationship between hours and real wages. This paper presents two models which are designed to address some of these issues. Extending Received for publication June 30, 1982. Revision accepted for publication January 7, 1983. * Pennsylvania State University. The research reported in this paper was partially supported by the Employment and Training Administration, U.S. Department of Labor under Research and Development Grant No. 91-24-77-34 and by the Federal Reserve Bank of Philadelphia. The views expressed herein are those of the author and do not necessarily reflect those of the sponsoring institutions or the Federal Reserve System in any way. I wish to thank Professors C. F. Christ, L. J. Maccini, H. Rose and M. Ali Khan for their constructive criticisms of this research. Two anonymous referees also provided excellent comments. John Hinrichs of the Bureau of Economic Analysis kindly provided the deflated inventory data used here. Diane Mayer and Donna Robinson provided expert research assistance. Any remaining errors are the responsibility of the author. l See Nadiri and Rosen (1973) for a survey of the employment demand literature.

James A. Dunlevy, Don Bellante, Net Migration, Endogenous Incomes and the Speed of Adjustment to the North-South Differential, The Review of Economics and Statistics, Vol. 65, No. 1 (Feb., 1983), pp. 66-75

The Japanese international trade structure in manufactured goods has been analyzed using cross-section regression analysis in which labor, capital, human capital, and energy are regressed on Japanese net exports, exports and imports with the world, OECD and developing countries for 1967 and 1975. Skill and wage differential measures have been utilized for the measuring of human capital. Contrary to the dualism found in earlier studies, the estimated results show that in 1967 Japan exported unskilled labor intensive goods with respect to the developing countries as well as the OECD countries. In 1975 Japan exported capital intensive goods to all regions and imported unskilled labor intensive goods from the world and the developing countries. Skilled labor intensive goods were imported from the OECD countries in both years. Drastic changes between 1967 and 1975 are noted. Japanese exports shifted from unskilled labor intensive goods to capital intensive goods while imports did the opposite. This result conforms to the changes in unskilled labor and capital usage in Japan and her major trading partners.

Results of an analysis show that the use of bonus payments in an experimental study of electricity demand is directly related to the income effects in the Slutsky equation. As with the income effect, it is not possible to predetermine the sign of the bonus effect. Theoretical results predict that if the relationship between the bonus payment and consumption of electricity is severed, then households would unambiguously increase consumption. The authors conclude that bonus plans will reduce electricity consumption and could be an alternative approach to promoting conservation. 10 references, 1 table.

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