At least since the early 1970's, it has been apparent that the cyclical variations in inflation summarized by the short-run Phillips curve are only one part of the inflation problem that confronts modern industrial economies. Another part is the relative persistence of an established rate of inflation. There is a good deal that we do not understand about this persistence. But I find the most useful way to model it is to start with the concept of a relatively stable wage norm, by which I mean a norm for the rate of wage increase. The model distinguishes sharply between the cycle and the trend in inflation, with the wage norm determining the trend. The variations in inflation of the typical business cycle take place around the existing wage norm and generate the empirical short-run Phillips curve. The wage norm itself is affected little if at all by the typical business cycle. Historically the wage norm has been shifted by prolonged departures from typical business cycles or by other extreme economic developments. Figuring out more precisely what it takes to shift wage norms, or what might keep them from shifting, is a central challenge for understanding inflation better. Before turning to its implications, let me sketch the behavioral underpinnings of the wage norm model and the empirical evidence about wage norms. The norm rate of wage increase has no allocational significance and describes the trend of nominal wages independent of real aggregate demand or relative demand effects. In this respect, it is like the anticipated rate of inflation in many familiar models. Wages are not determined in an auction-like labor market that clears over any reasonable interval of time. Rather they are established by wage-setting firms with a profit-maximizing interest in their long-run relation with their employees, in some cases in a bargaining situation with unions. Under both the implicit and explicit contracts that thus dominate wage setting, keeping up with the norm is the neutral standard for firms. An individual firm that raises wages in line with the norm neither improves nor worsens its relative position as an employer. A firm that wants to expand employment will, typically, offer a higher wage than would be required just to keep up with the norm. Relative wages and relative employment levels are thus codetermined in this process. When most firms want to expand employment, as in a cyclical upturn, the same behavior is part of the process producing the modest cyclical rise in inflation that we observe as the short-run Phillips curve. Thus the onset of cyclical inflation is not a sign that capital and labor resources are being overutilized. Nor is it a sign that inflation is on an accelerating path or even that wage norms are shifting up. In analyzing U.S. postwar data, I have found the wage norm shifted up substantially by the end of the 1960's and down again, though not by as much, by the end of the 1980-82 recession (see my 1983 paper). The first episode was a period with a historic expansion that ended with several years of very low unemployment rates. The second was a recession of unusual length and severity that ended with the highest unemployment rates since the 1930's. There is also evidence of a small shift down in the wage norm after the weak economic performance of 1957-61, which featured two recessions with only an aborted recovery in between. I also found evidence for Germany, the United Kingdom, and Japan of upward shifts in wage norms in manufacturing industries after the 1960's and downward shifts in the early 1980's (see my 1986 paper). All these episodes suggest the kinds of extreme cyclical developments that have shifted wage norms in the postwar period. *The Brookings Institution, 1775 Massachusetts Avenue, NW, Washington, D.C. 20036. In preparing this paper, I benefited from discussions with Charles Schnl t7.e

Several observed features of takeover contests appear to be inconsistent with value-maximizing behavior on the part of the agents involved. For instance, managers occasionally resist takeover bids, presumably in order to facilitate competition among bidders. However, counterbids do not always materialize, suggesting that management resistance was not in the best interests of the firm's shareholders. On the other hand, a successful takeover is sometimes accompanied by a decrease in the value of the acquirer's shares. In addition, valuable combinations are occasionally not consummated. We present a simple illustration of sequential takeover bidding in which all managers act in the best interests of their respective shareholders. Within the context of this model, we provide an explanation of the type of behavior described above.

ABSTRACT Several observed features of takeover contests appear to be inconsistent with value‐maximizing behavior on the part of the agents involved. For instance, managers occasionally resist takeover bids, presumably in order to facilitate competition among bidders. However, counterbids do not always materialize, suggesting that management resistance was not in the best interests of the firm's shareholders. On the other hand, a successful takeover is sometimes accompanied by a decrease in the value of the acquirer's shares. In addition, valuable combinations are occasionally not consummated. We present a simple illustration of sequential takeover bidding in which all managers act in the best interests of their respective shareholders. Within the context of this model, we provide an explanation of the type of behavior described above.

Numerous studies have established that part of the very substantial male-female earnings gap is explained by differences in the amount of human capital workers have accumulated. (See, for example, Jacob Mincer and Haim Ofek, 1983.) Institutional factors have also been found to play a role in determining wages (David Gordon et al., 1982). Occupation further helped to explain the remaining gap, but several researchers have shown that introducing dimensions of work authority by taking into account the individual's position in the work hierarchy explains more of the variation in earnings than does occupation (Martha Hill, 1980). Last, two recent studies (Ferber and Spaeth, 1984; Spaeth, 1985) also included control over monetary resources. This variable added substantially to the explanatory power of earnings regressions, even after human capital variables, institutional factors, and several other measures of work authority had been entered. Like the other studies, Ferber and Spaeth also found that reward structures for men and women are quite different, suggesting the possible existence of discrimination. The question whether women may also be at a disadvantage in achieving control over monetary resources was not investigated. When Hill examined the process of achievement of work authority, she found substantial differences between male and female workers. In this paper we examine whether the same is true for attaining financial control. I. Data and Analysis

Paul Davis and Gustav Papanek (1984) ranked major economics departments by citations; however, their approach was not novel. Dennis Gerretz and Richard McKenzie (1978) initiated the use of citations to rank economics departments. Though they ranked only southern economics departments for the years 1976 and 1977, GerritzMcKenzie used both total citations and mean citations as ranking criteria. As Davis-Papanek and Gerritz-McKenzie have shown, the citation-ranking approach eliminates many of the problems of ranking departments using journal articles and offers a qualitative as well as quantitative measure of faculty productivity. Both studies, however, ranked only Ph.D. granting institutions and ignored those economics departments which offer a master's degree as the highest degree awarded. Although many Ph.D.granting departments have master's programs, these institutions tend to concentrate on training future academicians and to treat the master's degree as a consolation prize for unsuccessful Ph.D. students. While non-Ph.D.-granting institutions may have different incentives, teaching loads, computer and library support, and quality and extent of graduate research assistantships, we use a citations-based criterion to demonstrate that these institutions should not be neglected as sources of economic research.' Column (1) of Table 1 shows the ranking of economics departments offering the master's degree as the highest degree based upon the average number of citations for the years 1977-1981 for department faculties denoted in the 1982 catalogs of their respective institutions (ties are ranked equally). Our procedure differs from Davis-Papanek in that they averaged citations from 1978 and 1981 only. Given the wide range of faculty size, column (2) denotes the mean citation per faculty member per year. As Davis-Papanek found for Ph.D.-granting institutions, the rankings do change significantly. Four of the top ten departments are replaced by smaller departments and there is considerable shuffling among the remaining top ten departments. Since Davis-Papanek included faculty members citing their own work, this may bias one of the major advantages of using citations instead of the number of major journal publications; that is, citations measure the quality of a person's research in stimulating further research by others. Column (3) ranks departments by citations per year adjusting for self-citations. In some cases this correction is important. For example, Auburn moves from 9th to 15th, Brigham Young from 5th to 13th, and West Texas State from 12th to 6th. In general, there is a high correlation between the two rankings (the Spearman rank correlation coefficient is .99). Another potential weakness of a citation index is the fact that one article cited ten times is weighted equally with ten articles cited once each. It would be an interesting exercise to examine how innovations in the literature (as measured by citations per article) compare between master's only institutions, and middleto lower-ranked Ph.D. programs. Because Davis-Papanek do not separate the number of articles cited from the number of citations, we are unable to make this comparison. For this reason, the number of articles is not reported in our tables. For master's only institutions, the * Blair and Wallace: Department of Economics, Clemson University, 222 Sirrin Hall, Clemson, SC 29631; Cottle: University of Mississippi. We thank an anonymous referee for helpful suggestions on a earlier draft. Any remaining errors are our own. 'Philip Graves et al. (1982) included master's only institutions in their publications-based rankings.

This paper analyses data on union and employer rankings of different panels of arbitrators in an actual arbitration system. A random utility model of bargainer preferences is developed and estimated. The estimates indicate that unions and employers have similar preferences, in favor of lawyers, more experienced arbitrators, and arbitrators who seem to have previously favored their side. Alternative rankings models, which are estimated to test whether bargainers rank arbitrators strategically, reveal no evidence of strategic behavior.