The major difference between segmented labor market and human capital theories about the labor force behavior of women lies in the attention paid to micro vs. market-wide or macro variables. In a study such as James Heckman's (1976) which includes no market variables, the demand for the labor of married women in any given education-experience (and hence offered wage) class is implicitly assumed to be infinitely elastic. Thus the observed differences in the labor force behavior of individual women are attributed entirely to differences in supply characteristics such as education and child status. On the other hand in segmented labor force analyses, such as Barbara Bergmann's and lrma Adelman's study, the macro phenomenon of occupational segregation by sex is seen as the major factor affecting the participation, wage rates, and hours of work of women. These two types of studies lead to different explanations of why the labor force participation of women has increased in recent years. Different sets of government policies aimed at improving the labor force situation of women are also implied. In this paper we present a model of the labor force behavior of married women in which both individual and family decision making, and macro labor market conditions are found to play important roles. An unemployment variable and an index summarizing the ratio of expected available local job slots for women to the potential female labor force population are incorporated into a marginal utility analysis of the labor force behavior of married women in Canada. The inclusion of the local opportunity for jobs variable is supported by detailed evidence on the labor force segregation of women in Canada. Consistent estimation results are presented for eleven age groups in a probit analysis of whether or not a married woman works, and for eight age groups in equations estimating the offered wage rates and annual hours of work of married women who do work. One unexpected finding is that working wives in Canada tend to work fewer hours per year when paid more per hour. This is contrary to the findings of other researchers for the United States, and has important policy implications. Although it is possible that our results differ from those of other researchers solely because we have analyzed data for another country, we argue in Section V of this paper that the difference in results is more likely due to differences in the form in which the labor supply function for wives is estimated and the choice of the variables which are used to control for child status. Our resulting uncompensated wage elasticities of hours of work are shown to be very similar to those reported by other researchers for men. The data base used in this study is the Family File of the first Public Use Sample to be made available from a Canadian census. Combined grouped R2s are presented showing the extent to which our equations explain the observed macro variations in the labor force behavior of married women classified by various characteristics. Finally we use our estimated model to see what changes we would expect in the labor force behavior of a hypothetical 41-year-old wife living in a small city in New Brunswick given a variety of changes *Faculty of Business Adminstration and Commerce, University of Alberta. For further computational results and theoretical arguments supporting various statements in this paper, see our book. The work for this paper was supported in part by the Statistics Canada-SSRCC Programme of 1971 Census Analytical Studies, and by the Faculties of Graduate Studies and Research and of Business Administration and Commerce of the University of Alberta. The empirical results in this paper are primarily based on Public Use Sample Data derived from the 1971 Canadian Census of Population supplied by Statistics Canada. The responsibility for the use and interpretation of these data is entirely ours. We would like to thank T. Daniel, K. Gupta, anonymous referees, and the managing editor for their helpful comments, and James Heckman for making available to us some of his work which had not yet been published.

Alice Nakamura, Masao Nakamura, A Comparison of the Labor Force Behavior of Married Women in the United States and Canada, with Special Attention to the Impact of Income Taxes, Econometrica, Vol. 49, No. 2 (Mar., 1981), pp. 451-489

In Lintner's model of dividend behavior of firms change in dividends is a function of current earnings and lagged dividends. We show that under a rational expectations hypothesis of management behavior change-individends equation should include lagged earnings as an additional explanatory variable, and that expected sign of coefficient of lagged earnings variable is positive. Fama and Babiak predicted opposite sign for a lagged earnings variable in such an equation. Estimation and simulation results based on panel data for U.S. and Japanese firms provide modest econometric support for our Rational model. A good descriptive model of firms' dividend policies is useful, for example, for portfolio managers and for studying aspects of firm behavior such as interactions between investment and financing decisions and the management's transmissions of signals concerning changes in expected future earnings.' The econometric specifications of dividend behavior favored in literature are Lintner model (Lintner (1956)) and its FamaBabiak (FB) variant (Fama and Babiak (1968)). In Lintner model change in dividends is regressed on current earnings and lagged dividends. Fama and Babiak (1968) note that forecasting ability of Lintner's model is increased by adding lagged earnings as a regressor. We show that under a rational expectations hypothesis dividend behavior of firms may be described by an extension of Lintner's model, that we call Rational model, that includes lagged earnings as an additional explanatory variable. An important empirical difference between our Rational model and FB model is that expected sign of coefficient of lagged earnings variable is negative in Rational model while in FB model it is implied to be positive (see Fama and Babiak (1968, equation 10)). Our results based on panel data for U.S. and Japanese firms provide modest support for Rational model.2 I. The Rational Model of Dividend Behavior Our point of departure is partial adjustment model of dividend behavior of a firm (Lintner (1956)) given by AD, = aO + c(D,* D,-) + u,; t= 1,2,...,T (1) where A Dt = Dt -Dtdenotes change in dividends, Dt is dividends paid out in time period (year) t, Dt* is unobserved target dividend payout, c is speed of adjustment to difference between target dividend payout and last year's payout, ao is a constant and ut is an error term often assumed to be independently and normally distributed with zero mean over time periods. In Lintner model target dividend payout is replaced by Dt* = ryt which means that desired dividend payout is a fraction r of current earnings (yt). Thus Lintner's model is A Dt= a0 + cryt cDt+ Ut. (2) This model fits U.S. data (at both aggregate and disaggregate levels) quite well. Suppose instead that management determines target dividend payout by

SOME economists have ignored corporate financing decisions on the assumption that they do not affect the investment and production decisions of firms. Yet even if this extreme position is accepted, firms must still make financing decisions which in turn have impacts on other sectors of the economy. Since interest payments on corporate debt are tax deductible, the reliance of firms on debt as opposed to equity financing directly affects the revenue the federal government collects through taxation of corporate profits. The corporate presence in bond markets and corporate borrowing from banks can be expected to affect both interest rates and the demand for money. Thus any large macro model must somehow account for the borrowing behavior of firms. Yet in assessing this portion of the 1965 Brookings Quarterly Econometric Model of the United States, de Leeuw (1965, p. 506) writes that the regressions for business borrowing are the least successful of the model. In this paper we derive an equation for the long-term debt ratio (capital structure) of a firm which can be estimated using available data. Unlike some recent qualitative studies' on the aggregate corporate debt ratio as related to inflation and taxation over time, our primary aim is to explain differences in the debt behavior among individual firms. Tobit estimation results, explicitly allowing for the fact that some firms have no long-term debt, are presented for both U.S. and Japanese firms. Our theoretical model implies that the long-term debt ratio which maximizes the present value of the existing stockholder's equity depends positively on the cost of equity and negatively on the cost of debt, capital productivity, and retained earnings. Our estimation results are generally in agreement with these expectations. In particular, we find that capital productivity, which has not been included as an explanatory variable in most previous studies,2 and the cost of equity capital are both important determinants of the firm's capital structure. Our empirical results also support the view put forward by Komiya3 that debt ratios for Japanese firms are higher than those for U.S. firms in part because the cost of equity has been historically higher in Japan than in the United States in relation to the cost of debt. Other important attempts to explain the debt ratio as a behavioral function of the price of debt and other variables include the studies of de Leeuw (1965) and Goldfeld (1969).4 Certain conceptual problems mar these studies, however. Short-term and long-term debt are not distinguished, despite the fact that long-term debt is usually used to finance capital spending while short-term debt is used to finance inventory and