T HE effects of schooling (as measured both by years attained and by one or more dimensions of quality), and socio-economic background in determining individuals' earnings, have long been controversial issues. In the past decade, with the advent of large scale empirical studies, a number of widely held but not well documented hypotheses about these issues have failed to find broad support in the data. Namely (a) several recent studies, most notably that by Coleman and his associates (1966), have found only a most tenuous relationship between conventional measures of the quality of school inputs and various achievement test scores and (b) the notion that socio-economic background is important in determining an individual's income has been played down in the literature concurrent with the rise in popularity of the human capital explanation of earnings differences (for example, Mincer (1970)). The purpose of this paper is to re-examine the relationship among income, socio-economic background, years of schooling and quality of school inputs. Several models are postulated which permit the examination of both the direct and the indirect effects of the various factors, separately for blacks and for whites. The primary data source is the 1968 Urban Problems Survey conducted by the Survey Research Center. The principal conclusions of this paper are: (a) school quality has a small direct effect on the wage rates of blacks but no apparent effect at all on the wages of whites; (b) for both races school quality has strong indirect effects as it influences the number of years of schooling attained; (c) socio-economic background, as variously measured, appears to have significant direct effects on earnings and, like school quality, indirect effects as it also influences the number of years of education attained; and (d) years of schooling appears to exert a strong influence on earnings independent of other measured variables, especially for whites.

The description for this book, Adaptive Control Processes: A Guided Tour, will be forthcoming.

William Hamovitch and Richard Morgenstern (H-M) are certainly correct in saying that experience is at least as important as research output in the determination of salaries. However, professor will probably never gain any considerable experience at prestigious university unless he publishes; instead, he will be fired. This is demonstrated by the fact that only 6.4 percent of the associate professors at the time of promotion to that rank had published nothing as compared to 22.4 percent for assistant professors who had not yet been promoted. Only 1.6 percent of the full professors at the time of promotion had published nothing. The existence of diminishing returns to publishing lends support to H-M's conclusion that experience is possibly the most heavily weighted factor in the reward process. To ignore, though, the very large contribution which publication makes in the salary and promotion process would significantly reduce the predictability of the model. Given the diminishing returns to publishing and the high relative rewards to experience, why do professors continue to publish after gaining tenure? Nonpecuniary rewardsprestige and self-satisfaction-would then explain their H-M suggest that a larger part of the salary differential is unrelated to rational market behavior. Actually the opposite may be true. If professors are willing, to do research at low pay because of the nonmonetary rewards, why pay them any more than is necessary? * University of Missouri, Rolla.

Reported expenditures for environmental protection are often cited as an assessment of the burden of current regulatory efforts. However, the potential for both incidental savings and uncounted costs means that the actual burden could be either higher or lower than these reported values.Using a production cost model that considers the possible interaction between environmental and non-environmental expenditures, we directly estimate the dollar-for-dollar incidental savings/uncounted costs arising from a one-dollar increase in reported environmental expenditures. Although recent literature supports the idea that reported expenditures probably understate the actual burden, we find no such evidence in the manufacturing sector based on a large panel of plant-level data. In one industry, we find statistically significant overstatement. In three others, we find no significant deviation in either direction.We conclude that, although cost estimates are not overstated on average, variation and uncertainty exist at the industry level, with some plants experiencing savings and others possibly facing uncounted burdens.