T HERE has been much theoretical work done on models of information and search beginning with the work of Stigler (1961, 1962) but there has been little empirical investigation of the implications of these models. With the importance these models have attained in describing macroeconomic phenomena such as the Phillips curve, this empirical work is necessary to guide any potential methods designed to reduce the unemployment rate. This paper examines the time path of wage demands of the unemployed as a test of some of the implications of the search models. Most of the theoretical work has been devoted to analyzing the optimal behavior of individuals who must make choices on the basis of incomplete information and of the equilibrium behavior of markets whose participants behave according to particular search rules. For labor markets it follows that it is not necessarily optimal for an individual to accept the first job offered to him, and thus, the equilibrium position will be characterized by positive unemployment. The search strategy of an unemployed individual usually takes the following form. Search until a wage offer is received that is above some reservation wage, this reservation wage being determined by maximizing expected returns. Since search is a sequential process, the sequence of reservation wages completely describes the behavior of the agents.1 Furthermore, it is derived in most of the theoretical work that this sequence of reservation wages is either constant or monotonically declining. People who remain in the market are willing to accept successively lower wages as time passes.2 This seems to be a paradoxical result about learning, i.e., time always makes one pessimistic. The models in which this monotonicity property is generally derived, do not consider learning as part of the mechanism generating behavior, but for any consistent model of both search and turnover (implicit in the search theories of the Phillips curve) it is required that individuals revise upward their expectations of the wage distribution with the state of the economy. In an economy that is constantly changing, learning should be an important determinant of search. It is hypothesized that when one is permitted or required to learn about the wage distribution through sampling, it seems reasonable to expect that initially pessimistic individuals will revise their wage demands upward before sampling terminates. This paper will argue that the above hypothesis is correct and that the sequence of reservation wages is not monotonically declining. The first part of the paper will present a heuristic formulation of a search and learning model where it can be seen that the sequence of reservation wages depends on the initial expectations of an individual and on the particular sequence of information (including wage offers) that an individual obtains. Although the particular search rule analyzed is not derived from optimization, it should help develop the intuition necessary for believing that reservation wages can and do rise in the course of search. The formulation could be considered as the study of behavior characterized by bounded rationality, but it is mainly presented to motivate the empirical work. The empirical evidence presented supports the hypothesis that a monotonically declining sequence of reservation wages is not an accurate description of actual search behavior of unemployed individuals looking for jobs. The sequence of reservation wages depends heavily on the perceived and actual wage distribution.

Replacement cost, Rule 3-17, Inventories, Estimators of replacement costs

Robert C. Klemkosky, Donald L. Tuttle, A Ranking of Doctoral Programs by Financial Research Contributions of Graduates, The Journal of Financial and Quantitative Analysis, Vol. 12, No. 3 (Sep., 1977), pp. 491-497

Abstract ABSTRACT: The deductibility of professors' home office expenses has been increasingly liberalized for the last 13 years, resulting in a favorable income tax deduction. Recent legislation has limited this deduction severely, although with proper tax planning, a number of professors still will find it available. The purpose of this article is to examine the availability of the home office deduction under the new legislation and to illustrate the economic feasibility of taking it even when the deduction is allowable. A table provides the economic results of taking the home office deduction under various combinations of personal residence ownership periods and total home office deductions to depreciation ratios. As illustrated, the home office deduction is not economically feasible in a number of circumstances.

A decade has passed since the passage of the federal Elementary and Secondary Education Act (ESEA) of 1965. Current federal expenditures for compensatory education under that act now exceed $1.5 billion annually. Those expenditures are largely focused on children in the elementary grades, in particular, kindergarten through grade three.' A major objective of compensatory education programs can be viewed as reducing poverty by increasing the human capital stocks of students at the end of their school-lives (i.e., the terminal human capital stock). Proponents of early childhood intervention programs expect terminal human capital stocks to be higher when limited resources are reallocated from later to earlier grade levels. However, empirical research has by and large failed to fulfill this expectation. Evaluations of early childhood intervention programs like Headstart have generally produced inconclusive results (Cicirelli, 1969; Bronfenbrenner, 1974; Ryan, 1974).2 There are several possible explanations for this finding, but the one explored in this research is low marginal productivity, with respect to the stock of terminal capital, of school inputs received in the early grades. While the conventional belief among psychologists and educators has been that this productivity is high (Hunt, 1961; Bloom, 1964), others have argued that the marginal product of school inputs in producing terminal capital is higher in the adolescent years than the early childhood years (Rohwer, 1971). If the latter view is correct, compensatory education programs should maximize terminal capital by increasing school resources in the secondary grades, not the early elementary grades. The purpose of this article is to estimate the productivity of school inputs over time for both and children. The estimates obtained will have implications for the optimal allocation of limited school resources over the school-life.3 In the case of disadvantaged children, the estimates provide one possible explanation for the presumed failure of compensatory, early childhood education programs. In the case of advantaged children, the results offer one prediction of the success of non-compensatory, early childhood education, which is receiving increasing political support these days. The model of human capital accumulation is derived and described in the next section, followed by a discussion of the data and sample used in the estimation of the model. Subsequently, the estimated results are presented, and the policy implications of the results are explored.