technology adoption under production uncertainty theory and application to irrigation technology we propose a theoretical framework to analyze the conditions under which a farmer facing production uncertainty due to a possible water shortage and incomplete information will adopt a more efficient irrigation technology a reduced form of this model is empirically estimated using a sample of 265 farms located in crete greece the empirical results suggest that farmers choose to adopt the new technology in order to hedge against production risk in addition we show that the farmer s human capital also plays a significant role in the decision to adopt modern more efficient irrigation equipment

testing the stochastic structure of production a flexible moment based approach conventional production function specifications are shown to impose restrictions on the probability distribution of output that cannot be tested with the conventional models these restrictions have important implications for firm behavior under uncertainty a flexible representation of a firm s stochastic technology is developed based on the moments of the probability distribution of output these moments are a unique representation of the technology and are functions of inputs large sample estimators are developed for a linear moment model that is sufficiently flexible to test the restrictions implied by conventional production function specifications the flexible moment based approach is applied to milk production data the first three moments of output are statistically significant functions of inputs the cross moment restrictions implied by conventional models are rejected

health care expenditures and gdp panel data unit root test results abstract this short paper presents unit root test results for time series on per capita national health care expenditures and gross domestic product in the oecd unlike the country by country test used by hansen p king a 1996 the determinants of health care expenditure a cointegration approach j health econ 15 127 137 the test we employ exploits the panel nature of the oecd data using this approach we are able to reject the null hypothesis that these series contain unit roots no single test is likely to be definitive in this rapidly evolving area of econometric research however our results help to mitigate concern that panel data analyses of national health care expenditures are misspecified

the union impact on profits evidence from industry price cost margin data this paper uses industry price cost margin data to estimate the extent to which unions reduce profits estimates allowing for the endogeneity of union status are contrasted with estimates that assume union status is exogenous and not determined in part by either profitability or industry structure endogeneity is found to be an important consideration in estimating the union impact on profits two stage estimates are considerably larger than ols estimates the final section explores the total estimated redistribution from capital to labor in the manufacturing sector an important conclusion is that unions raise prices less than was previously believed

capital skill complementarity and the interregional distribution of human capital in us manufacturing 1989 capital skill complementarity and the interregional distribution of human capital in us manufacturing applied economics vol 21 no 8 pp 1087 1098

unit root and cointegration tests timeseries versus panel estimates for international health expenditure models classical regression estimates of the determinants of the oecd health expenditures are useful for policy formulation and evaluation however if the underlying timeseries data are not collectively stationary in levels the estimated parameters are faulty and can misguide health policy until very recently the crucial stationarity tests were ignored in a large number of studies on international comparisons stationarity adf phillips perron ips heterogeneous panel and cointegration engle granger bivariate johansen s multivariate tests are conducted here using 1960 1997 health expenditures data 1998 cd rom of 19 oecd countries it is found that extending the time series data length affects the order of integration and number of cointegrating vectors however it is arguable whether the order of integration decreases or increases as more observations are added for testing the failure of the johansen and engle granger cointegration tests for most of the oecd countries cautions policy makers against

risk efficiency and the adoption of modern crop varieties evidence from the philippines efficiency among farmers of less developed countries has been the focus of numerous studies since t w schultz hypothesized that farmers in developing agricultures are poor but efficient 1 a growing body of literature supports schultz s argument that farmers in developing agricultures have low incomes not because they use their resources inefficiently but because they lack the technology and resources they need to realize higher productivity and thus higher incomes a high priority in agricultural development assistance since the 1960s has been the generation of technology that would enable farmers to increase their productivity much research has been devoted to the causes of low agricultural productivity and the longer term productivity gains that may be forthcoming from modern technology but less attention has been devoted to the process of technology adoption by low income farmers as noted in the recent survey of adoption of agricultural innovations by g feder r e just and d zilberman there have been efforts to model adoption in the context of risk but there is a dearth of empirical evidence on the ways that farmers respond over time as a new production technology is introduced in a risky environment 2 in this article we address the empirical analysis of technical efficiency as farmers adopt new production technology taking into account production risk and learning we utilize recently developed efficiency criteria applicable when production is risky and implement these criteria using an approximation to a representative farmer s decision model 3 pooled time series and cross sectional data collected by the international rice research institute are used to investigate the

what happens when agent t gets a computer the labor market impact of cost efficient computer adoption this paper offers a model of how computer technology has changed the labor market demonstrating that wage differentials between computer users and non users are consistent with computers first being introduced in high wage jobs following cost efficiency furthermore skill upgrading occurs following a reemphasis on non routine tasks after adoption the model also reveals that neither differences in computer skills nor complementary skills are needed to explain wage differentials between users and non users skill upgrading and the changing organization and intensity of work finally the predicted effects on the wage structure are consistent with empirical evidence

econometric estimation of producers risk attitudes general methods are proposed for the identification and econometric estimation of the parameters of the distribution of risk attitudes in a producer population the proposed methods also provide the basis for the development of statistical tests of model specification and of behavioral hypotheses econometric risk attitude estimation is shown to be possible under less restrictive conditions than previously believed a moment based version of the general model is applied to indian data and the econometrically estimated risk attitudes are presented and compared to experimental results for a similar group of producers

paralegals and substitution among labor inputs in the law firm despite the recent interest in economic analysis of the law firm and the market for legal services 1 little attention has been given by economists to a phenomenon of increasing importance in the markets for inputs to the production of legal services the rise of the paralegal to illustrate between 1972 and 1977 the number of practicing attorneys in the u s increased by 41 percent but the number of paraprofessionals in legal services increased by 135 percent if we look at all law firms in the u s we find the share of labor cost paid to paralegals almost doubled in those five years increasing from 3 7 percent to 6 7 percent on the other hand the cost share of salaried associate lawyers was stable over the same period this raises the questions of how easily substitutable the various labor inputs are for one another in this paper we examine this issue by using a short run labor substitution model estimating cost share equations derived from a translog labor price function data from the 1977 census of service industries are used to derive quantity and price measures for three types of labor inputs associate lawyers paraprofessionals and all others for law partnerships in 65 standard metropolitan statistical areas the primary result is that paralegals seem more closely substitutable with other workers secretarial clerical messengers than with associate lawyers suggesting that wages and employment of lawyers are unlikely to have been significantly affected by the influx of paralegals

skill biased technological change and wage inequality evidence from a plant retooling1 one of the most popular explanations for the increased wage inequality that has occurred since the late 1970s is that technological change has resulted in a downward shift in the demand for low skill workers this pattern is also alleged to account for the growth in racial inequality in wages over the same period this article reports on a case study of the retooling of a food processing plant a unique longitudinal multimethod design reveals the nature of the technological change the changes in job requirements and the mechanisms by which the changes affect the wage distribution for hourly production workers this research finds that indeed the retooling resulted in greater wage dispersion and that the changes have also been associated with greater racial inequality in wages however contrary to the claims of advocates of the skill bias hypothesis organizational and human resources factors strongly mediated the impact of the changing technology absent these high road organizational choices th

levels of responsibility in jobs and the distribution of earnings among u s engineers 1961 1986 this study using data from the professional administrative technical and clerical pay survey and the current population survey examines how the assignment of responsibility within firms affected the structure of wages of u s engineers between 1961 and 1986 patterns of wage dispersion in this sample mirrored patterns found in broader segments of the labor market during the same period in engineering wage dispersion within levels of responsibility fell steadily between 1976 and 1986 while wage dispersion between levels rose at the same time engineering jobs began to migrate to lower levels within firms the author explains the trends in wages and job assignments as responses to changes in the supply of and demand for engineers within the framework of hierarchy models of responsibility

does the u s health care sector suffer from baumol s cost disease evidence from the 50 states this study examines if health care costs in the united states are affected by baumol s cost disease it relies on an empirical test proposed by hartwig 2008 and extended by colombier 2010 and uses a panel data set of 50 states over the 1980 2009 period the results suggest that health care costs grow more rapidly when economy wide wage increases exceed productivity gains the findings are fairly robust with respect to time and state fixed effects individual state time trends and two stage least square estimation consequently this study suggests that the u s health care sector suffers from baumol s cost disease

radical political economy and the economics of labor markets this essay is the result of a long process involving many drafts and revisions i am grateful to duncan foley for the careful and constructive criticisms offered throughout the project the following people read the manuscript at different stages and although they often disagreed with me they generously provided helpful comments two anonymous referees for this journal samuel bowles william dickens greg dow robert drago richard edwards kathleen engel richard freeman james galbraith herbert gintis jody hoffer gittel sandfordjacoby tom kochan david levine lisa lynch paul osterman michael piore bob rebitzer gil skilman dan slesnick robert thomas and tsuyoshi tsuru comments from participants in seminars at the massachusetts institute of technology university of massachusetts at amherst and hitotsubashi university are also gratefully acknowledged

stationarity of health expenditures and gdp evidence from panel unit root tests with heterogeneous structural breaks this paper re examines the stationarity of national health care expenditures and gdp in a panel setting utilizing data from 20 oecd countries over the period from 1960 to 1997 previous research in this area has recognized the drawback of not allowing for structural breaks in their unit root tests and noted that their empirical results may not be robust we advance the literature by utilizing a recently developed panel lm unit root test that allows for heterogeneous level shifts in contrast to previous analyses that did not consider breaks our results reject the unit root null hypothesis for both series

measuring the spillovers from technical advance mainframe computers in financial services measuring the social gains from recent technological advances is difficult because there are no output indexes from some important adopters measurement methods that infer the willingness to pay of theadopting industries from the derived demand curve for a new technologyovercome this difficulty the derived demand for high speed computersfor use in banks finance and insurance is shown to imply a very largesocial gain to computerization that is not captured by computer manufacturers copyright 1986 by american economic association

what drives health care expenditure baumol s model of unbalanced growth revisited the share of health care expenditure in gdp rises rapidly in virtually all oecd countries causing increasing concern among politicians and the general public yet economists have to date failed to reach an agreement on what the main determinants of this development are this paper revisits baumol s baumol w j 1967 macroeconomics of unbalanced growth the anatomy of urban crisis american economic review 57 3 415 426 model of unbalanced growth showing that the latter offers a ready explanation for the observed inexorable rise in health care expenditure the main implication of baumol s model in this context is that health care expenditure is driven by wage increases in excess of productivity growth this hypothesis is tested empirically using data from a panel of 19 oecd countries our tests yield robust evidence in favor of baumol s theory

technology skill and the wage structure insights from the past recent technological advances and a widening of the wage structure have led many to conclude that technology and human capital are relative complements the possibility that such a relationship exists today has prompted a widely held conjecture that technology and skill have always been relative complements according to this view technological advance always serves to widen the wage structure and only large injections of education slow its relentless course a related literature demonstrates that capital and skill are relative complements today and in the recent past zvi griliches 1969 thus capital deepening appears also to have increased the relative demand for the educated serving further to stretch the wage structure physical capital and technology are now regarded as the relative complements of human capital but have they been so for the past two centuries some answers have already been provided a literature has emerged on the bias to technological change across history that challenges the view that physical capital and human capital have always been relative complements many of the major technological advances of the 19th century substituted physical capital raw materials and unskilled labor for highly skilled artisans john a james and jonathan s skinner 1985 but if physical capital and human skill were not always relative complements when did they become so and when did new technology become skilled labor s complement we argue that capital skill complementarity was manifested in the aggregate economy as particular technologies spread specifically batch and continuous process methods of production across the past two centuries manufacturing shifted first from artisanal to mechanized and nonmechanized factory production then from simple factories to assembly lines and finally from assembly lines to continuous and batch processes although few products were manufactured by more than two of the technologies mentioned manufacturing as a whole progressed in the fashion described in considering our argument it is useful to envision manufacturing as having two distinct stages i a machine installation and machine maintenance segment and ii a production or assembly portion capital and educated skilled labor we will argue are always complements in the machine maintenance segment of manufacturing regardless of the technology machinists for example are needed to install machinery and make it run the workable capital created by skilled labor plus raw capital is then used by unskilled labor to create the final product in the production or assembly segment of manufacturing how the adoption of a technology alters the relative demand for skilled workers will depend on whether the machinemaintenance demand for skilled labor is offset by the production process demand for unskilled labor

can baumol s model of unbalanced growth contribute to explaining the secular rise in health care expenditure an alternative test in a recent paper i argued that baumol s model of unbalanced growth offers a ready explanation for the observed secular rise in health care expenditure hce in rich countries baumol s model implies that hce is driven by wage increases in excess of productivity growth i tested this hypothesis empirically using data from a panel of 19 organization for economic cooperation and development oecd countries and found robust evidence in favour of baumol s theory an alternative way to test baumol s theory is to check whether its implication that variations in the relative price of medical care contribute significantly to explaining variations in health expenditure in the same direction has an empirical grounding earlier studies although mostly not in an explicit attempt to test baumol s theory have occasionally rejected this hypothesis despite poor data quality of the available medical price indices i perform the alternative test using data for nine oecd countries my findings suggest that the relat

the impact of global warming on agriculture a ricardian analysis reply we measure the economic impact of climate on land prices using cross sectional data on climate farmland prices and other economic and geophysical data for almost 3 000 counties in the united states we find that higher temperatures in all seasons except autumn reduce average farm values while more precipitation outside of autumn increases farm values applying the model to a global warming scenario shows a significantly lower estimated impact of global warming on u s agriculture than the traditional production function approach and in one case suggests that even without co sub 2 fertilization global warming may have economic benefits for agriculture 16 refs 5 figs 5 tabs

information assets technology and organization although there is good reason to expect that the growth of information work and information technology will significantly affect the trade offs inherent in different structures for organizing work the theoretical basis for these changes remains poorly understood this paper seeks to address this gap by analyzing the incentive effects of different ownership arrangement in the spirit of the grossman hart moore ghm incomplete contracts theory of the firm a key departure from earlier approaches is the inclusion of a role for an information asset analogous to the ghm treatment of property this approach highlights the organizational significance of information ownership and information technology for instance using this framework one can determine when 1 informed workers are more likely to be owners than employees of firms 2 increased flexibility of assets will facilitate decentralization and 3 the need for centralized coordination will lead to centralized ownership the framework developed shed

the division of labour worker organisation and technological change the model developed in this article explains differences in the division of labour across firms as a result of computer technology adoption changes in the division of labour result from reduced production time and improved communication possibilities the first shifts the division of labour towards generic structures while the latter enhances specialisation our estimates for a sample of dutch establishments in the period 1990 6 suggest that productivity gains have been the main determinant for shifts in the division of labour these productivity gains induced skill upgrading while in firms gaining from improved communication possibilities specialisation increased and skill requirements have fallen the rapid spread of computer technology has led to substantial changes in the division of labour and a shift in the demand for labour in favour of skilled workers mostly these changes have been accompanied by flatter organisational structures larger autonomy for workers or workgroups the application of innovative human resource management practices and so on there are also less typical examples where computerisation is associated with increased specialisation e g the rapid increase of call centres scripting of communication with clients and stricter procedures although the empirical relationship between information and communication technology ict adoption and organisational change has been well documented disagreement remains about the reasons why computerisation provides firms with incentives to change the structure of their organisation and the skill requirements of their workforce

substitution between production labor and other inputs in unionized and nonunionized manufacturing comment age points of the productivity decline after correcting faulty calculations in deriving a new price deflator errors in measuring the left hand side account for another 7 5 percentage points together they account for 56 5 of the observed decline this is a more modest accomplishment than the 92 claim of my earlier paper but still a substantial one in light of earlier research efforts such as stokes 1981 which could not explain any of the observed decline

measuring stochastic technology the case of tulare milk production the flexible moment based approach to production analysis is used to measure the stochastic structure of large scale dairy production in tulare county california this approach is flexible because it does not impose restrictions on the relationships between decision variables and the moments of the probability distribution of output the parameter estimates support the hypothesis that second and third moments are functions of inputs and indicate that capital intensive dairies are riskier the implied behavior of a risk averse dairy manager changed markedly when the effects of inputs on the skewness of the output distribution were included in a decision model

new panel results on cointegration of international health expenditure and gdp this article tests for existence of cointegration between health expenditure and gdp using data from 25 oecd countries for the period 19607ndash 1997 the empirical modelling is based on a heterogeneous bivariate vector error correction panel model that allows for trending data as well as intercepts and trends in the cointegrating relations univariate country by country and panel unit root tests generally fail to reject the null of a unit root in the health expenditure and gdp variables country by country results based on the johansen multivariate likelihood based inference indicate somewhat mixed results on country specific cointegration with a rank of one found for 12 countries and a rank of zero for the remaining 13 countries application of a new panel test for cointegration rank with higher power than the individual tests indicates that health expenditure and gdp are cointegrated around linear trends

inequality among american families with children 1975 to 2005 from 1975 to 2005 the variance in incomes of american families with children increased by two thirds in attempting to explain this trend labor market studies emphasize the rising pay of college graduates while demographers typically highlight the implications of family structural changes across time in this article we join these lines of research by conceiving of income inequality as the joint product of the distribution of earnings in the labor market and the pooling of incomes in families we develop this framework with a decomposition of family income inequality using annual data from the march current population survey our analysis shows that disparities in education and single parenthood contributed to income inequality but rising educational attainment and women s employment offset these effects most of the increase in family income inequality was due to increasing within group inequality which was widely shared across family types and levels of schooling

rejecting capital skill complementarity at all costs any serious empirical study of factor substitutability has to allow the data to display complementarity as well as substitutability the standard approach reflecting this idea is a translog specification this is also the approach used by numerous studies analyzing the relative capital skill complementarity hypothesis formulated by griliches 1969 according to this hypothesis the degree of substitutability between skilled labor and capital is lower than that for unskilled labor and capital yet the results of empirical studies investigating this hypothesis are controversial this paper offers a straightforward explanation using a translog approach reduces the issue of actor substitutability or complementarity to a question of cost shares our review of translog studies mentioned in hamermesh s 1993 summary on the demand for heterogeneous labor demonstrates that this argument is empirically relevant all these studies can be reconciled with each other on the basis of the cost share argument

an econometric analysis of health care expenditure a cross section study of the oecd countries this paper is an empirical examination of the determinants of aggregate health care expenditure the paper presents a systematic analysis of relationships across 19 oecd countries showing the effects of aggregate income institutional and socio demographic factors on health care expenditure the results indicate that institutional factors of the health systems in addition to per capita gross domestic product gdp contribute significantly to the explanation of the health care expenditure variation between countries for example the way physicians in outpatient care are paid and the mixture of public private funding and inpatient outpatient care

technological change and risk management an application to the economics of corn production the paper investigates the linkages between technological change and production risk with an application to corn the effects of technology on risk exposure are analyzed we define technological progress to be risk increasing risk decreasing if it increases decreases the relative risk premium the analysis is applied to panel data from wisconsin research stations conditional moments including mean variance and skewness of corn yield grain moisture and corn profit are estimated for different sites we investigate how the trade off between expected return and the risk premium varies over time and over space the empirical results indicate that technological progress contributes to reducing the exposure to risk as well as downside risk in corn production although this effect varies across sites they also stress the role of the relative maturity of corn hybrids as a means of managing risk

on the determination of the us aggregate health care expenditure per capita real health care expenditure is examined against three major groups of explanatory variables economic demographic and health stock and it is found that the three groups of variables have an impact on real health care spending other subcategories such as real private and government health care pharmaceutical dental home nursing ambulatory personal medical consumption and in patient expenditures have also been examined and have been found to be affected by the explanatory variables for several subcomponents there is evidence of supplier inducement of the demographic group of variables the ageing population had an impact only on the per capita real overall and private health care outlay and pharmaceutical spending also cointegrating relationships were found and consistent estimators of the elasticities found

the payoff to skill in the third industrial revolution1 is the third industrial revolution indeed driven by rising payoffs to skill this simple but important question has gone unanswered because conventional models of earnings inequality are based on exceedingly weak measurements of skill by attaching occupational skill measurements to the 1979 2010 current population surveys it becomes possible to adjudicate competing accounts of the changing returns to cognitive creative technical and social skill the well known increase in between occupation inequality is fully explained when such skills are taken into account while returns to schooling prove to be quite stable once correlated changes in workplace skills are parsed out the most important trend however is a precipitous increase in the wage payoff to synthesis critical thinking and related analytic skills the payoff to technical and creative skills often touted in discussions of the third industrial revolution is shown to be less substantial

unionism and employment behaviour although there exists a large literature on the effects of trade unions upon wages there is no published work that uses microeconomic data on establishments to examine the employment consequences of unionism this paper addresses this issue with a recent british data set and shows that even after the addition of a substantial set of control variables there is a strong association between poor employment performance and the presence of trade unions the union employment growth differential is estimated at approximately 3 percent per annum copyright 1991 by royal economic society

accounting for the gap a firm study manipulating organizational accountability and transparency in pay decisions great progress has been made in documenting how employer practices may shape workplace inequality less research attention however has been given to investigating which organizational strategies are effective at addressing gender and racial inequality in labor markets using a unique field study design this article identifies and tests for the first time whether accountability and transparency in pay decisions two popular organizational initiatives discussed among scholars and practitioners may reduce the pay gap by employee gender race and foreign nationality through a longitudinal analysis of a large private company i study the performance based reward decisions concerning almost 9 000 employees before and after high level management adopted a set of organizational procedures introducing accountability and transparency into the company s performance reward system before such procedures were introduced there was an observed gap in the distribution of performance based rewards where women ethnic minorities and non u s born employees received lower monetary rewards compared with u s born white men having the same performance evaluation scores and working in the same job and work unit with the same manager and the same human capital characteristics analyses of the company s employee performance reward data after the adoption of accountability and transparency procedures show a reduction in this pay gap i conclude by discussing the implications of this study for future research about employer strategies targeting workplace inequality and diversity

an economic analysis of factor usage and workplace regulation reply safety in the workplace has long been a subject of interest for economists much of this attention has focused on the presence of risks on the job and the tendency of workers and others to underestimate these risks adam smith 16 96 7 notes this optimism and as george stigler 19 points out jevons felt that workplace hazards were ignored by those most directly concerned this lack of faith in the market to provide adequate safety or to compensate those who face such risks is evident in the law regulating the workplace primarily workers compensation wc and the occupational safety and health act osha these policies are in the judgment of many modern economists justified by the misperception of risks 5 12 13 however other economists have argued that despite their intentions such laws may not have one of the primary effects they are directed to accomplish the reduction of workplace accidents relatively little research has been devoted to another aspect of safety regulation its cost perhaps because these costs are thought to be very small 2 it is on this issue that this paper focuses what is the impact of workplace regulation on firm decision making to accomplish this a model is developed in section ii which examines the impact on a firm s factor choices attributable to the imposition of workplace safety regulation the theory examines wc and osha both singly and jointly and their effects on the level of and changes in relative factor usage these considerations form the bulk of section iii this model yields some interesting conclusions about the effects of regulation in the workplace the primary implication of the theory is that all increases in safety are paid for through lowered output and factor employment moreover this result holds true whether the additional safety is the product of direct safety regulation osha or through indirect forms of regulation like wc these results are possibly more striking given the findings of empirical work done on the impact of wc and osha on safety this body of research has to

the diffusion of computers and the distribution of wages abstract when the costs are decreasing workers adopt technology at the point where the costs equal the increased productivity output per worker increases immediately while productivity benefits increase only gradually if costs continue to fall as a result workers in computer adopting labor market groups experience an immediate fall in wages due to increased supply on the other hand adopting workers experience wage increases with some delay this model explains why increased computer use does not immediately lead to higher wage inequality more specifically the results of the model are shown to be consistent with the question why within group wage inequality among skilled workers as a result of computer technology adoption in the united states increased in the 1970s while between group wage inequality and within group wage inequality among the unskilled did not start to increase until the 1980s the model also predicts that the more compressed german wage structure leads to a lagged diffusion of computer technology along with smaller changes in wage inequality our empirical analysis suggests that this is consistent with the actual developments in germany since the 1980s finally the theoretical predictions seem to be of the right magnitude to explain the empirical quantities observed in the data

pesticide use environmental spillovers and efficiency a dea risk adjusted efficiency approach applied to dutch arable farming pesticides are widely used by crop producers in developed countries to combat risk associated with pests and diseases however their indiscriminate use can lead to various environmental spillovers that may alter the agricultural production environment thus contributing to production risk this study utilises a data envelopment analysis dea approach to measure performance of arable farms incorporating pesticides environmental spillovers and output variance as undesirable outputs in the efficiency analysis and taking explicitly into account the effect of pesticides and other inputs on production risk the application focuses on panel data from dutch arable farms over the period 2003 2007 a moment approach is used to compute output variance providing empirical representations of the risk increasing or decreasing nature of the used inputs finally shadow values of risk adjusted inputs are computed we find that pesticides are overused in dutch arable farming and there is a considerable evidence of the need for decreasing pesticides environmental spillovers

the impact of unionization on motor carrier costs i introduction the increasingly competitive markets fostered by the motor carrier act of 1980 have forced motor carriers to focus on cost saving strategies intended to reduce operating miles fuel consumption and capital and labor expenses there are two reasons unions firms may be at a competitive disadvantage in these efforts first although the union nonunion wage differential has decreased following regulatory reform rose 1987 and hirsch 1988 find that union firms still pay higher wages second managers of unionized firms may have less flexibility in the use of inputs since union work rules restrict the activities and substitutability of drivers terminal workers and terminal facilities indeed harrington 1987 reports that post 1980 trucking expenses are still 40 higher for unionized motor carriers than for nonunion firms unionization may affect carrier cost both by increasing the price of labor and by potentially affecting cost function parameters if union rules make labor less productive the entire cost function will shift upwards for a given set of factor input prices further freeman and medoff 1982 argue that work rules may be expected to result in reduced elasticities of substitution between labor and other inputs in the unionized setting indeed they find that substitution between production labor and other labor in manufacturing is generally lower in unionized settings the impact of unionization on production has been investigated in industries such as construction coal mining hospitals and the cement industry by allen 1984 1986a 1986b byrnes et al 1988 and clark 1980a 1980b the results have been inconclusive with unionized firms being more productive than nonunion firms in some instances and less productive in others studies such as allen 1986c and addison and hirsch 1989 have utilized production function methodologies that use restrictive functional forms which impose homogeneity and identical elasticities of substitution between pairs of inputs allen 1986c examines the relative efficiency of union and nonunion firms with a translog cost function allowing for union effects using intercept and slope parameters that vary by union status in his study of different types of construction projects he finds significant differences between the cost functions for union and nonunion firms but no evidence of the inelasticity of factor substitutions as hypothesized by medoff and freeman in fact his estimates of factor demand elasticities show no discernible pattern for union versus nonunion firms leading him to conclude that work rules do not have the anticipated impact on elasticity the purpose of this study is to test whether unionization impacts motor carrier costs and if so to determine the direction of the impact of particular interest is whether the work rules imposed by the teamster s union have had a significant impact on factor substitutability in unionized firms as argued by freeman and medoff 1982 friedlaender and spady 1981 daughety et al 1985 mcmullen and stanley 1988 grimm et al 1989 and ying s 1990 studies of motor carrier industry costs have used translog cost functions which implicitly assume that union and nonunion cost functions arise from the same production technology this is equivalent to accepting the hypothesis that unionization does not affect the production structure of motor carrier firms if unionization does affect a firm s production process the results from these studies could be biased accordingly this study uses a translog cost function to test for differences in the cost structure of union and nonunion carriers not only is the translog cost function standard in the motor carrier literature permitting comparison of these results with those of previous work it also allows the flexibility necessary to examine the differential impact of unions on cost function parameters and elasticities of substitution between factors

modeling skewness with the linear stochastic plateau model to determine optimal nitrogen rates accurate modeling of skewness is needed to increase the actuarial fairness of crop insurance we test day s conjecture that crop yield skewness becomes negative as nitrogen rates increase and determine how well a linear response stochastic plateau lrsp production function matches the pattern of observed skewness using four long term nitrogen experiments stillwater wheat is consistent with day s conjecture but the skewness for lahoma and altus wheat yields as well as altus cotton yields are not the lrsp assumes normal random effects and can explain only a small part of observed skewness so a new lrsp with skew normal random effects is introduced which comes closer to explaining the observed skewness and should increase the accuracy of nitrogen rate recommendations negative skewness reduced optimal nitrogen rates and positive skewness increased optimal nitrogen rates

unionization and input flexibility in u s manufacturing 1973 1996 input flexibility as measured by the ability of firms to vary input demand in the face of changes in input prices is an important dimension of labor market flexibility using a new dataset the authors analyze the impact of unionization on input flexibility in u s manufacturing from 1973 to 1996 a period in which production was arguably becoming more flexible due to deep changes in the u s industrial relations system and in the broad macroeconomic environment the authors quantify the effects of unionization on input flexibility by estimating elasticities of substitution between a broad range of labor and non labor inputs controlling for unionization the pattern that emerges is more complex than that suggested by other research in particular low unionization apparently is associated with greater flexibility in the use of labor inputs but less flexibility in the use of non labor inputs

a note on unionization and the elasticity of substitution if unions force employers off their demand curves the measured elasticity of substitutio n should be lower where unionization is stronger estimates based on pooled data for twenty two digit sic canadian manufacturing industrie s over the period 1971 81 support this proposition point estimates a re that the elasticity is 1 98 in the absence of unions 1 04 if empl oyees are fifty percent unionized and only 0 10 if employees are one hundred percent unionized however the results are not very robust to specification changes

using economic analysis in health workforce policy making the health workforce is an essential component in building responsive and efficient health care systems yet despite its importance it remains in many countries the weakest building block of the health system and a major constraint to achieving universal health coverage goals most countries face either absolute shortages not enough health workers or relative shortages skills imbalances sometimes both countries also face maldistribution inadequate training capacity and a weak knowledge base negative work environments weak human resources management systems poor working conditions and inadequate financial and non financial incentives there is growing consensus among researchers practitioners and the research community that many of these problems have labour market roots this paper reviews the main economic issues around key health workforce challenges and discusses the contributions that economic analysis can make to health workforce policy making it adopts a labour market framework to address the service delivery challenges countries face due to health workforce bottlenecks and discusses the importance and contribution of the health workforce to general employment and economic growth the use of an explicit economic framework helps to define policy responses that go beyond scaling up health workers training highlighting the importance also of the roles of incentives preferences and market failures

union nonunion compensation differentials and industry structure abstract this paper examines the impacts of industry output and labor input market structures on workers total compensation in u s manufacturing for empirical analysis cps may 1983 data were matched with 1982 census of manufacturing results indicate that employees in highly concentrated product markets proxied by four firm concentration ratio crr earn more independent of their union membership second union members in the smaller plant sizes have the most to gain and the union advantage disappears for medium to large plants third and perhaps most important the joint effects of unionism and crr on earnings depend on the size of the manufacturing plant in conclusion the paper finds support for dowrick s 1989 conjecture that profits enhancing product market conditions generally tend to increase earnings

the translog approximate function substitution among inputs in manufacturing evaluated at sample means abstract this paper shows the translog function can approximate any first degree homogeneous function around any expansion point estimates for 1987 manufacturing confirm no weak separability of labor from capital but do not confirm lower production than non production worker substitution with capital

on stationarity and cointegration of international health expenditure and gdp this paper examines stationarity and cointegration of health expenditure and gdp for a sample of 21 oecd countries using data for the period 1960 1997 by applying a test battery that allows robust inference to be made on the stationarity and cointegration issue trend stationarity and no cointegration are tested using new country by country and panel tests not previously applied in this setting new results for country by country and panel tests of non stationarity and cointegration are presented our unit root and trend stationarity results indicate that both health expenditure and gdp are non stationary the no cointegration and cointegration results indicate that health expenditure and gdp are cointegrated

changes in the distribution of individual earnings in the united states 1967 1986 using micro data from the current population survey the author examines the sensitivity of conclusion regarding time series changes in inequality to the measure of inequality employed and to the population group analyzed although changes in inequality over time are sensitive to the measure of inequality the author finds a general pattern of stable or decreasing inequality throughout the 1970s followed by a period of increasing inequality based upon a decomposition analysis the author concludes that these changes are not simply the results of the changing employment distribution among groups defined by sex age education or industry instead the rise in inequality results from an increase in inequality within these groups copyright 1992 by mit press

the growth of public health expenditures in oecd countries do government ideology and electoral motives matter this paper empirically evaluates whether government ideology and electoral motives influenced the growth of public health expenditures in 18 oecd countries over the 1971 2004 period the results suggest that incumbents behaved opportunistically and increased the growth of public health expenditures in election years government ideology did not have an influence these findings indicate 1 the importance of public health in policy debates before elections and 2 the political pressure towards re organizing public health policy platforms especially in times of demographic change

modern varieties productivity and sustainability recent experience and emerging challenges abstract the contribution of modern varieties of cereal crops to increased productivity in the postgreen revolution period is reviewed and the future role of hybrids and biotechnology discussed particular emphasis is given to the ways in which modern varieties may contribute to input efficiency and sustainability finally economic and institutional issues in restructuring plant breeding programs for the most efficient use of resources in both the public and private sectors and at the national and international levels are analyzed

price and quantity in international comparisons of health care expenditure an important omission from earlier cross national comparisons of health care expenditure has been the failure to distinguish between price and quantity using recent data on purchasing power parities the purpose of this article is to report some preliminary results regarding health care expenditure and quantity across 22 oecd countries the article concludes that contrary to what has been suggested in some recent articles the relative price of health care is not correlated to the aggregate per capita income the fraction of the national income that is devoted to health care provision increases with the per capita income regardless of whether health care is measured in terms of expenditure or quantity the relative price of health care has a rationing effect on the quantity of health care that is offered with a price alasticity close to minus one the latter finding means that the health care expenditure is not greater in countries with higherprices furthermore the differences in health care expendit

computers skills and wages computer technology is most prominently used by skilled high wage workers this suggests that computer use requires skills to take full advantage of the possibilities which are particularly present among relatively skilled workers this article develops a simple technology adoption model showing that the decision to adopt computer technology depends on i the tasks to be performed ii the level of skill or education and iii the level of wages applying this model to british data it is shown that the effect of wages and particular tasks on computer adoption is larger than the effect of skills on adoption the estimates suggest that in britain computer use is likely to be a matter of cost efficiency and not so much of workers skills

aggregate health care expenditure in the united states evidence from cointegration tests unlike recent studies that are based on international cross sectional series this paper attempts to quantify the role of the determinants of aggregate health care expenditure per capita using time series data for the period of 1960 87 for the united states the paper applies the relatively new procedures of unit root testing cointegration and error correction modelling the evidence supports cointegration although the results indicate that per capita income age of the population number of practising physicians and public financing of health care are important determinants the age structure of the population and number of practising physicians emerge as the major determinants of aggregate health care expenditure in the united states

computerisation and wage dispersion an analytical reinterpretation the rich countries have recently seen a dramatic rise in income inequality all the more surprising because the long term trend had been toward equality this paper examines one of the leading explanations computerisation in the workplace i offer a theory of computers impact on white collar work which goes far toward explaining the timing form and locus of recent labour market changes the theory looks at the bureaucratic and organisational applications of computers that have been first largest and most influential they have two effects on firms demand for labour at different skill levels

production risk and optimal input decisions the paper examines the impact of production risk on a producer s optimal input decisions whether producers use more or fewer inputs in a yield risky environment depends on the sign of the marginal risk premium which is determined by risk preferences and technology i present the weakest condition on technology that is sufficient to sign the marginal risk premium for all risk averse preferences if this condition fails to hold the marginal risk premium is not of the same sign for all risk averters results are used to explore the properties of an estimated technology

union firm efficient bargaining and test of oligopolistic conduct this paper applies a production function approach to the analysis of imperfection in product and factor markets and develops a test of efficient bargaining for wage and employment determination based on a translog function defined at the firm level estimates for the belgian chemical industry are consistent with the existence of product market power which is significantly eroded by union wage rents

union nonunion compensation differentials across plant sizes evidence from cps 1983 previous empirical work on the relationship between plant size and union nonunion differentials has focused either on wages podgursky 1986 or benefits bramley wunnava and robinson 1989 freeman 1981 this note extends this research by simultaneously focusing on both wages and benefits there are several arguments that can be made in explaining union nonunion differentials across plant sizes 1 union threat effects 2 efficiency wage effects and 3 wage dispersion effects our study focuses on measuring the union nonunion differential in total compensation for this end estimates of total compensation are obtained using mellow s suggestion 1982 for combining hourly wage information with qualitative data on pensions and health insurance and ross s imputations 1989 for holidays and vacations benefits our results based on the may 1983 cps supplemented by bls data on pensions health insurance holidays and vacation benefits indicate significant union nonunion total compensation differentials exist only for workers in establishments with less than 500 workers these results are consistent with podgursky s wage differential findings

interactive innovation in financial and business services the vanguard of the service revolution abstract the concept of the reverse product cycle as a theoretical model of innovation in services is developed further in this paper using the vanguard sector of financial and business services as a case study example of how innovation operates as an interactive process the parallels between the emerging service revolution and the nineteenth century industrial revolution are explored in order to identify the key characteristics of the vanguard sectors in each technological revolution the particular nature of the new techno economic paradigm based on information technology is then identified leading to a discussion of the unique conjunction of factors favouring financial and business services as the vanguard sector of the service revolution the central part of the paper then offers an elaboration of the reverse product cycle model stressing the interactive nature of the innovation process as it reflects the prevailing technological opportunities market conditions and industry structures within the adopting sector the example of retail banking is used to illustrate how the innovation cycle proceeds from increases in efficiency through improvements in service quality to the generation of new network service products there is then a discussion of the question of the optimal industry structure for innovation suggestion that in the reverse product cycle large corporations are likely to dominate the early stage of incremental process innovations whereas later in the cycle there is an important role for small entrepreneurial firms to advance more radical process and product innovations the concluding section summarises six major characteristics of the service revolution and suggests how it may proceed from its first to its second phase as the focus of innovation shifts from the vanguard sector of financial and business services to a much broader range of higher level knowledge based services many of which are currently delivered by the public sector

economic inequality new methods for new trends two positions dominate the debate over the recent increases in economic inequality in the united states the job skill mismatch thesis attributes rising inequality to growth in the number of high skill high wage jobs that leaves less skilled workers behind the polarization thesis in contrast argues that the service shift generates growth in the number of both high wage and low wage jobs and declines in the middle standard summary measures of distributional inequality cannot discriminate between these depictions of where job growth is occurring we propose new methods for measurement that provide both summary and detailed information about the distributional shifts in earnings and aframework for statistical inference using data from the curent population survey cps on yearly earnings from 1967 to 1987 we show that the trends in distributional inequality vary considerably by race gender and time while the evidence provides more support for the polarization argument this thesis needs refinement if it is to account for the variations in changing inequality observed here

short run marginal medical costs from booze and butts evidence from the states this article uses a panel data set of u s states over the 1980 to 2007 period to estimate the demands for medical care cigarettes and beer the estimation process generates own price income and cross price elasticities for all three goods implied per capita beer and cigarette consumption elasticities of per capita health care expenditures suggested by our baseline estimates are 0 83 and 0 14 respectively these results are robust to a number of specification tests simulations suggest that yearly marginal medical costs amount to approximately 12 per bottle and 27 cents per cigarette in the short run in 2012 dollars these results are likely to be driven by the much larger corresponding increases in the consumption of binge drinkers and heavy smokers

make money surfing the web the impact of internet use on the earnings of u s workers much research on the digital divide presumes that adults who do not use the internet are economically disadvantaged yet little research has tested this premise after discussing several mechanisms that might produce differences in earnings growth between workers who do and do not use the internet we use data from the current population survey to examine the impact of internet use on changes in earnings over 13 month intervals at the end of the internet boom our analyses reveal robustly significant positive associations between web use and earnings growth indicating that some skills and behaviors associated with internet use were rewarded by the labor market consistent with human capital theory current use at work had the strongest effect on earnings in contrast to economic theory which has led economists to focus exclusively on effects of contemporaneous workplace technology use workers who used the internet only at home also did better suggesting that users may have benefited from superior

the returns to computer use revisited have pencils changed the wage structure too are the large measured wage differentials for on the job computer use a true return to computer skills or do they just reflect that higher wage workers use computers on their jobs we examine this issue with three large cross sectional surveys from germany first we confirm that the estimated wage differential associated with computer use in germany is very similar to the u s differential second we also measure large differentials for on the job use of calculators telephones pens or pencils or for those who work while sitting down we argue that these findings cast some doubt on the literal interpretation of the computer use wage differential as reflecting true returns to computer use or skill

inter industry wage differentials job content and unobserved ability the authors estimate inter industry wage differentials using the bureau of labor statistics s national compensation survey ncs dataset the ncs dataset has a number of distinct advantages over ho

rent seeking and the transformation of employment relationships the effect of corporate restructuring on wage patterns determinants and inequality a key debate in research on corporate restructuring is whether this widespread and extensive transformation process made contemporary employment relationships more open with firms relying largely o

the impact of agricultural research in africa aggregate and case study evidence abstract this paper presents case study results and aggregate data to evaluate the impact of research in african agriculture of 32 case studies all but eight report annual returns over 20 and many are far higher with most gains arising in the late 1980s and 1990s spurred by policy reforms and changing incentives these innovations have led to sustained growth in aggregate cereal crop yields since 1985 africa s belated green revolution is based on new varieties often with early maturation for drought escape complemented by new management techniques typically labor intensive efforts to conserve soil moisture and build soil fertility

input demand elasticities for heterogeneous labor firm level estimates and an investigation into the effects of aggregation labor economists have paid increasing attention to the estimation of demand elasticities for heterogeneous labor the majority of these studies investigate the effect on wage rates resulting from exogenous changes in factor quantities i e the measurement of elasticities of complementarity examples of these studies abound borjas for example investigates the impact of differences in labor market representation on the earnings of racial groups 8 in another paper borjas defines immigrants as a separate labor group and is able to determine the impact of immigration on the wages earned by natives 9 berger defines labor inputs along education and gender lines thereby allowing for the investigation of changes in the age education composition of the work force on wage rates 5 and grant and hamermesh study the effect of increasing female labor force participation on the wages earned by youth and adults 17 less attention has been paid to the study of the responsiveness of employment to exogenous changes in wage rates i e the measurement of elasticities of substitution less attention has been focused on this issue because the data requirements are more stringent since in order to presume that wage rates are exogenously determined the unit of observation must be small ideally establishmentor firm level data would be used the relative inaccessibility of these type of data has led researchers to use more aggregated figures such as smsa level or industry level data to address microissues as long as wage rates are determined exogenously the unit of observation chosen is appropriate there are real concerns however about the adequacy of more aggregated units to describe the behavior of firms 2 this study addresses the issue of whether micro level data are in fact needed to accurately measure elasticities of substitution among labor groups a firm level data set that includes input

disease or utopia testing baumol in education baumol s cost disease offers a compelling hypothesis of rising unit costs in stagnant sectors but increased productivity in progressive sectors may generate the same prediction through income effects we examine quantity rather than expenditure data from the u s educational sector to distinguish between these explanations our results indicate significant negative impacts of manufacturing productivity on teacher pupil ratios

the care economy gender economic restructuring and job polarization in the u s labor market the u s job structure became increasingly polarized at the turn of the twenty first century as high and low wage jobs grew strongly and many middle wage jobs declined prior research on the sourc

health care expenditure and gdp are they broken stationary in this paper we analyse the stationarity of the real per capita health care expenditure hce and real per capita gdp for a sample of oecd countries allowing for the presence of multiple structural breaks one novelty of the paper is that it permits the presence of structural breaks that affect both the level and the slope of the time series after the cross section dependence is accounted for we have found that these variables can be characterised as stationary processes evolving around a broken trend

policy reform and labour demand in branches of sri lankan manufacturing industry many policy reforms in developing countries aim to remove factor market distortions whether such reforms reduce unemployment depends partly on the substitution possibilities between labour and other factors of production this paper examines labour demand in seven branches of sri lankan manufacturing industry using data on 4 digit industrial categories over the 1990 to 1997 period the box cox transformation is used to allow for flexible and data dependent elasticities the elasticity of capital labour substitution varies widely across the branches of industry and is usually variable rather than constant the average long run own wage elasticity of labour demand for the manufacturing sector is estimated as 0 80 so factor price policy should have an important effect on labour demand in this setting

time series evidence on the sources of trends in wage inequality changes in wage inequality have long been a concern of labor economists and public policymakers when the wage premium for college graduates fell during the first half of the 1970 s many researchers blamed the decline on the increase in the relative supply of college graduates when the college wage premium increased dramatically during the 1980 s researchers offered a variety of explanations such as skill biased technological change and the internationalization of the u s economy in this paper we use time series analysis to evaluate the most common explanations given for the trends in wage inequality using cointegration techniques we evaluate the link between the trends in the candidate explanatory variables and wage inequality we show that the only variable that consistently shares the same long run trend with our wage inequality series is the durablegoods trade deficit as a percentage of gdp this variable not only follows the same trend as wage inequality during most of the 1980 s but also for the period from 1949 to 1979 no other single explanation shows the same long run consistency i an analysis of trends in wage inequality

agricultural productivity revisited this paper describes production accounts for agriculture output is defined as gross production leaving the farm as opposed to real value added inputs are not limited to capital and labor but include intermediate inputs as well we derive index numbers of gross output capital labor and intermediate inputs these data are used to construct indexes of total factor productivity we then compare the contributions of input growth and productivity growth to economic growth the important role of productivity growth in agriculture becomes immediately apparent

the effects of unions on employment and productivity an unresolved contradiction the evidence that unions substantially increase productivity is contradicted by the evidence that the effect of unions on employment is small it is shown in this paper that if the union is constrained by the firm s demand function and it is the efficiency units of labor that are in the demand function then essentially the only way to resolve this contradiction is for unions to raise the productivity of capital and not of labor under conditions where the substitutability between labor and capital is very limited but estimates of the substitutability parameter are near unity so that one of these effects must be wrong either unions do not substantially increase productivity or they substantially reduce employment

unions norms and the rise in u s wage inequality from 1973 to 2007 private sector union membership in the united states declined from 34 to 8 percent for men and from 16 to 6 percent for women during this period inequality in hourly wages increased by over 40 percent we report a decomposition relating rising inequality to the union wage distribution s shrinking weight we argue that unions helped institutionalize norms of equity reducing the dispersion of nonunion wages in highly unionized regions and industries accounting for unions effect on union and nonunion wages suggests that the decline of organized labor explains a fifth to a third of the growth in inequality an effect comparable to the growing stratification of wages by education

labour inputs substitution during corporate restructuring a translog model approach for us freight railroads after deregulation in 1980 competitive pressures forced the large us freight railroads to reduce costs and restructure resulting in an economic renaissance of the us railroad companies after years of poor financial conditions the most striking restructuring measure receiving much attention was dramatic labour downsizing until 2004 employment was reduced by 60 but other overlooked measures are the significant restructuring of workforce composition and important changes in railroads workplace organization practices and corporate culture to better understand this successful occupational restructuring i investigate labour inputs substitutional relationships by using a translog variable cost model labour is decomposed into six employee categories rather than traditional production nonproduction breakdown to estimate inputs elasticities of substitution the data investigated is a unique firm level dataset on the us freight class i railroads covering a 22 year period which allows this fine grained a

trends in the growth and distribution of skills in the u s workplace 1960 1985 using new measures of job skills and standard measures of education and earnings the authors examine the effects of changing occupational and industry employment patterns on the skill composition of work between 1960 and 1985 the results show a strong upgrading of cognitive and interactive skills combined however with a substantial slowdown in the rates of growth of those skills and a declining demand for motor skills the earnings mix of jobs did not show the same high correlation with employment growth as skill and education levels because high wage low skill jobs declined in the goods industries while low wage jobs requiring at least moderate skill levels grew rapidly in the services

customer discrimination and affirmative action i introduction beginning with the work of becker 1957 economists have been concerned with the relationship between competitive market forces and the persistence of labor market discrimination 1 a major insight of becker and the literature that followed is that competition could tend to eliminate discriminatory pay differentials if competitive forces do eliminate discrimination then empirical findings of persistent discrimination are either a result of faulty testing or market imperfections economic analysis of the link between competition and discrimination depends on the origins of prejudice becker identified at least three possible sources employers co workers and consumers 2 in each of these instances the group against which prejudice is directed e g women or minorities which will be termed minorities in this paper may be able to escape discrimination first minorities can work for nondiscriminatory employers if there are any moreover stiglitz 1973 shows that with constant returns to scale such employers will take over markets from the discriminators eliminating any pay gap based on prejudice 3 second if there is co worker prejudice then minorities can work in segregated firms which under constant returns to scale may have a cost advantage over integrated or all majority firms again discrimination will be driven away 4 third minorities can theoretically escape customer discrimination by specializing in the production of goods for which there is no contact between producers and consumers a case discussed by cain 1986 while competitive forces may in some cases erode discriminatory wage differentials the rate of decline of race and sex wage differentials has evidently not been rapid enough in the eyes of policymakers u s anti discrimination policy has been guided by two major vehicles title vii of the 1964 civil rights act and the office of federal contract compliance programs ofccp 5 the equal employment opportunity commission eeoc was created to enforce title vii and is empowered to aid plaintiffs or bring suit itself against employers the commission monitors the employment practices of federal contractors not only are contractors barred from discrimination against protected groups these firms are also required to take affirmative action not to discriminate the purpose of this paper is twofold first it demonstrates that in a general equilibrium framework the case of customer discrimination is theoretically distinct from employer or co worker prejudice in particular while constant returns to scale and the existence of nondiscriminatory firms can eliminate the latter two forms of discrimination customer discrimination may persist even under such conditions the persistence of discriminatory wage differentials is shown to depend on consumer demand technology and the relative size of the minority labor force 6 second the general equilibrium framework is then used to evaluate the impact of government anti discrimination policy where customers are the source of discrimination it is shown that if the government requires equal pay and proportional representation for minorities then the resulting allocation of resources will under particular assumptions be the same as if customers did not discriminate i then contrast these theoretical results with the predicted general equilibrium impact of affirmative action when there is employer or co worker prejudice among previous general equilibrium models of affirmative action welch 1976 assumed no discrimination while freeman 1978 did not specify the source of discrimination it is shown here that the source of prejudice markedly affects one s conclusions about affirmative action further even in some cases where segregation has eliminated discriminatory wage differentials the introduction of affirmative action has allocative effects finally evidence from studies evaluating the impact of affirmative action is used to distinguish among the various equilibrium models

substitution between production labor and other inputs in unionized and non unionized manufacturing the ease of substitution between labor and other factors of production is an important determinant of the elasticity of demand for labor and thus of the economic effects of unionism all else the same the greater the elasticity of substitution the greater is the elasticity of derived demand and the greater the displacement of labor for a given union induced wage increase in sectors where this elasticity is large unions are likely to be relatively weak and able to win only slight wage gains freeman and medoff 1981 and forthcoming or if they win large gains will have to pay a high price in terms of lost jobs in the sectors where the elasticity is small unions may be able to extract a substantial wage premium at little cost in terms of employment moreover as a simple general equilibrium model indicates the elasticity of substitution between labor and other factors in the unionized sector is a key parameter in determining the impact of the iiunion wage effect on the earnings of nonunion workers and on the efficiency of the economy johnson and mieskowski 1970 despite the importance of the elasticity of labor demand for an analysis of unionism little attention has been given to the absolute and relative magnitude of this elasticity under collective bargaining while there is some discussion of technological change and the substitution of capital and nonproduction workers for organized production workers in the institutional literature e g slichter 1941 slichter healy and livernash 1960 bok and dunlop 1970 modern econometric work provides no estimates of the relevant parameters as a result johnson and mieskowski 1970 rees 1963 lewis 1964 and others have been forced to evaluate union effects with guesstimates of the elasticities of concern in union settings this paper attempts to fill some of the gap in our knowledge by providing estimates for u s manufacturing of the constant output elasticity of demand for unionized and nonunionized production workers and of the elasticity of substitution between these workers and other inputs the analysis concentrates on what we call the relative inelasticity hypothesis which states that the demand for production workers will be more inelastic in the presence of a union for two reasons the likelihood that unions have organized and survived in sectors with low elasticities and the effects of various contract provisions on the ability of management to substitute other factors for production labor the study is divided into four sections section i develops the rationale for the relative inelasticity hypothesis and describes the nature of the empirical analysis conducted to test its validity the second section uses a 1972 state by 2 digit standard industrial classification sic industry data file for manufacturing to estimate the elasticity of substitution between production labor and both nonproduction labor and capital in the union and nonunion sectors of u s manufacturing industries section iii provides estimates based on a 1968 72 sample of manufacturing establishments of the elasticity of substitution between production and nonproduction labor the only two inputs for which information is available the final section briefly summarizes the findings and discusses their implications for understanding the impact of trade unionism on the u s economy to preview the ensuing discussion our main conclusion is substitution between production labor and other inputs is generally lower in union received for publication march 6 1978 revision accepted for publication august 17 1981 both authors are with harvard university and the national bureau of economic research supported by u s department of labor grant no j 9 m 6 0094 national science foundation grant no apt77 16279 and the national bureau of economic research under its program of research on labor economics we are especially grateful to jane mather for her invaluable assistance on this project and to greg bialecki charles brown gary chamberlain kathy coons jon fay martin van denburgh and lori wilson for their significant contributions the study has not been reviewed by the board of directors of the national bureau

what determines the elasticity of substitution between capital and labor a literature review this paper provides the first comprehensive review of the empirical and theoretical literature on the determinants of the elasticity of substitution between capital and labor our focus is on the two input constant elasticity of substitution ces production function we start by presenting four concise observations that summarize the empirical literature on the estimation of motivated by these observations the main part of this survey then focuses on potential determinants of capital labor substitution we first review several approaches to the microfoundation of production functions where the elasticity of substitution eos is treated as a purely technological parameter second we outline the construction of an aggregate elasticity of substitution aes in a multi sectoral framework and investigate its dependence on underlying intra and inter sectoral substitution third we discuss the influence of the institutional framework on the extent of factor substitution overall this survey highlights that the effective elasticity of substitution ees which is typically estimated in empirical studies is generally not an immutable deep parameter but depends on a multitude of technological non technological and institutional determinants based on these insights the final section identifies a number of potential empirical and theoretical avenues for future research

economic behavior under uncertainty a joint analysis of risk preferences and technology a method is developed to estimate jointly risk preferences and technology under general conditions the approach is illustrated in an application to the analysis of u s corn soybean acreage decisions over time the results provide useful information on the nature of farmers risk preferences and on the influence of price risk and production risk on acreage allocation and farmers welfare copyright 1996 by mit press

managing environmental risk in presence of climate change the role of adaptation in the nile basin of ethiopia this study investigates the impact of climate change adaptation on farm households downside risk exposure in the nile basin of ethiopia the analysis relies on a moment based specification of the stochastic production function we use an empirical strategy that accounts for the heterogeneity in the decision on whether to adapt or not and for unobservable characteristics of farmers and their farm we find that past adaptation to climate change i reduces current downside risk exposure and so the risk of crop failure ii would have been more beneficial to the non adapters if they adapted in terms of reduction in downside risk exposure and iii is a successful risk management strategy that makes the adapters more resilient to climatic conditions