the impact of market structure on wages fringe benefits and turnover this paper examines the relationship between labor compensation and the structure of the product market which is measured by the industry concentration ratio and by dummy variables for the existence and type of government regulation unlike previous studies that have estimated the impact of concentration and regulation on wages or earnings this study extends the analysis to include the effect of market structure on employer provided pensions and insurance and on voluntary labor turnover the hypothesis that product market power raises labor compensation is supported by empirical results indicating that concentration increases wages and fringes but lowers voluntary labor turnover regulations that set minimum prices and restrict entry raise labor compensation since wage premiums due to regulation are not offset by lower pensions and insurance or higher turnover other forms of regulation such as profit regulation in public utilities are found to reduce labor compensation as evidenced by higher turnover or lower wages and fringes or both

unions in a general equilibrium model of firm formation unions are introduced into a general equilibrium model of firm formation i find under reasonable conditions that large firms are more likely to be unionized and that unionized firms are more productive and better managed than nonunion firms of the same size as well unions reduce economic efficiency by distorting the occupation choice decision between managing a firm and working in one perhaps surprisingly this distortion persists even when individual union contracts set both wages and employment in a fully efficient manner but can disappear when the mechanism that allocates property rights to union jobs is changed in certain ways

the scope nature and effects of employee stock ownership plans in japan using data for various years including new data for 1973 84 the authors examine the scope nature determinants and effects of japanese employee stock ownership plans esops in 1988 of firms listed on japan s eight stock exchange markets 91 had an esop and the average non executive employee plan participant owned stock worth about 14 000 probit estimates for a sample of manufacturing firms show that firms were more likely to adopt esops when recent business performance was below average the capital labor ratio was relatively low and employment growth was relatively fast evidence is also found that esops enhanced enterprise productivity the authors argue that esops have played an important and largely overlooked role in the success of the japanese economy over the past two decades

valuing the deferred tax liability using a model of corporate investment in which the deferred tax liability never reverses i show that deferred taxes are a real economic burden whose value is the amount recognized multiplied by a fraction the numerator of the fraction is the tax depreciation rate and the denominator of the fraction is the sum of the tax depreciation rate and the cost of capital despite the requirement in statement of financial accounting standards no 109 accounting for income taxes fasb 1992 that a deferred tax liability or asset be recognized to reflect temporary differences between the book value and tax basis of assets the valuation relevance of deferred taxes is an open question davidson 1958 shows that the deferred tax liability will grow indefinitely as long as investments generate new temporary differences at least as large as the temporary differences that reverse because deferred taxes are paid in the future but not discounted their recognized values on financial statements are generally regarded to be overstated some have suggested their value is zero if the deferred tax liability never reverses these arguments are cited in stickney 1993

the effect of unions on productivity u s surface mining of coal the purpose of this paper is to compare the abilities of two competing analytical techniques mathematical programming and statistical regression to shed light on the union nonunion productivity differential in u s surface coal mining the programming approach has the virtues of being nonparametric and thus extremely flexible and of being able to provide a decomposition of productivity differentials into three components differences in technical efficiency differences in scale efficiency and differences in congestion identification of these three components provides an aid to management in its search for the sources of and remedies for productivity gaps the econometric approach on the other hand is neither flexible nor does it provide such a decomposition its chief virtue lies in the fact that being stochastic it allows for the presence of noise and measurement error that plagues most if not all empirical data thus the two approaches have complementary virtues the two techniques are used to investigate productivity in two samples of u s surface coal mines the programming approach finds a large and significant positive union nonunion productivity differential this differential is due primarily to greater congestion occurring in the smaller nonunion mines in one sample and to scale inefficiency in the smaller nonunion mines in the other sample the econometric analysis finds nearly the same union nonunion productivity differential but sheds no light on the composition of and thus the cure for the differential

collective bargaining arrangements closed shops and relative pay this paper uses establishment level data to examine the impact on union nonunion pay differentials of the industrial relations setting in which bargaining takes place the pre entry closed shop is found to be of prime importance for the pay of both skilled and semiskilled manual workers for skilled workers and for semiskilled workers in larger establishments the differentials are found to be insignificantly different from zero in the absence of a pre entry closed shop copyright 1987 by royal economic society

fair wages when employers face the risk of losing money abstract when employers can incur losses from the labor relationship in a gift exchange game they offer lower wages on average than in a no loss relationship taking employers risk of losing money into account employees exert more effort per wage unit

union wage hours and earnings differentials in the construction industry full information maximum likelihood is used to estimate union wage hours and earnings markups construction union wage markups are positive 58 2 at the sample means since union hours markups are negative 4 0 for most demographic groups union earnings markups 51 1 are smaller than the wage markups all exogenous variables are allowed to interact with the endogenous union dummy variable which allows us to test whether markups vary across demographic groups whether increased local unionization has a positive spillover effect in the nonunion sector and whether increased local unemployment equally affects wages and hours in increased local unemployment equally affects wages and hours in the two sectors

challenges in the portuguese textile and clothing industry a fight for survival abstractthe portuguese textile and clothing industry thrived after 1960 when portugal joined the european free trade association and it has been an important industry in portugal in terms of valu

trade in imperfectly competitive industries the role of market size and consumer preferences this study presents theoretical and empirical analyses of market size and consumer preference asymmetries to examine the implications of trade and trade policies for imperfectively competitive food manufacturing sectors the results show that the effects of trade reforms on imperfectly competitive product trade are counter intuitive if a significant portion of food trade is attributed to market size and preference asymmetries for example countries with smaller market gain relatively more from trade liberalization than countries with larger markets because export market opportunities are greater for small countries than for large countries

optimal tax depreciation with loss carry forward and backward options the choice of depreciation method from among straight line and accelerated methods can have a significant impact on the present value of expected tax payments this is a problem that has been studied for decades with most results indicating the optimality of accelerated methods recent research questions this claim by relaxing the assumption of positive taxable income the situation where net operating losses may be carried forward and backward in time is the subject of this paper we model this situation and establish conditions that allow straight line depreciation to be preferred over accelerated methods the results are focused around a threshold number of periods of consecutive losses which are determined by the allowable periods to carry a loss forward for consecutive losses beyond this threshold straight line will always be optimal when the cumulative depreciation charges up to and including the window are guaranteed to be applied on or before the threshold period then straight line will never be optimal

strike coordination and dismissal in uniform wage settings abstract we study a gift exchange game with 12 employees and one employer when the employer can offer individually differentiated wages in a setting without collective action we observe high levels of wages effort choices and total earnings when the employer is restricted to offering a uniform wage trust and reciprocity drop dramatically due to widespread shirking the stepwise introduction of two collective action mechanisms strike and coordination increases the employees share of the total earnings but does not mitigate the free riding problem adding employment risk to the collective action setup drives up wages reduces free riding and leads to higher total earnings however this increase in productivity is not sufficient to achieve the high levels of wages efforts and earnings that we observe with individually differentiated wages

unions and monopoly profits using cross sectional data for u s manufacturing the author identifies a negative effect of unions on the profits of highly concentrated industries and virtually no effect on the profits of unconcentrated industries the results for concentrated industries are explained in terms of the monopoly model which predicts a negative effect of unions on profits equivalent to the change in employer s surplus the monopoly model also suggests that previous profit studies which omitted the union variable were likely to significantly underestimate the relationship between concentration and profits this prediction is also supported by empirical evidence m sany studies have demonstrated the ability of unions to raise wages above the level of nonunion workers higher union wages in turn may affect the level of prices employment capital intensity productivity and profits recent studies by clark 1982 and freeman 1983 have found significant negative effects of unions on profit rates in the united states using line of business data from 1970 to 1980 for 900 firms clark found a negative effect of unions on the rate of return to capital more specifically the union effects were found to be significantly negative when market shares were low and insignificant when market shares were high according to clark the absence of a union effect in the latter case can be explained by the ability of firms with market power to pass on higher union wages into higher prices 1982 p 47 on the other hand freeman 1983 using data from the survey of manufactures from 1958 to 1976 and the internal revenue service from 1965 to 1976 also found a negative effect of unions on profits contrary to clark s results however the union profit effect was negative only in concentrated industries the point of contention appears to be the role of concentration in determining the union profit effect rather than the overall negative impact of unions the results of clark and freeman are important because previous industrial organization research on profit rates generally ignored unions for instance of the forty six profit studies surveyed by weiss 1974 none included a union variable more recently a profit study in this review by ravenscraft 1983 using high quality line of business data from the federal trade commission also ignored unionization as will be demonstrated the omission of the union variable leads to an understatement of the effect of industrial concentration on profits this means that concentrated industries generate much greater profits than indicated by previous research in order to measure the size of the understatement a new concept employer s surplus is developed which illustrates the theoretical impact of a union wage increase on monopoly profits the empirical estimates of employer s surplus in this paper indicate how monopoly profits are divided between firms and unions most of the data used in this study were obtained from james medoff and charles brown 2 unlike the previous two studies each observation corresponds to a state by two digit sic industry for manufacturing in 1972 because of the large variations in unionization across states this data set offers a useful test of the union profit effect i employer s surplus according to accepted theory the profit maximizing monopolist will employ labor up to the point where the market wage equals the marginal revenue product mrp 3 if for simplicity we assume that all other factors are variable then the mrp curve represents the monopolist s long run demand for labor in the absence of unions employment is determined by the intersection of the mrp curve and nonunion wage wn as pictured in figure 1 if unions raise wages to wa employment will decrease from ln to l with the reducreceived for publication november 28 1983 revision accepted for publication july 6 1984 eastern washington university i am very grateful to dave bunting lisa brown bill dickens claire brown and george strauss for their valuable suggestions on this research this paper is a revised version of chapter 3 from the author s ph d thesis the union impact on profits productivity and prices university of california berkeley 1 see parseley 1980 for a recent review of this literature 2 i would like to thank brown and medoff for making these data available to me 3 marginal revenue product is equal to marginal revenue multiplied by marginal physical product see rees 1979

monopoly plant and union effects on worker wages this paper examines the effects of industry concentration plant size and unionization on the wages of blue collar manufacturing workers the author points out that few previous wage studies have included all three of those variables or have employed data sufficiently detailed to test adequately their effect on wages this study using data primarily from the 1977 quality of employment survey demonstrates that concentration plant size and unionization all exercise significant and independent effects on wages

research in accounting for income taxes abstract this paper comprehensively reviews the accounting for income taxes afit literature we begin by identifying four distinctive aspects of afit and briefly covering the rules surrounding afit we then review the existing studies in detail and offer suggestions for future research we emphasize the research questions that have been addressed most of which relate to whether the tax accounts are used to manage earnings and whether the tax accounts are priced by equity market participants we also highlight areas that have not received much research attention and that warrant future analysis

comparison of depreciation and corporate tax policies between the countries of the north american free trade area nafta and the european community ec abstract this paper compares the depreciation rules corporate income tax rates and investment tax credits of canada mexico and the united states north american free trade area with the twelve countries of the european community belgium denmark france germany greece ireland italy luxembourg the netherlands portugal spain and the united kingdom for illustrative purposes a comparative example of computer systems is included

on the optimal timing of capital taxes for many kinds of capital depreciation rates change systematically with the age of the capital consider an example that captures essential aspects of human capital both regarding its accumulation and its depreciation a worker obtains knowledge in period 0 then uses this knowledge in production in periods 1 and 2 and thereafter retires here depreciation accelerates it occurs at a 100 rate after period 2 and at a lower perhaps zero rate before that the present paper analyzes the implications of non constant depreciation rates for the optimal timing of taxes on capital income the main finding is that under natural assumptions the path of tax rates over time must be oscillatory oscillatory tax rates are optimal when depreciation rates accelerate with the age of the capital as in the above example and provided that the government can commit to the path of future tax rates but cannot apply different tax rates in a given year to different vintages of capital

replacement decisions with multiple stochastic values and depreciation abstract we develop an analytical real option solution to the after tax optimal timing boundary for a replaceable asset whose operating cost and salvage value deteriorate stochastically we construct a general replacement model from which seven other particular models can be derived along with deterministic versions we show that the presence of salvage value and tax depreciation significantly lowers the operating cost threshold that justifies and thus hastens replacement although operating cost volatility increases defer replacement increases in the salvage value volatility hasten replacement albeit modestly while increases in the correlation between costs and salvage value defer replacement reducing the tax rate or depreciation lifetime or allowing an investment tax credit yield mixed results these results are also compared with those of less complete models and deterministic versions showing that failure to consider several stochastic variables and taxation in the replacement process may lead to sub optimal decisions

union effects on nonunion wages evidence from panel data on industries and cities the authors test for threat and crowding effects of unions on non union wages at the industry and city levels using panel data on the percent organized and nonunion industry and city wage differentials constructed from current population surveys over the period 1973 89 at the industry level increases in the percent organized were associated with decreases in the nonunion industry wage differential suggesting that crowding effects were the predominant union effect on nonunion industry wage differentials in contrast at the city level increases in the percent organized were associated with increases in the nonunion city wage differential suggesting that threat effects predominated the authors also find evidence of negative cross occupation union effects on nonunion industry wage differentials supporting their hypothesis that the industry level results were partly driven by complementarity between union and nonunion labor

the impact of deregulation on the production structure of the motor carrier industry empirical analysis of the motor carrier industry pre and post regulatory reform reveals that deregulation resulted in significant changes in firm production structure and lower real average costs translog cost functions for firms operating in 1977 and 1983 were estimated and compared for other specialized commodity carriers fitted average costs were computed from these functions the results indicate significant differences in the cost functions and real costs that cannot be attributed to technological changes but rather suggest efficiency gains the results also suggest that it is inappropriate to predict outcomes of deregulation using empirical analyses of firms in the regulated environment

union wage differentials product market influences and the division of rents this paper examines the extent to which product market conditions limit the ability of trade unions to establish wage differentials over nonunion pay the mean union pay differential is estimated to be of the order of 8 percent to 10 percent in establishments with some degree of product market power but zero in establishments facing competitive product market conditions when competitive conditions are faced a preentry closed shop and high union coverage of the industry are both required it is estimated that only 5 percent of the establishments in which there are significant differentials over nonunion pay face generally competitive product market conditions copyright 1990 by royal economic society

union effects on productivity evidence from western u s sawmills the authors conjecture that previous studies have tended to overestimate the productivity of union firms relative to nonunion firms due to inadequate controls for output quality and input usage important omissions if the higher cost of unionized labor leads to less labor intensive products and techniques to avoid those problems this study examines a fairly standardized commodity lumber and controls for detailed product attributes and inputs an analysis of data from a survey administered by the authors shows that unionized sawmills were between 12 and 21 less productive than nonunionized mills in fiscal year 1986 as predicted when product quality and raw material usage are not included in the analysis the estimate of union productivity is biased upward

union work rules and efficiency in the building trades this paper estimates the effect of union work rules in the building trades on employment and costs by comparing factor demand elasticities for union and nonunion contractors and subcontractors over micro data from two different types of construction the results show that the elasticities of substitution between labor and nonlabor inputs and own price elasticities for nonlabor inputs are about the same for union and nonunion contractors in contrast the elasticities of substitution among different skill categories of labor and the own price elasticities for each category are much lower under unionism

the korean textile industry still competitive after all these years although a vital part of the economy the korean textile industry has been challenged by the recent reduction of international trade barriers particularly as this industry was fully integrated into general agreement on tariffs and trade gatt in 2005 the textile industries in japan and many other countries have also faced difficulties this study examines future prospects for the korean industry by investigating the presence of economies of scale and relationships among the inputs of domestic capital labour and intermediate goods as well as foreign intermediate goods the findings are consistent with constant returns to scale and a substitutes relationship among all input pairs except for domestic capital and foreign intermediate goods thus there appear to be no further cost reductions available through increased output and economies of scale however some reduction in industry output may not result in increased unit costs either a reduction in the price of foreign intermediate goods will not onl

employee participation programs group based incentives and company performance a union nonunion comparison this analysis examines whether union representation positively or negatively influences the effectiveness of employee participation programs and group based incentives in improving firm performance examined at the firm level a model of the independent and interaction effects of participation profit and gain sharing and union representation is estimated against data on 841 manufacturing firms in michigan in 1989 the evidence indicates that employee participation programs contributed substantially more to performance in unionized firms than in nonunion firms whereas profit and gain sharing programs contributed substantially more to performance in nonunion firms than in unionized firms

do wage cuts damage work morale evidence from a natural field experiment employment contracts are often incomplete leaving many responsibilities subject to workers discretion high work morale is therefore essential for sustaining voluntary cooperation and high productivity in firms we conducted a field experiment to test whether workers reciprocate wage cuts and raises with low or high work productivity wage cuts had a detrimental and persistent impact on productivity reducing average output by more than 20 percent an equivalent wage increase however did not result in any productivity gains the results from an additional control experiment with high monetary performance incentives demonstrate that workers could still produce substantially more output leaving enough room for positive reactions altogether these results provide evidence consistent with a model of reciprocity as opposed to inequality aversion

determinants of the incidence of group incentives evidence from canada we use canadian data on four group incentive schemes to examine the deter minants of the probability that a firm offers each scheme to its non managerial workers and to production workers alone we find that unionization lowers the incidence of group incentives except for productivity gainsharing larger firms are more likely to offer share purchase plans to all non managerial employees and profit sharing to production workers cash bonuses are less common in larger firms we find little indication that group incentives are either discouraged by machine paced production or more common in firms with good industrial relations

the effect of unionization on productivity evidence from a long panel of coal mines the author measures the effect of unionization on productivity based on a panel of west virginia coal mines from 1897 to 1928 output and inputs are measured in physical terms and most of the mine

how unions affect productivity in manufacturing plants this study investigates several hypotheses as to how unions may affect productivity analysis of data from 46 manufacturing plants for 1982 indicates a negative union impact on productivity the author finds evidence suggesting that unions reduce the effectiveness of some managerial practices undertaken to increase productivity and that a poor labor management relations climate also reduces productivity these two factors account for almost 50 percent of the negative union impact

renewing assets with uncertain revenues and operating costs we study optimal replacement and abandonment decisions for real assets when both revenues and costs are uncertain and deteriorate with age we develop an implicit representation of the renewal boundary as the solution to a set of simultaneous equations this quasi analytical method has the merit of computational ease and transparency we show that the correlation between revenues and operating costs has a significant influence on the renewal boundary and that the increase in revenue immediately following a renewal has a greater relative influence on the boundary than either operating cost or renewal cost the quasi analytical method is sufficiently flexible to deal with other real option models involving 2 variables

in search of workers real effort reciprocity a field and a laboratory experiment we present a field experiment to assess the effect of own and peer wage variations on actual work effort of employees with hourly wages work effort neither reacts to an increase of the own wage nor to a positive or negative peer comparison this result seems at odds with numerous laboratory experiments that show a clear own wage sensitivity on effort in an additional real effort laboratory experiment we show that explicit cost and surplus information that enables an exact calculation of an employer s surplus from the work contract is a crucial prerequisite for a positive wage effort relation this demonstrates that an employee s reciprocity requires a clear assessment of the surplus at stake jel c91 c92 j41

technological progress and change in market concentration in the u s 1963 77 what effect does r d induced technological progress have on market structure do the concentration ratios the most used indices of market structure increase or decrease in an industry that is faced with a high level of technological opportunity and exploits it through a high rate of r d this paper focusses on a model by nelson and winter as a theoretical starting point to deal with this question in the nelson and winter model concentration increases as a result of dynamic competition in the technologically progressive industries but their model does not allow entry and the effect on concentration may be reversed if the possibility of entry is considered empirically this paper shows that concentration ratios in the high r d industries have decreased in the united states during 1963 77

the perversity of preferences gsp and developing country trade policies 1976 2000 industrial countries maintain special tariff preferences namely the generalized system of preferences gsp for imports from developing countries critics have highlighted the underachieving nature of such preferences but developing countries continue to place the gsp at the heart of their agenda in multilateral negotiations what effect do such preferences have on a recipient s own trade policies the authors develop and test a simple theoretical model of a small country s trade policy choice using a dataset of 154 developing countries from 1976 through 2000 they find that countries removed from the gsp adopt more liberal trade policies than those remaining eligible the results corrected for endogeneity and robust to numerous alternative measures of trade policy suggest that developing countries may be best served by full integration into the reciprocity based world trade regime rather than continued gsp style special preferences

pay equality and industrial politics personnel managers often argue that equitable pay treatment manifested as wage compression is useful because it reduces disharmony among workers but it is far from obvious that a compressed salary structure is morale improving since better workers may feel disenchanted by this scheme however when workers rewards are based on relative comparisons salary compression reduces uncooperative behavior that is detrimental to the firm relative comparisons imply that some reference group must be selected the major result is that within the relevant groups some wage compression is efficient

union organizing activity firm growth and the business cycle this paper analyzes the relationship between changes in unionization and firm growth average growth is significantly low er in manufacturing firms that experience successful union elections bu t these strong effects are largely illusory the authors find no evidence of a significant relationship between unionization and firm growth despite a strong cyclical pattern in election activity thei r results suggest that the significant negative effect of organizing activity on a firm s market value is not accompanied by any growth changes the authors therefore cannot reject the hypothesis that t he equity losses from union election activity represent a simple transf er of wealth from shareholders to workers copyright 1993 by american economic association

cost relationships and challenges in the spanish apparel industry in the twenty first century the spanish textile and apparel industries have faced substantial challenges resulting in declining sales and employment this study concentrates on the apparel industry since its economic challenges and opportunities differ from those of the textile industry the analysis employs a transcendental logarithmic cost function to investigate the presence of scale economies and the interrelationships among inputs of domestic capital labour and intermediate goods as well as outsourced intermediate products for the spanish apparel industry and discusses the implications for its future competitiveness and the demand for domestic inputs the results are consistent with diseconomies of scale or in the case of one model possibly constant returns to scale indicating that some contraction of the industry due to international competition will not raise unit costs all of the inputs except for capital and intermediate goods were found to be substitutes an important finding is that the

gift exchange in a multi worker firm one of the main findings of a large body of gift exchange experiments is that in an incomplete contracts environment workers on average do not shirk and usually provide more than the minimum enforceable effort level in general 40 to 60 percent of the workers reward higher wages with higher effort these results are observed for simple one employer one worker relationships in this paper we investigate whether they generalize to the more realistic situation in which the employer employs several workers we compare a bilateral gift exchange game with a treatment in which each employer has four workers we find that effort levels in the latter treatment are only marginally lower gift exchange thus appears to be robust to increases in the size of the workforce and intention based reciprocity rather than social preferences seems to be the main driving force behind gift exchange

a requiem for the australian motor vehicle industry the last automobiles manufactured in australia rolled off the assembly line in the fall of 2017 this article looks at some of the factors that have impacted the industry since 1968 and led to its

profit related pay prose discovered this paper estimates that in 1984 43 percent of british private sector establishments had some form of profit related pay regression results do not show that these establishments had statistically significant better financial performance cross ta bulations do not suggest that the establishments with income sharing schemes had noticeably greater employment growth or better industrial relations copyright 1988 by royal economic society

are union productivity effects overestimated evidence from coal mining the empirical literature of the influence of unions on productivity is extended by considering the effect in an industry with heterogeneous firms recent theoretical papers suggest that in such an industry unions will tend to organize the exogenously more productive firms thus a spurious correlation between unions and productivity may emerge we test this hypothesis by estimating production functions for coal with data from eastern kentucky underground coal mines the aspect of mine heterogeneity that we focus on is the width of the mine s seam of coal wider seams increase productivity empirically we find that unions disproportionately organize mines with wider seams and this accounts for the positive relationship between unions and productivity observed in our data in fact once seam thickness is accounted for the estimated effect of unions on productivity is negative

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

market structure and worker quality it is frequently asserted although never directly tested that firms in more monopolistic industries hire better qualified workers this paper presents two new results first worker quality education in particular is a strong determinant of whether a worker is employed in a concentrated industry when using a traditional data source second upon expanding the data to include measures of research and development workers of better quality are actually no more likely to locate in concentrated industries these results fit with theories claiming that industries subject to technological opportunities may be more concentrated and that those opportunities demand higher quality workers i introduction at least a score of articles since the 1960s test the hypothesis that more concentrated industries pay workers higher wages other things equal this investigation has been part of a more general examination of whether or not concentrated structure generates inefficiencies beyond the deviation of price from cost unfortunately this large scale effort has not been rewarded with consistent results separate researchers both confirm and fail to confirm an independent role for industrial concentration in wage determination among those who fail to confirm the concentration earnings hypothesis one explanation is offered most often while concentrated industries pay higher wages they obtain better qualified workers the generally acknowledged simple correlation between wages and concentration becomes an insignificant partial correlation in the presence of a vector of controls while some of the typical controls could be considered measures of worker quality others clearly are not it may be one or more of these non quality controls which frequently include industry characteristics which eliminates the significance of concentration for example plant size and unionization known to be correlated with both wages and concentration are among the more likely non quality variables which could explain the lack of the authors thank william j adams william g shepherd gary solon and frank p stafford their suggestions improved early versions of this paper thanks is also expressed to almarin phillips who suggested the association with technological progress those confirming a positive statistical association between wages and industrial concentration include dalton and ford 119771 mellow 119831 kwoka 119831 long and link 119831 and heywood 119861 those failing to find such an association include weiss 119661 rapping 1967 pugel i9801 and freeman and medoff 119811

unionization and cost of production compensation productivity and factor use effects unionization affects cost of production through compensation premia technology shifts and deviations from the least cost combination of inputs the first two are familiar but the last is not this article distinguishes the three effects illustrates the factor use effect and suggests that it may resolve several apparent inconsistencies union induced cost effects appear larger than those implied by union compensation and productivity differentials union compensation and productivity differentials suggest a larger effect on labor intensity of output than is observed and employers complain that union work rules reduce productivity when there is little evidence that this is so

empirical tax research in accounting this paper traces the development of archival microeconomic based empirical income tax research in accounting over the last 15 years the paper details three major areas of research i the coordination of tax and non tax factors ii the effects of taxes on asset prices and iii the taxation of multijurisdictional international and interstate commerce methodological concerns of particular interest to this field also are discussed the paper concludes with a discussion of possible directions for future research r 2001 elsevier science b v all rights reserved jel classification m41 h25 k34 g32 f23

unionism and productivity in west virginia coal mining this study presents econometric estimates of the effects of unionism on productivity in 83 west virginia coal mines in the early 1920s the size detail and panel structure of the data set permit investigation of many possible links between unionism and productivity in contrast to the summary measures reported by most studies the results show that the union effect was not uniform across mines and cannot be represented by a simple shift parameter rather unionism significantly reduced productivity at small mines but not at large mines drawing on historical evidence the author ascribes this differential effect to systematic differences between small and large operations in the quality of management and union leadership

optimal tax depreciation under a progressive tax system the focus of this paper is on the effect of a progressive tax system on optimal tax depreciation by using dynamic optimization we show that an optimal strategy exists and we provide an analytical expression for the optimal depreciation charges depreciation charges initially decrease over time and after a number of periods the firm enters a steady state where depreciation is constant and equal to replacement investments this way the optimal solution trades off the benefits of accelerated depreciation because of discounting and of constant depreciation because of the progressive tax system we show that the steady state will be reached sooner when the initial tax base is lower or when the discounting effect is stronger

non discriminatory discrimination special and differential treatment under the gatt for developing countries developing countries have long been strong supporters of a non discriminatory rule based multilateral system on the grounds that as economically small units they would otherwise be subject to bilateral pressure from larger powers at the same time they have equally been committed to special and differential s d treatment for themselves under gatt rules their approach has been to argue that trade problems of developing countries are special from those of developed countries balance of payments problems viewed by them as endemic to low income countries make liberalisation difficult and import substitution strategies suggest that liberalisation is anyway undesirable poor export prospects export pessimism imply they need different treatment from developed countries in order to grow that is trade preferences in developed country markets special and differential also became a bloc wide strategy jointly pursued reflecting the premise that developing countries are jointly and simultaneously special and differential in their trade problems this is however changing in the uruguay round developing countries have shown themselves remarkably adept at moving away from the earlier somewhat passive bloc wide s d approach in a surprising range of negotiating groups countries have actively pursued country over bloc wide interests and in an active way involving a willingness to take on new gatt disciplines while s d is far from having been abandoned as a principle of the trading system the approach seems to be one of protecting and preserving what is there rather than pushing for further enhancement the reasons for these changes are as always multi faceted strong growth performance in the more outward oriented developing countries korea and other nics has weakened the intellectual commitment to import substitution what exactly s d has yielded developing countries in concrete trade policy terms has also been queried and over the years the differences between developing countries large small middle income least developed industrialised commodity exports agricultural importers exporters and others have grown to the point that in the uruguay round a grand coalition of all developing countries does not exist in any active sense

can union labor ever cost less this paper examines the effect of unions on efficiency by estimating cost function systems over three different sets of construction projects the results show that union contractors have greater economies of scale this gives them a cost advantage in large commercial office buildings but in school and hospital construction nonunion contractors have lower costs at all output levels despite the cost differences profits for nonunion contractors in school and hospital construction are no higher than those for union contractors because the burden of higher union costs is shifted to buyers

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

the simple macroeconomics of profit sharing this paper is in the spirit of the temporary equilibrium approach to macroeconomics it basically extends that framework to cover a profit sharing system and then compares the macroeconomic characteristics with those of the more familiar wage system a first preliminary step is to demonstrate how a microeconomic model of monopolistic competition can be built up into a junior member of the keynesian macro family the methodology is to create from first principles including a careful formulation of a monopolistically competitive product market structurea natural underpinning for the standard aggregate demand specification the primary goal of the paper is to apply the integrated monopolistic competitionkeynesian type apparatus described above to investigate the macroeconomic properties of a profit sharing economy the existence of a consistent general framework covering both cases invites meaningful comparisons that indicate clearly why an economy based on profit sharing principles possesses natural immunity to stagflation by contrast the wage economya system we have largely accepted without critically examining its macroeconomic consequences is more prone to suffer from unemployment and inflation the policy implications for aggregate demand management in wage and share systems are analyzed and contrasted in writing this paper my philosophy has been to not shirk from using those reasonable parameterizations and functional forms which yield nice crisp results and permit me to focus sharply on the essential logic of basic issues it is certainly possible to present the main results in a somewhat more general formulation as the astute reader will appreciate but i fear only at some cost of distracting attention from those central features i wish to highlight

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

unions and the incidence of performance linked pay schemes in britain abstract this paper examines the relationship between trade unions and the incidence of share ownership profit sharing and value added schemes in britain the first two schemes are more common in the union sector whilst the third occurs more in non union establishments a distinction is made between weak and strong unions and it is found that performance linked pay schemes are in general less likely to be present if an establishment has a strong union rather than a weak one

operational asset replacement strategy a real options approach abstract this paper analyses the problem of replacement by investigating the optimal moment of investment replacement in a given tax environment with a given depreciation policy an operation and maintenance cost minimization model based on the definition of equivalent annual cost is applied to a real options paradigm the developed methodology allows for an innovative evaluation of the flexibility of replacement process analysis a new two factor evaluation function is introduced to quantify decisions on asset replacement under a unique cycle environment this study improves upon previous findings in the literature as it accounts for autonomous salvage value processes based on partial differential equations this model achieves a general analytical solution and particular numerical solution the results differ significantly from those observed in one factor models by showing evidence of over evaluation in optimal levels of replacement and by confirming suspicions that different types of uncertainties produce non monotonous effects on the optimal replacement level the scientific contribution of this study lies in new and stronger approaches to equivalent annual cost literature supplying an algorithm for operation and maintenance cost minimization that is conditioned by autonomous salvage value this study also contributes to the real options literature by developing a two factor model with brownian processes applied to asset replacement

wage differentials of transportation industries deregulation versus regulation this article investigates the wage differentials of similar occupations in three for hire transportation carrier industries railroad truck and motor bus under regulation and deregulation the estimation results indicate that the union wage gaps among all occupations have widened under deregulation specifically the union wages of railroad occupations have increased relative to those of truck drivers and the union wages of truck drivers have increased relative to those of motor bus drivers further wage gaps for all occupations for this period are greater among nonunion than among union workers jel l92 i introduction economic regulation of u s transportation carrier industries has been classified into three distinct eras the monopoly regulatory era the competition regulatory era and the regulatory reform era beginning in the late 1800s the 1930s and the 1970s talley 1983 these eras addressed carrier abuses destructive intramodal and intermodal competition and the negative impacts of regulation respectively the 1887 interstate commerce act sought to prevent monopolistic abuses and limit discriminatory practices of railroads the motor carrier act of 1935 of the competition regulatory era placed motor carriers freight and passenger under federal regulation by the 1970s advocates for federal regulatory reform argued that economic regulation protected inefficient carriers promoted high rates and fares and in general fostered an inefficient allocation of resources subsequently a number of deregulation or regulatory reform acts were passed including the railroad revitalization and regulatory reform act of 1976 the staggers rail act of 1980 the motor carrier act of 1980 and the bus regulatory reform act of 1982 though shippers and passengers have generally benefited from transportation deregulation paying lower real rates and fares the impact on carrier labor earnings has been negative for example the real weekly wages of union railroad engineers have declined 11 7 talley and schwarz miller 1998 the real hourly wages of union and nonunion for hire truck carrier drivers have declined 23 and 10 hirsch and macpherson 1998 and the real hourly wages of both union and nonunion for hire motor bus carrier drivers have declined 17 schwarz miller and talley 1994 the impact of deregulation however on the relative labor earnings of transportation carrier industries is unknown specifically have wage differentials changed from those of the regulation period if so have these differentials widened narrowed under deregulation thereby increasing decreasing the gap in the labor earnings of one industry relative to those of another do the changes in wage differentials differ for union and nonunion labor the purpose of this article is to investigate occupational wage differentials among transportation industries under regulation and deregulation as intermodal competition intensifies such information is expected to play a more important role in industry wage negotiations wage differentials of similar occupations in three for hire carrier industries under regulation and deregulation are estimated the three industries are the railroad truck and motor bus industries and the occupations include railroad engineers conductors and brakemen switchmen truck drivers and motor bus drivers the estimation results indicate that the union wages of railroad occupations have increased relative to those of truck drivers and the union wages of truck drivers have increased relative to those of motor bus drivers during the postderegulation period further wage gaps for all occupations for this period are greater among nonunion than among union workers the remainder of this article is structured as follows section ii discusses railroad truck and motor bus for hire carrier industries and in particular their labor under regulation and deregulation

social comparison and performance experimental evidence on the fair wage effort hypothesis we investigate the impact of wage comparisons for worker productivity we present three studies which all use three person gift exchange experiments consistent with akerlof and yellen s 1990 fair wage effort hypothesis we find that disadvantageous wage discrimination leads to lower efforts while advantageous wage discrimination does not increase efforts on average two studies allow us to measure wage comparison effects at the individual level we observe strongly heterogeneous wage comparison effects we also find that reactions to wage discrimination can be attributed to the underlying intentions of discrimination rather than to payoff consequences

profit sharing employment efficiency and wage stability a contract between a risk neutral firm and its risk average workers is considered under uncertainty about product demand we show that profit sharing can be used to attain the efficient level of employment and at the same time preserve optimal risk sharing between the parties optimal profit sharing does not imply wage variability instead wages are stabilized across states

investment under uncertainty the case of replacement investment decisions we analyze the determinants of replacement investment decisions in a contingent claims model with maintenance and operation cost uncertainty we find that the optimal time between replacements is increasing in the volatility of cost the purchase price of a new asset and the corporate tax rate and is decreasing in the systematic risk of cost the salvage value of the asset and the investment tax credit the optimal time between replacements can either increase or decrease with an increase in the depreciation rate extensions of the model to examine the effects of technological and tax policy uncertainty on replacement investment decisions give intuitive but striking results uncertainty about the arrival of a technological innovation that would decrease maintenance and operation cost results in a significant decrease in replacement investment uncertainty in a tax law change that would encourage investment decreases current investment and uncertainty in a tax law change that would discourage investment increases current investment

unionized construction workers are more productive this paper presents evidence on the effect of unionism on productivity in construction the linkages are distinct from those studied previously in industrial settings apprenticeship training and hiring halls probably raise union productivity while jurisdictional disputes and restrictive work rules lower it using brown and medoff s methodology union productivity measured by value added per employee is 44 to 52 percent higher than nonunion the estimate declines to 17 to 22 percent when estimates of interarea construction price differences are used to deflate value added occupational mix differences and possibly apprenticeship training account for 15 to 27 percent of this difference

fair wages survive multiple sources of income inequality when an employee in a gift exchange game earns significantly less than the employer the source of employer income does not affect effort choices however to induce one unit of effort the employer has to pay higher wages than in a game without payoff inequality

the effect of tax depreciation on the stochastic replacement policy abstract the optimal replacement policy for an asset subject to a stochastic deteriorating operating cost is determined for three different tax depreciation schedules and a known re investment cost as the solution to a two factor model using a quasi analytical method we find that tax depreciation exerts a critical influence over the replacement policy by lowering the operating cost thresholds although typically a decline in the corporate tax rate increase in any initial capital allowance or decrease in the depreciation lifetime increase in depreciation rate results in a lower operating cost threshold which justifies replacing older equipment these results are not universal and indeed for younger age assets the result may be the opposite an accelerating depreciation schedule may incentivize early replacement in a deterministic context but not necessarily for an environment of uncertainty

concentration unionism and labor earnings a sample selection approach using a simultaneous equations model of wages and union membership the elasticity of the wage with respect to market concentration is estimated to be approximately 0 2 the estimate uses a large data set and extensive controls to measure concentration s direct effect on the wage an indirect effect through unionization and a feedback effect the indirect effect represents the majority of concentration s effect copyright 1988 by mit press

balance of payments and related issues in the uruguay round of trade negotiations little attention has been paid to the balance of payments provisions of the general agreement on tariffs trade gatt despite the fact that they directly influence the trade policies of the developing countries this article suggests that there is a need to reconsider these provisions in the context of the ongoing uruguay round of multilateral trade negotiations the article traces the historical evolution of gatt practices on trade restrictions for balance of payments purposes with the general introduction of more flexible exchange rate arrangements the original rationale for temporary barriers to safeguard a country s external financial position appears to have lost its force recent theoretical and empirical work has demonstrated that neutral or export promoting trade strategies are more effective for development than the import substitution frequently advocated by economists in the 1950s and 1960s the current debt problems of developing countries strengthen the argument for a relatively open trade and payments regime to attain balance of payments viability the article suggests that stronger international discipline over trade restrictions for balance of payments purposes would contribute to and presuppose other necessary improvements in the multilateral trading system which are already on the agenda of the uruguay round

investments of uncertain cost abstract this paper examines irreversible investment decisions when projects take time to complete and are subject to two types of cost uncertainty the first is technical uncertainty i e uncertainty over the physical difficulty of completing a project which is only resolved as the investment proceeds the second is input cost uncertainty i e uncertainty over the prices of construction inputs or over government regulations affecting construction costs which is external to the firm these two types of uncertainty have very different effects on the investment decision a simple investment rule is derived that maximizes firm value and is used to analyze the decision to start or continue building a nuclear power plant during the 1980s

decision model and analysis for investment interest expense deduction and allocation abstract investment income tax planning requires informed strategic choices one must determine the amount of qualified dividends and net long term capital gain to be included in investment income against which investment interest expense can be deducted this choice also determines the residual qualified dividends and net long term capital gain which enjoy a reduced tax rate another important decision is whether all or some of this interest expense should be deducted in the current year or carried forward this paper puts forward a new approach to formulate these questions as a generalized resource allocation problem which permits analysis of the interdependence between and the tax consequences of the above decisions the commonly used approach deducting investment interest expense sooner rather than later we consider myopic since the benefit of deferring some of the deduction is not leveraged presented here is a tax planning guideline a necessary and sufficient condition for optimality to realize a more forward looking strategy we also show that for certain income structures the tax savings by deducting a one dollar investment interest expense may be more than the tax rate on the dollar of investment income that is offset

union effects on productivity profits and growth has the long run arrived this article interprets literature examining union effects on economic performance production function studies indicate small overall union impacts on productivity positive effects where they exist appear to result from management response to decreased profit expectations and from a natural selection process lower profitability among unionized firms is well established more interesting is the possibility that unions appropriate quasi rents deriving from long lived tangible and intangible capital the connection between unions investment behavior and productivity growth emerges as a particularly fruitful line of empirical inquiry although it does not encourage a sanguine view of unionism s long run impact

the effect of unions on productivity in a multinational manufacturing firm this paper examines the effect of unions on productivity in 31 plants of a large multinational firm in the years 1975 82 the plants 60 percent of which are unionized all produce a similar line of products using material intensive labor intensive low technology methods results obtained by estimating a translog production function indicate that unionization s overall effect on productivity is positive specific findings are that unionization increases the capital labor ratio and improves management performance but it also raises the absenteeism rate a net positive effect on productivity remains even when these channels of union influence are controlled for a result that the author suggests may reflect an improved labor relations climate or improved labor quality associated with unionization

market share and efficiency a reprise abstract a recent major study claims to have demonstrated the validity of the efficient market hypothesis this conclusion is unwarranted further empirical work suggests that market share is an element of industrial structure and may itself be a reflection of market power

the inefficiency of regulating a competitive industry productivity gains in trucking following reform this study confirms the higher productivity levels predicted by advocates of regulatory reform in trucking and shows that these gains have been substantial cost simulations suggest that following a year of higher expenditures efforts to remain competitive have yielded considerable cost savings that increase over time from 1 percent in 1981 to 23 percent in 1984 the indirect effects of reform through the independent variables initially decrease costs but later lead to higher costs the cumulative effect has been a less than 1 percent increase in costs in 1980 becoming by 1984 a significant 16 percent productivity gain copyright 1990 by mit press

optimal tax depreciation with uncertain future cash flows abstract since taxable income consists of cash flows reduced with depreciation charges the choice of the depreciation method affects taxable income in future periods a manager can therefore try to minimize the present value of future tax payments by choosing a particular depreciation method among those that are accepted by the tax authorities we focus here on the choice between the two most commonly used methods in practice i e the straight line depreciation method sdm and an accelerated depreciation method adm such as the double declining balance ddb method and the sum of the years digits syd method we show how the optimal choice depends on the discount factor the degree of uncertainty in future cash flows and the structure of the tax system

profit sharing and employee share ownership profit sharing and employee share ownership saul estrin paul grout and sushil wadhwani this paper evaluates the likely effects of linking a part of a worker s pay to the employer s profits it has been suggested by weitzman that this would raise employment by lowering the cost of taking on an extra worker however this can only happen if existing workers are willing to let their share of value added fall and experience of those firms in the uk who already operate profit sharing schemes suggests that the weitzman mechanism is not operative there is however some evidence that profit related pay does boost productivity but there are other ways of raising productivity such as performance related pay which may be more effective productivity enhancing effects are likely to be greatest when employees are involved in decision making as well but this is likely to undermine the weitzman case still further even if the argument that profit sharing raises employment is not compelling it is sometimes suggested that it can do little harm however there is evidence that it may well be inflationary in which case the government would be advised to proceed cautiously we argue that there is very little case for the introduction of a permanent subsidy to encourage increased profit sharing although there may be a case for a temporary one to overcome managerial inertia however there is a danger that a subsidy will promote cosmetic schemes designed to be eligible for the subsidy but which do not reflect any real change in behaviour

competition and relational contracts the role of unemployment as a disciplinary device when workers are faced with the threat of unemployment their relationship with a particular firm becomes valuable as a result a worker may comply with the terms of a relational contract that demands high effort even when performance is not enforceable by a third party but can relational contracts motivate high effort when workers can easily find alternative jobs we examine how competition for labor affects the emergence of relational contracts and their effectiveness in overcoming moral hazard in the labor market we show that effective relational contracts do emerge in a market with excess demand for labor long term relationships turn out to be less frequent when there is excess demand for labor than they are in a market characterized by exogenous unemployment however stronger competition for labor does not impair labor market efficiency higher wages induced by competition lead to higher effort out of concerns for reciprocity

confidence intervals for elasticity estimators in translog models this paper examines the distribution fu nctions of elasticity estimators in translog demand models the authors consider the normaland ratio of normals distributions and present confidence intervals for the elasticity estimators the results suggest that only elasticity estimato rs based on the means of the actual cost shares are likely to follow either the normal or ratio of normals distribution function examination of three published empirical studies demonstrates that inferences regarding the values of elasticities cannot be made from point estimates alone and suggests a trade off between the level of aggregation and the width of confidence intervals for the elasticit y estimators copyright 1986 by mit press

do unions contract for added employment the efficient contract model predicts unions will contract for added employment that is a level of employment higher than would be predicted by the demand curve for labor using three data sets on canadian industries in 1971 81 u s industries in 1972 and u s construction projects in 1973 74 and several estimation techniques the author estimates and compares labor demand equations for both union and nonunion firms some regressions that control for few variables support the added employment hypothesis but those with more complete specifications reject it

compensation unionization and deregulation in the motor carrier industry abstract previous research on the deregulation of the motor carrier industry has concluded that firms have become more efficient under deregulation and that costs have fallen largely at the expense of labor most studies that examine the effects on labor use current population survey data and find that wage premiums to union labor have fallen as a result of deregulation this study uses firm data and finds that deregulation had a very small effect on the average compensation paid by surviving union firms for nonunion firms the impact of deregulation is much larger these results suggest that the compensation premium for the labor of surviving union firms has increased but this increase applies only to surviving union labor in the paper we also point to and note a major exodus of union firms with the result that union labor levels have fallen and fallen dramatically