Leonard A. Rapping

Bio: Leonard A. Rapping is an academic researcher from Carnegie Institution for Science. The author has contributed to research in topics: Value (economics) & Wage. The author has an hindex of 8, co-authored 12 publications receiving 1432 citations.

Real Wages, Employment, and Inflation

Abstract: Current issues are now on the Chicago Journals website. Read the latest issue.One of the oldest and most prestigious journals in economics, the Journal of Political Economy (JPE) presents significant and essential scholarship in economic theory and practice. The journal publishes highly selective and widely cited analytical, interpretive, and empirical studies in a number of areas, including monetary theory, fiscal policy, labor economics, development, microeconomic and macroeconomic theory, international trade and finance, industrial organization, and social economics.

Learning and World War II Production Functions

Abstract: DURING World War II, shipbuilding output per man-hour evidenced a remarkable improvement. Between December 1941 and December 1944, man-hours required to produce a Liberty vessel, an emergency type developed for mass production, fell from an index value of 100 (December 1941 100) to 45, an increase in output per man-hour of 122 per cent, or an average annual increase of about 40 per cent.' Compared to the long-run improvement in man-hour productivity elsewhere in the United States economy the shipbuilding experience is impressive. Over the period 1909 to 1961, annual growth in output per man-hour, averaged over the entire economy, was 2.4 per cent.2 Even during a subperiod of rapid improvement, 1919-1929, and in a sector where improvement was most conspicuous, manufacturing, the average annual rate was only 5.6 per cent. In light of these figures, an explanation of the World War II shipbuilding productivity experience would be desirable, not only for its own sake but because it would shed light on secular forces constantly operating in the United States economy. An explanation is provided in this note with particular emphasis placed on the role of organizational and individual learning resulting from accumulated production experience.3 The extreme and unusual shipbuilding conditions that prevailed during World War II were conducive to extensive learning. New products were adopted, mass production techniques were introduced, labor inexperienced at shipbuilding was recruited, and the direction of production was placed in the hands of eminently successful managers who were, however, inexperienced at shipbuilding. This combination of unique events represents an extreme instance, which will facilitate the isolation of learning or adaptation effects from other effects, if learning is quantitatively important.

Unemployment in the Great Depression: Is There a Full Explanation?

Abstract: Professor Rees's reactions to our econometric study of the U.S. labor market, recently published in this Journal (1970), raise a bewildering variety of issues. Many of these issues have to do with "important implications for policy" which "lurk close . . . to the surface," as Rees sees it, of our study. These implications, whatever they may be, remain submerged after one has read Rees's remarks. We shall not attempt to guess at their nature or respond to them. There are, however, two substantive issues raised by Rees which deserve further discussion. Rees asserts that "in this [that is, our] model unemployment arises from the recalcitrance of suppliers and not from deficiencies in demand." This highly misleading statement is corrected in section 1 of this note. Rees also raises the important empirical question of whether our theory does succeed in accounting for labor-market behavior during the period 1929-39. Further study on our part indicates that Rees's skepticism on this point is well founded: our hypothesis accounts for much, but not all, of the observed labor-market rigidity during this period. These results are reported in Section 2.

The Role of Market Variables and Key Bargains in the Manufacturing Wage Determination Process

Abstract: The alleged trade-off between price stability and the rate of unemployment has been at the center of interest in economics for the past decade. Early work on this question by Phillips (1958) and Lipsey (1960) suggested an inverse relationship between wage changes and the level of unemployment for Great Britain over the period 1861-1957. Both writers argued that their results could be rationalized in terms of a Hicksian-type market "adjustment function."' However, it has proved difficult to identify a stable relationship between wage changes and unemployment for the United States, and this has led some economists to reinterpret the Phillips relationship.2 Adding a profit rate variable to the wage change-unemployment equation leads to a bargaining interpretation of the macroeconomic data. The wage determination process in the manufacturing sector, in which 70 per cent of the labor force is organized, has been examined within the framework of a bargaining model in which wage changes depend on two bargaining variables-industry-specific profit and unemployment rates. The individual industry relationships can then be aggregated to the manufacturing level to obtain an aggregate wage change-unemployment rate-

Time to build and aggregate fluctuations

Abstract: The equilibrium growth model is modified and used to explain the cyclical variances of a set of economic time series, the covariances between real output and the other series, and the autocovariance of output. The model is fitted to quarterly data for the post-war U.S. economy. Crucial features of the model are the assumption that more than one time period is required for the construction of new productive capital, and the non-time-separable utility function that admits greater intertemporal substitution of leisure. The fit is surprisingly good in light of the model's simplicity and the small number of free parameters. THAT WINE IS NOT MADE in a day has long been recognized by economists (e.g., Bdhm-Bawerk [6]). But, neither are ships nor factories built in a day. A thesis of this essay is that the assumption of multiple-period construction is crucial for explaining aggregate fluctuations. A general equilibrium model is developed and fitted to U.S. quarterly data for the post-war period. The co-movements of the fluctuations for the fitted model are quantitatively consistent with the corresponding co-movements for U.S. data. In addition, the serial correlations of cyclical output for the model match well with those observed. Our approach integrates growth and business cycle theory. Like standard growth theory, a representative infinitely-lived household is assumed. As fluctuations in employment are central to the business cycle, the stand-in consumer values not only consumption but also leisure. One very important modification to the standard growth model is that multiple periods are required to build new capital goods and only finished capital goods are part of the productive capital stock. Each stage of production requires a period and utilizes resources. Halffinished ships and factories are not part of the productive capital stock. Section 2 contains a short critique of the commonly used investment technologies, and presents evidence that single-period production, even with adjustment costs, is inadequate. The preference-technology-information structure of the model is presented in Section 3. A crucial feature of preferences is the non-time-separable utility function that admits greater intertemporal substitution of leisure. The exogenous stochastic components in the model are shocks to technology and imperfect indicators of productivity. The two technology shocks differ in their persistence.

Equilibrium Unemployment Theory

Abstract: Part 1 Unemployment in the model of balanced growth: the labour market long-run equilibrium and balanced growth adjustment dynamics. Part 2 further ananlysis of the labour market: search intensity and job advertising.

The Cyclical Behavior of Equilibrium Unemployment and Vacancies

Abstract: This paper argues that the textbook search and matching model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies in response to shocks of a plausible magnitude. In the United States, the standard deviation of the vacancy-unemployment ratio is almost 20 times as large as the standard deviation of average labor productivity, while the search model predicts that the two variables should have nearly the same volatility. A shock that changes average labor productivity primarily alters the present value of wages, generating only a small movement along a downward-sloping Beveridge curve (unemploymentvacancy locus). A shock to the separation rate generates a counterfactually positive correlation between unemployment and vacancies. In both cases, the model exhibits virtually no propagation. (JEL E24, E32, J41, J63, J64)