Showing papers in "National Bureau of Economic Research in 1977"

An Economic Study of U.S. Aircraft Hijacking, 1960-1976

Abstract: This study attempts to explain the general pattern of aircraft hijacking in the U.S. between 1361 and 1976, the reasons for the dramatic reduction in hijackings after 1972, and the costs and benefits of regulation instituted in 1973 that required mandatory preboarding searches of all passengers and carry-on luggage. The main findings of the paper can be summarized as follows: (1) Increases in the probability of apprehension, the conditional probability of incarceration and the sentence are associated with significant reductions in aircraft hijackings in the 1961 to 1976 time period. These findings are based on two methods of estimating the rate of hijackings , a quarterly time series and the time or flight intervals between successive hijackings, and alternative estimates of the deterrence variables. (2) Regression estimates from the sample period ending in 1972 were used to forecast the number of additional hijackings that would have taken place between 1973 and 1976 if (a) mandatory screening had not been instituted and (b) the probability of apprehension (once the hijacking is attempted) had remained constant and equal to its 1972 value. Under these assumptions, there would have been between 41 and 67 additional hijackings compared to the 11 that actually occurred in the 1973 to 1976 period. (3) Although the mandatory screening program is highly effective in terms of the number of hijackings prevented, its costs appear enormous. The estimated net increase in security costs due to the screening program (which does not include the time and inconvenience costs to persons searched) is $194.24 million over the 1973 to 1976 period. This, in turn, translates into a $3.24 to $9.25 million expenditure to deter a single hijacking. Put differently, if the dollar equivalent of the loss to an individual hijacked passenger were in the range of $76,718 to $219,221, then the costs of screening would just offset the expected hijacking losses.

The Government's Impact on the Labor Market Status of Black Americans: A Critical Review

Abstract: This paper surveys recent evidence on the impact of government programs on the measured labor market status of black Americans. In this paper, we argue that previous studies neglect the impact of recent government policy on the supply side of the labor market, and that the supply side effects of recent policy play an important role in explaining the recent measured increase in the ratio of the wages and incomes of blacks to the wages and incomes of whites.

A Theory of the Production and Allocation of Effort

Abstract: The purpose of this paper is to analyze systematically the production of effort and its allocation among different market and non-market sectors. I believe that this analysis can explain much of the variation in earnings that is not explained by human capital. The first section introduces the material. The next section develops the basic theoretical analysis of the production and allocation of effort by a free person. Section III applies this analysis to the value placed on time a1 located to the non-market sector, the effect of hours worked on fatigue and earnings, life cycle variations-in earnings and hours worked, investment in health, and the effect of marriage on the earnings and health of men and women. Section IV considers worker effort from the view point of firms, and shows how various characteristics of firms determine the wage rates offered and the effort supplied by their workers. Section V analyzes the production and allocation of effort by slaves, and derives "expropriation rates'' and other implications about the treatment of slaves .

Linear Regression Diagnostics

Abstract: This paper attempts to provide the user of linear multiple regression with a battery of diagnostic tools to determine which, if any, data points have high leverage or influence on the estimation process and how these possibly discrepant data points differ from the patterns set by the majority of the data. The point of view taken is that when diagnostics indicate the presence of anomolous data, the choice is open as to whether these data are in fact unusual and helpful, or possibly harmful and thus in need of modifications or deletion. The methodology developed depends on differences, derivatives, and decompositions of basic regression statistics. There is also a discussion of how these techniques can be used with robust and ridge estimators. An example is given showing the use of diagnostic methods in the estimation of a cross-country savings rate model.

An Adaptive Nonlinear Least Square Algorithm

Abstract: NL2SOL is a modular program for solving the nonlinear least-squares problem that incorporates a number of novel features. It maintains a secant approximation S to the second-order part of the least-squares Hessian and adaptively decides when to use this approximation. We have found it very helpful to "size" S before updating it, something which looks much akin to Oren-Luenberger scaling. Rather than resorting to line searches or Levenberg-Marquardt modifications, we use the double-dogleg scheme of Dennis and Mei together with a special module for assessing the quality of the step thus computed. We discuss these and other ideas behind NLZSOL and briefly describe its evolution and current implementation.

Alternative Trade Strategies and Employment - Plan of Research for Country Studies

Abstract: This paper was originally prepared as part of the first stage of the research project, Alternative Trade Strategies and Employment The project as a whole is focused upon identifying the relationships between alternative trade strategies -- export promotion and import substitution -- and growth in the demand for labor The project has altogether three stages: (1) the preparatory stage, in which the theory underlying the relationship between trade strategy and employment was developed and a methodology for undertaking empirical research was formulated; (2) the second stage, in which project participants undertook the empirical research for individual countries and also for particular topics of special interest for the project as a whole, based upon the papers prepared in the first stage; and (3) a summing up, in which the results of the individual studies are analyzed in order to ascertain what insights into the trade-employment relation seem generally applicable At the present time, the second stage of the project is nearing completion This paper constituted one part of the first stage of the project: it spells out much of the basic methodology that underlies the individual country studies

The Cumulative Unanticipated Change in Interest Rates: Evidence on the Misintermediation Hypothesis

Abstract: The term structure of interest rates is carefully analyzed over the period 1947-77 in order to construct a monthly series on cumulative unanticipated changes in long-term interest rates. This series is a sort of synthetic interest rate, changes in which over several months or years represent entirely unanticipated changes in interest rates. The behavior of this series is examined over recognized business fluctuations, and it is found to be actually more reliably pro-cyclic than the raw long-term interest rate, in spite of Kessel's finding that the market tends to correctly predict the direction of change of interest rates over phases. That the series is pro-cyclic supports the hypothesis we have put forward in another paper, that business fluctuations may be caused by "misintermediation", by which we mean the traditional mis-matching of asset and liability maturities on the part of financial intermediaries.

Taxation and Aggregate Factor Supply: Preliminary Estimates

Abstract: This paper extends the analysis of aggregate factor supply to a model which accounts simultaneously for the consumption/saving and labor/leisure choices. A translog utility maximization model is used to derive the set of consumption and leisure demand equations; these in turn are estimated on U.S. aggregate time series data. The empirical results are striking: we estimate (quite precisely) substantial own and cross price elasticities for current and future consumption and labor supply. The implied interest elasticity of saving is approximately 0.4.The results suggest that previous studies of labor supply and/or consumption which have ignored cross-price effects are mis-specified. We also strongly reject the hypothesis that implicit social security had no effect on factor supply.

Sample Selection Bias As a Specification Error (with an Application to the Estimation of Labor Supply Functions)

Abstract: In this paper, I present a simple characterization of the sample selection bias problem that is also applicable to the conceptually distinct econometric problems that arise from truncated samples and from models with limited dependent variables. The problem of sample selection bias is fit within the conventional specification error framework of Griliches and Theil. A simple estimator is discussed that enables analysts to utilize ordinary regression methods to estimate models free of selection bias. The techniques discussed here are applied to re-estimate and test a model of female labor supply developed by the author. (1974). This paper is in three parts. In the first section, selection bias is presented within the specification error framework. In this section, general distributional assumptions are maintained. In section two, specific results are presented for the case of normal regression disturbances. Simple estimators are proposed and discussed. In the third section, empirical results are presented.

Export and Domestic Prices Under Inflation and Exchange Rate Movements

Abstract: It is almost invariably taken for granted in theoretical descriptions of the international price mechanism and in the construction of trade models that a country's export price for a particular product is identical to its domestic price. Any impact of foreign or domestic events on prices is expected to fall identically on the export and the domestic price for a good. In contrast to these conventional assumptions, the few empirical studies of international prices have shown that there are fairly substantial and long-lasting divergences between export and domestic price changes for the same or closely related products. If there can be divergences between export and domestic prices, a type of relative price mechanism may be at work: the depreciating country should find export prices rising relative to domestic prices of the same goods. Since a producer can shift more easily from domestic to export sales of a product than from production of home goods to production of export goods we should expect the changes within commodities between domestic sales and exports to occur more rapidly. Since the evidence is strong that there are divergences between export and domestic prices, we wish to trace through the effects of foreign price changes and exchange rate changes on export and domestic prices and see whether a mechanism of the hypothesized type exists. In this paper we concentrate our attention on price movements, but offer some evidence that the response of exports to these price divergences is in the expected direction.