Showing papers in "Research Papers in Economics in 1976"

I: The Theory of Moral Sentiments

Abstract: A scholarly edition of a work by Adam Smith. The edition presents an authoritative text, together with an introduction, commentary notes, and scholarly apparatus.

Decisions with Multiple Objectives

Abstract: Many of the complex problems faced by decision makers involve multiple conflicting objectives. This book describes how a confused decision maker, who wishes to make a reasonable and responsible choice among alternatives, can systematically probe his true feelings in order to make those critically important, vexing trade-offs between incommensurable objectives. The theory is illustrated by many real concrete examples taken from a host of disciplinary settings. The standard approach in decision theory or decision analysis specifies a simplified single objective like monetary return to maximise. By generalising from the single objective case to the multiple objective case, this book considerably widens the range of applicability of decision analysis.

Child Endowments, and the Quantity and Quality of Children

Abstract: This paper brings together and integrates social interactions and the special relation between quantity and quality. We are able to show that the observed quality income elasticity would be relatively high and the quantity elasticity relatively low and sometimes negative, even if the true "unobserved� income elasticities for quantity and quality were equal and of average value. Moreover, the observed quality elasticity would fall, and the observed quantity elasticity would rise, as parental income rose.

Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods -

Abstract: This paper discusses Ricardian trade and payments theory in the case of a continuum of goods. The analysis thus extends the development of many-commodity, two-country comparative advantage analysis as presented, for example, in Gottfried Haberler (1937), Frank Graham (1923), Paul Samuelson (1964), and Frank W. Taussig (1927). The literature is historically reviewed by John Chipman (1965). Perhaps surprisingly, the continuum assumption simplifies the analysis neatly in comparison with the discrete many-commodity case. The distinguishing feature of the Ricardian approach emphasized in this paper is the determination of the competitive margin in production between imported and exported goods. The analysis advances the existing literature by formally showing precisely how tariffs and transport costs establish a range of commodities that are not traded, and how the price-specie flow mechanism does or does not give rise to movements in relative cost and price levels. The formal real model is introduced in Section 1. Its equilibrium determines the relative wage and price structure and the efficient international specialization pattern. Section II considers standard comparative static questions of growth, demand shifts,

Leisure, Home Production and Work--The Theory of The Allocation of Time Revisited

Abstract: From the theoretical point of view, the justification for aggregating leisure and work at home into one entity, "non-market time" (or "home time") can rest on two assumptions: (a.) the two elements react similarly to changes in the socio-economic environment and, hence, nothing is gained by studying them separately, and (b.) the two elements satisfy the conditions of a composite input, i.e., their relative price is constant, and there is no interest in investigating the composition of this aggregate since it has no bearing on production and the price of the output. This study sets out to show that none of these assumptions holds. Recent time budget findings have established that work at home is affected differently by changes in socioeconomic variables than is leisure, and this paper shows that the aggregation is also suspect from the analytical point of view.

The Economy of Europe in an Age of Crisis, 1600–1750

Abstract: By relating economic changes to the political backdrop, The Economy of Europe in an Age of Crisis, 1600–1750 describes and analyzes the economic civilisation of Europe in the last epoch before the Industrial Revolution. The author makes a special effort to apply economic reasoning to the economic forces of the period and challenges some longstanding opinions about what was and was not important in explaining economic performance. The significance of this study rests in its identification of the ways a 'traditional' society developed its economy despite the absence of the obvious growth factors of the nineteenth century. The approach is consciously comparative: problems of interpretation are identified; research not yet available elsewhere is incorporated into the text; and examples are drawn from minor as well as major countries in western and central Europe. Topics dealt with include the development of agriculture and industry, foreign and regional trade, urbanization, a study of demand in explaining economic growth, the bourgeoisie, and the state.

The Commercial Revolution of the Middle Ages, 950–1350

Abstract: Professor Robert Lopez provides an incisive analysis of the economic structure of the Middle Ages. He makes use of modern economic concepts to explain how an underdeveloped economic system gave birth to the commercial revolution through which Europe succeeded in developing itself. The book goes far beyond the familiar picture of medieval European society, with its magnificent cathedrals and imposing castles, to concentrate instead on the walled cities and open countryside, for it was here that the revolution was born. Deftly and concisely, Professor Lopez traces the history of this remarkable economic upheaval which saw the rise of merchants and craftsmen and the decline of agricultural dependence by the society.

An empirical study of politico-economic interaction in the US

Abstract: Popularity and reaction functions as the main relationships between the economic and political sectors are theoretically derived and empirically estimated with quarterly data for the U.S. One of the purposes is to endogenize government behavior in macro-econometric models. Unemploymentj inflation (negatively) and the growth of consumption (positively) influence presidential popularity. The presidents who fear not to be reelected use in turn their policy instruments (public expenditures and jobs) to increase their popularity. There is also some indication that the presidents pursue ideological goals when they are confident to win the upcoming election.

Housing Demand in the Short Run: An Analysis of Polytomous Choice

Abstract: In this paper the author presents a model of household choice among types of residential housing that incorporates intramet­ ropolitan variations in housing prices arising from variations in work site location. Under suitable assumptions, the prices that households face in choosing among alternative types of residential housing are deduced. ¶ The empirical analysis suggests that consumers are re­ sponsive to the systematic variation in these prices in their choices among housing types in a metropolitan area. A model relating house­ hold choices among some 18 types of residential housing to intrarnet­ ropolitan price variation is estimated by maximum likelihood methods using conditional logit analysis. The results of the analysis, which is conducted separately for some O stratifications of households by income and family size, provide strong evidence of the importance of these intrametropolitan variations in relative prices in motivating choice among alternative types of residential housing. NOTE: A previous version of this paper was presented at the winter meetings of the Econometric Societ New York, December 1973. I am grateful to Bill Apgar. Jim Ohis, and William Weaton for helpful criticise of an earlier draft, and to Wallace Campbell, Walter Fisher, and Philip Klutznick of the Board reading committee for their comments on the final version of the paper.

A reexamination of migration, economic opportunity, and the quality of life

Abstract: The paper lacks an abstract, but corrects an earlier paper and introduces a more nuanced approach to the role of climate in human location and relocation.

A Modified Conjugate Gradient Algorithm

Abstract: W E PRESENT a modification of the Fletcher-Reeves (FRCG) conjugate gradient algorithm [3]. This modification results in a more stable computational performance than the ones exhibited by either FRCG or PRCG (Polak-Ribiere conjugate gradient algorithm [7, 10]). We attribute this stable behavior to the modification proposed here, which incorporates one of the most important features of the quasi-Newton algorithm into the conjugate gradient procedure (this feature is missing in FRCG and PRCG) without increasing storage requirements. We shall present the motivation for the modification and support these arguments by a sample of encouraging computational results.

Estimating the Effect of Training Programs on Earnings with Longitudinal Data

Abstract: GOVERNMENTAL post-schooling training programs have become a permanent fixture of the U.S. economy in the last decade. These programs are typically advocated for diverse reasons: (1) to reduce inflation by the provision of more skilled workers to alleviate shortages, (2) to reduce unemployment of certain groups, and (3) to reduce poverty by increasing the skills of certain groups. All of these objectives require that training programs increase the earnings of trainees above what they otherwise would be. For example, alleviating shortages by training more highly skilled workers should increase the earnings of these workers. Likewise, the concern for unemployed workers is derived from a concern for the decreased earnings of these workers; and if trainees subsequently suffer less unemployment, their earnings should be higher. Finally, training programs are intended to reduce poverty by increasing the earnings of low income workers. Evaluating the success of training programs is thus inherently a quantitative assessment of the effect of training on trainee earnings.' It is an important process both because it helps to inform discussions of public policy by shedding light on the past value of these programs as investments and because it can provide a means of testing our ability to augment the human capital of certain workers. Although there have been many studies of the effect of post-school classroom training on earnings it is by now rather widely agreed that very little is reliably known about the actual effects of these programs.2 Three main problems account for this state of affairs: (1) the large sample sizes required to detect relatively small anticipated program effects in a variable with such high variance as earnings, (2) the considerable expense required to keep track of trainees over a long enough period of time to measure the full inter-temporal impact of training, and (3) the extreme difficulty of implementing an adequate experimental design so as to obtain a group against which to reliably compare trainees.3 The purpose of this paper is to report on efforts to cope with this third problem using a data collection system that comes some way towards resolving the first two. The basic idea of this data system is to match the program record on each trainee with the trainee's Social Security earnings history. The Social Security Administration maintains a summary year-by-year earnings history for each Social Security account over the period since 1950 that may be used, under the appropriate confidentiality restrictions, for this purpose.4 In this paper I have concentrated on an analysis of all classroom trainees who started training under the Manpower Development and Training Act (MDTA) in the first 3 months of 1964 so as to ensure their having completed training in that year. In choosing to analyze trainees from so early a cohort something is clearly lost. On the one hand, the nature of the participants in these early years was considerably different than in the later years. In particular, programs geared Received for publication February 9, 1977. Revision accepted for publication August 1, 1977. * Princeton University. This research was supported by ASPER, U.S. Department of Labor, but does not represent an official position of the Department of Labor, its agencies, or staff. I would like to thank Gregory Chow, Ronald Ehrenberg, Roger Gordon, Zvi Griliches, George E. Johnson, Nicholas Kiefer, Richard Quandt, and Sherwin Rosen for helpful comments. I also owe a heavy debt to D. Alton Smith for computational and other assistance. 'See Reid (1976), for example, for a clear analysis of how knowledge of these effects is required in order to establish the impact of government training on the black/white wage differential. 2 Surveys of many of these studies may be found in Stromsdorfer (1972) and O'Neill (1973). 3For further discussion of these points see Ashenfelter (1975). 4The idea for using these data to analyze the effectiveness of government training programs is apparently quite an old one, having been suggested by the National Manpower Advisory Committee (U.S. Department of Labor, 1972) to the Secretary of Labor at its first meeting in a letter dated October 10, 1962, the year of passage of the Manpower Development and Training Act. Actual efforts along these lines were ultimately reported by Borus (1967), Commins (1970), Farber (1970), and Prescott and Cooley (1972).

Introduction to Equilibrium Analysis

Abstract: Advanced Textbooks in Economics, Volume 6: Introduction to Equilibrium Analysis: Variations on Themes by Edgeworth and Walras focuses on the approaches developed and instituted by Edgeworth and Walras in the study of equilibrium analysis. The book first underscores exchange economies, core of a game, and large economies. Discussions focus on economies with a continuum of agents, Walras equilibrium, prices and demand, balancedness, and commodity space. The manuscript then ponders on limit theorems for the core and existence of competitive equilibria. Topics include equilibria without convexity of preferences, existence of equilibria for economies with convex preferences, individual demand, emergence of prices, asymptotic equal treatment for most, uniform boundedness of core allocations, and limit theorems for type and replica economies. The publication examines continuous, upper, and lower hemi-continuous correspondences, fixed point theorems, and separation of convex sets. The book is a vital source of data for economists and researchers interested in equilibrium analysis.