Showing papers on "Earnings published in 1970"

The Time Series Behavior of Earnings

Abstract: The time series behavior of earnings is an important area for empirical research because of its implications for related research in several areas of accounting and finance. Although many other examples could be provided, three "accounting" issues immediately come to mind: (1) income smoothing, (2) the relative forecast ability of alternative income measurements, and (3) interim reporting. The hypothesis that management uses discretionary accounting practices to smooth income was first posited by Gordon [21] and later tested by Gordon, Horwitz, and Meyers [22] and by Copeland [14] among others. As stated by Gordon, smoothing involves minimizing the deviations of reported income from some standard, where the standard is defined in terms of normal income. Normal income has never been precisely defined at the conceptual level, but in many cases it appears to have been used in the sense of the expected value of the process at a given point in time. A variety of models could be used, and in fact have been used, to assess the normal or expected value of income for a given period. Each model makes specific assumptions about the process generating income numbers. Any inferences drawn from empirical evidence regarding the existence of income smoothing (or the lack of it) are dependent upon the validity of the assumptions made about the underlying earnings process. Moreover, as shown later in the paper, for certain processes attempts to smooth income can have exactly the opposite effect. Yet the models used in the smoothing literature represent only a narrow range of the possible alternatives, little justification (either a priori or empirical) has been offered in their behalf, nor has there been any direct, rigorous investigation of the underlying nature of the earnings process itself.

Lifetime Earnings and Physicians' Choice of Specialty

Abstract: Deals with a study that explored whether lifetime earnings in various specialties influence the choice of field of physicians. Estimates of lifetime earnings differentials between specialties and general practice; Regression equations measuring the supply response to income. (Abstract copyright EBSCO.)

The effect of education on the earnings of Blacks and Whites

Abstract: T HIS paper is concerned with the effect of schooling and learning on the level of workers' earnings. Individual data obtained from the 1/1000 sample of the 1960 United States Census for the North Central region 1 and information on scholastic achievement obtained from Equality of Educational Opportunity,2 popularly known as the Coleman Report, are used to measure the effect of educational achievement and various other personal characteristics on the earnings of those with twelve or fewer years of schooling. The first section discusses the data and the specification of earnings functions. In the next section it is shown that, for whites, a significant relationship exists between an individual's scholastic achievement and his earnings and that achievement explains more of the variance in earnings than does the number of years in school. The third section presents findings that the effect of education on earnings is less for blacks than for whites and that the black's lower average achievement does not account for the difference in the mean earnings of blacks and whites. The fourth section describes a recursive model of income determination.

Aggregation of Labor Inputs in the Economics of Growth and Planning: Experiments with a Two-Level CES Function

Abstract: Most recent attempts to explore the relationship between education and economic growth have been based, often implicitly, on a measure of the aggregate supply of labor services in the economy. A variety of such measures have been proposed, both in the study of the sources of economic growth, and in models for the efficient allocation of resources in the educational system. The need for an aggregate measure of the supply of labor services arises when we seek to determine the historical growth contribution of changes in labor quantity and quality. Similarly, in the determination of the efficient allocation of resources in the educational system it is ordinarily helpful to have a measure of the aggregate supply of labor services in the economy; for it is by effecting increases in the total supply of labor services that the schooling system makes its primary contribution to future economic growth. In both the study of the sources of growth and educational planning, the measure of the aggregate supply of labor services must be constructed for periods of time quite removed from the present. We ordinarily do not have adequate time-series data on the relative earnings of labor by schooling category which would be required to construct the labor supply index in a historical sources-of-growth analysis. Similarly, we have no information on the likely movement of relative earnings of various types

Changes in Labor Market Discrimination Over Time.

Abstract: This article offers some evidence on what effect changes in discriminatory practices in labor markets may have had on the relative earnings of black workers. Interest focuses on estimating the extent of any change in the relative earnings of nonwhite workers which may be attributed to changes in discrimination in the postwar period and testing hypotheses about the effect which cyclical swings in aggregate labor market activity may have had on discrimination. The results suggest that there was little change in the extent of discrimination against black men over the period 1950 to 1966, that there was a significant reduction in the extent of discrimination against black women over this period, and that cyclical swings in aggregate labor market activity had little effect on the extent of discrimination.

Some Determinants of the Variation in Earnings for College Men

Abstract: The influences of several factors on the earnings of men with college degrees were measured using multiple regression with dummy variables. Earnings were found to be positively related to the rank of the colleges where degrees were received. For the holders of bachelor's degrees, engineering, the physical sciences, and business and commerce offer the greatest monetary rewards. For those with higher degrees, health fields and law offer the greatest returns. After accounting for college quality, age, field of specialization, and level of degree, nonwhites were found to have significantly lower average earnings than whites. The difference at each degree level is over $2,400 per year. Other factors tend to reinforce the lower earnings attributable to being nonwhite. Several background factors were introduced into the analysis, but they did not appear to be very important in determining the earnings of college men.

Amortization of Advertising Expenditures in the Financial Statements

Abstract: In 1967, the national expenditure on advertising in the United States amounted to 16.8 billion dollars or more than 2% of GNP and 15% of gross private domestic investment (of reproducible assets). The rate of increase of nominal advertising expenditures during the last 30 years has been about the same as that of the nominal GNP.' In 1962, the 558 largest firms in the U.S. spent an average of 1.9% of their sales on advertising, with some firms spending as much as 44.5% and others as little as .01%. Industry averages varied from 13.07% of sales in drugs to .16% in aircraft and parts.2 The magnitude of these figures for some firms suggests that the accounting treatment of advertising expenditures may significantly affect reports of earnings and financial position. The dominant accounting practice is to charge advertising expenditures to current expenses, producing an implicit rate of amortization of 100%. This practice is based on tax benefit considerations, conservatism, and a lack of other acceptable and nonarbitrary systems of amortization. The accounting literature usually considers advertising assets as part of the general category of goodwill, i.e., as an undefined residual. There have been a number of suggestions as to the origin of this intangible asset and how to account for it. A common feature of many of these suggestions is the absence of sound a priori or empirical justifications for

The Distribution of Earnings in New Zealand

Abstract: Changes in the distribution of individual earnings between 1984 and 1995 are examined using data from the Household Economic Survey. Several dimensions of changes in the earnings structure are considered, including measures of aggregate earnings inequality, the gender earnings gap and shifts in relative earnings by level of educational attainment. Changes in the variance of earnings are decomposed to identify more clearly the source of the tendencies towards and against greater inequality. Evidence is found of a rise in hourly earnings inequality among males over the decade. However, the effects of this trend on the total earnings distribution were offset by a rise in the female share of employment and a narrowing of the gap between male and female average hourly earnings.

Partial Benefit Schedules in Unemployment Insurance: Their Effect on Work Incentive.

Abstract: If the earnings of otherwise qualified workers fall below certain specified levels, these workers are paid unemployment insurance benefits, although in smaller amounts than when they are fully unemployed State-to-state variation in these partial benefit schedules is studied here for the differential effects on work behavior The hypothesis is a rational, economic one-that workers adjust their part-time work to serve their interests under these schedules Data from Wisconsin confirm this view, at least under conditions where a small increment in earnings brings a sudden drop in income from benefits and earnings combined The policy implication is that minimizing work disincentive, as well as the criteria of simplicity and administrative convenience, should figure in the construction of partial benefit schedules In particular, the schedules should be rewritten to avoid a sudden drop in the worker's income during his transition from full unemployment to full employment The schedules should allow higher earnings than at present so as to permit gradual reduction in benefits as earnings increase and to keep rising income correlated with greater effort

Estimating Shadow Rates of Return to Investment in Education.

Abstract: Internal rates of return to investment in education are estimated on the basis of the marginal social product of labor instead of the observed earnings. A comparison of the shadow to the actual rates of return to investment in labor skills suggested that privately advantageous decisions with respect to investment in human capital may be very inefficient when assessed in social terms. Discrete substitution possibilities between labor skills introduced in a fixed coefficients production function gave considerably more elastic marginal productivity curves for labor, as compared to the no-substitution version of the model. The proposed methodology is illustrated by an empirical application referring to Greece for the period 1954 to 1965, and the implications of the findings are analyzed in terms of educational planning.

The Valuation of Public Utility Equities

Abstract: This paper reports on a cross-sectional valuation study of public utility equities during the year-end periods from 1961 through 1967. The ratios of market prices to earnings are related to such factors as anticipated earnings growth, dividend payout, and various proxy variables designed to measure the risk or quality of the earnings stream. The distinguishing feature of the study is that it uses the actual expectations of security analysts for variables that heretofore had to be estimated from historical data alone. The results of the regressions using expectations data are contrasted with results relying on historical data. Results of alternative risk proxies are compared, and the stability and predictive power of the model over time are examined.

The Effect of Discrimination on Earnings: Evidence from Military Test Score Results.

Abstract: The test score performance of a large sample of youth on the Armed Forces Qualification Test, cross-classified by schooling and race, was used to estimate the relative importance of current and past discrimination in explaining 1960 racial differentials in earnings. Our results indicate that, for schooling levels below college graduate, between 50 and 55 percent of the differentials were attributable to (then) current labor market discrimination and the remaining 50 to 45 percent to the lagged effect of past discrimination, both market and nonmarket. Since these results must be viewed in the context of the imperfect statistical procedure that produced them, a detailed discussion of biases is presented.

Earnings Heterogeneity and Job Matching - Evidence from Linked Employer-Employee Data

Abstract: This paper uses data from Statistics New Zealand’s linked Employer-Employee Database (LEED) over the six-year period April 1999 – March 2005 to derive and analyse estimates of two-way worker and from fixed efforts components of job earnings rates. The fixed effects estimates reflect the portable earnings premium that each worker receives in whichever firm they work for, and the time-invariant premium that each firm pays to all the workers in employs. We focus on three issues. First, how much of the variation in job earnings rates is attributable to observable worker demographic factors (age and gender), unobserved worker effects and unobserved firm effects? Second, how much compositional change occurred during this period of substantial employment growth? Third, what is the aggregate pattern of sorting of workers and firms across jobs?

Opportunity costs and models of schooling in the nineteenth century

Abstract: The study of schooling in the nineteenth century United States lends itself well to a discussion of many of the issues involved in the economics of education. The two main components of schooling costs are foregone earnings (opportunity costs of students while attending school) and direct resource costs (operating costs and implicit interest and depreciation). The first section of this paper will look at the problems of estimating foregone earnings. The proper definition and estimation of these reveals the necessity of studying urban and rural areas separately, particularly in the nineteenth century United States. Next a summary of the results of state-by-state estimates of school costs is presented. Then a model to explain the differences among states in the amount of education will be developed and empirical results obtained from testing the model will be discussed. The nineteenth century is a particularly good period in which to study factors affecting differences in education across states. The state-by-state differences were substantial, and when studying state observations, we can feel confident that these observations are from distinct, independent units. The population was less mobile than in more recent times, in terms of both ability to move to different states or regions, and access to information about conditions elsewhere. Also very important is the fact that there was much less intervention by the Federal Government into state education

Have computers changed the new zealand wage structure? evidence from data on training

Abstract: One of the reasons why inequality in earnings may have widened in recent years is due to technological changes, which include the wider use of computers within the workplace. Partly as a result, the current Government is keen on encouraging people to obtain the computer skills required to enable them to be part of the modern economy. A number of international studies have shown that workers who use a computer at work earn more than workers who do not. While large-scale survey data on wages and computer use in New Zealand are unavailable it is possible to examine the effect on wages of receiving computer-related training. The results from the 1996 Education and Training Survey suggest that there is a significant effect on wages for those workers who received some form of computer training. These effects persist even when controlling for occupation and industry, and they exceed the wage effects of training in other subjects.

Work Patterns After Paid Parental Leave

Abstract: This paper uses longitudinal data from the Linked Employer-Employee Dataset to describe the employment and earnings patterns of people who first received paid parental leave between 1 July 2002 and 30 June 2005. Recipients were observed for at least 36 months before starting leave and at least 18 months afterwards. We focused on whether and when recipients returned to work, whether recipients returned to the same employer or not, and changes in earnings before and after taking leave. We also explored associations between prior earnings, the likelihood of returning to work, experiencing a change in earing’s and starting a new employment relationship. We found that -10 percent of recipients were working six months after starting parental leave, and nearly 70 percent were working 13- 18 months later. Qverall three-quarters of recipients returned to work within 12 months of starting parental leave, and two-thirds of those returned to work after taking six months leave or less. Many people reduced their earnings after returning to work, with around one-third earning considerably less than before. Most people who returned to worked within 12 months of starting leave returned to the same employer, while one-fifth started a new employment relationship. Those who did not return to the same employer, but started a new job, were much more likely to have reduced their earnings. Until the majority of recipients who returned to work changed their working arrangements, most commonly by reducing their earnings, or in some cases starting a new job, around one-fifth were working for the same employer and had similar earnings 12-18 months after starting parental leave.

Direct Marginal Productivity of College Education in Relation to College Aptitude of Students and Production Costs of Institutions.

Abstract: By combining a variety of data sources, the authors arrive at cautious estimates of expected earnings flows and their present values for students of different college aptitude entering institutions of different "quality." When linked to estimates of alternative earnings and production costs of college education, these figures provide marginal decision criteria for the reallocation (or additional allocation) of resources in college education. A rough policy implication of the benefit-cost ratios is that additional college places should go in preference to students of higher college aptitude and should be created in low-cost institutions. One of the more surprising results is that we apparently have gone too far in the policy, or market outcome, which consists of placing high aptitude students in high quality colleges and lower aptitude students in inferior institutions. These conclusions hold as long as increases in measured national product are the only objective and college expansion is controlled by the amount of funds made available for it. New conclusions emerge if the drag on expansion is associated with tuition and student financial aid policies and, again, if equalization of opportunities enters as an additional objective.

Response Error and Questioning Technique in Surveys of Earnings Information

Abstract: This article compares two questioning techniques for securing earnings information. Two broad earnings questions and detailed work history information were asked of 300 residents of low income neighborhoods. Systematic differences, based on the level of earnings, the age and the number of jobs of the respondents, were found between the estimates from the two techniques. When the estimates were compared with employer earnings data, it was found that for surveys dealing primarily with urban, low income neighborhoods, the broad question approach was as accurate as the work history method, and therefore, was preferable because of its lower cost and greater ease of use. For surveys of higher income groups, however, the work history approach provided more accurate earnings estimates. Here, the researcher will have to weigh the improved accuracy of the work history against its disadvantages. The relative response errors using the two approaches are presented to facilitate this decision.

Income Maintenance and the Rural Poor: An Experimental Approach

Abstract: INCREASING CONCERN about the exclusivity, inequity, and inadequacy of the welfare structure has stimulated a search for alternative income maintenance schemes to augment or replace current public assistance programs. One of these alternatives is the negative income tax. The desirability of adopting a nationwide negative income tax depends, among other things, upon (1) the cost of the program and (2) its effect upon the behavior and attitudes of the poor. While some answers can be provided from our existing state of knowledge about these issues, others cannot. The cost of any specific negative income tax plan can be quickly calculated if we assume no change in earned income of the recipients. The problem is in the assumption-there is little evidence to support or refute the assumption that individuals would not alter their work habits and consequently their earnings if a negative income tax were introduced. Obviously, if the work effort and hence the earned income of recipients declined, the cost of the program would rise. Experimentation seems desirable in order to get more information about this issue. Besides the cost aspect, it is important to evaluate a negative income tax program in terms of possible changes in the attitudes and behavior of the poor upon receiving transfer payments. Will they become more or less dependent on the government? Will they spend the money "wisely" or "foolishly"? Will their children do better in school? Will there be more or less family separation? Will those receiving payments gain more or less self-respect and self-reliance? Answers to these and similar questions are necessary to fully

Exploring the Gap: An Expliration of the Difference in INcome Received from Wages and Salaries by Women and Men in Full-Time Employment

Abstract: The difference between the income received by employed women and men in New Zealand is widely recognised. Often referred to as the "gender wage gap"1 , this income differential has prevailed despite significant improvements in the past 50 years including changes in society's attitudes towards women in employment and increasing numbers of women in paid work. What then can this difference be attributed to? Is it structural factors such as age and occupation, or are there other un-measurable factors at work? Confining itself to the wages and salaries of women and men in full-time employment, this paper presents some of the results of recent analysis conducted by Statistics New Zealand's Analytical Support Division. Using data from the 1997 New Zealand Income Survey and several different multivariate techniques, this analysis attempts to explore some of the factors behind this "earnings gap". Originally conducted for an upcoming Statistics New Zealand analytical publication, this research first explores the factors responsible for prescribing the level of earnings for all people then applies these results in a process of standardisation. The results leave much scope for both discussion and a continuation of analysis.

Price-Earnings Ratio and Corporate Growth

Abstract: ment management and analysis as it is the definition of the value of a security. This was recognized during the 1930's by the pioneering work of Guild and Williams and forcefully brought to the attention of the investment community during the late 1950's by the numerous articles of Molodovsky and others.' In fact, the basic formulas in this article have already been presented in the pages of this and other journals; the main objective of this article being a iogical exposition of the factors to be weighed in developing an appropriate valuation model for each individual stock that is considered. A variety of approaches is possible and unfortunately some writers have emphasized their particular pet formulas rather than presenting the basic forces at work in any present value formula. While some security analysts go through the actual process of discounting forecasted earnings (dividends) to a present value for each stock that they review, the majority of analysts do so infrequently. Yet, these analysts implicitly go through the same process when they associate the fundamental or intrinsic value of a stock with the price-earnings ratio. Therefore, the purpose of this article is twofold: one, to explicitly develop the relationship between the present value formula and the more commonly used price-earnings ratio; two, to discuss the significance of the price-earnings ratio for investment decisions.

A Benefit-Cost Analysis of the Neighborhood Youth Corps: The Out-of-School Program in Indiana.

Abstract: Earnings of 604 participants in Neighborhood Youth Corps programs in five urban areas of Indiana and of 166 eligible nonparticipants (the control group) were examined in this study. On the basis of cost data and regression analyses of 1967 earnings, the following conclusions were reached: (1) The earnings gain as a result of NYC participation is substantial for males and high benefit-cost ratios are obtained by society. Thus the NYC program is much more than an "aging vat" for male participants. (2) Female participants, however, increase their post-program earnings very little and their benefit-cost ratios for society are almost always below one. (3) High school dropouts benefit more from the program than do graduates from high school. Therefore the program should continue to serve dropouts primarily. (4) The longer the participants remain in the NYC, the greater are the increases in post-program earnings. It appears, therefore, that if society wishes to increase the earnings of individual participants, the optimum strategy is to encourage early dropouts to remain in the program as long as possible.