Showing papers on "Earnings published in 1972"

Leadership and organizational performance: a study of large corporations

Abstract: Leadership influence in large complex organizations, though commonly assumed to be greatly significant, is normally not studied in terms of the variance accounted for in organizational performance. The leadership effect is viewed here as a product of an organization's environmental constraints and its leadership variance. Based on sales, earnings, and profit margin data for 167 large corporations over twenty years, we compare the impact of leadership changes with yearly, industry, and company influences. Industry and company account for far more of the variance in two performance variables than does leadership, but not for profit margins after lag effects are considered. It appears that the importance of external restrictions, and hence the maximum possible leadership influence, may range widely between specific performance criteria. The second phase of the study considers industry characteristics that appear to be associated with high and low leadership influences. These results suggest a perspective on organization performance that may be applied to the leadership influence in other large organizations and political bodies, like cities, states and nations.

Learning and Experience in the Labor Market.

Abstract: This paper models the role of the labor market in the transmission and acquisition of skills and knowledge, based on the hypothesis that indivduals learn from their working experiences. The problem is cast in terms of an implicit market for learning opportunities that is dual to the market for jobs. Optimum choices in this setting have implications for the evolution of earnings and occupational patterns over the workers' lifetimes and provide the basis for a theory of occupational mobility. Several implications of the model, including those for occupational discrimination against minorities, are also discussed.

Schooling and Inequality from Generation to Generation

Abstract: For at least half a century schooling has been the chosen instrument of American social reformers. More and better schooling has been seen as an antidote to the brutalization of industrial life. More equal access to schooling has been sought as a powerful vehicle for the equalization of economic opportunity, the redistribution of income, and the elimination of poverty. Until recently, the choice of education as the instrument of those who sought greater equality in the United States has not been based on any direct evidence of its efficacy in bringing higher incomes to the children of the poor. Rather, the popularity of educational reform among liberals and progressives stemmed from more political considerations: educational equalization seemed to offer a strategy for achieving the greater social equality that was politically viable. More equal education, it was confidently asserted, could achieve significantly greater equality of economic opportunity and incomes without challenging the basic economic institutions of society and without requiring any major redistribution of capital. Yet over the past decade, important empirical support has been forthcoming for those who see education as-to quote Horace Mann-"the great equalizer." First, the possibility of more equal schooling achieving a more equal distribution of income seemed to be confirmed by studies of the determinants of individual earnings.' The earnings functions estimated in these studies demonstrated a strong relationship between years of school-

The Labour Force

Abstract: Manpower statistics cover a wide field.1 This chapter concentrates on those aspects which are of particular importance to sociologists: the structure of the occupied population, unemployment, hours of work, wage rates and earnings, the cost-of-living and retail prices, trade union membership, and industrial disputes. Statistics on other aspects of the labour force, such as mobility and turnover and vacancies in industry, are not discussed here partly because of lack of space but mainly because of lack of adequate historical data. The emphasis in the following discussion is generally upon the strengths and weaknesses of the various series rather than upon the trends which they reveal.

Investor Evaluation of Accounting Information: Some Empirical Evidence

Abstract: ing from Industry Effects As mentioned before, there were some industries in which several firms switched back from accelerated to straight-line depreciation in the same year. Professor Ray Ball pointed out that such coinicidenital action might have confounded the results. Since the sample size of the depreciation group is relatively small (seventy-one) and since a small but significant proportion of a security's price variation can be explained by an industry f actor,32 he argued correctly that the ability of cross-sectional averaging to eliminate factors other than the accounting change from the "abnormal return" may have been hampered. To make a rough measure of the possible bias introduced, we recomputed the abnormal returns for the depreciation group after taking out the industry effect for the four most heavily represented industries33 in the sample. This 32. The first and definitive study of the industry factor was by Benjamin F. King, "Market and Industry Factors in Stock Price Behavior," Journal of Businiess 39, suppl. (January 1966): 139-90. 33. These industries were steels, nine firms; papers, eight firms; cement, four firms; and glass and metal containers, three firms; these comprised a total of twenty-four of the seventy-one firms in the sample. No other industry was represented by more than two firms. This content downloaded from 207.46.13.128 on Tue, 06 Sep 2016 05:43:44 UTC All use subject to http://about.jstor.org/terms 245 Evaluation of Accounting Information was accomplished by adding a third explanatory variable, the return on an industry index,34 to regression model (2). Then the abnormal return was calculated net of this industry index return (and net of the total market return and the interest rate, too). The results can scarcely be distinguished from those reported in figure 1, Panel C, and in table B1, Panel C, for depreciation changes where the effect of heavily represented industries was not eliminated.35 VI. SUMMARY Earnings manipulation may be fun, but its profitability is doubtful. We have had difficulty discerning any statistically significant effect that it has had on security prices. Relying strictly on averages, however, one can conclude that security prices increase around the date when a firm announces earnings inflated by an accounting change. The effect appears to be temporary, and, certainly by the subsequent quarterly report, the price has resumed a level appropriate to the true economic status of the firm. In the present sample, firms that manipulated earnings seem to have been performing poorly. If this is generally true, one would predict that earnings manipulation, once discovered, is likely to have a depressing effect on market price because it conveys an unfavorable management view of a firm's economic condition. APPENDIX A ESTIMATORS FOR SYMMETRIC STABLE DISTRIBUTION Let x be a random variable conforming to a symmetric stable distribution function dF(x; a, 8, s). Let A A . . . A xi 1? x2 ..?XN 34. The industry index return was defined by Ri t = loge [INDj,t/INDjt_1] where 1ND, t is the Standard and Poor index for industry i at time t. It might have been better to construct an industry index that is orthogonal to the market index (see King, n. 32 above). However, the uniformly significant industry and total market coefficients in all twenty-four cases where the industry factor was included led us to believe that multicollinearity was not a serious problem. In the twenty-four regressions, the lowest t-ratio associated with the industry effect was 1.8 and only three were below 3.0. Among the t-ratios associated with the total market return, nineteen of twenty-four were above 3.0. 35. The patterns are almost identical. The only difference is a small downward shift in the abnormal returns from weeks 10 through 60. For example, the cumulative abnormal returns (Ut's) were previously -5.058 percent in week 52 and -0.31 percent in week 38 (Ut reached a relative peak in week 38). After we abstracted from the four industries, these cumulative abnormal returns were U52 = -6.00 and U38 = -1.59 percent. If anything, this strengthens our conclusion that switching back to straight-line depreciation has little permanent effect. In addition, the temporary effect is lowered. Previously, the cumulative abnormal return increased 2.24 percent from week 28 to week 38. After we netted out the industry return; this temporary increase was only 1.85 percent. This content downloaded from 207.46.13.128 on Tue, 06 Sep 2016 05:43:44 UTC All use subject to http://about.jstor.org/terms 246 The Journal of Business be the order statistics of a random sample of size N drawn from dF(x). The parameters are a, the characteristic exponent; 6, the location; and s, the scale. We examine the problem of estimating a, 6, and s from the x's. An Estimator for s Any random variable can be standardized by the linear operation

Interperiod tax allocation, earning expectations, and the behavior of security prices

Abstract: T HE measurement of earnings has been of continuing concern to accountants and to users of accounting data. Because there is an unlimited number of reporting methods and because the process of data collection, storage, reporting, and analysis is not a costless activity, the relative merit of alternative income measurement rules is a topic of importance to accounting research. This paper presents some preliminary findings regarding the observed association between security prices and alternative income numbers, where the primary focus is upon the issue of interperiod tax allocation. The interperiod tax allocation controversy is an attractive research topic for several reasons. (1) It is virtually impossible to resolve the controversy with traditional sorts of arguments.1 This is also true of many other measurement controversies in accounting, and it is particuarly obvious here. (2) The controversy affects a large number of firms. Many other controversies tend to be of concern in only a few industries (e.g., research and development, advertising and long-term leases), while most firms have a deferred tax account. (3) Although deferral is required (APB Opinion No. 11), nondeferral income can be easily estimated from the financial statements. Such an adjustment would be extremely difficult and/or costly in other controversies (e.g., LIFO versus FIFO). Hence, the issue of differences in visibility among alternative measures is not nearly as serious here as it is for some measurement issues. The association between the alternative

Earnings Profile: Ability and Schooling

Abstract: This study examines the role played by ability in determining earnings differentials along both the earnings profile for given levels of schooling attainment and across schooling levels. Information about these relationships is important for determining more precisely the quantitative contribution of schooling to earnings as well as the "technology" by which schooling increases earnings. The net earnings increment from schooling has been subject to some uncertainty because most studies have lacked data on ability. If people of higher ability have the capacity to earn more (at a given schooling level) and if they also tend, significantly, to acquire more schooling than others, the failure to take ability differences explicitly into account has two consequences: it leads one to overstate the gross contribution of schooling to earnings and to understate the opportunity cost of foregone earnings to high-ability persons who attain high levels of schooling. There is a well-documented, strong, positive relationship between earnings and schooling attainment, and the rising demand for (and expansion of) formal schooling seems to be significantly motivated by the expectation of higher earnings. However, there is little decisive evidence,

The Informational Content of Quarterly Earnings: An Extension and Some Further Evidence

Abstract: The usefulness of quarterly earnings per share (EPS) data is subject to some debate.' Our intent in this paper is to extend empirical knowledge of current reporting in one sense. While we adopt a different approach from the previous studies, our results have implications regarding them, and for future research.2 Previous empirical research addresses the contribution of quarterly EPS to predictions of (1) annual EPS3 or (2) ex post rates of return on common stocks for oneto twelve-year horizons.4 The results appear anomalous.5 We chose a different empirical design, based upon a different though still restricted, view of informational content.

Earnings Estimates and the Accuracy of Expectational Data

Abstract: This paper examines the accuracy of forecasts produced by mechanical forecasting techniques and three groups of analysts. The nine mechanical forecasting techniques are variations of exponentially weighted moving averages, naive models, simple moving averages, and regressions. One-, two-and three-year forecasts are used to evaluate these techniques. The mechanical techniques exhibit statistically significant differences in their ability to forecast earnings per share, with the exponentially weighted moving averages producing the best forecasts. One-year forecasts produced by the best of the mechanical forecasting techniques were compared to the corresponding analysts' projections. No statistically significant difference could be discerned.

The Correlation Between Education and Earnings: What Does It Signify?.

Abstract: This paper examines three alternative explanation of the basic finding that amounts of education and personal earnings are positively correlated in some 30 countries studied. Arbitrarily labelled (1) the “economic”, (2) the “sociological” and (3) the “psychological” explanation, (1) argues that better-educated people earn more because education imparts vocationally useful skills that are in scarce supply; (2) propounds that they do so either because length of schooling is itself correlated with social class origins or because education disseminates definite social values which are prized by the ruling elite of a society; (3) contends that education merely selects people in accordance with their native abilities and, obviously, abler people earn more than less able ones. The question is asked: Are these really conflicting explanations? It is concluded that a proper appreciation of the economic explanation in fact assimilates the other two. In a perfectly competitive labour market, earnings will necessarily reflect the relative scarcity of “vocationally useful skills”, and the vocational skills must include the possession of values and drives appropriate to an industrial environment. In the absence of competitive pressures, however, earnings may reflect purely conventional hiring practices. In the final analysis, therefore, the question posed by the paper highes on the strength of competitive forces in the labour markets. The question whether education contributes to economic growth turns out likewise to depend on the presence or absence of competitive labour markets. An analysis is made of the internal logic of the three explanations. Also examined is the small quantity of direct evidence available on the link between education and the productivity of workers. An attempt is made to view familiar questions from a new angle and to relate the education-causes-growth debate to contentious issues in the field of educational planning.

Labour in the South African gold mines 1911-1969

Abstract: List of appendices List of tables List of plates List of figures Preface Acknowledgements Author's note 1. Foundations 2. Gold mining 3. Earnings 4. Supply and demand 5. Human Capital 6. Interaction of forces 7. The economics of migrant labour 8. Implications Appendixes Bibliography Index.

An Empirical Investigation of NYSE Volume and Price Reactions to the Announcement of Quarterly Earnings

Abstract: A number of papers have appeared recently describing studies dealing with the usefulness of interim reports. Several of these evaluated the predictability of interim reports vis-A-vis the annual income number.' Others dealt with the use of quarterly earnings figures as filter techniques in selecting stocks which produced higher than average returns over a following six-month time span. Two studies relied on questionnaires mailed to members of analysts' organizations in an effort to determine how analysts use interim statements.8 The results indicated that respond-

The Effects of Human Asset Statements on the Investment Decision: An Experiment

Abstract: Under current accounting practices, the costs of recruiting, hiring, training, familiarization and development of personnel are treated as expenses of the period in which they are incurred. Following such treatment, the income statement reflects less profit in the period in which a successful personnel training or development program takes place. On the other hand, the future improvements in earnings resulting from such programs are reflected in the future income statements as cost free. Furthermore, the position statement does not reflect any portion of the above costs as unexpired, that is, as assets possessing future service potential. The problem is essentially one of proper matching of revenues and related expenses. The R. G. Barry Corporation of Columbus, Ohio, was the first to install a human resource accounting system and to include unaudited financial statements incorporating human assets in its annual reports.' Concerned with human resource accounting from the managerial point of view, Brummet, Flamholtz and Pyle state:2

The effect of Schistosoma mansoni infection of the productivity of cane cutters on a sugar estate in Tanzania.

Abstract: In an attempt to justify future snail control on an irrigated sugar estate in Tanzania, the effects of Schistosoma mansoni infection on the productivity of apparently healthy cane cutters were investigated. The bonus earnings of cane cutters who were found to be infected with S. mansoni were compared, retrospectively, with earnings of uninfected cane cutters during the years 1968-69. For one 6-month period a more detailed study was made to correlate bonus earnings with actual output in tons of cane cut. It was found that in the four 6-month periods the mean bonus earnings of the uninfected cane cutters exceeded the mean bonus earnings of the infected men by 11.0%, 11.4%, 6.0%, and 13.7%, respectively. In all except the third period these differences were statistically significant. After treatment for S. mansoni infection, the workers were able to improve their earnings relative to both infected and uninfected workers. In a more detailed study of some of the workers during the third 6-month period, it was discovered that a 4% difference in bonus earnings represented a 1% difference in output. Taking into account the variations of bonus earnings it was estimated that the overall difference in productivity between infected and uninfected workers was 3-5%.

A Geometric Treatment of Averch-Johnson's Behavior of the Firm Model: Reply

Abstract: Robert Stonebraker argues that a model of the regulated firm should have management trying to maximize stockholders' total return: dividends (presumed to be earnings) plus capital gain. This leads one to the capital markets and to theories involving difficultto-measure expectations and behavior of both investors and regulators. Regardless of theoretical assumptions about the capital markets and what regulators and managers should do, one observes that they pay great attention to rate of return, a quantity that is relatively easily determined and monitored. It would seem premature to dismiss rate of return as "a rather meaningless concept of little value." If one accepts Stonebraker's model, it is clearly untenable to make his assumption that the firm is guaranteed earnings at an allowed rate f, greater than the cost of capital, i. To conclude that such a firm will have a tendency to expand because it will make AK(f-idfd) in equity earnings on AK is analogous to concluding that the profitmaximizing firm will expand because it is guaranteed profits of Arr= (f-i)AK on AK. In either case the firm would expand indefinitely (indeed one would assume that the regulators would eventually setf=i to bring the firm's return in line with the opportunity cost of capital). The point is that the constraint off is merely an upper bound and not a guaranteed earnings rate. Earnings possibilities as well as the constraint must be considered to make resource allocation conclusions. To consider these possibilities in Stonebraker's model, one would write the firm's E/S maximand as

Rates of Return to Investment in Education around the World

Abstract: AFTER THE human capital revolution in the economic thought of the sixties, it is no longer taboo to talk about the economic value of education. The acquisition of education and skills by an individual tends to increase his productivity and hence his earnings. Since resources devoted to schooling have alternative uses, however, it is natural that many attempts have been made to measure the relationship between the costs of education and its economic benefits. Such analyses do not deny the sociological and cultural values attributed to education, rather they attempt to complement them. After a decade of work in the economics of education directed to quantifying the cost-benefit relationship of education in many countries, a systematic presentation of the results is in order. The main purpose of this paper is to report some evidence on the economic returns to investment in education in a large number of countries. A further aim is to attempt to trace any patterns that might exist between the returns to education and other socio-economic characteristics of the countries

Income-Smoothing Behavior under Selected Stochastic Processes

Abstract: I This paper attempts to provide a framework for clarifying and testing a version of the "income-smoothing" hypothesis. This hypothesis has been variously expressed in terms of income levels, rates of change in income, and rates of return, inter alia.1 In general, each version of the hypothesis is concerned with the extent to which managers may attempt to affect the volatility of a series of reported accounting numbers (or, in the case of rates of return, a series of relationships among accounting numbers) via selections and applications of accounting procedures. The alleged motivation for this behavior is a desire to reduce the extent to which "bad times" and-at the other extreme-"good times" are revealed by reported accounting numbers. It is suggested by some that a "smoothed" series of accounting numbers, particularly income numbers, will enhance the value of a firm. A typical statement of this argument was provided by Hepworth: "Certainly the owners and creditors of an enterprise will feel more confident toward a corporate management which is able to report stable earnings than if considerable fluctuation of reported earnings exists."2

Cost-Benefit Analysis in Education: A Case Study of Kenya

Abstract: This study presents a cost-benefit approach to education that attempts to take into account a number of considerations left aside by previous studies. It concentrates on the income effects of education and provides a framework for an economic evaluation. The data derive from private and social rates of return to investment in education, wage employment alternatives for the future, and rates of return to increasing different kinds of expenditures per pupil. While the data from the study apply to the Kenyan case only, the conceptual framework and analytical methods employed in this exercise have wider applicability; it is on these concepts and methods rather than on the particular situation in one country that attention is focused. The study attempts to meet the usual objections raised in applying a cost-benefit approach to expenditure on a social product such as education. In addition to the analysis of the overall rates of return, the study analyzes the influences of educational policy variables, such as size of school, pupil-teacher ratio, teachers' salaries per pupil, on students' scores on the three major examinations. It then assesses the returns, in terms of additional earnings, to increased inputs into the school system.

The Predictive Content of Interim Reports- A Time Series Analysis

Abstract: The importance of interim reports to investors seems beyond dispute. Summaries of these reports appear in most of the daily newspapers and on stock exchange wire services, and security analysts reportedly incorporate this information into forecasts of yearly earnings.' In addition, the announcement by a firm of quarterly earnings is often accompanied by substantial price changes in the stock of that firm.2 Given this preference for interim reports, the apparent lack of interest in them by the accounting profession is both surprising and difficult to explain. Accountants sometimes justify their rejection of interim reports on the basis that the results are often so inaccurate as to be meaningless. Nevertheless, investors use interim reports, apparently because more information is at least as good as less. Supposition is necessary in explaining the behavior of either group since there is almost no empirical research with which to judge the quality of interim reports vis-a-vis annual reports. However, Green and Segall have provided evidence on the predictive power of first

Soviet Wages: Changes in Structure and Administration since 1956

Abstract: During the past fifteen years, a unique wage structure emphasizing consistency and equity has developed in the USSR. "Soviet Wages" is the only detailed description and analysis of contemporary earnings determination for Soviet industrial workers. The study focuses on the period since 1956, during which the entire wage system has undergone a major restructuring.In contrast to "market forces," which are usually taken to be the main determinant of wage differentiation in Western economies, this book demonstrates how explicit quantifiable standards have been utilized for setting wages in the USSR. The resultant pattern of earnings has shown an increasing internal consistency during recent years. Skill differentials, differentials for working conditions, incentive payments, and the impact of recent reforms in economic administration receive especially detailed attention.From the innumerable scattered sources in this difficult area, Professor Kirsch has assembled a clear picture of the Soviet principles of wage administration and resulting wage differentials. He answers such central questions as: What principles of wage administration and job evaluation determine the indicated differentials? How have these changed with wage reform? What are the results in terms of the actual statistical differentials?A concluding chapter evaluates Soviet wage setting within the framework for western labor economics, while brief appendixes discuss measurement of inter-industry differentials and aggregate measures of earnings inequality.

Some Aspects of the Aggregation Problem in the Dividend-Earnings Relationship

Abstract: Four models of the relationship between dividends and earnings are estimated to study the effects of different types of aggregation. The data indicate that the adjustment process is probably discrete. One of the models implies a discrete adjustment process, while the other three imply a continuous process. All of the models are estimated using two different but equally reasonable proxies for normal earnings. Temporal and cross-sectional aggregation, and changes in assumptions about the adjustment process, affect the estimated speeds of adjustment more than the target payout ratios. Temporal aggregation produces a bigger information loss than aggregation across firms.

Consequences of Plant Closure.

Abstract: Pre- and post-shutdown annual earnings reported to the Social Security Administration are used to measure the economic impact of plant closure on the income of workers exercising different vocational choices. Workers who sought new jobs in the local labor market suffered substantial reductions in post-shutdown annual earnings. With the influence of age, skill, sex, seniority, education, race, and pre-shutdown earnings held constant, short-term training did not improve the situation significantly. Workers who elected the interplant transfer option increased their annual earnings by more than $2,000, suggesting that government support of measures to increase the use of interplant transfers should be considered.

Corporate Earnings and Tax Shifting in U.S. Manufacturing, 1930-1968

Abstract: FEW economic magnitudes have commanded as much attention from economists as the earnings of capital. Despite this emphasis, it is interesting that there exists scant empirical evidence concerning the determinants of capital income over the relatively long run. This is rather surprising since the short-term behavior of profits has come under considerable scrutiny by econometric model builders. Existing evidence concerning long-run behavior stems primarily from recent studies of the incidence of the corporation income tax.' In order to isolate the effects of the tax, investigators have had to identify and eliminate the effects of the nontax determinants of profit. As would be expected, conclusions regarding tax incidence have turned out to be extremely sensitive to the underlying model of profit. It is the purpose of this paper to ascertain the extent to which a model based upon standard competitive behavior is capable of explaining the time path of corporation earnings over a period of almost forty years. Since most incidence studies have been based upon models which explicitly or implicitly assume nonprofit maximizing behavior, such a study will provide a useful extension of the empirical evidence concerning the behavior of profit as well as a test of the relative efficacy of standard economic theory. Furthermore, unlike existing studies, the model will be tested in such a way that the contribution of such determinants of profit as technological change, capital intensity and aggregate demand can be isolated. Since indirect evidence on such factors exists from studies of aggregate production functions and business cycle behavior, the plausibility of the estimates can be determined. Finally, the model can be used to provide additional evidence concerning the shifting of the corporation income tax. If the model is specified correctly, the introduction of a corporation income tax variable into the estimating equation should have little effect. In what follows, a model of corporation earnings is developed and tested for the manufacturing sector of the United States economy for the period 1930-1968. The model is based upon the hypothesis that the return to capital depends upon its marginal productivity and short-run fluctuations in output. It is found that the model does quite well in explaining the time path of manufacturing earnings over the sample period; all coefficients are statistically significant, have the right sign, and are of reasonable magnitude. These estimates also provide evidence concerning the underlying aggregate production function. Specifically, the estimates imply an elasticity of factor substitution of less than one, and technical progress which is not solely of the Harrod-neutral variety. At this point the question of short-run corporation tax shifting is taken up. A suitably defined tax variable is introduced into the statistical model. It is found that the tax variable does not significantly add to the explanatory power of the model; its coefficient is small in absolute value and is statistically insignificant. It is concluded, therefore, that corporations bear the full burden of the corporation income tax in the short run.

Corporate Taxation and Dividend Behaviour: a Reply and Extension

Abstract: In my original paper [2] I showed that the equilibrium dividend payout ratio falls during periods in which retained earnings are taxed at a lower rate than dividends. Although this is contrary to much popular and political opinion, it is implied by qualitative economic analysis. A lower tax rate on retained earnings makes it advantageous for shareholders to save through retained earnings instead of by reinvesting a portion of their dividends. Even if future dividends are taxed at the same higher rate, capital retained within the firm has a relatively higher long-run net yield because these earnings are taxed at a lower rate until they are paid out. This effect on retained earnings is analogous to the effect on personal saving of substituting a consumption tax for an income tax. Mervyn King's two notes strengthen the conclusion that tax differentials influence dividend policy. Using a longer period of annual observations, a somewhat different data source, and a modified functional form, he also finds that dividends respond to changes in the differential taxation of dividends and retained earnings. The issue is now not whether tax policy influences dividend behaviour but by how much. King's estimate of the elasticity of dividends with respect to the tax variable (0-the opportunity cost of retained earnings in terms of foregone dividends) is about 04 in contrast to my estimate of approximately 1I0. Although I have no a priori reason to believe that the elasticity is of any particular size, I suspect that King's estimate is biased downwards. The first section of this note shows that my original elasticity estimate is essentially unaffected by adopting the nonlinear form suggested by King. I then discuss why his lower parameter value is most likely due to differences in data that cause an underestimate of the relevant elasticity. The second section considers the evidence about takeover activity and the hypothesis of a " managerial " theory of dividend behaviour. I have also taken the occasion of this reply to extend the previous analysis by considering the effect on dividend behaviour of another important aspect of company tax policy: investment allowances. The results of this extension are presented in section 3.

The low earnings of agricultural workers: a sociological approach*

Abstract: This paper shows that agricultural economists have tended to account for the low incomes of agricultural workers by utilising the economic model which explains low returns to agriculture as a whole This aproach is called low returns to agriculture as a whole This approach is called into question by referring to regional data on workers' earnings and farmers' incomes A sociological approach is outlined which takes account of the degree of choice open to agricultural workers to accept the earnings and conditions of agriculture

Note on the Intergenerational Transfer of Public Higher-Education Benefits

Abstract: The traditional way of looking at the burdens and benefits of higher education is to distribute the net benefits received by students by the income classes of parents (taxpayers). This sweeps the problem created by the intergenerational nature of the benefit transfer under the rug. It seems to me that a more useful way of looking at the problem is to acknowledge that the benefits of public higher education are received by one generation while the costs are paid by another and that there is no way of merging benefits and costs in one distribution to evaluate the equity of the system. The benefits of higher education are received by the students who attend college (although their parents may also feel better knowing that their children are being educated). The costs are shared by the parents, who pay for most of the out-of-pocket costs (tuition and room and board), the taxpayers, who subsidize higher education, and the students, who bear the cost of foregone earnings. Let us omit foregone earnings for the moment. The remainder of the costs are borne by a generation of people (either parents or taxpayers) who are, in effect, making a gift to those who are going to a public college or university. Of course, there is an understanding that each generation of earners will pay for the higher education of the succeeding generation. There is no practical way of obtaining a distribution of net benefits (or net burdens) by income classes in such a system, because the persons who receive the benefits are not the same persons who pay the costs.'

Monetary policy in the “checkless” economy

Abstract: THERE ARE MANY different systems to improve the domestic payments mechanism in operation or at advanced stages of planning.1 This paper is an attempt to identify and describe some of the important evolving mechanisms for effecting transactions within the American economy, with particular emphasis on how their adoption is likely to affect the implementation of monetary policy. Check clearing is a large and growing business in the United States. In 1971, the Federal Reserve has reported that the annual number of checks written in the United States is about 22 billion and that this number is likely to double during the current decade.2 No doubt similar growth rates have been experienced in the past. At the outset it is important to understand why banks are anxious to modify the existing payments mechanism. First, stock exchange brokerage houses have given banks a most discomforting view of what can happen to financial intermediaries which ignore growing transaction volumes. Second, commercial banks have not really been holding their own in the battle to clear checks. Their failure has been obscured temporarily by a growing labor force of clerical personnel in large urban areas during the last two decades. This growth in labor supply results from 1) growing female labor force participation, 2) higher relative rates of automation by nonbank clerical employers, 3) the exodus from large cities by many nonbanking firms, and 4) immobility of the nonwhite urban labor force. To illustrate the situation, between 1963 and 1968 total employment in banking grew 23 % while employment in nonbank finance, insurance, and real estate grew about 15 %. Between 1950 and 1960 total employment in banking grew nearly 100%, but employment in all industries grew less than 20%. Between 1950 and 1960, female employment as a percent of total bank employment rose from 49%o to 54%o and, while average weekly earnings of bank non-supervisory personnel grew, they fell relative to wages of similar workers in all private industry and in finance. In 1966 and 1967 average hourly earnings of clerical employees in urban financial establishments were lower than in urban manufacturing estab-