Trade,Wage Gaps,and Specific Human Capital Accumulation*

We develop a new framework for the analysis of the impact of trade liberalization on the wage structure and on welfare. Our model focuses on the decision of workers to accumulate firm‐specific skills, by “on‐the‐job” training, knowing that this means their future wages will have to be negotiated, and that the outcome of negotiation will depend on the profitability prospect of firms operating in a new trading environment. We show that trade liberalization may reduce the welfare of a developing country because of its adverse effect on skill accumulation. We also explore the effects of trade liberalization on the wage gap between skilled and unskilled workers.     

The effects of incorrect specification of the Minkowski metric: A simulation experiment

This is the second article in a two part investigation into the consequences of incorrectly specifying the value of the Minkowski metric in multidimensional scaling studies. The first article, which appeared in the Summer 1974 issue of this journal, established five theorems which hold if the axes of the true and derived solution spaces have the same orientations. It was further shown that four of these theorems hold only for the special Euclidean case when the axis orientations of the true and derived solution spaces are different. This second article extends these results by investigating the sensitivity of the TORSCA nonmetric multidimensional scaling algorithm to incorrect specification of the Minkowski metric and the ability of Krukal's “stress” measure to detect such incorrect specification.     

Firm-Level Influences on Forms of Employment and Pay in Russia

This article examines forms of employment and compensation in a sample of 44 Russian enterprises in 1996. The incidence of employee participation in decision making is highest in employee-owned enterprises. Otherwise, ownership has little impact. Effects of industry, size, resources, and transaction costs are consistent with Western experience. The employment relation in contemporary Russian enterprises is thus not so deeply embedded in institutional influences as to be insensitive to conditions prevailing in individual workplaces.     

VOTER PREFERENCES FOR TRADE POLICY INSTRUMENTS*

We analyze voter preferences for tariffs and production subsidies. The distribution of tax revenues argument shows that voters with high direct tax burdens prefer tariffs to subsidies. The uncertainty argument demonstrates that if actual tariff and subsidy rates are chosen from the set of individually optimal rates then the range of tariff rates is smaller than the range of subsidy rates. Thus, tariffs might be preferred even though they are less efficient. Finally, the large country argument shows that if a country is large then voters whose income shares decline with more protection prefer tariffs to subsidies.     

Measuring the interrelationships between concentration and price cost margins

The interrelationship between concentration (CR) and price cost margins (PCMs) are measured to test whether changes in structure (as measured by CR) occur prior to changes in performance (as measured by PCMs), or whether changes in PCMs occur prior to changes in CRs. The former relationship is consistent with the market power “doctrine,” while the latter is consistent with the “interventionist” view of the monopoly problem. A sample of 41 four-digit SICs having relevant product markets and consistent concentration ratios were collected for the intercensus periods from 1947–1977. Two generalized least square models were estimated, each containing a lead, concurrent and lagged independent variable for two functional forms: CRs as a function of: PCMs and PCMs as a function of CRs. The introduction of the lead variable in both functional forms or equations to the corresponding unrestricted model added significantly to explaining variations in the dependent variables. This result implied that a bidirection relationship existed between concentration and profits and that both the price elevation and cost reduction hypothesis have wilidity. This same time series approach could be applied to individual industrles or a dominnt firm within a industry. If a single hypothesia beat deacribed the firm’s altructure and performunce, evidence used in anlltrual euforcement could be simplified considerably.