IMMIGRATION AND NATIVE WELFARE*

This article unifies two approaches for identifying the welfare and wage effects of immigration, one emphasizing the immigration surplus, the other stressing a potential welfare loss due to a terms‐of‐trade effect. We decompose the native welfare effect into a standard complementarity effect, augmented by a Stolper–Samuelson effect, and a terms‐of‐trade effect. We illustrate the welfare and wage effects of endogenous goods prices in a stylized‐specific factors model. Finally, we calibrate this model to a generic OECD economy and provide simulation results. The key insight is that endogenous goods prices play a quantitatively important role, sometimes even overturning received results.     

Factor-price equalization under joint and nonjoint production

We investigate how joint production affects the likelihood of factor price equalization (FPE) through trade. Following up on recent contributions by Samuelson (1992) and Jones (1992), we propose to take the relative size of the FPE region of endowment distributions to measure this likelihood, and we show that it mayincrease even if joint production leads to adecrease of the number of basic production processes, and it maydecrease even if the number of basic production processes operated in equilibrium isthe same as under nonjoint production. A 2×2×2 example is analyzed in more detail. Moreover, we show that the argument of Jones (1992) can be reinterpreted in a more applied direction by considering the effects of switching from a regime where only intermediate products are traded to a regime where all products are traded. The paper shows that the likelihood of FPE may decrease by integrating product markets in this way. Still more surprising is the fact that integration may even destroy FPE.     

An economic evaluation of area yield insurance for small-scale cane growers

In the past, crop insurance schemes have based indemnity payments on individual producers' yields. Insurance of individual yields does not cope efficiently with systemic risk and therefore fails in areas where crop yields are correlated across space. Area yield insurance provides an alternative and eliminates the problems of moral hazard and adverse selection associated with individual yield insurance. Area yield insurance therefore effectively copes with systemic risk. In this study, principles of area yield insurance were applied to yield data on small-scale cane growers in KwaZulu-Natal and used to calculate pure premium rates. The viability of a government-subsidised area yield insurance scheme for small-scale cane farmers was assessed in terms of affordability to the government, the farmers and private insurance companies. The empirical results obtained from this study indicate that such a scheme may pose great expense to the government and, as a result, may not be viable in South Africa. This topic needs further study, while other risk management strategies should also be considered.     

Book review

New Technologies and Work: Capitalist and Socialist Perspectives A. Francis & P. Grootings (Eds) London, Routledge, 1989, 335 pp.

New Technology and Manufacturing Management: Strategic Choices for Flexible Production Systems M. Warner, W. Wobbe & P. Brodner (Eds) Chichester, Wiley, 1990, 265 pp.

The Single European Market and the Information and Communication Technologies Gareth Locksley (Ed.) London and New York, Belhaven Press, 1990, 290 pp., £27.50.

Technology and Competition in the International Telecommunications Industry David Charles, Peter Monk & Ed Sciberras London and New York, Pinter Publishers, 1989, 170 pp., £35.00.

Organising for Manufacturing Innovation: The Case of Flexible Manufacturing Systems Harry Boer Enschede, Febodruk, 1990, 253 pp.

Future Work: Seven Critical Forces Reshaping Work and the Work Force in North America Joseph F. Coates, Jennifer Jarratt & John B. Mahaffie Sun Francisco, CA, Jossey-Bass, 1990, 2 vols, 445 pp. & 120 pp., $49.50.

Science, Technology and Reparations: Exploitation and Plunder in Postwar Germany John Gimbel Stanford, CA, Stanford University Press, 1990, 280 pp., £29.50 (hbk).     

Modeling Newspaper Advertising

Mathematical modeling is recognized as a powerful tool for planning business operations. The purpose of this paper is to present a mathematical model for simulating a newspaper financial system. The model was developed from actual newspaper industry data and includes the effects of advertising and circulation. The use of the model to predict advertising linage as a function of population, income and advertising rate is included in the discussion.     

RECONSIDERING THE SUNK-COST CONCEPT

This paper presents a decision procedure to aid in making capital rationing investment and borrowing decisions. Weingartner's Basic Horizon Model and Oakford and huesen's Maximum Prospective Value criterion are both extended to explicitly include long-term borrowing decisions. Information derived from interviews with financial executives on the subject of business attitudes toward borrowing is used to develop the conceptual logic of the decision procedure, which is presented in terms of a mathematical programming formulation.     

Die Rolle der Versicherungsmathematik innerhalb der gesamten Wissenschaft und Praxis der Versicherung

Abstract

Der überraschenden ehrenvollen Einladung in den drei skandinavischen Hauptstadten im Verein der Aktuare einen Vortrag zu halten, bin ich zwar gern aber nicht ohne Bedenken gefolgt; weiss ich doch nicht, ob ich in einem solchen Kreise von Sachverstandigen der Wissenschaft und Praxis der Versicherung etwas bieten kann. Aber die so überaus liebenswürdige Schreiben Ihrer Herrn Vorsitzenden geben mil' den Mut hier zu sprechen. Ich will kein speziell versicherungsmathematisches Thema behandeln: rch will vielmehr den Rahmen weiterspannen und iiber die {iRolle der Versicherungsmathematik innerhalb del gesamten Wissenschaft und Praxis der Versicherung sprechen.     

Mathematical analysis applied to school attendance areas

The objective of this paper is to develop a generalized mathematical model of pupil assignment within school districts. This model can then be used to examine various policies of student integration. Proposed bussing schemes, school location policies, educational parks, attendance boundaries, etc., can be tested for cost, travel time or other measures of efficiency. Extension to other areas of educational planning is feasible.

Mathematical programming techniques are used to assign resources (say school children) to facilities (say schools) subject to restrictions on facilities (say capacity limits) and resources (say a maximum travel time or a desirable range of school “mixtures”) so that a measure of performance, the “objective function” (say total cost or total time of travel) is optimized. The model is intended to allow examination of a wide range of objective functions and system constraints.