Joint tests of non-nested models and general error specifications

This paper is concerned with joint tests of non-nested models and simultaneous departures from homoskedasticity, serial independence and normality of the disturbance terms. Locally equivalent alternative models are used to construct joint tests since they provide a convenient way to incorporate more than one type of departure from the classical conditions. The joint tests represent a simple asymptotic solution to the “pre-testing” problem in the context of non-nested linear regression models. Our simulation results indicate that the proposed tests have good finite sample properties.     

The risky business of insurance pricing

The factors influencing insurance pricing decisions are assessed using the ISO product liability ratemaking files for 1980–1984. The mean loss level has a strong positive effect on manual rates and premium rates/exposure. Evidence on a variety of ambiguity measures is more mixed. As a broad generalization, risk ambiguity lowers manual rates, which may reflect exclusion of large loss outliers as being unrepresentative. Risk ambiguity tends to have a positive effect on actual pricing decisions for particular policies, especially bodily injury lines and the interactive risk-ambiguity model.     

Construction and selection of quick switching double-sampling system: sample size tightening

A new sampling inspection system involving normal and tightened plans is presented. Performance measures are developed. The average sample number of the newly developed system is compared with those of existing plans. Procedures are indicated an tables are constructed for designing the system indexed by various combinations of parameters.     

Formalization of grievance procedures: A multi-firm and industry study

This study examines how two aspects of formalization of grievance procedures affect grievance procedure effectiveness: written versus oral presentation of grievance and the level of union and management authorized to resolve grievances at the first step. Several demographic variables were controlled for: size of bargaining unit, percentage of organization represented, number of grievances filed, and industry. A sample of 46 firms, representing a broad cross-section of unionized companies in the private sector, was obtained with the help of the American Arbitration Association. Results indicate that more formal grievance procedures (e.g., written presentation) are positively related to resolution rates at the first step. The number of grievances field and the size of the bargaining unit were positively related to total resolution rates prior to arbitration. We thank the American Arbitration Association for making this study possible.     

CORPORATE TAX INCIDENCE AND INEFFICIENCY WHEN CORPORATE AND NONCORPORATE GOODS ARE CLOSE SUBSTITUTES

An important deficiency in Harberger's [1962] model of corporate income taxation is its inability to consider both corporate and noncorporate production of the same good. Within-industry substitution has potentially major implications for both the excess burden and incidence of the corporate tax.
We analyze this within-industry substitution using a model in which each industry/sector contains corporate and noncorporate firms (with identical production functions) which produce goods that are close substitutes. The scope for considerable within-industry substitution of noncorporate for corporate capital leads to a very much larger excess burden than that in the Harberger model.     

Portmanteau test for conditional heteroscedasticity, using ranks of squared residuals

Squared residual autocorrelations have been found useful in detecting departures from linearity in time series models. This is especially the case with data exhibiting heterogeneity in variances. A rank test is proposed which is much more robust than its parametric counterpart.     

Race and gender as bases of class fractions and their effects on earnings

Maints auteurs ont affirmé que la race et le sexe repreésentent des bases de fractions de classe en ce sens que leur construction sociale permet à des segments d'une classe de se constituer à partir de caractéristiques liées à la race et au sexe. Cependant, les études ernpiriques antérieures tendent à considérer seulernent la race et le sexe comme des facteurs de fractionnernent au sein de la classe ouvrière seulement. À l'aide des données du recensement de 1986, cette communication analyse lea effets interactifs de la race et du sexe sur le revenu considéré comme facteur de fractionnement des classes. Les recherches de l'auteur indiquent que les effets produits par le groupement par race et par sexe sont inégaux en ce qui trait au revenu, les hommes gagnant davantage que les femmes tout en étant davantage ‘fractionnés’ par le revenu que les femmes. Lorsqu'on fait abstraction des différences de revenu entre classes, la race et le sexe demeurent des facteurs explicatifs importants du niveau de revenu, bien que leurs effets soient plus marqués chez les cadres, les professionnels et les ouvriers. L'écart entre les sexes est plus prononcé, mais la race demeure importante comme facteur de fractionnement au niveau des revenus des homrnes, měme après correction pour tenir cornpte d'autres variables. L'auteur affirme que l'assimilation des relations de sexe et de race aux relations entre classes est insatisfaisante et qu'il existe de sérieuses considérations théoriques pour considérer que les causes des inégalités entre les sexes et les races se trouvent non seulement à l'intérieur du domaine de la production, mais également à l'extérieur de celui-ci. The literature has argued that race and gender are bases of class fractions in that their social construction enables segments of a class to be constituted on racialized and gender-linked characteristics. However, previous empirical works tend to consider race or gender as fractionalizing the working class only. Using the 1986 Census data, this paper analyses the interactive effects of race and gender on earnings as grounds of fractionalizing classes. The findings indicate that race and gender groupings produce unequal effects on earnings: males have an income advantage over females, but race fractionalizes the earnings of men to a greater extent than for women. When inter-class differences in earnings are removed, race and gender remain important in explaining earnings, although their effects are stronger among the managerial, the professsional, and the working class. The gender gap is more pronounced, but race remains important in fractionalizing the earnings of men even after controlling for other variables. The paper argues that it is insufficient to subsume gender and race relations under class relations, and that there are compelling theoretical grounds to consider gender and race inequality as having roots both within and outside the sphere of production.