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In the rapidly growing literature on the relationship between income distribution and economic development, two of the most frequently investigated issues are the so-called inverted-U hypothesis (otherwise known as the Kuznets curve) and short-run trends in income distribution. The inverted-U hypothesis alleges that the relationship between income inequality and per capita income resembles an inverted U, wherein at low levels of development there is little inequality, but, as income per capita rises, inequality rises also but only up to a point, after which it gradually decreases. Irrespective of the U shape of the relationship, there is also very considerable interest in the direction, size, and explanation for trends in income distribution in developing countries.

This paper reviews the theoretical relationship between old age pensions and human fertility and offers preliminary evidence from Mexico on the direction and magnitude of the effect on fertility of the introduction of a formal old-age pension system. The security motive is an untested but plausible hypothesis especially for rural areas where alternative methods for caring for the elderly if they exist are likely to be relatively risky and unprofitable. A number of different effects can theoretically be expected following introduction of a system of old age pensions in such areas including a savings-reduction effect and life-cycle effects such as effects on the time-phasing of labor force participation and of consumption and effects on family fragmentation and intergenerational transfers and on the sex composition of the labor force and the allocation of family resources between the sexes. Information costs uncertainties about various aspects of the social security system and the possibility of differences between desired and actual fertility must also be considered. Given the long list of possible effects and offsetting influences and uncertainties about the magnitudes of such effects the actual outcome can only be resolved empirically. Data on sugar cane workers who began to be covered by a social security system in 1963 in 34 contiguous rural municipalities in the Papaloapan River Basin in southeastern Mexico were used to test the relationship. A regression analysis of the determinants of change in the child-woman ratios in the 34 municipalities from 1960-70 indicated among other findings that the proxy used for the influence of participation in an old age pension system had a significantly negative effect on fertility. An increase in social security participation from 0 to 50% would appear to reduce the child-woman ratio by more than 1/10. Despite the simplicity of the testing procedure shortcomings in the available data and the possibility of specification bias the results indicate that the security motive may be important and requires further empirical and theoretical research.

The choice between wage labor and sharecrop contracts is analyzed in a model that avoids both the pitfalls of previous models--inefficiency of sharecropping and indeterminacy--by introducing transactions costs with appropriate nonlinearities. Plantation data from the American South provide empirical support for the hypothesized nonlinearity in transactions costs and simultaneous determination of direct supervision and contractual choice.

As Greece heads into its second five-year development plan-its first within the context of its associate membership in the Common Market-the vast number and magnitude of the structural changes required in Greek society and economy (if her plans are to be achieved) become increasingly apparent. The necessity of accomplishing these transformations within the time limitations of the Common Market Agreement is finally drawing the attention of Greek economists to the crucial problem of choosing between alternative strategies of development and of selecting priorities among the many investment activities which are desirable from the social point of view.