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Labour market supply is assumed to depend on the maximization of worker welfare. Welfare is assumed partly to depend on the ‘tension’ between schooling required by the job and actual schooling. Hence in the allocation of workers over jobs a tendency can be expected to minimize tension. Strict minimization produces a matrixt obtained by Hitchcock's Northwest-corner rule. Recent material due to Rumberger allows an explanation of 69 to 85 per cent of frequency variance. The remaining error term can be explained by the assumption of independence of demand and supply.

textabstractAfter the Pivogian era the tendency of the majority of economists was to adhere to Pareto's view that utility is not measurable. (In this note the words utility and welfare will be considered as synonymous). Recently in the Netherlands measurability has been defended again, by Bernard M.S. van Praag and his school (including A. Kapteyn, A. Kouwenhoven, Th. Goedhart, T.J. Wansbeek, F,G. van Herwaarden, J. Buyze, H v.d. Stadt, and others) and by this author. Van Praag and his pupils made considerable contributions to both theory and measurement; the present author concentrated on the application only. The essence of their empirical work consists of direct interviewing of very large numbers of European consumers. The question consists of indicating the income intervals in which the interviewee would feel resp. 'excellent,' 'good,' 'amply sufficient,' etc . . . . down to 'very bad' (9 intervals).

textabstractIn the last few decades an increasing number of economists have contributed to new methods of welfare (or utility) measurement. As set out in this journal (Tinbergen, 1985) three groups of economists have been active in this field since 1968, initially relatively independently; an American, a British and a Dutch group, of which the leading economists were Dale W. Jorgenson (Harvard), George W. McKenzie (Cambridge, UK) and Bernard M.S. van Praag (Erasmus). Additional imaginative contributions have been made since by several other economists, mentioned in my 1985 note. 1 In that same note I mentioned a lacuna in the Anglo-Saxon method: it considers utility derived from consumption but not utility (positive or negative) from work or from risk taking. The empirical research by the Dutch group implies all sources of satisfaction (in this article a third word for utility). The present article is an attempt to fill part of the lacuna stated, but simplified to the extreme, with the intention to clarify the essence of the additional aspect. Among the simplifications one must be mentioned in advance: the model submitted is static. This may be a disadvantage to some (or many) readers; and it may be avoided. Some remarks about a dynamic model will be made. Since the static version already introduces a number of new concepts the present author tentatively starts with the static version.

After a brief historical survey starting around 1930, the article discusses some of the main new concepts used in development models. Thus, the Domar-Harrod principle, planning in stages, input-output, and two-gap models are discussed. From national models we have now attained a point of world models. The newest developments are characterized by the introduction of income distribution variables, the informal sector, appropriate technologies and environmental variables. New uses made of models recognize the existence of more than one policy maker, or alternative groups in power as wen as ~'interactive multiple goal planning". 1. mSTORlCAL Development policies may be considered a component-and a very important one at that-of socio-economic policies generally. Accordingly, the roots of development planning have to be looked for in the first attempts to conduct socioeconomic policies in a planned way. Two branches stand out; central planning as developed in the Soviet Union from the late 19208onward, and indicative macroplanning, as elaborated in some Western countries. Of course, there are large differences between the two approaches. Soviet planning was seen as obligatory (as distinct from indicative), and it (as distinct from macro planning) dealt with an enormous number of details. For quite some time, moreover, the use of mathematical models was not considered appropriate in the Soviet Union. In this article I propose to deal with socio-economic policy preparation with the aid of econometrically tested models. The first attempts originated in the Netherlands in 1936, when I, assisted by B. G. F. Buys, set up a simple macro-model in order to formulate a policy for that period, in the aftermath of the great depression[20] . During World War II, J. E. Meade and collaborators in the British "Cabinet Offices" made related studies directed at the solution of war fmance problems. After World War II, various forms of indicative planning-with a varying degree of compulsion-developed in Western countries. In the USA, the Council of Economic Advisors was established, but the main emphasis of its activities was *The author, a Nobel Laureate (Economics), is Professor Emeritus at the Centre for Devel

an article published in this journal oy the second author of the present note in 19561 the problem he proposed to tackle was how earnings must depend on the frequency distributions' parameters of the supply of and the demand for labour of different quality. The quality of the labour supplied as well as the quality required in order properly to perform the jobs available were supposed to be two-dimensional and the frequency distributions of both to be the normal or Gaussian distribution. The parameters appearing in the distribution of qualities required, hence the demand side were: sv the average intensity or degree of capability 1, s2 that for capability 2, Oj the standard deviation of the sv o2 that of the s2 and rs the correlation coefficient between Sj and s2. Similarly, for the capabilities of the workers supplying their labour the parameters tl9 ', iv t2 and rt were assumed to apply. The way in which workers choose their job was specified by assuming their maximization of a utility function2

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textabstractEconomic development: theory, policy and international relations, by I.M.D. Little 'The poverty of ‘development economics', by Deepak Lal, Hobart Paperback No. 16 The theory and experience of economic development, Essays in Honour of Sir W. Arthur Lewis, edited by Mark Gersovitz, Carlos F. Diaz‐Alejandro, Gustav Ranis and Mark R. Rosenzweig Copyright

Data on income after tax, schooling completed, job held, age, and ‘level of satisfaction’ of 2663 members of the Dutch Consumer Union have been used to estimate regression equations of two types. Type I may be called a specification of a utility function, Type II an ‘earnings function’ (where income after tax was used as earnings). For both types a number of alternatives were estimated both with regard to mathematical shape and with regard to variables included. Defining equitable or justified income differences as differences which do not change the level of satisfaction, a formula for equitable incomes for given combinations of job, schooling and age can be derived from Type I equations. All regression coefficients are found to be lower than the corresponding earnings function coefficients. The latter can then be decomposed into a ‘compensatory’ component and a ‘scarcity rent’ component.

In October the third report to the Club of Rome was published under the title Reshaping the International Order (RIO).1 It was formulated by a group of about twenty experts from developing as well as developed countries, including one from Romania. The initiative to undertake this study of the international order was taken by the Club of Rome Board, especially by its chairman Dr Aurelio Peccei and the study was financed by the Netherlands Ministry of Foreign Affairs at the initiative of the Minister for Development Cooperation, Jan Pronk. The report was presented to the Club of Rome in a meeting at Algiers, hosted by the Algerian Government, 25–28 October 1976.

In Western countries the share of incomes form assets in national income has fallen considerably during the last century. Inequality in labour incomes is much more important. Two types of labour show relatively high incomes: the professions and managers. incomes of the former show along-term relative decline due to a sharp increase in university graduates. The author offers a crude attempt to compare manager incomes in the U.S.A. with the sine of the enterprise they are heading. He then poses question whether manager incomes may be reduced further in comparison to average incomes by increasing their supply. This depends on whether manager capabilities are Iearnable or mainly innate. He concludes with some remarks on the demand for managers in a post-industrial society.

In this essay in honour of Professor P. Hennipman the latter's clarity and precision of expression are chosen as an example of how to avoid misunderstanding of his publications. As counterexamples some twenty-odd misunderstandings are set out by the essay's author in the field of income distribution policies, ranging from that specific subject to the theory of economic policy, to economic science and to science as a whole. Several of these misunderstandings are due to the essay's author, while others seem to prevail either among the general public or among scientists.

Tinbergen Jan. Proposition d'action mondiale concertée en faveur de l'emploi. In: Revue économique, volume 32, n°3, 1981. pp. 437-447.

Part-collective goods are defined as a continuum between private and purely collective goods. Their degree of collectivity is indicated by a parameter as used in a special case of the CES production function. Factor inputs in the latter play the role of quantities available to individuals of the collective good; product in the production function corresponds with total quantity available of the collective good. Parameter values range from-1 (private goods) to −∞ (purely collective goods). External data determine the varying parameter values of a given partly collective good. The latter are in need of an allocation system.

The welfare concept is central to economics and to some topical problems, requiring interdisciplinary research. Psychology, biology and pedagogics may be important contributors. Economists have overemphasized economic, and among these consumption, aspects. A learning process to reduce unhealthy consumption remains topical. On the production side the diversity of labor types has been neglected. Here a central problem is job choice by maximizing welfare. Variables needed are capabilities required by jobs and personality traits. We ignore the number of independent characteristics. Path analysis with inherited and learnable traits may be extended by data on grandparents and on non-cognitive capabilities. A more precise production function of education is badly lacking. Two methods of measuring welfare functions and the shape of the latter are discussed.

SUMMARY Three alternative definitions of equity are presented, which coincide under special conditions only. The author prefers the definition that equity means equality of welfare. This presupposes measurability of welfare (or utility). Two methods of measurement are discussed, called revealed or indirect and direct measurement. Concrete applications of both are shown, together with their shortcomings. In both cases equitable distribution is found to be less unequal than actual distribution in the Netherlands. Further research needed, on additional relevant determinants of utility and on learnability of some capabilities are formulated.

As a follow-up of his book on income distribution the author reformulates his version on the scarcity theory of income from productive contributions. The need to introduce into an earnings theory several job characteristics, non-cognitive as well as cognitive, and the corresponding personality traits is stressed, the latter subdivided into innate and learnable capabilities. The theory is presented in two alternative mathematical versions: one where job and person characteristics are continuous and one where they have discrete values and their frequencies assume continuous values. Although, mainly in the United States, numerous empirical inquiries have been made, job characteristics and the corresponding personal characteristics have not been included in sufficient number.

It is argued that action can be undertaken to reduce unemployment. However, such action needs to be taken on a basis of internationally coordinated policies to combat unemployment. Initially, there is a need for the EEC member countries to formulate a coherent programme to deal with this problem. Yet this is unlikely to be adequate. The intriguing idea is floated that the EEC countries can learn from the policies pursued in Japan. Ultimately, it is hoped that cooperation between the EEC and Japan can form the basis of an adventurous initiative to attack unemployment.

Jencks's well-known sociological path analysis connecting parental socio-economic characteristics and some ability measure of the person investigated with his or her schooling, occupation and income is available for the United States, Sweden and the Netherlands in various versions. For the United Kingdom the analysis has now been applied to the new General Household Survey, supplying over 5000 observations. This article compares the various results and offers a few alternative models, using the American and British data. These alternatives do not offer, in the British case, improvements in variance explained. Moreover, most regression coefficients show wide variations between countries. A suggestion for improvement is derived from a recent study using at least three occupation characteristics.

Previous tests of the marginal productivity theory have been criticized on several grounds reviewed by the authors. One important deficiency has been the small number of factor inputs entered in the production functions. In 1978 Gottschalk suggested a method to estimate production functions with many inputs by assuming that the production process can be split into subprocesses. This reduces the probability of multicollinearity. The authors show that the method depends on an additional assumption. Tinbergen has developed a method for avoiding this assumption. Its application to American cross-section (state) data did not alter the estimated coefficients greatly.

Substitution von Akademikern durch andere ArbeitskrAfte. — Dieser Aufsatz berichtet uber SchAtzungen von verschiedenen Autoren uber die SubstitutionselastizitAt zwischen hochqualifizierten (meist akademisch ausgebildeten) und anderen ArbeitskrAften und befaβt sich mit den moglichen Ursachen fur die Unterschiede in den ermittelten Werten. Die Hauptkritik besteht darin, daβ einige Autoren die Natur der untersuchten Beziehung unzureichend spezifiziert haben, d. h. nicht versucht haben, Nachfrage- und Angebotsbeziehungen getrennt zu identifizieren. Der Verfasser versucht, Material von anderen Autoren zu verwerten und weitere erklArende Variable hinzuzufugen, um diese beiden Beziehungen zu trennen. Diese Versuche lassen vermuten, daβ die SubstitutionselastizitAten in der NAhe von — I liegen. Allerdings ist einige Vorsicht angebracht, da die ermittelten Werte fur die AngebotselastizitAten keineswegs einheitlich sind.

The structure of the optimal order should be found by scientific analysis. State of the art shifts over time. Marx's scientific socialism was based on science a century ago; it must be adapted accordingly. Laissez faire was based on too simple assumptions. Collective goods and marginal welfare equality require State intervention. Level of decision-making must be supranational in some fields. Controversial points and the 'research needed to reduce controversies are listed.

Narrates the life and works of the author, a Nobel laureate and an emeritus professor of economics at Erasmus University in Rotterdam, The Netherlands.

The foremost place of R. Frisch in the modern development of economics and especially econometrics is assessed. Some of his achievements are briefly described: on land rent theory, marginal utility of income, bunch map ‘technique’ model building, planning, programming and Pareto optima. Some remarkable facts of Frisch's life are also reported, e.g. his short stay in a concentration camp during the war and his crusade against Norway joining the E.E.C. on the ground that the country had better remain an outside exampie of democracy and social justice.

This paper recalls some early work of the Dutch pioneers of long-wave research which anticipated many of the contemporary debates. Various explanations which have been advanced for the existence of long waves are reviewed, and the applicability of long-wave theories in a number of contexts is examined.

The organizers of this meeting have asked me to summarize the discussions of the last three days and to draw some conclusions. These will have to be provisional and personal conclusions only, formulated in all modesty, since I am not an expert in several of the more sophisticated methods discussed here. While the term “operational research” has not, as far as I know, a very precise meaning, we may nevertheless characterize it by: (1) treating complicated problems with a large number of variables; (2) using various modern mathematical and logistic methods; and (3) being directed toward a goal of action. Its success has been proved already especially solving a number of problems in manufacturing industries, transportation and energy, fields for which usually precise and abundant data are available which make it worthwhile applying sophisticated methods. When we ask whether this complex of methods can also be applied to development problems, it seems appropriate to summarize also what seems to be characteristic for these problems.

Summary This lecture deals with a general view on forecasting and planning with special emphasis on the application in less developed countries. After some introductory remarks attention is paid to the evaluation of the results of forecasting by means of statistical methods in comparing forecasts and realization. The paper gives some outlook on the general features of planning in the less developed countries. Special attention is drawn to a rather new aspect of the matter: the importance of non-economic factors which may have great influence on the process of development. Thorough investigation in this field seems necessary as it may contribute to a better planning and to more efficient activities in these countries.

Development planning has become a routine activity for large numbers of corporations as well as for public authorities at various levels, particularly national governments. In quite a few national planning agencies extensive analyses of the probable expansion of world supply and demand and of prices are made. Such analyses require projections of the probable development of a group of autonomous factors, say, public expenditure and private investment, for a number of foreign countries. In some industries, such as agriculture, an old well-established agency like the Food and Agriculture Organization exists, fully able to play the part supposed to be fulfilled by sector representatives. For manufacturing some worldwide private organizations exist although it is not certain that they are sufficiently equipped to cooperate. In the education sector, the UN Educational, Scientific and Cultural Organization and in the health sector the World Health Organization are the natural partners. Business as well as trade unions should be asked for their advice and suggestions. The International Labor Organization will be available.

The author proposes a method to arrive at a cardinal theory of utility or welfare (considered identical) by the introduction into the utility function of (1) variables, (2) parameters and (3) coefficients. Parameters characterize measured differences between individuals relevant to the problem considered; variables indicate either choices open to individuals (job, income) or exogenous circumstances (a salary scale or a tax scale). The ethical postulate introduced is the equality of each coefficient among different individuals, offered as an interpretation of the ‘fundamental equality of men’. Once the utility function has been defined and tested, justice in distribution is defined as equality of the values of that function for all individuals considered. A numerical illustration is added in which years of schooling and degree of independence are used as parameters to characterize twenty social groups and the just as distinct from the actual income distribution is calculated for the Netherlands around 1965.

textabstractIn English: The Significance of Wage Policy for Employment, International Economic Papers, Vol. 1(1951), pp. 80-92. Also: Reprint No. 8 Centraal Planbureau (Central Planning Bureau, The Hague)

textabstractSince the phrase income distribution covers a large number of different concepts, it is necessary to define these and to indicate the choice made in this article. Income for a given recipient may cover lists of items which are not always the same. Apart from popular misunderstandings about which items to include and exclude, statistical sources on incomes use varying definitions, often because of the data available. Tax statistics, which are among the most important sources for income data, sometimes exclude items because tax legislation contains allowances or includes items because of traditional concepts of income. The data from this source have been processed by a number of authors seeking to approximate the economic income concept, and it is assumed that this aim more or less has been attained. In other words, the article assumes that, in principle, the income figures used in the more sophisticated studies available cover the economic income concept and, more precisely, primary income, which is considered identical to income before tax.

The semi-input-output method has been proposed by the author as a substi¬tute for what was formerly called the estimation of the indirect effects of invest¬ment projects. Essentially it rests on assumption I that a country must aim at an "ideal development process", meaning a growth process which at no time shows unutilized production capacity. Furthermore, the method rests on assumption II that a distinction can be made between national or domestic activities (industries in the widest sense or sectors) on the one hand and international activities on the other hand. By definition the products of the former cannot, for technological or cultural reasons, be imported or exported. Examples have been given elsewhere [1]. Together with assumption I it follows from II that the productive capacity in the national sectors equals the demand for their products. With a given develop¬ment of national income the growth of the national sectors is practically deter¬mined. The choice of new sectors to be developed must mainly be made among the international sectors, where those showing the highest comparative advantages must be chosen, if with given sacrifices of scarce factors a maximum of result is wanted. The criterion for selection of sectors will depend on the aims of policy as well as on the relative scarcity of factors. Its precise content is independent of the subject to be discussed here. For simplicity's sake we will assume that the criterion is to prefer sectors with the lowest capital-output ratio. This choice only effects the later portions of this article. The emphasis here is on something else, namely that it is not possible, if we accept assumption I, to add to the equip¬ment of the nation a factory or set of factories in one international sector only, but that simultaneously with such an "international" investment a number of complementary investments in domestic sectors are necessary, in order to keep all capacities fully utilized. We will call the necessary combination of investments a bunch; it always consists of an investment in one international sector combined with a number of investments in all national sectors.

In English: Determination and Interpretation of Supply Curves: an example In: David F. Hendry and Mary S. Morgan (Eds), The Foundations of Econometric Analysis, Cambridge University Press, New York, 1995, pp. 233-245

Dans cet essai nous nous proposons de discuter ce qui nous semble etre le noyau de chaque planification regionale. Un plan regional se caracterise par l'indication, pour chaque region, des projets a executer dans cette region : un plan regional, en d'autres termes, donne une subdivision d'un plan national. Le probleme que nous allons considerer se pose de la maniere suivante : quelle information minimale est neces saire pour composer un tel plan regional ? Nous croyons utile de consi derer ce probleme pour la raison que beaucoup de recherches — parfois couteuses — faites par les bureaux de developpement regional ne nous semblent pas suffisamment orientees vers les decisions concretes neces saires pour aboutir a un plan coherent de developpement regional. Parmi les decisions concretes, les plus indispensables sont celles concer nant l'execution de projets d'investissement : sans eux il n'y a pas de developpement. Afin de mettre en lumiere ce qui nous semble essentiel nous nous bornerons a cette« phase des projets» ; nous sommes conscient de l'utilite d'autres phases, de caractere preparatoire, comme par exemple la phase macro-economique de la planification ou une phase des secteurs (voir [5]). Nous croyons avoir recueilli dans le schema que nous allons presenter les elements les plus essentiels — et seulement eux — d'une planification par region.