Price Changes and the Rate of Change of Money Wage Earnings in the Light of American Data

Abstract

* This research was supported by a grant from the Ford Foundation for study of the Dynamics of the Labor Market, and is part of the research efforts of the Institute for Research on Poverty, University of Wisconsin. 1. Tsunehiko Watanabe. Price Changes and the Rate of Change of Money Wage Earnings in Japan, 1955-1962, this Journal, LXXX (Feb. 1966). 2. In many fields of scientific research there is a well-developed tradition of replicating experiments. The discipline of describing data and methods in the original papers with sufficient care and accuracy to allow such replications is healthy in itself. If the original results are sustained by an independent check, a good deal more confidence can be placed in the results. Economic research could certainly benefit from such discipline and such double checking! We know that the estimates of regression coefficients even for data from a single country may be quite different when estimated from data over two different time spans. That is to say the estimates are to some extent dependent upon the particular economic fluctuations observed. Although the economic conditions in Japan will not necessarily be the same as in the United States over any given time span, there are linkages through international trade and capital movements that tend to some degree to produce an international synchronization of economic fluctuations. Thus there is some basis for feeling that by maintaining the same time span for the estimates in both countries one source of incompatibility between the estimates will be minimized. While applying the same two equation models to a national economy hardly qualifies as a controlled experiment, the authors would argue that there is some real virtue in making a serious attempt exactly to replicate the original work. If any changes had been made in time span, types of data or the model itself, the question would have been introduced as to whether the United States is really different from Japan in the phenomenon studied, or whether observed differences were instead traceable to the changes that had been made in the experiment.