Journal of Economic Literature
Vol. 33, No. 3, September 1995

Contents

Real Wages and the Business Cycle
Katharine G. Abraham and John C. Haltiwanger      1215

Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues
Rodney Fort and James Quirk      1265

Diagnosing McCloskey
Uskali Maki      1300

Modern Epistemology against Analytic Philosophy: A Reply
Donald N. McCloskey      1319

Book Reviews in pdf format (AEA members only)


Real Wages and the Business Cycle
Katharine G. Abraham and John C. Haltiwanger

The objectives of this review are threefold: (1) to characterize the empirical literature on the cyclical behavior of real wages; (2) to identify the sources of the differences in results across studies; and (3) to enumerate key factors that determine the cyclicality of real wages. Given a host of measurement and methodological issues, drawing firm conclusions is difficult, but several generalizations can be made. The estimated cyclicality of real wages depends crucially on the time period of analysis and the choice of whether to examine the production or the consumption wage. Composition effects play an important but complicated role as well.

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Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues
Rodney Fort and James Quirk

Professional team sports leagues provide insight into the problems facing the management of functioning cartels. This paper provides an analysis of the incentives and outcomes inherent in the management of professional team sports cartels. Except for revenue sharing and salary caps, league cartel management outcomes are consistent with league-wide revenue maximization and have no impact on competitive balance. However, there are predictable impacts on the profitability of strong- and weak-drawing teams within the league. While providing an analytical review of the literature, the work here also yields new results concerning salary caps, local TV revenue sharing, and the behavior of cartel managers in the face of rival leagues.

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Diagnosing McCloskey
Uskali Maki

The diagnosis focuses on McCloskey's concept of rhetoric (persuasion of one's audience in a morally purified conversation), his theory of truth (constrained coherence), and his conception of the social organization of economics (morally self-regulated marketplace of ideas). His theory of truth appears as an "elite theory" (beliefs of the elite of the profession as the constraint) and an "angel theory" (ethics of speech as the constraint). These notions cannot accommodate McCloskey's own assessments of current economics. It is suggested that elites and angels be dropped from the concepts of rhetoric and truth, and a distinction be made between truth and plausibility.

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Modern Epistemology against Analytic Philosophy: A Reply
Donald N. McCloskey

Uskali Maki read three books by McCloskey on the "rhetoric of economics" with sympathy. But he wants McCloskey to choose between a coherence and a correspondence theory of truth. McCloskey notes in reply that modern epistemology - by contrast with the analytic philosophy circa 1955 that many philosophers of economics espouse - rejects the choice. Modern epistemology would say that economic scientists argue in many legitimate ways, governed by ethics. In brief, as Maki agrees, economics has a rhetoric. Rhetoric is a better guide than 1955-style analytic philosophy.

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