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Most economists believe that improvements in foreign economies can benefit the domestic economy, but many politicians believe that international competition harms the economy. International competition can cause aggregate US income to fall while world income rises by causing the relative price of formerly exported US goods to decline. A model of international competition shows that the changes in terms of trade caused by international competition can cause increases in the real wage to fall below productivity growth.

The article presents the author's reply to a critique on their research on the earnings and promotion of women faculty. Before dealing with the substance of the comments, let us make two general points. First, in our paper (1974b) we did not maintain that direct labor market discrimination in the academic markel place was unimportant; such a conclusion would be unwarranted on the basis of the analysis. Second, it should be noted that as a result of government pressures on the academic sector during the past five years our estimates for 1970 are likely to overestimate the currently prevailing total male-female salary differential and of the proportion of that differential attributable to discrimination. The presumption in our analysis is that although our data are restricted to those employed full time at the date of the survey, some of these women have previously experienced periods of part-time employment or labor force withdrawal. In our (1974b) paper we used the initial starting salary differential as an estimate of the pure discrimination effect under the assumption that upon completion of the doctorate women and men have equal stocks of human capital and choose to rent them out in equal proportion.

The article presents an economic analysis of trade unionism. The study of the behavior and effects of trade unions is not currently one of the major growth industries of the economics profession. For example, the average proportion of all articles in the American Economic Review, Journal of Political Economy, and Quarterly Journal of Economics dealing with questions concerning unionism, which seems a reasonable index of the degree to which economists It is not difficult to understand why the relative interest in trade unions has declined. First, the fraction of the civilian work force organized by unions has remained roughly constant at about 25 percent since the early 195Os. Second, unionism in its present form has been quite secure since the early 195Os. Third, there has been a great deal of activity with respect to policies concerning discrimination, anti-poverty programs, income maintenance, and the like, and this has further diverted attention away from unionism.

The purpose of this article is to examine certain received theories of the firm, trade union behavior and bargaining in order to derive testable implications concerning the conditions under which labor disputes are more likely to occur. Results suggest that the aggregate level of strike activity is behaviorally related to the degree of tightness of the labor market and previous rates of change of real wages. The results have a number of implications for public policy with respect to wage determination in the unionized sector of the economy. First, policies which are geared to induce labor leaders to convince their constituencies to be satisfied with "more reasonable" wage settlements are likely to result eventually in political turmoil within trade unions. It does not, therefore, seem likely that such a policy can continue for long without encouraging the growth and power of more militant leadership and a subsequent decline in the effectiveness of the original policy. Second, in addition to the well-known tradeoff between wage changes and unemployment, there seem also to be tradeoffs between unemployment, wage changes, and industrial strike activity. To the extent that the maintenance of industrial peace is a goal of public policy, this adds an additional dimension to the problem of maintaining full employment and stable prices.