Little evidence is currently available on the regional growth effects of federal defense spending. In this study, econometric models for state personal income and manufacturing employment between 1976 and 1985 are specified and estimated. Pooled cross-sectional time-series data are used, and the estimation procedure corrects for serial correlation, heteroscedasticity, and contemporaneous cross-sectional correlation. The results indicate that aggregate defense spending has a positive effect on both growth measures. However, when defense expenditures are disaggregated, only investment-type outlays appear to consistently affect state economic growth.

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This study investigates the influence of blue-collar unions on the wages and fringe benefits of white-collar workers employed in the same establishment. The author uses establishment data on employee compensation in 1974, the last year such data were collected, to estimate these wage and fringe spillovers in the two-digit industries in the manufacturing sector. Wage spillovers appear in only three of 16 industries, with the effect ranging from 10 to 19 percent. For fringes, however, significant spillovers are evident in 12 industries, with effects ranging from 15 to 52 percent. Although the models estimated also allow for the influence of white-collar unions on white-collar wages and f'ringes, no such effects were observed. THE effect of blue-collar unions on whitecollar wages and fringe benefits has important implications for both the wagedetermination process and for inflation. White-collar compensation is usually thought of as being determined in a fairly competitive environment. Many whitecollar jobs are regarded as similar from firm to firm, and unionization is low among white-collar workers, conditions assumn-ed to foster efficient market functioning. If there are significant spillovers from bluecollar unions, however, the wagedetermination process in the white-collar market merits reexamination. Also of concern is the effect of spillovers on the rate of wage and price increase. The greater the spillover from blue-collar union wage gains to white-collar wages, the larger the impact of blue-collar wage gains on the overall rate of wage increase and thus on inflation'. Since about 32 percent of all manufacturing employment was in white-collar occupations in 1977, this is not a trivial issue.2 'Although there is disagreement about the size and even the direction of spillovers from the union to the nonunion sector, Mitchell argues that "it would be