Similarly, it can be shown that for reasonable values of the number of activists and
parameters:
(30) Y(Na) ≡ bNγ (κNbr∆R)δ, where γ > 1, δ < 0.
Figure 4 presents an example of a family of X(Na) curves (28) and their
approximations (29) corresponding to the elasticity of substitution 0.4 (ρ = -1.5), constant
returns to scale, various capital-labor ratios in the vicinity of K/L = 1, and the productivity
parameter a = 10. Parameter values in (29) - k = 0.204, α = 0.838, β = 0.684 - were obtained
by minimizing the unweighted sum of squared errors of approximation over the range of Na
from 0.002 to 0.06.
Combining (29) and (30), taking logs, rearranging terms, and relabeling coefficients
obtains the reduced form equation:
(31) ln(Na) = β0 + β1ln(Nb) + β2ln(∆R) + β3 ln(K/L),
where β1 > 0, β2> 0, 0 < β3 < 1, as follows from (29) and (30).
I use the number of party candidates for the number of activists. This is an accurate
proxy, since the candidate term in the studied period was about one year on average. The part
of the population relevant in the context of activist recruitment is practically limited to young
male workers - a vast majority of new candidates were recruited from this stratum. Because
of the absence of adequate age and gender distribution data, the total labor force is used
instead. The bureaucratic premium, ∆R, is the gap between bureaucratic rents, R, and the
workers’ real wages. The former are approximated with average salaries of the party officials.
Several variables are used as the indicators of the real wages. Because of the typical for the
Soviet economy price distortions, pervasive shortages in consumer markets and absence of
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