on the fixed nature of sharecropping contracts newbery and stiglitz i979 suggest four stylised facts of sharecropping which theories should attempt to explain the first is the persistence of sharecropping and its coexistence with fixed rental and wage markets under a variety of conditions over centuries of time the second is that in modern developed economies there appears to be a decline in share tenancy thirdly share tenancy is often but not alwavs associated with lower productivity than fixed rental land finally in many economies contracts involve shares of around one half for landlord and tenant this does not vary from contract to contract and does not seem to be the object of negotiation smith i776 and many subsequent authors have likened sharecropping to a tax they argue that under this type of contract tenants choose their labour supply to equate their marginal disutility of labour with their proportionate share of the marginal product instead of the full marginal product they therefore regard sharecropping as an inefficient form of land tenure however this view is difficult to reconcile with the first observation given the coexistence of fixed rent and share contracts it is reasonable to expect that if share contracts were relatively inefficient they would quickly die out this does not appear to have happened more recently it has been argued most notably by cheung i969 that if there is certainty and transactions costs are the same for all contracts then provided a share contract specifies the labour supply of the tenant it leads to the same efficient allocation of resources as a fixed rent or wage contract cheung has used this result as the basis of an explanation for coexistence he suggests that the transaction costs for share contracts are higher than for wage and fixed rent contracts however share contracts have the advantage that they allow the risk to be shared between the landlord and tenant whereas with fixed rent contracts the tenant bears all the risk and with wage contracts the landlord does given varying degrees of risk aversion among landlords and tenants it is possible that for some parties the risk sharing advantages outweigh the transaction cost disadvantages so that they will prefer share contracts whereas with others the reverse is true one problem with this argument raised by stiglitz i974 and newbery i977 is that given constant returns to scale the risk sharing properties of share contracts can be attained with mixtures of fixed rent and wage contracts if these do indeed have lower transaction costs share contracts would not then be observed

unionization and input flexibility in u s manufacturing 1973 1996 input flexibility as measured by the ability of firms to vary input demand in the face of changes in input prices is an important dimension of labor market flexibility using a new dataset the authors analyze the impact of unionization on input flexibility in u s manufacturing from 1973 to 1996 a period in which production was arguably becoming more flexible due to deep changes in the u s industrial relations system and in the broad macroeconomic environment the authors quantify the effects of unionization on input flexibility by estimating elasticities of substitution between a broad range of labor and non labor inputs controlling for unionization the pattern that emerges is more complex than that suggested by other research in particular low unionization apparently is associated with greater flexibility in the use of labor inputs but less flexibility in the use of non labor inputs

fiscal federalism in the uk be known as a result of its association with the analysis of fiscal relations between central and local state governments in federal states such as australia canada and the u s as an expositional device i will focus on the issue of whether it would be possible to introduce a decentralised system of local and regional finance which embodies the ideas of fiscal federalism as they have been developed in such federal countries the history of constitutional development in the united kingdom suggests that the prospects for such a radical reform are slight however some form of fiscal federalism is the logical consequence of the arguments for scottish and welsh devolution perhaps accompanied by regional devolution within england and of the case for greater local government autonomy so eloquently argued in the report of the layfield committee 1976 an analysis of the feasibility should thus provide useful insights concerning the consequences and success of less drastic moves in the direction of fiscal decentralisation much of the literature on fiscal federalism is concerned with issues related to what one might term the fiscal constitution i e the allocation of responsibility for public expenditure and taxation between national and sub national units of government which may be states cantons municipalities and a variety of other local government units since the literature can be applied equally to regional government units i e states provinces cantons lander and to local in the conventional sense government units i e counties municipalities communes districts 1 shall use the term local government to refer inclusively to all sub national units of government the

economic growth and productivity a case study of south korea the economic performance that south korea has achieved over the past quarter century is often likened to a miracle recently much interest has been expressed in the driving forces behind the korean economic transformation using the valueadded measure of output christiansen and cummings have shown that technology measured by tfp accounts for about 43 of korean economic growth between 1960 and 1973 this figure is considerably high compared with recent major studies on japanese and singaporean economic growth we found that the value added framework is not appropriate for the description of the structure of the korean economy and re examined the sources of korean economic growth using the gross output framework surprisingly it has been discovered that only 7 of real output growth in the manufacturing sector during the 1962 1981 period is attributable to technological progress these findings parallel those for the japanese and singapore economies

a note on unionization and the elasticity of substitution if unions force employers off their demand curves the measured elasticity of substitutio n should be lower where unionization is stronger estimates based on pooled data for twenty two digit sic canadian manufacturing industrie s over the period 1971 81 support this proposition point estimates a re that the elasticity is 1 98 in the absence of unions 1 04 if empl oyees are fifty percent unionized and only 0 10 if employees are one hundred percent unionized however the results are not very robust to specification changes

share contracts and their rationale lessons from marine fishing most of the existing literature on share contracts is based explicitly or implicitly on agriculture a sector in which share contracts are seldom dominant and apparently on the decline moreover since agricultural activities have some rather special characteristics the purpose of the present article is to analyse contractual choice and especially the choice of share contracts in a sector in which share contracts are dominant namely fishing in the process of explaining the dominance of share contracts in fishing the article also explains a some heretofore neglected features of these share contracts such as the way in which shares are calculated and the treatment of repair and maintenance expenditures b the nature and extent of interlinked transactions c the exceptional cases where share contracts are not used and d the relevance of varying environmental conditions and especially those of poor developing countries to the nature of contracts in fishing and to the differences therein between

regional spending a comment on mackay mackay 2001 recently examined the regional pattern of taxation and spending in the uk concluding that for four regions london the south east scotland and northern ireland public expenditure was well above the level expected for their degree of prosperity mackay 2001 had a very approximate measure of the regional pattern of non identifiable government expenditure a major component of the latter is defence spending and a more precise allocation of this suggests that london and the south east get very preferential treatment moreover so does the south west which should be added to the list of well favoured regions this raises important issues of spatial balance and efficiency

a two country natrex model for the euro dollar this paper develops a natrex natural real exchange rate model for two large economies the eurozone and the united states the natrex approach has already been adopted to explain the medium long term dynamics of the real exchange rate in a number of industrial countries so far however it has been applied to a one country framework where the rest of the world is treated as given in this paper we build a natrex model where the two economies are fully specified and allowed to interact our theoretical model offers the basis for empirical estimation of the euro dollar equilibrium exchange rate that will be carried out in future research jel classification f31 f36 f47

skilled labor unskilled labor and economic growth abstract we study a growth model in which workers with different skill levels are imperfect substitutes we show that economies with high substitutability between skilled and unskilled workers have high levels of capital output and a high proportion of skilled workers

factor substitution average firm size and economic growth this paper extends the lucas 1978 the bell journal of economics 9 2 508 523 analysis of firm size by taking into account a normalised aggregate ces production function in a general equilibrium framework it is proved that there is an inverse relation between the elasticity of substitution and average firm size if interpreted together with the fact that richer countries are characterised by a higher elasticity of substitution this result can explain why the recent literature finds a positive association between the importance of smes in an economy and its stage of development but seems to fail in finding causality between the two both have a common origin a high value of the elasticity of substitution this paper also provides a first empirical test of the theory proposed using cross country data from both developed and developing countries

regional taxing and spending the search for balance the financial settlement has been described as the key to devolution public spending above tax in scotland and wales has been criticized public spending is above tax in seven uk regions including four english regions if we treat equal citizens equally public spending will be above tax in poorer regions there is nothing extraordinary about spending above tax but there are important questions with regard to regional levels of expenditure in four regions london south east scotland and northern ireland public expenditure is well above the level expected for their degree of prosperity this article provides possible explanations

theories of share tenancy a critical survey for the past 2 decades the problems of agricultural tenancy have attracted a great deal of attention not only from agricultural economists but also from economists in general as a typical example of agencyprincipal contract relations despite the prolific growth of literature both theoretical and empirical there has been little convergence in opinions on tenancy contracts the divergence has been especially great on the understanding of the causes and the effects of sharecropping tenancy much confusion underlying the widely divergent perspectives has stemmed from partial treatments of contractual choice which unduly limit the optimizing behavior of contracting parties and the options of contract forms this essay aims at clarifying the sources of the confusion by reviewing the past literature in light of the more general theory of agency principal relations the agency theory in order to examine the problems of various theoretical models in a unified framework in section ii we first develop the basic framework of a general model of tenancy contract in section iii we clarify in terms of the general model contradictions latent in the traditional marshallian theory which asserts that share tenancy is inefficient because of the disincentive effect of cropsharing on the tenant s work effort in section iv we attempt to show that recent efforts to reconstruct the theory based on the traditional assumption have not yet been quite successful section v draws implications and testable hypotheses from more general theories incorporating the aspects of risk and uncertainty section vi tests allocational and distributional implications of those alternative hypotheses based on the summary of evidence col

ces production functions and economic growth we examine inconsistencies and controversies related to the use of ces production functions in growth models first we show that not all variants of ces functions commonly used are consistently specified second using a simple growth model we find that a higher elasticity of substitution leads to a higher steady state and makes the emergence of permanent growth more probable it is also pointed out that the effect of a higher elasticity of substitution on the speed of convergence depends on the relative scarcity of the factors of production finally we discuss possible explanations of variations in the elasticity of substitution jel classification o41 o11

intertemporal and intratemporal substitution and the speed of convergence in the neoclassical growth model abstract this paper re examines the speed of convergence in a one sector growth model under fairly general conditions with respect to both production and preferences we investigate the response of the rate of convergence to the intratemporal elasticity of substitution in production and to the intertemporal and intratemporal elasticities of substitution in consumption the speed of convergence is highly sensitive to the first two elasticities but not to the third which is reflected primarily in the agent s labor leisure choice small deviations in the elasticities from standard benchmark parameters can lead to significant variations in the rate of convergence encompassing the range of typical empirical estimates

the dynamics of hours worked and technology the response of hours worked to technology shocks in the postwar us economy has increased over time we offer a structural interpretation of this important time varying macroeconomic moment the time varying patterns captured by a structural var are consistent with those obtained from a parsimonious rbc model with a less than unitary elasticity of substitution between capital and labour the observed changes in the response of hours are attributable to increases in the magnitude of the degree of capital labour substitution finally we conjecture that the observed time variation in is related to changes in the skill composition of the work force and biases in technological change

ces technology and business cycle fluctuations we contribute to an emerging literature that brings the constant elasticity of substitution ces specification of the production function into the analysis of business cycle fluctuations using us data we estimate by bayesian maximum likelihood methods a standard medium sized dsge model with a ces rather than cobb douglas cd technology we estimate a elasticity of substitution between capital and labour well below unity at 0 15 0 18 in a marginal likelihood race ces decisively beats the cd production and this is matched by its ability to fit the data better in terms of second moments we show that this result is mainly driven by the implied fluctuations of factor shares under the ces specification the ces model performance is further improved when the estimation is carried out under an imperfect information assumption hence the main message for dsge models is that we should dismiss once and for all the use of cd for business cycle analysis

a dual elasticity of substitution production function with an application to cross country inequality abstract this note first develops a production function with two elasticities of substitution between two input factors second the note gives an application regarding the unequal development of relative capital intensities and productivities across countries and tries to quantify it empirically

poverty in palanpur the meaning and identification of poverty are examined using three indicators of standard of living in the north indian village of palanpur the first is intended as a measure of apparent prosperity based on the personal assessments of investigators after intensive field work in the village over the full agricultural year 1983 84 the other two are income in 1983 84 and a measure of permanent income obtained by averaging incomes from four surveys conducted over a twenty six year interval a comparison of these three indicators shows that income measured in any one year may give a misleading impression of the incidence of poverty the risk of poverty for households is calculated vulnerability is high among low caste households and those which are involved in agricultural labor categories however are not homogeneous for example whereas the landless and widows are more likely to be poor some of such households are quite well off it is argued that poverty in a good agricultural year is a better indicator of sustained poverty than poverty in a bad year occupational mobility out of agricultural labor is low and changes in the distribution of land are largely accounted for by demographic processes such as household splits

the long term success of the neoclassical growth model in this paper we seek to re establish the link between the constant elasticity of substitution ces production function and neoclassical solow growth theory we do so in three dimensions first we review the increasing importance of the ces technology in modern dynamic macroeconomics in expanding not only theory but also in addressing important policy questions second we aue that the importance of the ces function in growth theory is intimately linked to normalization finally we examine the data congruence between ces functions and recent growth patterns in the usa and the euro area economies where we apply a supply side system incorporating a ces function with factor augmenting and time varying technical progress

capital labor substitution and equilibrium indeterminacy empirical evidence indicates that the elasticity of capital labor substitution for the aggregate u s economy is below unity in contrast the existing indeterminacy literature has mostly restricted attention to a cobb douglas production function which imposes a substitution elasticity exactly equal to unity this paper examines the quantitative relationship between capital labor substitution and the conditions needed for equilibrium indeterminacy and belief driven fluctuations in a one sector growth model with variable capital utilization the substitution elasticity has little quantitative impact on the minimum degree of increasing returns needed for indeterminacy however when capital utilization is constant a below unity substitution elasticity sharply raises the minimum degree of increasing returns in this version of the model lower substitution elasticities impose a higher adjustment cost on labor hours that cannot be mitigated by shifts in the capital utilization rate overall our results show that empirically plausible departures from the cobb douglas specification can make indeterminacy more difficult to achieve

the 1956 contribution to economic growth theory by robert solow a major landmark and some of its undiscovered riches the famous 1956 contribution by robert solow was always thought to be central to positive or descriptive economic growth theory we show that it is also at the core of optimal growth because the fisher equation of competitive equilibrium is nothing short of an euler equation it corresponds to the maximization of the sum of discounted consumption flows from this equation an optimal savings rate results with reasonable very reachable values we also show the importance of the elasticity of substitution there is a threshold value of this parameter leading to a permanent growth rate of income per person that is above the labour augmenting rate of technical progress and that rate does depend upon the investment saving ratio

shocking stuff technology hours and factor substitution the response of hours to technology shocks is a key controversy in macroeconomics we show that differences between rbc and nk models hinge on highly restrictive views of technology we introduce ces production technologies and demonstrate that the response of hours depends on the factor augmenting nature of shocks and the capital labor substitution elasticity in both models we develop analytical expressions to establish the thresholds determining its sign this opens new margins for shock identification combining theory and var evidence we discuss how our models provide new robust restrictions for empirical work especially using the labor income share

a theory of sharecropping the role of price behavior and imperfect competition this paper proposes a theory of sharecropping on the basis of price behavior in agriculture and imperfectly competitive nature of rural product markets we consider a contractual setting between one landlord and one tenant with seasonal variation of price where the tenant receives a low price for his output while the landlord can sell his output at a higher price by incurring a cost of storage we consider two different classes of contracts i tenancy contracts and ii crop buying contracts it is shown that sharecropping is the optimal form within tenancy contracts and it also dominates crop buying contracts provided the price variation is not too large then we consider interlinked contracts that have both tenancy and crop buying elements and show that there are multiple optimal interlinked contracts finally proposing an equilibrium refinement that incorporates imperfect competition in the rural product market it is shown that the unique contract that is robust to this refinement results in sharecropping

new measures of factor productivity in australia a sato approach this article derives new results of the elasticity of substitution es between capital and labour and factor productivity for australia an economy which experienced major economic reform that substantially increased the flexibility of its labour product and capital markets throughout the 1980s and 1990s it employs a sato production function specification which has unique properties that enable the estimation of capital labour substitution elasticity and changing marginal productivities through time these estimates reveal that the substitution elasticity and labour productivity in australia rose significantly from the mid 1960s and remained elevated during the economic reform period a novel contribution of this article is the depiction of australia s production isoquants to convey how combining labour and capital to produce real gross domestic product gdp has changed over recent decades

a fiscal federalism analysis of debt policies by sovereign regional governments this paper takes a fiscal federalism approach to analyzing debt issue by subfederal regional governments households have a short run attachment to a particular region but are free to migrate between regions in the long run regional governments choose their fiscal policies independently it is shown that the nash equilibrium of regional fiscal policies is one where migration is efficient and households are insured against the idiosyncratic part of shocks occurring in the region in which they live however regional governments issue too much debt relative to the level that would be issued under a coordinated policy such as that which might be carried out by a federal government

the barnett allocation mechanism formula plus influence christie a and swales j k the barnett allocation mechanism formula plus influence regional studies this paper seeks to explain why the operation of the barnett formula has failed to generate convergence in the per capita public expenditure levels in the four countries of the united kingdom using scotland as an example this paper argues that a formula plus influence allocation mechanism has been in place this offers improved flexibility greater political integration and increased information flows than would be available through either a straight bargaining or a formula process while devolution has not changed the barnett formula it has altered the environment in which it operates and that this may well destabilize an otherwise secure system christie a et swales j k la methode d affectation barnett formule plus influence regional studies cet article cherche a expliquer pourquoi l application de la formule barnett n a pas reussi la convergence des depenses publiques par tete dans les

assessing the impacts of foreign manufacturing on regional economies the cases of wales scotland and the west midlands brand s hill s and munday m 2000 assessing the impacts of foreign manufacturing on regional economies the cases of wales scotland and the west midlands reg studies 34 343 355 this paper examines the direct and indirect contributions made by foreign manufacturing companies to the regional economies of wales scotland and the west midlands survey data derived from foreign manufacturers in each region were used in conjunction with regional input output tables to assess the comparative contributions of defined foreign and domestically owned sectors to regional value added the analyses are a starting point for the more accurate targeting of regional resources to industry sectors in the respective regional economies brand s hills s et munday m 2000 evaluer les retombees de l industrie etrangere sur les economies regionales etude de cas du pays de galles de l ecosse et des west midlands reg studies 34 343 355 cet article cherche a examiner les roles direct et indirect joue par les en

two level ces production technology in the solow and diamond growth models the two level ces aggregate production function that nests a ces into another ces function has recently been used extensively in theoretical and empirical applications of macroeconomics this paper examines its theoretical properties and establishes existence and stability conditions of equilibria under the solow and diamond growth models in addition it examines the efiect of changes in substitution parameters on transitional growth and steady states it is shown that in the solow model the su cient condition for a steady state is fulfllled for a larger range of substitution parameter values than with the basic ces function in the diamond model an increase in substitution parameters results in higher transitional growth under weaker conditions than with the basic ces function

substitution between clean and dirty energy inputs a macroeconomic perspective in macroeconomic models the elasticity of substitution between clean and dirty energy inputs within the energy aggregate is a central parameter in assessing the necessary conditions for long run green growth using new sectoral data in a panel of 26 countries we formulate specifications of nested constant elasticity of substitution production functions that allow estimating this parameter for the first time we present evidence that it significantly exceeds unity a favorable condition for promoting green growth

unemployment wage bargaining and capital labour substitution many economists believe that capital accumulation technical progress and labour force expansion have no lasting effect on unemployment this view rests on the empirically doubtful assumption that the elasticity of substitution between labour and capital is equal to unity i e production is cobb douglas using a simple model based on the work of layard nickell and jackman this paper demonstrates that with a lower elasticity of substitution the equilibrium unemployment rate is affected by all of the above factors it considers briefly how capital accumulation may be endogenised and what long run implications this has for unemployment copyright 1999 by oxford university press

the normalized ces production function theory and empirics abstract the elasticity of substitution between capital and labor and in turn the direction of technical change are critical parameters in many fields of economics until recently though the application of production functions with specifically non unitary substitution elasticities i e non cobb douglas was hampered by empirical and theoretical uncertainties as recently revealed normalization of production technology systems holds out the promise of resolving many of those uncertainties we survey and assess the intrinsic links between production as conceptualized in a production function factor substitution as made most explicit in constant elasticity of substitution functions and normalization defined by the fixing of baseline values for relevant variables first we recall how the normalized constant elasticity of substitution function came into existence and what normalization implies for its formal properties then we deal with the key role of normalization in recent advances in the theory of business cycles and of economic growth next we discuss the benefits normalization brings for empirical estimation and empirical growth research finally we identify promising areas of future research

factor substitution and economies of scale and utilisation in kuwait s crude oil industry abstract the cost structure of the crude oil industry in kuwait has been examined with specific focus on factor substitution and economies of scale and utilisation this has been done by estimating translog cost functions both long run and short run using time series data covering the period from 1976 to 1996 the results indicate that the implied production structure is non homothetic and the pattern of scale effect is labour saving but capital and material using the evidence also supports the presence of an induced exogenous technical change which is non neutral labour and capital using and material saving the elasticity of substitution between capital and labour is positive implying that the two inputs are substitute the results also indicate the existence of diseconomies of scale in the production of crude oil but no economies or diseconomies of utilisation

economic growth and the elasticity of substitution two theorems and some suggestions at the beginning of the twentieth century the work of the swedish economist knut wicksell 1901 marked an important advance in our understanding of the relationship between the structure of production functions and income distribution wicksell had asked the following question among many others suppose that the marginal productivities are equal to the remuneration rates of each factor what then should be the form of the corresponding production function he pointed out p 125 that the general integral of the partial differential equation implied by this relationship was of the form y lf kil which meant in turn that the product y was necessarily a homogeneous of degree one function of capital k and labor l as an example he gave a function where the shares of k and l in y were constant and wrote down the function which would be rediscovered decades later by charles w cobb and paul h douglas 1928 however it is only half a century later in robert m solow s nobel prize winning 1956 essay that implications between the structure of the production function and long run equilibrium or disequilibrium of the economy were drawn in his classic article a contribution to the theory of economic growth solow had considered three cases analytically other cases were also discussed geometrically using a phase diagram he had labeled the two first cases 1hlarrod domar and cobb douglas respectively and he referred to the third type of production function as offering a bit of variety it was y ak 2 l 2 2 a particular case of y akp lp 1p in those early days solow had not pointed out to the reader that his cases could have been numbered 0 1 and 2 following the elasticity of substitution of the corresponding production function it would be only five years later in 1961 that with his coauthors kenneth j arrow et al he would find the general form of the two factor constant elasticity of substitution ces production function by integrating the differential equation corresponding to the observed relationship between output per capita and the wage rate solow s third case was indeed highly interesting since it allowed the possibility of everincreasing income per head even without any technical progress indeed solow showed that due to the efficiency of the system entailed by the particular production function he had chosen there existed a threshold for the savings rates s to generate investment per head large enough for income per head to grow forever that threshold was s nla2 where n is the growth rate of the population it was then natural to ask whether one could express that threshold in terms of the elasticity of substitution a the value of that threshold was determined by de la grandville 1989 to be equal to s no3 or where a is k s coefficient in a normalized ces function equal to a in solow s third case where u 2 for any s and n values this relationship gives also the threshold value in implicit form by the solution of ao1 1 log 3q or ilog nls by totally differentiating the last relationship one could observe that the threshold for the elasticity of substitution to entail ever sustained growth was an in klump faculty of mathematics and economics university of ulm helmholtzstrasse 20 d 89081 ulm germany de la grandville department of economics university of geneva 102 boulevard carl vogt ch 1211 geneva 4 switzerland we gratefully acknowledge the comments of seminar participants at stanford university and at the universities of stuttgart hohenheim and munich where parts of the paper were presented also we would like to thank without implicating in any way robert solow for his insightful remarks and an anonymous referee for very helnfuil supgestions wicksell cobb and douglas would no doubt burst with pride if they knew that one of our first year students wrote in a paper of his of course we recognize here a kirk douglas production function

sharecropping in a north indian village this article presents a case study of sharecropping in a north indian village drawing on a detailed survey of tenancy relations in the village it examines a number of issues that have received prominent attention in the literature including the motives for tenancy the choice of tenancy contract the rationale for equal shares the relationship between tenant and landlord the efficiency of sharecropping and interlinkage the wider implications of this case study are also discussed

scotland the grey a linked demographic computable general equilibrium cge analysis of the impact of population ageing and decline lisenkova k mcgregor p g pappas n swales j k turner k and wright r e scotland the grey a linked demographic computable general equilibrium cge analysis of the impact of population ageing and decline regional studies this paper links a multi period economic computable general equilibrium cge modelling framework with a demographic model to analyse the economic impact on scotland of its projected ageing and declining population the model quantifies the effect on aggregate economic variables such as gross domestic product gdp employment and competitiveness and also on individual sectors with the principal demographic projections the fall in population and particularly working age population has a depressing impact on economic activity by changing the demographic parameters the impact of increasing net migration a policy actively being pursued by the scottish government is tracked however the required size of the annual net migration needed to neutralize the adverse natural

the effects of unions on employment and productivity an unresolved contradiction the evidence that unions substantially increase productivity is contradicted by the evidence that the effect of unions on employment is small it is shown in this paper that if the union is constrained by the firm s demand function and it is the efficiency units of labor that are in the demand function then essentially the only way to resolve this contradiction is for unions to raise the productivity of capital and not of labor under conditions where the substitutability between labor and capital is very limited but estimates of the substitutability parameter are near unity so that one of these effects must be wrong either unions do not substantially increase productivity or they substantially reduce employment

capital skill complementarity and balanced growth we construct a general equilibrium version of the krusell et al econometrica 68 1029 2000 model with capital skill complementarity we assume several sources of growth simultaneously exogenous growth of skilled and unskilled labour equipment specific technological progress skilled and unskilled labouraugmenting technological progress and hicks neutral technological progress we derive restrictions that make our model consistent with balanced growth a calibrated version of our model can account for the key growth patterns in the us data including those for capital equipment and structures skilled and unskilled labour and output but it fails to explain the long run behaviour of skilled labour wages and consequently the skill premium

steady state growth and the elasticity of substitution in a neoclassical economy with endogenous capital and labor augmenting technical change the steady state growth rate of output per worker is shown to increase in the elasticity of substitution between capital and labor this confirms the assessment of klump and de la grandville 2000 that the elasticity of substitution is a powerful engine of economic growth however unlike their findings my result applies to the steady state growth rate moreover it does not hinge on particular assumptions on how aggregate savings come about it holds for any household sector allowing savings to grow at the same rate as aggregate output

the breakup of nations a political economy analysis this paper develops a model of the breakup or unification of nations in each nation the decision to separate is taken by majority voting a basic trade off between the efficiency gains of unification and the costs in terms of loss of control on political decisions is highlighted the model emphasizes political conflicts over redistribution policies the main results of the paper are i when income distributions vary across regions and the efficiency gains from unification are small separation occurs in equilibrium and ii when all factors of production are perfectly mobile all incentives for separation disappear i introduction following the demise of communism the entire map of europe from the atlantic coast to the urals is being redrawn and issues of separation unification and the redrawing of borders are yet again at the forefront of european concerns many of the issues raised by this process are primarily of a political cultural or linguistic nature however there are also economic considerations that bear on this problem the objective of this paper is to analyze some important economic and political determinants of the process of unification and separation of democratic nations the starting point of our analysis is to suppose that from an economic efficiency point of view separation of nations is never desirable a unified nation is always more efficient since free trade among regions is guaranteed duplication costs in defense and law enforcement are avoided and local public goods provision such as transportation and communication networks or common standards can be coordinated furthermore any benefits of decentralization that might be obtained in a world with several nations may also be achieved within a unified nation by replicating the administrative structure of the world with several

in quest of the slutsky diamond the slutsky equation can be constructed as a parallelogram a diamond the area of which is proportional to the elasticity of substitution this construction permits to show immediately that demand functions become concave on an interval if the elasticity of substitution increases sufficiently also the diamond sheds light on the fact that the production level increases with the elasticity of substitution as an application the author shows that the elasticity of substitution has a direct bearing not only on the rate of growth of an economy but also on the very existence of sustained growth copyright 1989 by american economic association

what will take the con out of econometrics the paper begins with the question of whether leamer s extreme bounds analysis eba really does take the con out of econometrics by analytically demonstrating that the extreme bounds are simply functions of the f statistic for the deletion of variables from a regression we conclude that the information provided by eba represents no advance over that available from traditional methods furthermore there is a degree of arbitrariness in eba which exactly parallels the selective reporting of regressions it was designed to supplant the last part of the paper attempts a positive response to its title by following a well defined series of modelling steps we maintain that cooley and le roy s eba derived conclusions concerning the interest elasticity of money demand owe more to a faulty methodology than to the data this abstract was borrowed from another version of this item

a microfoundation for normalized ces production functions with factor augmenting technical change based on a tractable endogeneous technology choice framework we provide a microfoundation for aggregate normalized constant elasticity of substitution ces production functions with non neutral factor augmenting technical change in this framework firms are allowed to choose unit productivities of capital and labor optimally from a technology menu constructed under the assumption that unit factor productivities ufps are independently weibull distributed the weibull distribution itself is also microfounded here based on extreme value theory it is found to be an accurate and robust approximation of the true ufp distribution if technologies consist of a large number of complementary components

the potential impacts of climate change on capital in the 21st century abstract an endogenous growth model with a simple climate system is used to examine the potential impacts of climate change on the capital to net income ratio and the net of depreciation share of income to capital a measure of wealth concentration and income distribution between capital and labour respectively over the next two centuries if climate change only directly affects production as usually assumed the capital to net income ratio will increase as compared to what it would be in the absence of climate change the capital to income ratio will increase even further if climate change affects labour productivity in both cases the increase in the ratio after 2100 is due to the stock of capital being depleted at a lower rate than net income is falling however the capital to net income ratio will be lower and eventually fall if damage from climate change increases the depreciation rate of capital this decline is marginally reduced if climate change impacts both capital and labour productivity in the case where climate change impacts the depreciation of capital the ratio after 2100 is falling because the stock of capital is destroyed faster than net income is falling furthermore climate change reduces the net share of income accruing to capital in all scenarios with dramatic changes in the case of climate change affecting the depreciation of capital emissions abatement almost completely mitigates these impacts on the capital to net income ratio and the net share of income to capital

capital labor substitution structural change and the labor income share abstract recent work has documented declines in the labor income share in the united states and beyond this paper documents that this decline was more pronounced in manufacturing than in services in the u s and in a broad set of other industrialized economies and shows that a model with cross sectoral differences in productivity growth and in the degree of capital labor substitutability is consistent with these trends we calibrate the model exploiting additional information on the pace of structural change from manufacturing to services on which the model also has predictions we then conduct a decomposition to establish the relative importance of several potential drivers of changes in factor income shares and structural change that have been proposed in the literature this exercise reveals that differences in the degree of capital bias of technical change across sectors combined with differences in substitution possibilities are key determinants of the observed patterns

avoiding mis estimation of the ces function unit matters abstractwe demonstrate that unit errors of measurement will lead to significant biases in estimating the constant elasticity of substitution ces function monte carlo simulations show that estima

information and the operation of markets tests based on a general equilibrium model of land leasing in india abstract this paper develops an estimable general equilibrium model of land leasing to test the extent to which information is commonly held in a village and whether village markets are efficient information regarding the relative farming skill of households is found to be widespread but the assumption of perfectly efficient markets within the village is rejected these results have ramifications for the estimation of agricultural household models and for our understanding of rural institutions the model is derived from the primitives of the production technology the extent of information and the distributions of assets and several household unobservables simultaneity and selection issues are dealt with explicitly in a two stage maximum likelihood estimation procedure using panel data from india

life expectancy schooling time retirement and growth i analyze how changes in life expectancy affect retirement age education time and growth rates of economies i set up a continuous time overlapping generations model of endogenous growth with externalities in human capital production i find that increases in life expectancy give rise to first higher retirement ages and second higher education spans a threshold level for life expectancy exists such that per capita growth rates follow an inverted u pattern i introduction in this article i analyze how changes in life expectancy may affect optimal education time retirement age and the growth rates of economies to this end i set up a continuous time overlapping generations growth model with human capital accumulation that i solve numerically the issue of the effects of the reduction in mortality rates and the resulting increases in life expectancy on economic growth rates has been recently addressed in the literature through both empirical and theoretical studies along these lines i focus on human capital acquisition and its transmission across generations as the force driving the growth rate concerning empirical studies the hypothesis that the reduction in mortality rates has caused higher levels of investment in human capital and therefore augmented growth rates is partially supported for various economies thus kalemli ozcan et al 2000 show an increase in life expectancy at birth along with an increase in average numbers of years of schooling in england they claim that after averaging across lower income countries there is apparently a connection between increases in life expectancy at birth and increases in gross secondary school enrollment that is positively connected with higher growth rates observed preliminary data from latin american and caribbean countries show that gross domestic product gdp growth is statistically associated with life expectancy for instance estimates based on data from mexico suggest that for any additional year of life expectancy there will be an additional 1 increase in gdp 15 years later see world health organization 1999 box 1 2 9 along the same lines rodriguez and sachs 1999 also find a positive effect of life expectancy on gdp growth for the case of venezuela barro and sala i martin 1995 estimate for a sample of 97 countries that a 13 year increment in life expectancy would increase the per capita growth rate by 1 4 per year they also find however some exceptions where increments in life expectancy have not resulted in higher growth even though all of them exhibited higher schooling levels in the period 1960 85 malmberg 1994 gives another exception higher growth was achieved when middle aged persons were numerous whereas increases in dependent age groups led to lower per capita growth in sweden finally some other studies find mixed evidence so that increments in life expectancy result in higher growth rates for low levels of life expectancy but in lower growth rates for high levels of life expectancy see zhang et al 2003 and references therein a common result in most theoretical studies that include some sort of human capital is that an increase in life expectancy lengthens the period needed to recover investment in human capital which translates into higher returns to individual education or human capital investment this augmented return will give rise to higher levels of investment in human capital which in turn will raise growth rates ehrlich and lui 1991 show in a three overlapping generations model how improvements in longevity lower fertility thus raising educational investment and long term growth meltzer 1995 finds that mortality reductions may favor economic growth by increasing educational investment kalemli ozcan et al 2000 show in an overlapping generations model a la blanchard that if mortality drops life expectancy increases so that an augmented life horizon to enjoy the return to human capital investment gives rise to higher schooling human capital investment although growth is not affected because the growth rate in their model is identically equal to zero

tenancy and interlocking markets issues and some evidence abstract it is frequently asserted that the land lease markets in agrarian economies tend to be interlocked with other markets in recent years a number of theoretical models have been constructed to explain and analyze interlinkages of various markets under cropshare tenancy however the empirical basis for such assertions remains very weak this paper reviews the issues discussed in the literature and attempts empirical verification in the specific context of agriculture of bangladesh the evidence presented does not reveal any significant interlinkages of rural markets in bangladesh

a microeconomic analysis of decentralized small scale biomass based chp plants the case of germany alternative energy sources such as biomass chp plants have recently gained significantly in importance and action is due both on the large scale corporate level and on the small scale hence making the scope and economic outline of such projects easily intelligible without losing relevant details seems a key factor to further promote the necessary developments the model setup presented in this paper may therefore serve as a starting point for generating numerical results based on real life cases or scenarios its focus lies on the economic analysis of decentralized biomass chp plants it presents a new approach to analyzing the economic aspects of biomass chp plants implementing a formal microeconomic approach as germany claims a leading role in the market for renewable energy production the paper also takes a closer look on the effects of german energy policy with respect to biomass chp plants

tiebout or not tiebout the market metaphor and america s devolution debate the market metaphor of intergovernmental choice as a spur to efficiency formalized by charles m tiebout is often invoked to support the shift away from washington and toward the states but the model translates badly to governments governmental entry and exit is costly public sector co11usion often serves citizens interests heterogeneous mobility distorts the signals sent by interstate migration and while tiebout and followers condition efficiency predictions on optimal distribution the u s devolution movement coincides with rising inequality and has gone furthest where distribution matters most the metaphor is misapplied devolution will likely do more to enfeeble government than to improve it

the solow model with ces technology nonlinearities and parameter heterogeneity this paper examines whether nonlinearities in the aggregate production function can explain parameter heterogeneity in the solow growth regressions nonlinearities in the production technology are introduced by replacing the commonly used cobb douglas cd aggregated production specification with the more general constant elasticity of substitution ces specification we first justify our choice of production function by showing that cross country regressions favour the ces over the cd technology then by using an endogenous threshold methodology we show that the solow model with ces technology is consistent with the existence of multiple regimes copyright 2004 john wiley sons ltd

constrained discretion in uk monetary and regional policy mcvittie e and swales j k 2007 constrained discretion in uk monetary and regional policy regional studies 41 h m treasury claims that the notion of constrained discretion which directs the effective operation of uk monetary policy applies equally to other delegated and devolved policies such as the use of regional development agencies in the delivery of english regional policy a transaction cost politics perspective is used to argue that the delegation of responsibility for monetary stabilization raises principal agent issues quite different to those encountered in the delegation of the responsibility for regional regeneration in particular the effectiveness and transparency that characterize present day monetary policy cannot be expected in regional policy further the institutional arrangements that accompany the operation of regional development agencies in england should be critically reviewed mcvittie e et swales j k 2007 la notion de discretion entravee dans les poli

economic growth technical change biases and the elasticity of substitution a test of the de la grandville hypothesis a recent development in microeconomic theory suggests that the size of the elasticity of substitution between factors is relevant to economic growth this study undertakes an empirical investigation of this proposition comparing two economies the united states and south korea the authors test results support the de la grandville hypothesis that the elasticity of substitution is a potent explanatory variable of economic growth this inquiry also provides a clue to the puzzle that the u s elasticity of substitution between labor and capital is well below unity whereas that of south korea is close to unity nonetheless the u s factor shares have tended to remain fairly stable whereas the distributive shares of south korea seem to have changed in favor of capital their findings indicate that a high elasticity of substitution is a bad signal for the distribution of income under the paradigm of modern technology copyright 1991 by mit press

endogenous aggregate elasticity of substitution abstract in the literature studying aggregate economies the aggregate elasticity of substitution aes between capital and labor is often treated as a constant or deep parameter this view contrasts with the conjecture put forward by arrow et al 1961 capital labor substitution and economic efficiency review of economics and statistics 43 225 250 that aes evolves over time and changes with the process of economic development this paper evaluates this conjecture in a simple dynamic multi sector growth model in which aes is endogenously determined our findings support the conjecture and in particular demonstrate that aes tends to be positively related to the state of economic development a result consistent with recent empirical findings

factor substitution and labor market friction in the united states 1948 2010 we re estimate the capital labor elasticity of substitution and the biased factor augmenting technological progress using a system approach for the aggregate u s economy from 1948 to 2010 due to

productivity versus elasticity a normalized constant elasticity of substitution production function applied to historical soviet data this study tests the extensive growth hypothesis which would attribute the soviet economic slowdown to low elasticity of substitution and over investment rather than deteriorating productivity growth to circumvent the low availability of data widely applicable new methods for estimating productivity and elasticity of substitution were developed based on the normalized constant elasticity of substitution ces production function one is an extended version of the solow residual calculation and the other is a direct estimation of the time varying parameter normalized ces production function the application of the methods to the soviet data showed a decreasing trend in productivity growth and a low elasticity of substitution of approximately 0 25 the results neither reject nor support the extensive growth hypothesis because of uncertainty in the interpretation of the low elasticity of substitution the results suggest that it is reasonable to assert that both deteriorating productivity growth and low

determinants of income growth in metropolitan and nonmetropolitan labor markets this article analyzes determinants of growth across labor markets in the united states using a production function approach based on four inputs labor manufacturing investment human capital investment and public capital investment we find little role for public capital investment in growth but that manufacturing investment spurred growth in nonmetropolitan areas in contrast to metropolitan areas we also find that human capital investment mattered more for metropolitan areas than for nonmetropolitan areas further the presence of more colleges and universities more household amenities and lower tax rates are all found to have encouraged human capital accumulation in u s labor markets copyright 2008 oxford university press

the soviet economic decline soviet growth from 1960 to 1989 was the worst in the world after we control for investment and human capital the relative performance worsens over time there is some evidence that the burden of defense spending modestly contributed to the soviet debacle the declining soviet growth rate from 1950 to 1987 can be accounted for by a declining marginal product of capital with a constant rate of growth of total factor productivity the soviet reliance on extensive growth rising capital to output ratios was no greater than that of market economies such as japan and the republic of korea but a low elasticity of substitution between capital and labor implied especially acute diminishing returns to capital compared with the case in market economies copyright 1995 by oxford university press

substitution between production labor and other inputs in unionized and non unionized manufacturing the ease of substitution between labor and other factors of production is an important determinant of the elasticity of demand for labor and thus of the economic effects of unionism all else the same the greater the elasticity of substitution the greater is the elasticity of derived demand and the greater the displacement of labor for a given union induced wage increase in sectors where this elasticity is large unions are likely to be relatively weak and able to win only slight wage gains freeman and medoff 1981 and forthcoming or if they win large gains will have to pay a high price in terms of lost jobs in the sectors where the elasticity is small unions may be able to extract a substantial wage premium at little cost in terms of employment moreover as a simple general equilibrium model indicates the elasticity of substitution between labor and other factors in the unionized sector is a key parameter in determining the impact of the iiunion wage effect on the earnings of nonunion workers and on the efficiency of the economy johnson and mieskowski 1970 despite the importance of the elasticity of labor demand for an analysis of unionism little attention has been given to the absolute and relative magnitude of this elasticity under collective bargaining while there is some discussion of technological change and the substitution of capital and nonproduction workers for organized production workers in the institutional literature e g slichter 1941 slichter healy and livernash 1960 bok and dunlop 1970 modern econometric work provides no estimates of the relevant parameters as a result johnson and mieskowski 1970 rees 1963 lewis 1964 and others have been forced to evaluate union effects with guesstimates of the elasticities of concern in union settings this paper attempts to fill some of the gap in our knowledge by providing estimates for u s manufacturing of the constant output elasticity of demand for unionized and nonunionized production workers and of the elasticity of substitution between these workers and other inputs the analysis concentrates on what we call the relative inelasticity hypothesis which states that the demand for production workers will be more inelastic in the presence of a union for two reasons the likelihood that unions have organized and survived in sectors with low elasticities and the effects of various contract provisions on the ability of management to substitute other factors for production labor the study is divided into four sections section i develops the rationale for the relative inelasticity hypothesis and describes the nature of the empirical analysis conducted to test its validity the second section uses a 1972 state by 2 digit standard industrial classification sic industry data file for manufacturing to estimate the elasticity of substitution between production labor and both nonproduction labor and capital in the union and nonunion sectors of u s manufacturing industries section iii provides estimates based on a 1968 72 sample of manufacturing establishments of the elasticity of substitution between production and nonproduction labor the only two inputs for which information is available the final section briefly summarizes the findings and discusses their implications for understanding the impact of trade unionism on the u s economy to preview the ensuing discussion our main conclusion is substitution between production labor and other inputs is generally lower in union received for publication march 6 1978 revision accepted for publication august 17 1981 both authors are with harvard university and the national bureau of economic research supported by u s department of labor grant no j 9 m 6 0094 national science foundation grant no apt77 16279 and the national bureau of economic research under its program of research on labor economics we are especially grateful to jane mather for her invaluable assistance on this project and to greg bialecki charles brown gary chamberlain kathy coons jon fay martin van denburgh and lori wilson for their significant contributions the study has not been reviewed by the board of directors of the national bureau

the new development economics abstract the theory of rural organization based on rational peasants in environments where information is imperfect and costly provides a simple explanation for a wide variety of phenomena in ldcs it provides insights into both why sharecropping is so widespread and why it takes on the particular forms that it does it provides an explanation of the interlinkage of credit and land markets and of cost sharing the paper argues that this theory provides a better explanation of these phenomena than do the competing theories this theory can be viewed as an important application of a more general paradigm the imperfect information paradigm which has been useful in explaining economic phenomena under a wide variety of settings under competition oligopoly and monopoly in labor markets capital markets in insurance markets and product markets and in developed and less developed countries

the co2 trade balance between scotland and the rest of the uk performing a multi region environmental input output analysis with limited data in this paper we attempt an empirical application of the multi region input output mrio method proposed by turner lenzen wiedmann and barrett turner k lenzen m wiedmann t barrett j 2007 examining the global environmental impact of regional consumption activities part 1 a technical note on combining input output and ecological footprint analysis ecological economics 62 1 37 44 in a recent issue of this journal in order to enumerate the co2 pollution content of interregional trade flows between scotland and the rest of the uk ruk we extend the analysis to account for direct emissions generation by households as final consumers and to a social accounting matrix sam where a more comprehensive account of incomes and expenditures is possible while the existence of significant data problems mean that the quantitative results of this study should be regarded as provisional the interregional economy environment io and sam framework for scotland and ruk allows an illustrative analysis of some very important issues in terms of the nature and significance of interregional environmental spillovers within the uk and the existence of a co2 trade balance between scotland and ruk

an optimal taxation approach to fiscal federalism in a federal system of government each unit of government decides independently how much of each type of public good to provide and what types of taxes and which tax rates to use in funding the public goods in this paper we explore what types of problems can arise from this decentralized form of decision making in particular we describe systematically the types of externalities that one unit of government can create for nonresidents through both its public goods decisions and its taxation decisions the paper also explores briefly what the central government might do to lessen the costs of decentralized decision making

the aggregate production function of the finnish economy in the twentieth century this article uses the bayesian approach to estimate the parameters of the normalized constant elasticity of substitution ces function with factor augmenting technical progress directly rather than using derived first order conditions of profit maximizing behavior bayesian estimation is applied because maximum likelihood estimation is sensitive to the starting values of maximization and the parameters typically fail to converge to the global optimum because of a multimodal likelihood thanks to a convenient prior distribution the posterior simulation of parameters works fairly well the results indicate that in the long run over 100 years the parameters for the elasticity of substitution and capital income share are intimately linked to the shape of capital augmenting technological progress in particular the linear restriction excludes the possibility that the speed of capital augmenting technological progress converges to zero which seems to lead to upwardly biased estimates of the elasticity of substitution and income share parameters

what determines the elasticity of substitution between capital and labor a literature review this paper provides the first comprehensive review of the empirical and theoretical literature on the determinants of the elasticity of substitution between capital and labor our focus is on the two input constant elasticity of substitution ces production function we start by presenting four concise observations that summarize the empirical literature on the estimation of motivated by these observations the main part of this survey then focuses on potential determinants of capital labor substitution we first review several approaches to the microfoundation of production functions where the elasticity of substitution eos is treated as a purely technological parameter second we outline the construction of an aggregate elasticity of substitution aes in a multi sectoral framework and investigate its dependence on underlying intra and inter sectoral substitution third we discuss the influence of the institutional framework on the extent of factor substitution overall this survey highlights that the effective elasticity of substitution ees which is typically estimated in empirical studies is generally not an immutable deep parameter but depends on a multitude of technological non technological and institutional determinants based on these insights the final section identifies a number of potential empirical and theoretical avenues for future research

on the output effects of barriers to trade we study the macroeconomic effects of international trade policy by integrating a hecksher ohlin trade model into an optimal growth framework the model predicts that a more open economy will have higher factor productivity furthermore there is a selective development trap to which countries may or may not converge depending on policy income at the development trap falls as trade barriers increase hence cross country differences in barriers to trade may help explain the dispersion of per capita income observed across countries the effects are quantified and we show that protectionism can explain a relevant fraction of tfp and long run income differentials across countries we study the effects of international trade policy on output to do so we analyze a standard neoclassical growth model where countries can trade intermediate goods the markets of these goods are structured as in the also standard hecksher ohlin trade model thus trade happens owing to comparative advantage which emerges from differences in factor endowments across countries 2 we focus on the case of a small price taking economy one can solve for equilibrium sequentially first each period s output and trade can be treated as a static problem and its solution can be summarized by a mapping from capital and labor to the output of the final good then using that endogenous mapping as if it were an exogenous production function one can solve the intertemporal decisions of agents in the economy in that way a potentially complex dynamic trade problem is avoided it turns out that the equilibrium mapping linking inputs and final output is affected by tariffs as the gains from trade impact not only welfare but also the availability and price of intermediate inputs and hence productivity

factor substitution and convergence speed in the neoclassical model with elastic labor supply abstract we study the link between factor substitutability and the speed of convergence in the ramsey cass koopmans model with elastic labor supply and normalized ces production if the baseline value of capital per unit of effective labor is below its steady state value an increase in the elasticity of substitution reduces the convergence speed

factor substitution and factor augmenting technical progress in the united states a normalized supply side system approach abstract using a normalized ces function with factor augmenting technical progress we estimate a supply side system of the u s economy from 1953 to 1998 avoiding potential estimation biases that

an econometric model of merseyside validation and policy simulations minford p stoney p riley j and webb b 1994 an econometric model of merseyside validation and policy simulations reg studies 28 563 576 the paper estimates an econometric model of merseyside on annual data the model is derived from a heckscher ohlin framework for the traded sector set beside a non traded sector and facing a positively sloped supply curve of manual labour whose reservation wage is set by unemployment benefits with all other factor prices being set exogenously to the region through elastic supply the supply of manual labour responding to traded sector wages set by world market conditions determines the size of the region s output the model s fit over the past is acceptable though data is limited its simulation properties contrasting with those of previous demand driven models imply high returns to policies that reduce local costs such as taxes union mark ups and transport charges minford p stoney p riley j et webb b 1994 un modele econometrique de merseyside

policy scepticism and the impact of scottish higher education institutions heis on their host region accounting for regional budget constraints under devolution hermannsson k lisenkova k mcgregor p g and swales j k policy scepticism and the impact of scottish higher education institutions heis on their host region accounting for regional budget constraints under devolution regional studies a policy scepticism has emerged that challenges the results of conventional regional higher education institution hei impact analyses this paper provides a systematic critique of such scepticism while rejecting its extreme form the limiting effect of the binding public sector expenditure constraints under devolution is noted and it is shown how conventional impact analyses can be augmented to accommodate these constraints while the results suggest that conventional impact studies overestimate the expenditure impacts of heis they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of heis in particular their export intensity

should we fear the robot revolution the correct answer is yes abstract advances in artificial intelligence and robotics may be leading to a new industrial revolution this paper presents a model with the minimum necessary features to analyze the implications for inequality and output two assumptions are key robot capital is distinct from traditional capital in its degree of substitutability with human labor and only capitalists and skilled workers save we analyze a range of variants that reflect widely different views of how automation may transform the labor market our main results are surprisingly robust automation is good for growth and bad for equality in the benchmark model real wages fall in the short run and eventually rise but eventually can easily take generations

economics of devolution decentralization in the uk some questions and answers mcgregor p g and swales k 2005 economics of devolution decentralization in the uk some questions and answers regional studies 39 477 494 the paper explores the economic implications of the radical process of devolution decentralization and delegation of decision making and policy delivery initiated by the post 1997 uk labour government it is argued that the economies of all the presently devolved regions ultimately suffer if the barnett formula is rigorously imposed it is shown that the efficiency of devolving fiscal authority involves a balance of positive and negative elements depending on wage bargaining and migration responses it is then argued that delegation devolution of regional economic development policies while exploiting regional information advantages neglects regional economic interdependence so there are potential gains from greater cooperation coordination