family and community networks in mexico u s migration a household s decision to send migrants is based on infornation it has on the entry costs expected returns and risks of migration information and assistance flow from both family migrant networks and community migrant networks using data from a national survey of rural mexican households we show the importance of networks in both the decision to migrate and the level of migration we find that community and family networks are substitutes in assisting migration suggesting that once migration is well established in a community family networks become less important in addition the development of strong community networks erases the role of household characteristics in migration allowing those initially least favored to also participate in migration finally we show that network density at points of destination in the united states strongly affects where individuals choose to migrate

increasing returns capital utilization and the effects of government spending abstract we show that a one sector real business cycle model with mild increasing returns to scale variable capital utilization and saddle path stability is able to produce qualitatively realistic business cycles driven solely by disturbances to government purchases due to an endogenous increase in labor productivity a positive spending shock can lead to simultaneous increases in output consumption investment employment and real wage our analysis illustrates a close relationship between this result and the recent literature that explores indeterminacy and sunspots in real business cycle models under laissez faire in particular the condition which governs the required magnitude of increasing returns for government spending shocks to generate procyclical macroeconomic effects is identical to that necessary for a laissez faire one sector real business cycle model to exhibit local indeterminacy

fiscal policy and growth in a small open economy with elastic labour supply endogenizing labour supply leads to fundamental changes in the equilibrium structure of the ak growth model of a small open economy the balanced growth equilibrium is described by two tradeoff loci relating the equilibrium growth rate to the fraction of time devoted to leisure the implications of endogenous labour supply for fiscal policy are addressed the effects of distortionary taxes and government expenditure on the equilibrium growth leisure employment tradeoff are analysed the responses contrast with both those of a closed economy having an elastic labour supply and an open economy with fixed labour supply optimal fiscal policy is also characterized jel classification f41 f43 politique fiscale et croissance dans une petite economie ouverte quand l offre de travail est elastique l endogeneisation de l offre de travail entraine des changements fondamentaux dans la structure d equilibre du modele de croissance du type ak d une petite economie ouverte l equilibre de croissance balancee est decrit par deux lieux de relations d equivalence reliant le taux de croissance d equilibre a la fraction du temps allouee au loisir on examine les implications de cette endogen6isation de l offre de travail pour la politique fiscale on analyse les effets de taxes distorsionnantes et des depenses gouvemementales sur la relation d 6equivalence entre taux de croissance et loisir et donc emploi on obtient des reactions differentes de celles qu on obtient en economie ferm6e quand l offre de travail est elastique et en economie ouverte quand l offre de travail est fixe on proc ede alors a la definition de la politique fiscale optimale

the impact of military burden on long run growth and welfare abstract this paper presents an endogenous growth model to examine how a government s resource allocation between the defense and non defense sectors will govern both economic growth and social welfare we demonstrate that there exists an optimal defense expenditure share that maximizes the economic growth rate but this rate is smaller than the welfare maximizing share this result can be viewed as a possible vehicle to explain why in many developing countries arms limitation and disarmament negotiations usually have low performance even failing

the transferability and depletability of externalities abstract this paper is concerned with symmetry and asymmetry in pollution pricing as conditions for the attainment of a pareto optimum in pollution pricing it has already been claimed freeman j environ econom manage 8 321 329 1984 that for both depletable and undepletable externalities pollution pricing should be asymmetric it is shown in this paper that the relevant distinction is not between depletable and undepletable externalities rather it is between transferable and non transferable externalities the effects of which can or cannot be transferred by the recipient to another party optimality requires symmetric pricing for transferable externalities and asymmetric pricing for non transferable externalities

schooling and public capital in a model of endogenous growth this paper studies the allocation of public spending between education services and infrastructure investment in an endogenous growth model where public capital in infrastructure affects the process of human capital accumulation the balanced growth path is derived and the dynamics associated with a budget neutral reallocation of spending from education to infrastructure are studied through numerical simulations the growth maximizing tax rate is shown to depend only on the production technology as in standard flow models of public expenditure whereas the optimal share of infrastructure investment depends also on the productiveness of infrastructure relative to education services in the schooling technology

endogenous markups and the effects of income taxation theory and evidence from oecd countries abstract existing studies on the effects of fiscal policy under imperfect competition typically treat each firm s price cost markup as fixed this paper examines the implications of endogenising the markup in a simple model of income taxation under monopolistic competition it is demonstrated that an increase in income tax reduces the number of firms lessens competition among surviving firms and raises the optimal markups in the new steady state through this channel the effects of income taxation on the key macroeconomic variables as well as on consumer welfare are unambiguously enlarged the simple model prediction is largely supported by cross section regressions with data from oecd countries

is the relationship between financial development and economic growth monotonic evidence from a sample of middle income countries summary we revisit the relationship between financial development and economic growth in a panel of 52 middle income countries over the 1980 2008 period using pooled mean group estimations in a dynamic heterogeneous panel setting we show that there is an inverted u shaped relationship between finance and growth in the long run in the short run the relationship is insignificant this suggests that too much finance can exert a negative influence on growth in middle income countries the finding of a non monotonic effect of financial development on growth is confirmed by estimating a threshold model

local social capital and geographical mobility in the north of europe club membership is higher than in the south but the frequency of contacts with friends relatives and neighbors is lower we link this fact to another one the low geographical mobility rates in the south of europe relative to the north to interpret these facts we build a model of local social capital and mobility investing in local ties is rational when workers do not expect to move to another region we find that observationally close individuals may take different paths characterized by high local social capital low mobility and high unemployment vs low social capital high propensity to move and higher employment probability employment protection reinforces the accumulation of local social capital and thus reduces mobility european data supports the theory within a country and at the individual level more social capital is associated with lower mobility

an alternative to steady state comparisons in perfect foresight models abstract this note examines a technique for the computation of the welfare impact of a pertubation of the steady state in a typical perfect foresight model the major innovation is the ability to analyze non stationary perturbations

rough and lonely road to prosperity a reexamination of the sources of growth in africa using bayesian model averaging this paper takes a fresh look at africa s growth experience by using the bayesian model averaging bma methodology bma enables us to consider a large number of potential explanatory variables and sort out which of these variable can effectively explain africa s growth experience posterior coefficient estimates reveal that key engines of growth in africa are substantially different from those in the rest of the world more precisely it is shown that mining primary exports and initial primary education exerted differential effect on african growth these results are examined in relation to the existing literature copyright 2008 john wiley sons ltd

determinants of regional economic growth by quantile crespo cuaresma j foster n and stehrer r determinants of regional economic growth by quantile regional studies the robustness of growth determinants across european union regions is analysed using quantile regression using bayesian model averaging bma on the class of quantile regression models it is proposed that the set of relevant covariates is assessed allowing for different effects across growth quantiles the results indicate that the robust growth determinants differ across quantiles the set of robust variables includes physical investment when taking country fixed effects into account and skill endowment and initial gross domestic product per capita when not even when a variable is found to be robust across quantiles its estimated impact on growth is often found to vary across quantiles crespo cuaresma j foster n et stehrer r les determinants de la croissance economique par quantile regional studies a partir d une regression par quantile on analyse la solidite des determinant

depletable externalities and pigouvian taxation abstract in their book baumol and oates the theory of environmental policy externalities public outlays and the quality of life prentice hall englewood cliffs n j 1975 argue that whether an externality is depletable private or undepletable public is the key characteristic in determining the optimal pricing pattern they argue that unlike the undepletable case a negative depletable externality requires not only a charge or tax on the generator of the externality but a payment or compensation to the victim in order to achieve pareto optimality it is shown that the key characteristic determining whether compensation of victims is required for efficiency is not the depletability of the externality but whether the victim can costlessly control or limit the amount of the damaging substance received

public budgetary rules and gdp growth an empirical study on oecd and twelve european countries we study the long term effects of budgetary rules on gdp growth rate and analyse the determinants of the short term gdp growth dynamics for both a sample of 19 oecd and a subsample of 12 european countries we show that in the long run improvements in the cyclically adjusted budget balance as well as increases in the tax burden have negative effects on gdp growth the highest effect of fiscal policy on gdp growth would be obtained if the structural deficits were used to increase the market size by reducing the tax burden in line with barro 1990 a deficit financed reduction of tax burden has a stronger effect for european than for oecd countries because in europe the government size with respect to market size is too large therefore if gdp growth is a dominant policy objective in europe specific actions should redress the 2012 treaty toward a reduction of the tax burden

infrastructure investment a review essay economists try not to be faddists but they often cannot help themselves while work on a topic should mirror the prospective importance of the topic that situation seems to occur with disappointing frequency instead the usual pattern is that some reasonably important topic will be totally ignored for the longest time then recognized and then the subject of a flurry of work all out of proportion to its likely long run importance nowhere has this speculative bubble of economic research been more clearly illustrated than with infrastructure investment macroeconomists havelong felt that the stock of public capital is an important factor input in the production of total output macroeconomists have known that u s productivity growth slowed dramatically in about 1973 and macroeconomists should have known that united states investment in public capital has been down since the late 1960s yet analysis of the u s productivity slowdown completely ignored infrastructure investment for the first fifteen years of this slowdown concentrating instead on energy prices social regulation the composition of the work force research and development different rates of obsolescence of the private capital stock and any number of other matters the public capital stock was hardly ever even mentioned as a potential factor in the productivity slowdown aschauer changed all that he wrote a series of papers 1989a 1989b 1989c that put these two movements together econometrically infrastructure investment turned down and aggregate productivity turned down slightly later both in the united states and in some other developed countries his work hit the magic button those who had worried about the productivity puzzle for fifteen years welcomed a new suspect those who were worried about low rates of u s national saving welcomed a new way to make their argument even more forcefully than with official figures on saving and investment which do not count infrastructure investment as investment political liberals and liberal politicians saw a way to rescue government spending and projects from the assaults of reaganism and even a way to avoid oth

scale congestion and growth this paper explores the relationship between aggregate and relative congestion returns to scale and economic growth aggregate congestion reduces the effective productivity of capital relative congestion reduces the effective productivity of labour both forms of congestion adversely affect the equilibrium growth rate although their relative effects depend upon aggre gate returns to scale the two forms of congestion have contrasting effects on the transitional dynamics relative congestion retards the rate of adjustment aggregate congestion accelerates it the externalities generated by congestion and non optimal expenditure can be fully cor rected both during the transition and in steady state by a time invariant income tax the role of public expenditure as an instrument of economic growth has been a major policy issue as governments throughout the world design stimulus packages as in japan and face difficult choices to meet the emu criteria in europe empirical research investigating the impact of public investment on the productivity of private capital and output was stimulated by aschauer 1989a b who found the effects to be strongly positive the nature of public investment is however diverse in general public goods vary extensively in terms of the nature of their services spanning the range between the polar cases of pure private and pure public goods but the treatment of public expenditures in formal growth models is limited barro 1990 and futagami et al 1993 treat government expenditure as a pure pub lic good and in so doing they fail to take account of the congestion typically associated with public goods however as barro and sala i martin 1992 have argued almost all public services are characterized by some degree of congestion so that the pure public good should be viewed as only a bench mark these considerations suggest that congestion is an important consider ation in assessing the effect of public expenditures on economic growth attempts to analyse the effects of congestion on economic growth have been limited in various dimensions drawing on the public goods literature edwards 1990 proposes a number of specifications of congestion two notions particularly relevant in a growth context are relative congestion and aggregate absolute congestion the former specifies the level of services derived by an individual from the provision of a public good in terms of the usage of his individual capital stock relative to the aggregate capital stock aggregate congestion sometimes called crowding indicates how aggregate usage of the service alone influences the services received by an individual 2 existing applications of congestion to growth theory introduce it into ak models see barro and sala i martin 1992 1995 glomm and ravikumar 1994 1997 and turnovsky 1996 1997 however the ak model features two limitations that restrict its flexibility to examine the relationship between congestion and growth first as solow 1994 pointed out sustained ongoing

social contacts and occupational choice social contacts help workers to find jobs but those jobs need not be in the occupations where workers are most productive hence social contacts can generate mismatch between a worker s occupational choice and his comparative productive advantage thus economies with dense social networks can exhibit apparently low labor force quality and as a result low returns to firms investment and depressed aggregate productivity we employ us and european data for the 1990 s to test the key prediction that social contacts distort workers occupational choices in a direction that reduces their apparent productivity we find that the use of social contacts helps find jobs one to two months sooner but leads to individual wage discounts of 5 to 7 and produces negative externalities on aggregate productivity

job information networks neighborhood effects and inequality this paper explores the theoretical and empirical literature to examine the use by different social groups of informal sources of information provided by friends relatives and acquaintances during job search and its consequences for the job market it also addresses the role of network structure and size the resource endowments of contacts and nature of the links between contacts to explain differences in the effects of job information networks in doing so the paper also turns to the sociology literature on job information networks and provides an economic perspective on such sociological concepts as strong versus weak ties inbreeding distance from structural holes etc the paper distinguishes between models of exogenous job information networks that is where individuals obtain job related information through a given social structure and endogenous job information networks which are social networks that result from individuals uncoordinated actions the paper pays special attention to such issues as physical and social proximity and sharing of information and discusses them in the context of the recent social interactions and neighborhood effects literature finally the paper outlines a model that integrates job information networks where interactions occur in business cycle frequencies with the dynamics of human capital formation which include the joint effects of parental community and neighborhood human capital and are set in life cycle frequencies for the purpose of organizing suggestions for future research and examining earned income inequality

an economic approach to social capital a standard optimal investment model can be used to analyse an individual s decision to accumulate social capital we analyse six facts that support the predictions of this individual based approach 1 social capital first rises and then falls with age 2 social capital declines with expected mobility 3 social capital rises in occupations with greater returns to social skills 4 social capital is higher among homeowners 5 social connections fall sharply with physical distance 6 people who invest in human capital also invest in social capital we fail to find robust evidence that social capital investments fall with the value of time or that geographic religious groups generate social capital complementarities

is infrastructure capital productive a dynamic heterogeneous approach this paper offers an empirical evaluation of the output contribution of infrastructure drawing from a large data set on infrastructure stocks covering 88 countries and spanning the years 1960 2000 and using a panel time series approach the paper estimates a long run aggregate production function relating gdp to human capital physical capital and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport power and telecommunications tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector which is taken to represent the long run production function estimation of its parameters is performed using the pooled mean group estimator which allows for unrestricted short run parameter heterogeneity across countries while imposing the testable restriction of long run parameter homogeneity the long run elasticity of output with respect to the synthetic infrastructure index ranges between 0 07 and 0 10 the estimates are highly significant both statistically and economically and robust to alternative dynamic specifications and infrastructure measures there is little evidence of long run parameter heterogeneity across countries whether heterogeneity is unconditional or conditional on their level of development population size or infrastructure endowments

public investment in infrastructure in a simple growth model abstract in this paper we examine the implications for capital accumulation when infrastructure enters as an external input into private production functions in our model infrastructure is nonexclusive but may exhibit varying degrees of nonrivalry revenues from uniform taxes on capital and labor income are used to finance public investment in infrastructure we show that the optimal tax rate is independent of the degree of nonrivalry when production exhibits constant returns to augmentable factors the equilibrium displays constant growth for most parameters the growth rate depends on the population size under decreasing returns the optimal trajectory exhibits monotonic convergence to a steady state level

anticipated environmental policy and transitional dynamics in an endogenous growth model this paper makes a new attempt toinvestigate how an anticipatedenvironmental policy governs the transitionaldynamics of an economy when pollutionexternality is taken into account themodeling strategy we use is an ak technologyendogenous growth framework with an endogenousleisure labor choice it is found that unlikeinelastic labor supply framework a rise inpublic abatement expenditure will stimulate thebalanced economic growth rate it is alsofound that public abatement technology plays animportant role in determining the transitionaladjustment of the economic growth rate inresponse to a pre announced environmentalpolicy

global behaviour of a system with imperfect private public substitutability abstract empirical findings reveal that the relationship between private and public consumption generically differs from country to country it is substitutable for some while it is complementary for others the present paper incorporates this regularity into a simple growth model with public goods which affect utility and production the model casts off the standard assumption of socially constant returns to scale and as a result it generates many interesting dynamic features which do not arise with constant returns when the system displays increasing returns the dynamic path may diverge from an interior equilibrium in expanding oscillations suggesting that self fulfilling expectations could play an essential role with decreasing returns the interior equilibrium becomes a saddle point interestingly it turns out that the substitutability versus complementarity distinction does make a difference in affecting the stationary state and its transitional dynamics

family attachment and the decision to move by race abstract blacks in the united states move less than whites despite having many characteristics that are commonly associated with high geographical mobility such as high unemployment low rate of home ownership low marriage rate and settlement in areas where unemployment is high we find that this puzzle can be explained by the effects of family ties both nuclear and extended families which we proxy using data from the university of michigan s psid the results are robust to different specifications and estimation techniques

growth convergence and public investment a bayesian model averaging approach the aim of this study is twofold first the determinants of economic growth are studied among a wide set of potential variables for the spanish provinces nuts3 among others various types of private public and human capital in the group of growth factors are included also it is analysed whether spanish provinces have converged in economic terms in recent decades the second objective is to obtain cross section and panel data parameter estimates that are robust to model specification for this purpose a bayesian model averaging bma approach is used bayesian methodology constructs parameter estimates as a weighted average of linear regression estimates for every possible combination of included variables the weight of each regression estimate is given by the posterior probability of each model

residential mobility and social capital abstract this paper empirically investigates the role of social capital in households residential mobility behavior by considering its spatial dimension this study focuses on a household s social ties with people living nearby which we refer to as its local social capital local social capital may deter residential mobility because the resources stemming from them are location specific and will be less valuable if a household moves we conjecture that a household s possession of local social capital has a negative effect on its residential mobility and this negative effect of local social capital may be stronger on long distance mobility than on short distance mobility our empirical investigation is based on data from the panel study of income dynamics we obtain evidence which is supportive of these conjectures

a model of multiple equilibria in geographic labor mobility abstract we develop a model of double matching in the labor market and the social environment in order to explain different migration patterns in response to local economic shocks this approach explains the different behaviors of workers in different groups regions or countries in an endogenous way by showing the existence of multiple equilibria rather than in an exogenous manner by introducing ex ante regulations or unemployment benefits this model can also explain why individuals from some communities form sister communities in some cases and not in others

transitional dynamics in two sector models of endogenous growth the steady state and transitional dynamics of two sector models of endogenous growth are analyzed in this paper we describe necessary conditions for endogenous growth the conditions allow us to reduce the dynamics of the solution to a system with one state like and two control like variables we analyze the determinants of the long run growth rate we use the time elimination method to analyze the transitional dynamics of the models we find that there are transitions in real time if the point in time production possibility frontier is strictly concave which occurs for example if the two production functions are different or if there are decreasing point in time returns in any of the sectors we also show that if the models have a transition in real time the models are globally saddle path stable we find that the wealth or consumption smoothing effect tends to dominate the substitution or real wage effect so that the transition from relatively low levels of physical capital is carried over through high work effort rather than high savings we develop some empirical implications we show that the models predict conditional convergence in that in a cross section the growth rate is predicted to be negatively related to initial income but only after some measure of human capital is held constant thus the models are consistent with existing empirical cross country evidence authors

spill over effects of supply side changes in a two country economy with capital accumulation abstract using a two country dynamic optimization model with capital accumulation we explore the effect of such supply side changes as a rise in productivity and a reduction in the corporate tax rate on the equilibrium path and the welfare of two countries the welfare effect consists of a tax distortion term and a wealth term those supply side changes in the creditor country increase its welfare but unambiguously decrease the debtor country s welfare as capital moves from the debtor country to the creditor country

growth versus welfare in a model of nonrival infrastructure abstract the paper constructs a model of endogenous growth where infrastructure acts as an accumulable stock generating a nonrival input service steady state growth paths are studied for market and command economies in the former a final good is produced privately and as in many developing economies infrastructure accumulated on noncompetitive basis by the state the command economy allocates resources by solving a grand optimization exercise the transitionally stable steady growth rate for the market economy dominates the command economy growth rate due to the joint presence of noncompetitive behaviour by the state and noninternalizable externalities

anticipated inflation in a monetary economy with endogenous growth this paper makes a new attempt to investigate the role of anticipatedmonetary growth in economic growth combining the barro 1990 rebelo 1991 type endogenous growth model with sidrauski s 1967 framework we show that the pre announcement of money supply behaviour may have significant effects on the rate of growth during the transition process the key factor indetermining adjustment patterns of the economy to anticipated monetary changes is the degree of relative risk aversion however changes in the rate of monetary growth do not affect the rate of long run growth regardless of the degree of relative risk aversion

budget balance welfare and the growth rate dynamic scoring of the long run government budget this paper determines conditions under which a reduction in the role of government either through a tax cut alone or together with accompanying expenditure cuts will improve long run government fiscal balance for a ceteris paribus cut in the income tax rate to improve long run government balance the intertemporal elasticity of substitution must exceed unity a tax cut balanced by an expenditure cut is likely to improve the long run balance even if it does not improve the short run balance the relationship between improving the long run fiscal balance and economic welfare is also analyzed

job contact networks abstract many workers hear about or obtain their jobs through friends and relatives the aim of this paper is twofold first we relate both individual and aggregate labor market outcomes to the network structure of personal contacts second we study strategic network formation to this purpose we develop a model specifying at the individual level both the decision to form contacts with other agents and the process by which information about jobs is obtained and transmitted we show that equilibrium networks always exist and that only moderate levels of network asymmetry can be sustained at equilibrium also we establish a general non monotonicity result on information flow and unemployment with respect to network size in symmetric networks

public investment congestion and private capital accumulation this paper analyses the impact of public investment on the dynamics of private capital formation in an intertemporal optimising market clearing framework the key feature characterising the analysis is that the public good is treated as a durable capital good subject to congestion we show how in the presence of congestion the effect of government investment on private capital formation involves a tradeoff between the degree of substitution between private and public capital in production and the degree of congestion both lump sum and distortionary tax financing are considered with this tradeoff being tightened in the latter case

family values and the regulation of labor flexible labor markets requires geographically mobile workers to be e cient otherwise rms can take advantage of the immobility of workers and extract monopsony rents in cultures with strong family ties moving away from home is costly thus individuals with strong family ties rationally choose regulated labor markets to avoid moving and limiting the monopsony power of rms even though regulation generates lower employment and income empirically we do nd that individuals who inherit stronger family ties are less mobile have lower wages are less often employed and support more stringent labor market regulations there are also positive cross country correlations between the strength of family ties and labor market rigidities finally we nd positive correlations between labor market rigidities at the beginning of the twenty rst century and family values prevailing before world war ii which suggests that labor market regulations have deep cultural roots

infrastructure provision and macroeconomic performance this paper studies the differences between private and government provision of infrastructure capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy a subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed the case for private provision is much stronger in economies characterized by high levels of congestion the choice between private and government provision also has a crucial effect on the design of optimal fiscal policy 2011 elsevier b v all rights reserved

looking for a needle in a haystack revisiting the cross country causes of the 2008 9 crisis by bayesian model averaging in this paper we explore the cross country variation in the output impact of the global financial crisis in 2008 9 we use the extensive dataset of rose and spiegel but control for the problems of model uncertainty and outliers by using a variety of bayesian model averaging techniques we find first that cross country differences in crisis intensity can be explained by macroeconomic vulnerabilities second ignoring model uncertainty can lead to incorrect inferences third international trade linkages do matter

media slant against foreign owners downsizing abstract using a unique data set from nationally distributed quality newspapers in germany we find evidence for both quantitative and qualitative media slant against foreign firms a downsizing foreign firm receives almost twice as much attention as a domestic firm and the tone of media reports is more negative media slant is a measure for economic xenophobia directed against foreign owners which constitutes an obstacle to foreign direct investment

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

a further generalization of the solow growth model the role of the public sector we develop in this paper an augmented version of the solow 1956 solow r 1956 a contribution to the theory of economic growth quarterly journal of economics 70 65 94 growth model including the role of government the model leads to a non monotonic relationship between the rate of growth of per capita output and government size generalizing previous results by barro 1990 barro r 1990 government spending in a simple model of endogenous growth journal of political economy 98 s103 s125 to the case in which returns to scale to private factors are not constant 2000 elsevier science s a all rights reserved

networks in labor markets wage and employment dynamics and inequality we present a model of labor markets that accounts for the social network through which agents hear about jobs we show that both wages and employment are positively associated a strong form of correlation across time and agents we also analyze the decisions of agents regarding staying in the labor market or dropping out if there are costs to staying in the labor market then networks of agents that start with a worse wage status will have higher drop out rates and there will be a persistent differences in wages between groups according to the starting states of their networks

strong and weak ties in employment and crime this paper analyzes the interplay between social structure and information exchange in two competing activities crime and labor we consider a dynamic model in which individuals belong to mutually exclusive two person groups referred to as dyads there are multiple equilibria if jobs are badly paid and or crime is profitable unemployment benefits have to be low enough to prevent workers for staying too long in the unemployment status because they are vulnerable to crime activities if instead jobs are well paid and or crime is not profitable unemployment benefits have to be high enough to induce workers to stay unemployed rather to commit crime because they are less vulnerable to crime activities also in segregated neighborhoods characterized by high interactions between peers a policy only based on punishment and arrest will not be efficient in reducing crime it has to be accompanied by other types of policies that take into account social interactions

the migration of technical workers using panel data on the danish population we estimated the revealed preferences of scientists and engineers for the places in which they choose to work our results indicate that these technical workers exhibit substantial sensitivity to differences in wages but that they have even stronger preferences for living close to family and friends the magnitude of these preferences moreover suggests that the greater geographic mobility of scientists and engineers relative to the population as a whole stems from more pronounced variation across regions in the wages that they can expect these results remain robust to estimation on a sample of individuals who must select new places of work for reasons unrelated to their preferences those who had been employed at establishments that discontinued operations

does local social capital deter labour migration evidence from rural china abstractthis article empirically investigates the effect of local social capital on job related migration in rural china a household s social ties in the region of origin which we refer to as local social capital may deter migration because local social capital is location specific and an individual cannot benefit from it if s he migrates in view of chinese gift giving culture we use household expenses on wedding gifts for family members outside household relatives and friends as a proxy for local social networks based on the data from the china health and nutrition survey we find that in rural china local social networks have a significantly negative effect on migration the iv results suggest that a 10 increase in wedding gifts expenses results in roughly a 1 1 percentage points decrease in migration probability

excludable and non excludable public inputs consequences for economic growth non excludable and excludable public inputs are introduced into an endogenous growth model we derive the equilibrium growth rate and design the optimal tax and user cost structure emphasizing the role of congestion and its consequences for the government s budget the latter comprises fee and tax revenues that are used to finance the public inputs although they may generate insufficient revenue to do so entirely we extend the model to allow for monopoly pricing of the user fee by the government most of the analysis is conducted for general production functions consistent with endogenous growth but the ces technology is also considered a vast literature has evolved emphasizing the role of public investment as a determinant of economic growth among the earliest contributions arrow and kurz 1970 is particularly significant while the seminal work of barro 1990 has been especially influential with respect to the contemporary endogenous growth literature stimulated by aschauer s 1989 findings pertaining to the high rate of return on public capital several authors have explored various aspects of the role of public capital in stimulating economic growth for example baxter and king 1993 and fisher and turnovsky 1998 examine the interaction between public and private capital in a ramsey type growth model while futagami et al 1993 perform a similar type of analysis in an endogenous growth context glomm and ravikumar 1997 analyse the growth effects of productive public spending in an overlapping generations setup extending the framework to include majority voting and alternative compositions of publicly provided goods and services they also indicate private alternatives to public provision but do not pursue this in detail cassou and lansing 1998 focus on the relationship between private and public capital showing how the evolution of the ratio between the two in the us economy since 1925 is broadly consistent with the predictions of a simple ramsey growth model they also show how the productivity slowdown in the us economy since the 1970s is more likely due to increasing tax rates than to non optimal public investment policy much of the literature including barro treats the public input as a pure public good freely available without restrictions or impediments to all agents in the economy but the public goods literature identifies many different characteristics that most public goods in fact exhibit notably the presence of rivalry and or excludability see e g cornes and sandler 1996 thus the treatment of a public

on the optimality of public capital for long run economic growth evidence from panel data the role of public capital in economic growth is examined using data from the penn world tables and other sources on a large number of countries drawing on intertemporal optimization the theoretical framework nests the exogenous solow and endogenous types of growth and is data consistent it is found that public capital makes a significant contribution to growth the actual level of investment on public capital is suboptimal growth in recent decades can be characterized as endogenous with little sign of convergence there is evidence of a growth slow down between the 1970s and 1980s human capital also significantly enhances growth

reprint to infrastructure provision and macroeconomic performance abstract this paper studies the differences between private and government provision of infrastructure capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy a subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed the case for private provision is much stronger in economies characterized by high levels of congestion the choice between private and government provision also has a crucial effect on the design of optimal fiscal policy

building resilience to natural disasters an application to small developing states abstract we present a dynamic small open economy model to explore the macroeconomic impact of a major natural disaster in addition to permanent damages to public and private capital the disaster causes temporary losses of productivity inefficiencies during the reconstruction process and damages to the sovereign s creditworthiness we use the model to study the debt sustainability concerns that arise from the need to fully rebuild public infrastructure over the medium term and analyze the feasibility of ex ante policies such as building adaptation infrastructure and fiscal buffers and contrast these policies with the post disaster support provided by donors investing in resilient infrastructure may prove useful in particular if it is viewed as complementary to standard infrastructure because it raises the marginal product of private capital crowding in private investment while helping withstand the impact of the natural disaster in an application to vanuatu we find that donors should provide an additional 50 of pre cyclone gdp in grants to be spent over the following 15 years to ensure public debt remains sustainable following cyclone pam helping the government build resilience on the other hand reduces the risk of debt distress and at lower cost for donors

growth outside the stable path lessons from the european reconstruction abstract this paper exploits a natural experiment the large destruction of capital in continental europe during world war ii to characterize the transitional dynamics of an economy that begins with a capital stock below its steady state level we use these regularities as a benchmark to discriminate among competing growth specifications a model that combines non separabilities in preferences with a technology that restricts the degree of substitutability between inputs outperforms the widely used ak and cobb douglas specifications with time separable preferences our results suggest that policy evaluations based in growth models that overlook non separabilities in preferences or impose strong restrictions on the technological structure might be grossly misleading

the effects of social networks on employment and inequality we develop a model where agents obtain information about job opportunities through an explicitly modeled network of social contacts we show that employment is positively correlated across time and agents moreover unemployment exhibits duration dependence the probability of obtaining a job decreases in the length of time that an agent has been unemployed finally we examine inequality between two groups if staying in the labor market is costly and one group starts with a worse employment status then that group s drop out rate will be higher and their employment prospects will be persistently below that of the other group

factor taxation and labor supply in a dynamic one sector growth model abstract this paper studies a class of ak type growth models with factor income taxes public capital stock and labor leisure trade offs while a higher capital tax rate reduces economic growth in the short run the long term growth effect is ambiguous and remains ambiguous even if the level of tax rate is larger than the degree of government externality a higher labor income tax rate has ambiguous growth effects both in the short and long runs however if the intertemporal elasticity of substitution for labor supply is sufficiently small a higher labor tax rate always lowers economic growth in the long run despite the existence of productive government taxation

aid non traded goods and growth we examine the effects of foreign aid in a small recipient country with two traded goods one non traded good and two factors learning by doing and intersectoral knowledge spillovers contribute to endogenous growth we obtain two main results first a permanent increase in untied aid raises or lowers the growth rate if and only if the non traded good is more capital intensive or effective labour intensive than the operating traded good second a permanent increase in untied aid raises welfare if the non traded good is more capital intensive than the operating traded good otherwise it may raise or lower welfare jel classification f43 o41

optimal taxation of capital income in general equilibrium with infinite lives this paper analyzes the optimal tax on capital income in general equilibrium models of the second best agents have infinite lives and utility functions which are extensions from the koopmans form the population is heterogeneous the important property of the models is the equality between the social and the private discount rates in the long run i find that the optimal tax rate is zero in the long run for a special case of additively separable utility functions i then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state

human capital in spain an estimate of educational attainment in this article an alternative methodology is proposed for obtaining long time series data for a human capital indicator based on the average number of years of education of the working age population in contrast to previous studies we use labour force survey microdata relating to the level of education actually completed in order to construct temporal profiles of educational attainment and thus avoid the need to interpolate from censuses to illustrate the method proposed we evaluate the average number of years of education of the spanish working age population for the period 1910 to 2000

the growth effects of tax rates in the oecd this paper explores the merits of macro and micro based tax rate measures within an open economy fiscal policy and growth model using annual data for 15 oecd countries we find statistically small non robust long run growth effects of macro based average tax rates on capital income and consumption but some evidence for average labor income tax effects changes in micro marginal income tax rates at both the personal and corporate levels yield statistically robust gdp responses of modest size both domestic and foreign corporate taxes appear relevant in general tax effects on gdp operate largely via factor productivity rather than factor accumulation

dynamic analysis of an endogenous growth model with public capital this paper develops an endogenous growth model with productive public capital along with private capital in a spirit similar to that of r j barro 1990 since the authors model includes two stock variables it has transitional dynamics unlike most of the previous studies on endogenous growth including barro s where concerns are restricted to the steady state analysis first they show that the transitional path is unique and stable second the character of the transitional path is explored third the authors show that the optimal tax rate is smaller than the rate that maximizes the national growth rate with a log linear utility function copyright 1993 by the editors of the scandinavian journal of economics

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded