Human capital and FDI: Development process of the developing country in an overlapping generation model

We construct an overlapping generation model with human capital accumulation to analyze the effect of human capital level on foreign direct investment (FDI) in a small open developing country. In particular, we assume that manufactured goods have the human capital intensive technology and young agents choose whether to work or to educate themselves. When the human capital level in the developing country is sufficiently small, manufactured goods firms do not conduct FDI and the economy in the developing country is trapped in poverty. If the government of the developing country levies a tariff on the imports of manufactured goods, manufacturers conduct FDI, and the economy in the developing country can escape from the poverty trap.     

Industry-Specific Human Capital,Occupation and Firm Size: Evidence from Taiwan

This paper investigates the importance of various types of human capital and highlights the role played by industry tenure in determining wages in Taiwan. It also aims to offer possible explanations as to why industry-specific human capital is much less significant than it is in the United States. Empirically, it is found that, other things being equal, accumulating industry tenure decreases earnings for both the least-skilled workers and those employed in mid-sized firms. Industry-specific skills are not yet deeply implemented in most occupations and firms of all sizes. This might also account for the remarkable level of labor reallocation among industries that is observed in Taiwan. Furthermore, the capital stock accumulated through education is found to be the most crucial in determining wages in all estimations and a factor considered the engine of growth during the miraculous development of Taiwan's economy. However, the importance of other types of human capital on earnings – namely, general labor market experience and firm-specific human capital, varies substantially across groups.     

人力资本与经济增长——兼论经济增长贫困陷阱

人力资本是经济增长的源泉,人力资本不足会损害经济的长期稳定增长。文章通过构建人力资本经济增长模型,说明人力资本在经济增长中的重要作用,并提出人力资本不足引起的经济增长"贫困陷阱"假说。文章还研究了中国1978－2007年的人力资本与物质资本的积累状况,发现相对于物质资本积累的迅速增长,中国人力资本积累严重不足,人力资本存量与物资资本存量的比率连年下降,这必然会影响经济的长期稳定增长,必须增加人力资本投资来提高人力资本积累。     

Mortality,the Trade‐off between Child Quality and Quantity,and Demo‐economic Development

An economy is investigated where parents observe wage rates, interest rates and child mortality and decide about savings and the quantity and quality of their children. Expenditure on child quality causes human capital accumulation as an external effect. If mortality is high parents prefer to have many children and spend only essential rearing effort. Without human capital accumulation the economy may stabilize in an equilibrium of economic stagnation and high population growth. If mortality is low parents prefer to have only few children and spend comparatively large fractions of income on their quality. With human capital accumulation the economy is capable of long‐run growth. The paper also shows the possibility of an endogenously explained demographic transition and a development aid program on education is discussed.     

Trade, wages, and the political economy of trade protection: evidence from the Colombian trade reforms

Worker industry affiliation plays a crucial role in how trade policy affects wages in many trade models. Yet, most research has focused on how trade policy affects wages by altering the economy-wide returns to a specific worker characteristic (i.e., skill or education) rather than through worker industry affiliation. This paper exploits drastic trade liberalizations in Colombia in the 1980s and 1990s to investigate the relationship between protection and industry wage premiums. We relate wage premiums to trade policy in an empirical framework that accounts for the political economy of trade protection. Accounting for time-invariant political economy factors is critical. When we do not control for unobserved time-invariant industry characteristics, we find that workers in protected sectors earn less than workers with similar observable characteristics in unprotected sectors. Allowing for industry fixed effects reverses the result: trade protection increases relative wages. This positive relationship persists when we instrument for tariff changes. Our results are in line with short- and medium-run models of trade where labor is immobile across sectors or, alternatively, with the existence of industry rents that are reduced by trade liberalization. In the context of the current debate on the rising income inequality in developing countries, our findings point to a source of disparity beyond the well-documented rise in the economy-wide skill premium: because tariff reductions were proportionately larger in sectors employing a high fraction of less-skilled workers, the decrease in the wage premiums in these sectors affected such workers disproportionately.     

Costly investment and complementarities in an international trade model with directed technological change

We investigate the impacts on the skill premium and on economic growth in an innovator‐imitator general equilibrium growth model assuming: (a) directed technological change; (b) international trade of intermediate goods; (c) internal costly investment in both physical capital and R&D; and (d) complementarities between intermediate goods in aggregate production. With trade of intermediate goods, the complementarities degree and investment costs influence the economic growth of both countries, but do not affect the countries' skill premia, which are directed by technological knowledge. Additionally, in agreement with related empirical literature, openness to trade of intermediate goods leads to a higher equilibrium skill premium in both countries, whereas its impact on the common growth rate can vary in sign.     

Exporting out of poverty: Provincial poverty in Vietnam and U.S. market access

Can a developing country reduce poverty by gaining increased market access to a large, rich country? The 2001 U.S.–Vietnam Bilateral Trade Agreement (BTA) provides an excellent opportunity to examine this question as, unlike other bilateral trade agreements, the U.S. tariff cuts were not influenced by Vietnamese industries. Using variation in the structure of the labor force across provinces prior to the trade agreement, I construct provincial measures of U.S. tariffs. To address concerns over confounding trends between changes in provincial poverty and changes in provincial tariffs I follow two approaches: controlling for trends based on observable initial conditions and differencing away time invariant trends using pre-BTA data. I find that provinces that were more exposed to the U.S. tariff cuts experienced faster decreases in poverty between 2002 and 2004. Additionally, I document that the movement of workers across provinces is limited in scale, particularly for those with low levels of education. Finally, I show that the most exposed provinces experienced faster wage growth for workers with low levels of education, but not for highly educated workers.     

农民工市民化对经济增长的影响研究

加快以农民工市民化为核心的城市化进程,有利于为我国第三产业发展积累人力资本,有利于我国产业结构的转型升级,更有利于拉动内需,进而推动我国经济的均衡可持续发展。我国农民工群体数量巨大,虽然他们被统计为城市居民,但由于消费模式单一、水平低下,与城市本地居民生活有非常大的差别。我国应加快提升农村地区教育水平,着力解决农民工人力资本积累严重不足问题;尽快打破城乡二元结构,让农民工享受城市居民同样的社会保障,解决他们的后顾之忧。为加快农民工转型和我国产业结构的转型升级创造条件。     

Education,trade and development

A two-sector trade model with scale economies in education can account for some broad features of the contrasting development of those countries which have pursued import substitution and those pursuing export promotion, assuming that the former group is at a ‘low education’ equilibrium where relatively few workers are educated and that the latter group is at a ‘high education equilibrium’ where most workers receive an education. Our analysis suggests that the recent switch toward export promotion by countries disappointed with import substitution may fail to achieve some important development goals, unless the switch is accompanied by major initiatives in education.     

Productivity and Wages

The United States’ output per capita is approximately 30 percent higher than in the developed European countries and Japan, and its productivity growth is among the highest in the world. Much of this record has been due to an environment that fosters growth in human and physical capital and innovation. Maintaining and enhancing this environment is key to the growth we need for our future. Flexibility in the labor force, fostering entrepreneurship, and high levels of education are major contributors to U.S. productivity increases, which have been tracked closely by growth of compensation. Future productivity growth will depend largely on incentives for investment in physical and human capital by appropriate tax policies, continuing a free flow of trade and foreign investment, and making sure that young Americans have the skills necessary to compete in the global economy. JEL Classification J2, J24     

新知识经济时代下我国人力资本优化研究

新知识经济时代,人力资本水平和结构已成为决定未来核心竞争力的关键,人力资源资本化和人力资本优化是实现我国经济进一步提升的有效途径,人力资本优化不仅是总量和纵向上的,更重要的是横向上即性别、产业、行业、区域间的优化。为此对我国人力资本的优化空间进行分析,提出优化的维度分析框架,并制定我国人力资本优化的四条对策。     

Education, trade and investment liberalizations

Empirical evidence suggests a two-way causality between skilled labor and inward direct investment. I construct a general equilibrium model that allows for endogenous firm and plant-location decisions and the endogenous accumulation of skilled labor. I examine the effect of an education subsidy when trade is liberalized and investment is restricted and vice versa. For an initially skilled-labor-scarce country, I show that an education subsidy under investment liberalization can jump the economy to a high-level equilibrium, and that it may be possible to remove the subsidy completely and remain at the superior equilibrium.     

Globalization and the empowerment of talent

Many experts have identified globalization as the new way in which firms organize their activities and the emergence of talent as the new stakeholder in the firm. This paper examines the role of trade integration in the changing nature of the corporation. International trade leads to a ‘war for talent’ which makes it more likely that an organizational equilibrium emerges in the integrated world economy in which control is delegated to lower levels of the firm's hierarchy empowering human capital. Furthermore, trade integration is shown to lead to waves of decentralization and to convergence in corporate cultures across countries.     

Are Human and Social Capital Linked? Evidence from India

This paper develops a two‐period Overlapping Generations (OLG) model of endogenous growth in which a two‐way relationship between social capital and human capital is studied. In order to illustrate the impact of public policies, the model is calibrated using the data for a low‐income country, India and a sensitivity analysis is reported under different parameter values. Based on the numerical analysis, this paper focuses on possible trade‐offs in the allocation of government spending between two productive components, that is, social capital‐related activities and education. The results of this paper show that an increase in the share of public spending on social capital‐related activities through a cut in spending on education or vice versa entails trade‐offs. However, the trade‐off fades away and the net impact on long‐run growth turns out to be positive for different parameter values in the case where a higher share of spending on education is financed by a cut in spending on social capital‐related activities but a policy in improving social capital accumulation at the expense of education is always detrimental to long‐run growth.     

Wage Inequality in the United Kingdom: Trade and/or Technology?

I employ two alternative intra‐industry trade Applied General Equilibrium (AGE) models to explain some stylised facts of the British economy. The model with skill‐biased technical change (i.e. exogenous skill‐biased technical change à la Solow) can explain the rise in wage inequality between skilled and unskilled workers, the decline in manufacturing and the expansion of modern services. However, the model where technical change is trade‐induced (i.e. endogenous sector‐biased technical change à la Romer) performs better, because it can also explain the exponential rise of imported intermediate capital goods and developments in the wage rate of unskilled workers.     

贸易开放、人力资本与中国能源消耗

文章从贸易开放对中国能源消耗产生的影响这一基本问题出发,将人力资本纳入分析视角,研究了贸易开放、人力资本对中国能源消耗的直接效应和交互效应。利用中国2001-2012年30个省份的统计数据,运用固定效应回归模型和面板门槛回归模型进行了实证研究,结果表明：贸易开放对能源消耗的直接效应呈倒“U”型曲线关系,即在贸易开放水平较低时,提高贸易开放水平将增加能源消耗量并提高能源消耗强度;当贸易开放水平较高时,提高贸易开放水平反而能促使能源消耗量和能源消耗强度降低。人力资本对能源消耗的直接效应显著为负,提高人力资本要素积累将促进地区经济增长从物质资本驱动型向人力资本驱动型转变。贸易开放与人力资本对能源消耗的交互效应在人力资本处于较高的门槛区间时显著为负,说明贸易开放在人力资本较高的地区将促进该地区专业化生产节能降耗的人力资本密集型产品,从而降低地区能源消耗量并提高能源利用效率。     

A CGE model of 'Dutch disease' economics in Taiwan

A computable general equilibrium (CGE) model of Dutch disease economics in Taiwan's economy is established in order to examine the impacts of the imbalanced growth in output, endogenous learning effects from imports and exports and the import tariff reduction. Twenty-nine industry sectors and five quintiles of households are taken to measure the changes in industry structure and functional distribution of income. An imbalanced growth, either from output or exports, contributes to the reduction in the share of manufacturing industry, but the deterioration in the functional distribution of income only happens to an imbalanced growth in intersectoral output. A widespread trade liberalization policy helps to mitigate the Dutch disease phenomenon in the sense that de-industrialization and deterioration of the distribution of income by an imbalanced growth in manufacturing industry are not so severe.     

Domestic Implications of a Global Labor Market

Conventional thinking about labor markets has been slow to adjust to the reality of labor in a context of a global rather than a closed, national economy. Liberalization of international trade and capital flows has made substitution of foreign for domestic labor increasingly feasible. This has put downward pressure on reservation wages of unemployed workers. Also, the relatively easy substitution of foreign and domestic manufactured products relative to services has led to a dual economy in which manufacturing employment has been severely impacted by foreign competition while service employment has not. This has been amplified by the U.S.’ comparative advantage in high education and skills, which tends to be more characteristic of services than of manufacturing. This implies that low-skilled workers will be increasingly left behind unless they upgrade their skills in an increasingly competitive global economy. JEL Classification J400,F410     

透视“民工荒”——当前我国农村劳动力转移态势的人口经济学分析

改革开放以来沿海地区持续了二十多年的“民工潮”,近年来却悄然退去,演变成了令人震惊的“民工荒”。原因究竟何在?劳动力无限供给不等于有效供给,进城民工人力资本存量不足,在劳动力市场上缺乏就业竞争能力,“民工荒”表现为“数量荒”,实际上是“质量荒”,来源于民工的“教育荒”。从一定意义上说,“民工荒”反映的又是“权利荒”。善待民工,规范用工行为,切实维护民工的合法权益, 才能营造出一个留住民工的良好就业环境。     

Welfare implications of trade liberalization and fiscal reform: A quantitative experiment

This paper studies the welfare implications of revenue-neutral trade liberalization and fiscal reform programs for developing economies using a multi-sector dynamic general equilibrium model of a small open economy. We analyze how different combinations of tariffs – on imported consumption goods, intermediate inputs, and capital goods – and taxes – on consumption, labor income and capital income – affect the transitional and long-run welfare. We report three main findings. First, trade liberalization programs financed by consumption and labor income taxes tend to result in substantial welfare gains, but financing the lost tariff revenue through capital income taxes can have an adverse impact on welfare. Second, a significant fraction of welfare changes is due to transitional effects stemming from the allocation of resources in response to changes in tariffs and taxes. Third, trade liberalization and fiscal reform programs often translate into much larger welfare gains in countries that are more open to international financial markets.