Perpetual growth,the labor share,and robots

ABSTRACT

The recent literature on the economic effects of machine learning, robotization and artificial intelligence suggests that there may be an upcoming wave of substitution of human labor by machines. We argue that these new technologies may lead to so-called perpetual growth, i.e. growth of per capita income with a non-progressing state of technology. We specify an exact parameter threshold beyond which perpetual growth emerges, and argue that ongoing technological change may bring the threshold in reach. We also show that in a state of perpetual growth, factor-eliminating technological progress reduces the role of labor in the production process and that this leads to a rising wage rate but ever-declining share of wage income. We present simulation experiments on several policy options to combat this inequality, including a universal basic income as well as an option in which workers become owners of ‘robots’.     

David Ricardo: on the art of “elucidating economic principles” in the face of a “labyrinth of difficulties”

Abstract

The paper discusses David Ricardo's analytical achievements. These concern his approach to the theory of value and distribution; his analysis of the effects of different forms of technical progress on income distribution; his analysis of exhaustible resources in terms of differential rent; his discussion of machinery and induced technical progress; and his theory of foreign trade and the principle of comparative advantage. It is argued that Ricardo's analysis has been frequently misrepresented and is a great deal more sophisticated than is commonly acknowledged. There are still ideas in his writings that have yet to be fully explored.     

Can innovation shocks determine CO2 emissions (CO2e) in the OECD economies? A new perspective

ABSTRACT

This study has attempted to address prior knowledge gaps in the environmental economics literature by integrating the innovation shocks into the Environment Kuznets Curve (EKC) equation for twenty-six OECD economies using data from 1990 to 2014. Foreign direct investment (FDI), exports (EXP), renewable energy consumption (REC), and GDP per capita were included as control variables. The results from multiple empirical analyses indicated that positive shocks to innovation improve, but the negative shocks disrupt environmental quality. Data analyses also showed that a positive correlation exists between income per capita of OECD economies. From the negative coefficient of income per capita (squared) and the existence of a negative nexus between FDI and CO2e, both the EKC and the Pollution Halo Hypothesis (PHH) were confirmed in sampled economies, respectively. The paper offers empirical support for the favourable impacts of REC on the quality of the environment and calls for the adoption of innovation shocks as a policy instrument to formulate better environmental policies for a sustainable future.     

The tax-rate induced bond substitution hypothesis and the traditional textbook treatment of the relationship between tax-free and taxable bond yields

ABSTRACT

This empirical study posits and tests the ‘tax-rate induced bond substitution hypothesis,’ wherein the propensity for bond buyers to substitute tax-exempt municipal bonds for taxable bonds in their portfolios is hypothesized to be an increasing function of the maximum federal personal income tax rate. This substitution acts to elevate the real interest rate yield on taxable bonds while diminishing it on tax-exempt bonds, ceteris paribus. Two measures of real interest rates are included in the present analysis, ex post real interest rate and ex ante real interest rate. Empirical estimations for the 1981–2018 period provide strong support for the hypothesis. They reveal that the real interest rate yield on high-grade tax-exempt municipal bonds is a decreasing function of the maximum marginal federal personal income tax, whereas the real interest rate yield on taxable ten-year Treasury notes is an increasing function of that same tax rate. We examine the implications of this study and the information underlying it for the traditional formulaic textbook treatment of the relationship between yields on bonds whose interest rate payments are taxable versus those whose interest rate payments are tax exempt and find it is not as dependable as the textbooks would have us believe.     

The effect of artificial intelligence on China’s labor market

ABSTRACT

Automation and artificial intelligence technology have played a pivotal role in today’s economic and social development. They represent a labor-substituted technological progress, featuring more and more jobs to be replaced by AI. Based on the adoption rate calculated in our paper and theoretical substitution probability estimated by existing studies, our research estimates the actual substitution probability by AI for various occupations in China. By using this actual substitution probability on occupation level, we also explore the substitution effects on labor force with different characteristics and find that AI has larger substitution impacts on labors of female, old age, low education and low income. We also predict the number of employed people that would be replaced by AI in each industry, and the results show that China will have 278 million labors (201 ~ 333 million under different adoption rates) replaced by AI by 2049, representing 35.8% of the current employment in China.

Abbreviation: Artificial intelligence (AI), internet of things (IoT), Council of Economic Advisers (CEA)     

The future of the working classes: a comparison between J.S. Mill and A. Marshall

Abstract

Both J. S. Mill and A. Marshall had a lifelong interest in the living conditions of the working classes and theorized the possibility of a new age, characterized by a widespread mental and moral cultivation. This paper compares the precise arguments put forward by them in the period ranging from Mill's to Marshall's Principles, against the background of the evidence of social and human progress at their times. It is argued that, at different stages and with different specific arguments, their predictions relied on self-reinforcing mechanisms, in which a better life was the cause, no less than the effect, of progress. In order to make similarities and differences more transparent from a logical point of view, two simple mathematical formulations are proposed.     

人工智能技术创新缩小了性别收入差距吗？——基于中国家庭追踪调查的经验分析

人工智能技术创新在提高制造业生产效率的同时,也在重塑行业内劳动力市场中不同群体的“技能-技术”匹配关系和收入分配。本文基于中国家庭追踪调查(CFPS)数据考察人工智能技术创新对制造业性别收入差距的影响,并从理论上探讨其内在影响机理。研究发现：(1)技术进步扩大了行业中的性别工资差距,但使整体工资水平趋于上升；(2)技术进步使低技能群体的性别收入差距缩小,但却扩大了高技能群体的性别收入差距；(3)制造业中人工智能技术创新主要通过教育程度、行业内性别偏好、女性精细化能力优势以及低技能工作对体力技能需求下降的方式影响性别工资差距。     

Electricity Tariff Changes and Consumer Sentiment on Household Consumption Expenditure in Malaysia

Purpose

This study investigates the impact of the current electricity tariff, represented by optimized tariff calculation, on Malaysian household’s consumption across different levels of income.

Design/methodology/approach

The input-output (IO) model has vastly been used in many energy economics literature that presented the matrix of production between various sectors in an economy. This study aggregated the 124 subsectors in IO Price Table 2015 into 12 groups of consumption of goods and services based on Household Expenditure Survey 2019 (HES 2019) to meet the study’ objectives.

Findings

This study found that in all simulations, high-income earners would be highly affected by the tariff changes. The lower the increment level in electricity tariff rate, the lower the magnitude would be on the changes of household expenditure level.

Research limitations/implications

Optimization in electricity tariff consumptions can pattern the Malaysian household’s consumption across different levels of income efficiently.

Practical implications

Useful to all consumer in the Malaysia economic business sector to predict their energy consumption up to optimum level.

Social implications

The study’s findings can benefit the society in optimiza their electricity consumption since everyone requires the energy for basic needs in their life.

     

Personal Income and Hierarchical Power

Abstract:

This article examines the relation between personal income and hierarchical power. In the context of a firm hierarchy, I define hierarchical power as the number of subordinates under an individual’s control. Using the available case-study evidence, I find that relative income within firms scales strongly with hierarchical power. I also find that hierarchical power affects income more strongly than any other factor for which data is available. I conclude that this is preliminary evidence for a hierarchical-power theory of personal income distribution.

Supplemental data for this article can be accessed online at http://dx.doi.org/10.1080/00213624.2019.1657746.     

Regional Disparities in Transition Economies: A Typology for East Germany and Poland

This article uses cluster analysis to construct a typology of regions for East Germany and Poland on the basis of indicators for economic capability and their determinants. The results show that, in both countries, the most capable regions are those with or in the vicinity of the largest agglomerations. Besides high income, low unemployment and population gains from migration, these regions have comparatively large stocks of qualified labour and participate in technical progress. Two regional types in particular could be established as problematic: (1) rural regions peripheral to the agglomerations and (2) old industrialised regions. Indicators of investment are not very well suited to indicating the future economic capability of regions under the circumstances of transformation.     

技术创新的中等收入分配效应:原创还是引进再创新

文章从理论与实证两个层面分析技术原创及技术引进再创新对中等收入群体的影响,以全面探究技术创新的收入分配效应.研究发现:技术原创改善了收入分配状况,即技术原创促使技术进步偏向于劳动,以提高劳动收入份额与扩大中等收入群体,能有效地发挥技术原创的收入分配效应;长期内,技术引进不利于改善收入分配状况,即技术引进的收入分配效应相当有限,且不显著;而技术引进再创新会恶化收入分配状况,即技术引进再创新使技术进步偏向于资本,资本逆转与逆向溢出较为严重,这会抑制中等收入群体的扩大,造成技术引进再创新对收入分配的效应失效.文章为创新驱动发展模式下技术创新的收入分配效应分析提供了参考,也为技术原创还是引进再创新对收入分配的影响提供了明确的政策含义.     

Collaborative innovation and policy support: the emergence of trilateral networks

ABSTRACT

The present article models the critical factors for a successful and evolutionarily stable National System of Innovation. We simulate a model, against the background of increasingly complex technologies, in a national process of agents’ interactions with social-dilemma characteristics. In particular, the articleinvestigates the emergence of a trilateral collaborative innovation alliance among ‘enterprise’, ‘university’ and ‘government’. We apply a tripartite evolutionary game with a replication process and explore the role and options of the public policy agent to support collaboration on innovation. We find that some policy mix, in particular, a combination of (1) public rewards for cooperation, (2) public punishment for non-cooperation and (3) settings of public cost controls and tax income from innovation, can promote broad and sustainable innovation alliances. For instance, threats of strong punishment, even with low public rewards for cooperation, may promote the formation of a collaborative innovation alliance. We run some sensitivity analyses of the results through parametric variation of two critical factors of the model, knowledge spillover and output elasticity of knowledge input. We find some qualifications for the velocity of the process.     

R&D organization,monitoring intensity,and innovation performance in chinese industry

This paper examines the relationship between organizational design and technological innovation in Chinese industry. In a principal-agent model, monitoring intensity is an endogenously determined input to innovation production. A recursive system of an innovation production function and a monitoring intensity equation, where the latent monitoring intensity is indicated by the existence of an R&D organization, is estimated with a nonlinear two-stage estimator for a sample of large- and medium-sized Chinese state-owned enterprises. It is the first knowledge production function estimate for China's enterprises. I find that R&D organization affects innovation performance positively and significantly.     

Polarization patterns in economic development and innovation

This paper examines the polarization of economic development in African economies. Based on nonparametric and bipolarization frameworks, we find that countries tend to cluster in two classes, and that bipolarization has been accelerating over the period 1966–2008. We relate the evolution of income bipolarization to specialization in a country. The main sectors that tend to reduce income bipolarization are mining and services. We also study the effects of innovation on income polarization. In particular, we analyze short-run and long-run effects of innovation and their inter-relationship with income polarization. We show that the impact of innovation differs depending on its origin and its type. If innovation is resident, then trademarks outweigh patents. On the contrary, if the origin of innovation is non resident, then patents have a greater effect. Moreover, there is an adjustment process between trademarks residents and patents residents. In the short-run, when trademarks residents are too high, they quickly fall back toward patents residents level. We do not observe such adjustments between trademarks non residents and patents non residents. Last, unexpected shocks that affect patents (res. trademarks) have a permanent (res. transitory) effects on income polarization.     

The long-run impact of human capital on innovation and economic development in the regions of Europe

ABSTRACT

Human capital is supposed to be an important factor for innovation and economic development. However, the long-run impact of human capital on current innovation and economic development is still a black box, in particular at the regional level. Therefore, this paper makes the link between the past and the present. Using a large new dataset on regional human capital and other factors in the 19^th and 20^th century, we find that past regional human capital is a key factor explaining current regional disparities in innovation and economic development.     

National Income Accounting and Public Policy

Modern national income accounting was designed in the early 20th century for the purpose of providing improved indicators about the performance of the economy so that government policy makers could better control the economy. The way that performance is measured affects the types of policies used to try to accomplish policy goals. Two attributes of national income accounting are analyzed for their effects on economic policy. First, government production is included in the national income accounts at cost, rather than at market value as private sector output is measured. This biases policy toward a larger public sector. Second, output is measured as a homogeneous dollar amount. This biases policy toward focusing on increasing quantities of inputs and outputs in the production process, rather than on innovation and entrepreneurship, which are the true engines of economic progress. Economic policy could be improved by focusing less on national income as an indicator of policy, and more on the underlying processes that foster economic progress.     

Identifying and ranking novel indicators of MSMEs innovation potential

ABSTRACT

The aim of this paper is to present the research on the identification and ranking of innovation potential indicators of micro, small and medium enterprises (MSMEs). The main innovation management challenge is to recognise and measure factors that enable innovations. In that sense, the key 6 criteria and 41 indicators that describe innovation potential of MSMEs have been identified, based on expert judgment and the selected literature review in the field of innovation and entrepreneurship. Next, the rank of every indicator based on an expert’s assessment was determined by using Fuzzy AHP approach. A case study was conducted for Serbian MSMEs. The holistic approach, applied in this research for the identification of the innovation potential criteria and indicators, represents novelty and contribution to the literature. The presented procedure of the innovation potential indicators selection and ranking could be used as a bench-marking tool, to help managers to improve innovation capacity of the company.     

R&D financing and growth

ABSTRACT

R&D investment are an important engine of growth and development. Yet economists have often claimed underinvestment, based on the consideration that these projects are more costly to finance, especially, due to the asymmetric information between inside and outside investors. Coherently, a recent empirical evidence has shown that firms intensively active in R&D are less leveraged and rely more heavily on internal finance. Motivated by this evidence, we study the effects of asymmetric information and financial frictions within a GE economy of Schumpeterian tradition. The model and equilibrium concept are rich enough to represent investment and innovation decisions, technology adoption/diffusion through patent licensing and, most importantly, firms' financial decisions. In this representation, R&D-intensive firms might effectively rely more on internal sources and equity than on debt financing, relative to what would happen in frictionless markets. Further, financial decisions affect aggregate investment and income dynamics.     

Value of innovation for hematologic malignancies

Background:

Several novel drugs are dramatically improving both lifespan and quality-of-life of patients with blood cancers.

Aim:

Prolonged disease duration and increased treatment costs for hematologic malignancies impose a relevant economic burden onto healthcare services, despite the low incidence of blood cancers. Therefore, an appropriate paradigm for valuing ‘innovation’ is urgently required in order to refine pricing and reimbursement decisions. Cost-per-QALY-gained is still the standard metric for assessing the ‘incremental’ value of new drugs; however, the high number of ‘comparator’ therapies and the huge variety of treatment sequences make plain two-treatment comparisons sub-optimal, while multiple-treatment and multiple-sequence comparisons require complex and less-transparent decision models. A repository of standard backbones for decision models might allow benchmarking and comparability among cost-effectiveness analyses; however, an international effort is required to build it up.

Results:

Deontology recommends that hematologists act in optimizing healthcare resources while preserving patient–physician alliance, but clinical practice guidelines do not support doctors in balancing cost against clinical outcomes. Decision models of chronic blood cancers unexpectedly proved that cost might be an appropriate value for innovation if treatments avoided severe toxicity and further lines of treatments, despite the eventually long duration of treatment and the competing risk of death due to comorbidity and old age.

Conclusion:

The improved transparency of decision models allows sharing of relevant structural and analytic parameters (i.e., time horizon, comparator treatments, hierarchy of end-point, assumptions, source of data, sub-group analyses) by stakeholders, physicians and patients, making health economics a noble ‘translator’ of values for innovation.     

Inequalities in Income Distribution in Slovenia

This article presents an empirical analysis of income distribution based on income tax data for Slovenia in 1991-2000. It presents evidence of rising inequalities in income distribution (gross income, gross wages and pensions). These results are supported by coefficients of variation, Gini coefficients and by the Lorenz curves. Inequalities increased rapidly in the 1991 to 1993 period. After a significant decrease in 1994 and a steady increase from 1995 to 2000, the peak value from 1993 was not surpassed. Atkinson's requirements for dominance comparisons are not violated. Inequalities are also present in the distribution of the benefits of economic growth among income groups.