Growth and social security: the role of human capital

This paper studies the growth and efficiency effects of pay-as-you-go financed social security when human capital is the engine of growth. Employing a variant of the Lucas model [Lucas, R.E., 1988. On the mechanics of economic development. Journal of Monetary Economics 22, 3–42.] with overlapping generations, it is shown that a properly designed, unfunded social security system leads to higher output growth than a fully funded one. Furthermore, the economy with an unfunded social security is efficient, while the other one is not. These results stand in sharp contrast to those obtained in models where the reason for economic growth is physical capital accumulation.     

The role of human and social capital in growth: extending our understanding

Human capital, institutions and social capital are now all recognisedas significant factors of growth. They have largely been studiedseparately, and although they present sufficient common characteristicsto be conceptualised as one main category distinct from physicalcapital, it may still be more important to focus on the linksbetween their specific sub-categories. Direct links with incomemay be spurious, as there appears to be a ‘web of associations’between the sub-categories, which would benefit from furtherempirical investigation. This paper reviews the literature onhuman capital, institutions and social capital, extracting threesub-categories of human capital (human skills capital, stock-of-knowledgeand entrepreneurship) and two of social capital (low- and high-rationalisation).Specific areas are then suggested for further empirical study.     

Private versus social returns to human capital: Education and economic growth in India

This paper investigates whether differences between private and social returns to education of government sector employees can contribute to an explanation of the “micro–macro paradox” in the literature on education and growth. We hypothesize that in India educated people find privately rewarding jobs in a sector in which social returns are low, namely the government sector. This could help explain high returns to education at the micro level and small or negative coefficients on education growth in growth regressions at the macro level. The empirical results, which are consistent with this hypothesis, are based on an analysis of state-level data from India spanning 40 years.     

The importance of social capital: Comparing the impacts of the 2004 Asian Tsunami on Sri Lanka, and Hurricane Katrina 2005 on New Orleans

This paper compares the experiences of the 2004 Asian Tsunami and Hurricane Katrina in New Orleans, to highlight the importance of social capital in strengthening resilience against extreme events. Key issues and implications for policy and research are discussed.     

Law and social capital: Evidence from the Code Napoleon in Germany

I test whether legal institutions crowd-in social cooperation in the long-run, using the introduction of the Code Napoleon in parts of 19th century Germany as a historical experiment. I find that the application of the Code Napoleon is associated with higher levels of trust and cooperation today. This finding is robust to an identification strategy that uses only individuals located around a discontinuity in the number of years the Code Civil was used. Results from a falsification test that moves this discontinuity artificially, as well as the comparison of pre-treatment characteristics support the interpretation of a causal effect. In addition, regions around the discontinuity are similar in post-treatment economic development and inequality. On the contrary, the positive social consequences of the Code Civil manifest themselves in less political fraud in elections from 1871 to 1900, and in more “bridging” social capital in the 1920s.     

Decentralization,social capital,and regional growth: The case of the Italian North-South divide

This paper aims to show how a region's constant level of social capital may have a very different impact on its economic growth depending on whether the central or the local level of government is responsible for regional policy.Our case study is the economic performance of Northern and Southern Italy in the post-World War II period, when a long phase of regional convergence came to a sudden halt in the early 1970s. We focus on the economic effects of the 1970s institutional reforms on government decentralization and wage bargaining. Our main hypothesis is that decentralization allocates the provision of public capital to institutions, the local ones, more exposed to a territory's social capital. Since social capital is lower in the Southern regions, decentralization made their developmental policies less effective from 1970 onwards, and regional inequality increased.We build an endogenous growth model augmented to include the interaction between social capital and public investment as well as the reform of the Italian labour market. We calibrate our model using data of the Italian regions for 1951–71. Our quantitative results indicate that decentralization triggered the influence of local social capital on growth and played a central role in halting the convergence path of the low-social-capital regions.     

Government spending, capital accumulation and the optimal policy rule: The role of public service capital

In this paper, we modify the Djajić [Djajić, S., 1987. “Government Spending and the Optimal Rates of Consumption and Capital Accumulation,” Canadian Journal of Economics 20, 544–554.] model in such a way that government consumption expenditure provides utility to households via the total stock of government services rather than the government consumption flow alone. By using such a framework, we show that the optimality condition for the public service capital stock is the marginal rate of substitution between public service capital and consumption that equals the intertemporal marginal rate of transformation between the two goods. In addition, we show that the relationship between private consumption and public service capital in a household's utility plays an important role in determining the transitional behavior of relevant variables. We also examine the second-best government consumption expenditure policy. By contrast, in the standard flow specification, e.g., Turnovsky and Brock [Turnovsky, S.J. and Brock, W.A., 1980. “Time Consistency and Optimal Government Policies in Perfect Foresight Equilibrium,” Journal of Public Economics 13, 183–212.], Ihori [Ihori, T., 1990. “Government Spending and Private Consumption,” Canadian Journal of Economics 23, 60–69.], and Turnovsky and Fisher [Turnovsky, S.J. and Fisher, W.H., 1995. “The Composition of Government Expenditure and its Consequences for Macroeconomic Performance,” Journal of Economic Dynamics and Control 19, 747–786.], the second-best government consumption expenditure is decided on the basis that the marginal utility of consumption is equal to the discounted sum of the marginal utility of the government's flow spending.     

The effects of corruption on the human capital accumulation process: Evidence from Vietnam

This study aims to identify the effects of corruption on the human capital accumulation process in Vietnamese provinces/cities. I employ labour quality assessments of firms as a proxy for human capital and divide human capital accumulation into the following two processes: an educational process and a process through which educational outcomes and worker training transform into labour quality. The estimation results have some notable implications for the Vietnamese context. Corruption has both negative and positive effects on human capital. On the one hand, corruption reduces the positive effect of local government spending on educational achievements and worsens labour quality. On the other hand, the prevalence of corruption in provinces/cities increases the advantages of local schools in the competition to obtain funds from the central government; hence, corruption enhances educational achievements in those regions. The results of this study indicate that corruption adversely affects human capital overall.     

Accumulation and distribution of human capital: the interaction between individual and aggregate variables

The paper analyses the joint evolution of accumulation and distribution of human capital in an OLG framework. Dynamics arises from the interplay between human capital distribution and individual variables—inherited human capital and inborn ability. Such interaction drives individual investment in human capital and accumulation in the economy. According to initial distribution the model provides different dynamical behaviours linking growth and inequality; in general economies with a more equal initial distribution grow faster but other cases are possible. Moreover, since the model provides an endogenous threshold for investing in human capital, the distribution is characterised by multi-modality.     

Intellectual capital and new product development performance: The mediating role of organizational learning capability

Previous studies rarely examined the relationship between intellectual capital and organizational learning capability. Moreover, most studies neglect the mediating effect of organizational learning capability in the relationship between intellectual capital and new product development performance. This study uses interviews and the survey method to discuss the relationships governing intellectual capital, organizational learning capability, and new product development performance. Results are based on empirical data from Taiwan's IC design industry, and are generated by the Partial Least Squares (PLS) method. Results show that human capital and relational capital actually improve new product development performance through organizational learning capability. Although structural capital positively affects organizational learning capability, managers should pay attention to possibly negative effects of structural capital on new product development performance. Relational capital is the greatest factor among these three types of intellectual capital in Taiwanese IC design companies, structural capital is second, and human capital is last. Comparing three types of intellectual capital of Taiwan's large enterprises with those of Taiwan's small and medium enterprises (SMEs) reveals that the relational capital of Taiwan's SMEs is marginally less than that of large enterprises.     

On the effects of human capital and R&D policies in an endogenous growth model

We introduce an external effect of existing technologies in human capital accumulation in an endogenous growth model and describe its steady-state and transition. We numerically solve the model to compare the quantitative effects of R&D policy with the quantitative effects of human capital policy in wealth and welfare. Although R&D subsidies have now an overall positive effect on growth, wealth and welfare, the calibration exercise shows that for plausible values for the parameters, human capital policy is simultaneously the most income and welfare-improving and the less expensive to the government.     

Human capital and the re‐employment of retrenchment labor in urban China

The inefficiency of state‐owned enterprises, followed by the economic reform in urban China, resulted in large‐scale retrenchment during the late1990s. The laid‐off workers were middle‐aged, not well educated and had accumulated a lot of firm‐specific human capital that was unlikely to be of value in the product market. In this study, we investigate how differently human capital affects laid‐off workers’ occupation choices: self‐employment, re‐employment and remaining unemployed. Using 2002 Chinese Household Income Project and 2009 Urban Household Survey datasets, we find that although general human capital measured by education is positively related to the probability of finding a job, it is negatively associated with the probability of self‐employment. Displaced workers with more sector‐specific work experience are more likely to be self‐employed than to be employed by others. Government‐sponsored training significantly increases the likelihood of finding a job. Health is positively associated with re‐employment.     

Economic development,human capital and technical change: the question of machinery revisited

A systemic element of prevailing economic growth and development is the massive introduction of machinery into the production process. The introduction of new technologies became decidedly a debated issue in economic analysis because of the dual character of technology, which simultaneously creates and destroys employment, advances and deteriorates labor skills. This paper attempts to introduce the relative issues and to assess the extent to which the introduction of machinery into the labor process improves human capital or simplifies labor skills and forms a stream of unskillful laborers.

The Role of Absolute Continuity in “Merging of Opinions” and “Rational Learning”

D. Blackwell and L. Dubins (1962, Ann. Math. Statist.38, 882–886) showed that opinions merge when priors are absolutely continuous. E. Kalai and E. Lehrer (1993, Econometrica61, 1019–1045) use this result to show that players in a repeated game eventually play like a Nash equilibrium. We provide an alternative proof of merging of opinions that clarifies the role of absolute continuity while casting doubt on the relevance of the result. Persistent disagreement, the opposite of merging, allows the construction of a sequence of mutually favorable “bets.” By a law of large numbers, both agents are certain they will win these bets on average. This certain disagreement violates absolute continuity. Journal of Economic Literature Classification Numbers: C11, C69, C72, D83.     

Immigration, fertility, and human capital: A model of economic decline of the West

I show how the influences of unskilled immigration, differential fertility between immigrants and the local indigenous population, and incentives for investment in human capital combine to predict the decline of the West. In particular, indigenous low-skilled workers lose from unskilled immigration even if the indigenous low-skilled workers do not finance redistribution, do not compete with immigrants in the labor market, and do not compete with immigrants for publicly financed income transfers. For the economy at large, high-fertility unskilled immigrants and a low-fertility indigenous population result in economic decline through reduced human capital accumulation and reduced growth of per-capita output.     

Sugar daddy u: human capital investment and the university-based supply of ‘romantic arrangements’

To deal with the financial hardships associated with rising college tuition, many female college students in the U.S. are turning to risqué forms of financing human capital investments, such as agreeing to potentially lucrative ‘romantic arrangements’ with older males, referred to as ‘sugar daddies,’ through the largest Internet-based club in the industry. Yet despite this recent trend, there is a relative paucity of published academic research on the economics of such behaviour. Using data from the more than 220 nationally ranked (by U.S. News & World Report’s America’s Best Colleges) colleges and universities in the U.S., presents results from both Poisson and scaled Poisson estimation suggesting that large, high-cost universities that are located in larger cities or where unemployment rates are higher lead the nation in the number of female students choosing such romantic arrangements in order to fund higher education. Moreover, those institutions that are chosen by more physically attractive female students, and those that enrol a higher percentage of female students, are also generating greater numbers of female student entrants into the sugar daddy industry. Each of these findings has implications for the human capital literature and the growing body of academic literature on the economics of beauty.     

How market access shapes human capital accumulation in a peripheral country: the case of Spain

Human capital endowment is one of the main factors influencing the level of development of a region. This article analyses whether remoteness from economic activity has a negative effect on human capital accumulation and, consequently, on economic development. Making use of microdata, this research proves that remoteness from economic activity can explain the differences in the level of education observed across Spanish provinces over the last 50 years. The effect is significant even when controlling for the improvement of education supply. Nonetheless, the accessibility effect has been petering out since the 1960s due to decreasing barriers to mobility.     

Two tales on human capital and knowledge spillovers: the case of the US and Brazil

This article uses a quasi-Mincerian approach to verify whether the concentration of college-educated individuals employed in the business support services sector and in the own sector contributes to increased productivity in other sectors of the economy. We estimate the returns to education using data from the 2008 US Current Population Survey (March supplement) and from the 2008 Brazilian household survey. This article finds evidence of a positive and significant human capital sectorial spillover effect, which is consistent with Acemoglu’s (1996) conjecture. The sectorial concentration of highly educated workers contributes to increase wages for all workers. This study also finds evidence of increasing returns to education in Brazil and diminishing returns to education in the United States. This finding may be explained by differences in supply of skilled workers in both economies. In addition, the short supply of highly skilled workers in Brazil likely explains the importance of the spillover effect from the business supporting sector.     

我国产业集群兴起与发展的理论研究——基于制度变迁、社会资本的分析

本文以我国由计划经济向市场经济的制度变迁过程为背景,分析了两种社会资本,即塑造型社会资本和沿袭型社会资本的动态变化对我国产业集群的兴起和发展所具有的双面效应:整合与激励的正面作用和阻碍与限制的负面效应,并提出了基于产业集群的社会资本重构。