The simultaneity in human capital estimations： The case of China

Existing papers on human capital and growth in China has been using single equation estimations. This might cause a simultaneity bias if a two-way causality between the two variables exists. In this paper, the author performs vector autoregressive estimations using panel data on the number of graduates at each level of education as a proxy for human capital in China during 1991-2005. The results show that investment in human capital increases output per worker at all three levels of education. Regarding the effects of output per worker on the accumulation of human capital, the author finds mixed results with the primary-school graduates＇ benefits the most from increases in per capita output.     

Money–output Granger causal dynamics in China

This paper attempts to investigate the time-varying causal dynamics between China's money and output by using a Markov switching causality approach. Unlike the pre-specified break points and rolling-window methods, the Markov switching causality approach can capture the time-varying causality patterns endogenously. Our empirical results show that there are bidirectional time-varying Granger causalities between China's money and output. On the one hand, the money supply Granger-causes output when the economy is overheated or during recession, whilst it has no significant effect on output when the economy grows moderately; the short term interest rate only has temporary effect on output, suggesting the ineffectiveness of the interest rate based monetary policy. On the other hand, output only affects the money supply in short periods, whilst the feedback of output on the short term interest rate has distinct regime switching features, which implies that the nonlinear Taylor rule targeting on the short term interest rate is more appropriate than the McCallum rule in describing China's monetary policy reaction function.     

Price and nominal wage Phillips curves and the dynamics of distribution in Japan†

This study estimates two types of Phillips curves – the price Phillips curve and nominal wage Phillips curve – for the Japanese economy and analyses the institutional structure of the dynamics of effective demand and income distribution in each period from 1977 to 2007. The estimated results allow us to make the following three findings. First, the Japanese economy was a profit-led regime and a counter-cyclical wage share regime. The combination of regimes can make the dynamics of effective demand and income distribution unstable. Second, the dynamics of price and nominal wage do not reflect each other in Japan by labour–management cooperation. Finally, after 1997, the distributive regime in Japan switched from a counter-cyclical wage share to a pro-cyclical wage share regime because Japanese firms quickened their speeds of employment adjustment. As a result, the dynamics of effective demand and income distribution were stabilised.     

Stochastic accumulation of human capital and welfare in the Uzawa–Lucas model: an analytical characterization

Stochastic growth models are often solved numerically, because they are not tractable in general. However, recent several studies find the closed-form solution to the stochastic Uzawa–Lucas model in which technological progress or population dynamics follow a Brownian motion process with one or two parameter restriction(s). However, they assume that the return on the accumulation of human capital is deterministic, which is inconsistent with empirical evidence. Therefore, I develop the Uzawa–Lucas model in which the accumulation of human capital follows a mixture of a Brownian motion process and many Poisson jump processes, and obtain the closed-form solution. Moreover, I use it to examine the nexus between human capital uncertainty, technological progress, expected growth rate of human capital, and welfare.     

Investment–productivity dynamics and distribution dynamics in a multisector economy: some theory and an application to Italian regions

In this paper, we study the investment–productivity dynamics in the Framework Space, presented by Böhm and Punzo [Cycles, Growth and Structural Change, Routledge, London (2001) 47], as the distribution dynamics of the production sectors of an economy. We apply such theoretical framework to data from Italian regions to identify differences in sectoral behaviors both within and across regions. Our main findings are: sectors within a region generally follow different regime dynamics; Southern Italian regions are generally characterized by higher degrees of heterogeneity in sectoral growth behaviors and of regime instability. Also, we find support to the hypothesis of a positive relation between this type of instability and unemployment, as argued by the Neo-Austrian theory of structural dynamics.     

Misallocation of talent,teachers’ human capital,and development in Brazil

In this study, we investigate the allocation of talent in an economy where teachers play a critical role in developing the human capital of the workforce. To this end, we formulate a Roy model with externality in the occupational choice, as the quantity and quality of teachers are key determinants of workers’ human capital. Our analysis suggests that when individuals with greater abilities opt for teaching careers, the entire workforce benefits. However, frictions in the labor and educational goods markets may lead to a suboptimal allocation of talent and hinder economic growth and development. Our model is calibrated to the Brazilian economy, and our findings reveal a negative correlation between frictions in the teacher’s occupation and per capita output in the Brazilian states. Our results indicate that eliminating friction in the labor market could result in a 16.94% increase in Brazilian income.     

Granger causality tests among openness to international trade,human capital accumulation and economic growth in China: 1952–1999

Abstract

This study examines Granger causality among openness to international trade, human capital accumulation and economic growth in China using time series data over the period from 1952 to 1999 and a sub-period, i.e. a period from 1978 to 1999. For the 1952–1999 period, economic growth is found to Granger cause human capital accumulation and not vice versa. For the 1978–1999 period, economic growth and openness to international trade, economic growth and human capital accumulation, and human capital accumulation and openness to international trade are found to have bidirectional Granger causality, respectively. Thus, there is a dynamic relationship among openness to international trade, human capital accumulation and economic growth. The experience of economic reform in China could be an example to other developing countries.     

A story of large landowners and math skills: Inequality and human capital formation in long-run development, 1820–2000

We create a new dataset to test the influence of land inequality on long-run human capital formation in a global cross-country study and assess the importance of land inequality relative to income inequality. Our results show that early land inequality has a detrimental influence on math and science skills even a century later. We find that this influence is causal, using an instrumental variable (IV) approach with geological, climatic and other variables that are intrinsically exogenous. A second major contribution of our study is our assessment of the persistence of numerical cognitive skills, which are an important component of modern human capital measures. Early numeracy around 1820 is estimated using the age-heaping strategy. We argue that countries with early investments in numerical education entered a path-dependency of human capital-intensive industries, including skill-intensive agriculture and services. The combined long-run effects of land inequality and human capital path-dependence are assessed for the first time in this article.     

Regional inflation dynamics using space–time models

This article provides empirical evidence of the role of spatial factors on the determination of inflation dynamics for a representative set of tradable commodities in Chile. We present a simple model that explains inflation divergence across regions in a monetary union with similar preferences as a consequence of the geographical allocation of producers in the different regions. Our results indicate that spatial allocation together with transport costs are important determinants of regional inflation, while macroeconomic common factors do not play an important role in this process. Existing literature had obtained the opposite result for Europe, and the reasons for this difference warrant further investigation. Moreover, we find that geographical distance seems to be a more appropriate measure of neighbourhood than the adjacency of regions. Our results are robust to different specifications, regression methods and product groupings.     

Optimal taxation in the Uzawa–Lucas model with externality in human capital

In this paper we study the optimal policy in the Uzawa–Lucas model with externality in human capital when agents value both consumption and leisure. We find that the government pursuing the first best can achieve its goal by a subsidy which depends on foregone earnings while studying and which is financed through a lump sum tax. Anyway, the optimal policy, that should be designed to provide incentives for agents to devote more time to schooling and cut both on leisure and working, is not unique. There exists an infinite number of combinations of consumption, capital income, labor income and lump sum taxes that can decentralize the first best.     

Regional clusters of innovative activity in Europe: are social capital and geographical proximity key determinants?

Finding proper policy instruments to promote productivity growth features prominently in the Europe 2020 strategy and is central in many national as well as European policy debates. In view of the increased mobility of high-skilled workers in Europe, ongoing globalization and increased interregional and international co-operation, location patterns of innovative activity may be subject to drastic changes. A proper understanding of location patterns of innovative outputs can enhance the effectiveness and efficiency of national and European placed-based innovation policies. Building on the literature on the knowledge production function, the aim of this article is to explain the observed differences in the production of innovative outputs across European regions. Our main research question is whether geographical proximity and social capital are important vehicles of knowledge transmission in Europe. Several other variables are used to control for structural differences across European regions. We find support for the hypothesis that both social capital and geographical proximity are important factors in explaining the observed differences in the production of innovative output across European regions.     

Conquering or mapping? Textbooks and the dissemination of human capital theory in applied economics

Textbooks are an important subject for the study of science in general and economics in particular. In this paper, we analyse at the process of the acceptance of human capital theory through its inclusion in economics textbooks by looking at two specialized fields to which this theory became highly influential: labour economics and the economics of education. The analysis will compare the patterns of the dissemination of these new theoretical developments in a more consolidated field and in an emergent field of economics research with a particular focus in the early stages of that dissemination process.     

Predator–prey dynamics in general equilibrium and the role of trade

We examine the implications of trade in an economy with two interrelated natural resources, focusing on the case of a simple predator–prey relationship. We derive a three-sector general equilibrium model where production functions are linked via the ecological dynamics of the natural system. Under autarky, this economy exhibits a steady-state equilibrium that overexploits the prey stock, reducing the linked predator population and overall welfare in the absence of harvesting controls. When two economies engage in trade, differences in the dynamics of the two resource systems can become the basis for comparative advantage. In this case, the predator–prey relationship leads to a source of comparative advantage in harvesting prey for a country with a lower autarky steady-state proportion of predators to prey. This feature has not been noticed in the literature and leads to a counterintuitive implication: free trade can help conserve predator and prey stocks in the country with the higher autarkic steady-state proportion of predators to prey. To illustrate the relevance of our analytic findings, we present the stylized empirical example of the effect of Chinook salmon imports on killer whale populations.     

A two-country dynamic Heckscher–Ohlin model with physical and human capital accumulation

We study a two-country endogenous growth model in which the long-run growth is propelled by the accumulation of physical and human capital. We show that in the integrated world economy, there exists a unique and locally saddlepoint stable balanced growth equilibrium. We also show that the incorporation of adjustment costs in the process of human capital accumulation leads to a lower long-run growth rate. We then show that, in the 2-country world economy with international trade, balanced growth is possible. Finally, we present a dynamic Heckscher–Ohlin theorem concerning the pattern of international trade. We appreciate the constructive comments from an anonymous referee which have improved this paper significantly. We acknowledge also with gratitude the valuable comments of Hideyuki Adachi, Kosuke Aoki, Daniel Bernhofen, Eric Bond, Koichi Futagami, Ronald Jones, Tamotsu Nakamura and Raymond Riezman on earlier versions. We appreciate also the beneficial comments from the participants of the GEP conference on New Directions in International Trade Theory held in the University of Nottingham and of the Adachi OB Workshop in Kobe University.     

Does human capital or physical capital constrain output in Japanese prefectures?

This paper develops a dynamic–network DEA (data envelopment analysis) model where total output is jointly produced from two sectors: a human capital sector and a physical capital sector. Each prefecture produces a final output and an intermediate product which is used to augment future physical capital. The optimization method allows future production possibilities to be enhanced if some final output in the current period is foregone so that larger amounts of the intermediate product can be produced. The goal is to choose the amounts of final output and intermediate product so as to maximize the size of the production possibility set. The method also allows identification of whether output is constrained by a lack of physical capital, a lack of human capital or a lack of both types of capital. We apply our method to 47 Japanese prefectures during the period 2007–2009. A key finding is that a lack of human capital is constraining potential output.     

Do education quality and spillovers matter? Evidence on human capital and productivity in Greece

This paper estimates production functions for Greek regions over 1971–2011, using census data on educational human capital. We construct rich human capital series, where data for employees are decomposed according to their education level. In addition, we take into account possible effects due to education quality and spillovers. Our evidence shows that human capital has a strong positive association with labor productivity through upper secondary and tertiary education, while primary education exhibits a negative relationship and lower secondary education does not exhibit any association with productivity. Tertiary education spillovers along with a number of education quality indicators present a significant positive relationship with productivity. Overall, findings suggest that policy makers should account for education quality as well as spillovers and direct their efforts toward a more efficient and enhanced education system with emphasis on high education levels to improve labor productivity overall and reduce spatial productivity disparities.     

FDI, Geographic Location and Their Impacts on the Pattern of Regional Economic Development in China

This paper states how the reciprocal matching of foreign direct investment （FDI） and geographic location generally determine the pattern of regional economic development in China by analyzing the co-relations among geographic location, FDI and regional economic development. Among various factors that affect FDI inflow into specific regions of China, it is believed that geographic location might be one of the most essential factors in shaping the overall trend of diversification in regional economic development in China. Examinations are followed for identifying the above judgment both with econometric models and data analysis.     

Estimates of China capital input index by industries (1981–2000)

The purpose of this paper is to report estimates of capital input index classified by industries in China from 1981 to 2000. We estimate capital stock based on the perpetual inventory method, and then estimate the flow of capital service and capital service price consistently with the capital compensation in input-output table. In our study, we discuss various assumptions and adjustments made on the data and estimation implementation.      

Regional Comparative Adrantage of China＇ s Tourism Industyr and Development Strategy

应用区位商方法对我国旅游产业区域发展现状进行了分析,并以市场占有率作为辅助衡量指标与区位商共同作用判断我国各省市旅游产业区域比较优势和发展水平,在此基础上提出了区域旅游产业发展策略。     

Energy and capital inputs: cornerstones of productivity growth in Mexico: 1965–2004

Gross domestic product per remunerated labor (GDP/L), known as the Mexican average productivity, grew very rapidly from 1965 to 1979; it increased at an average annual rate of 3.7%. But from 1979 through 2004, productivity stagnated with an average annual growth rate of only 0.19%. The hypothesis is that from 1965 through 1979, productivity increased rapidly because of concomitant growth in the utilized capital and energy per worker and the improvements in technology. After 1979, the productivity growth came to a standstill because of a slowdown in investment and stagnation in the utilized capital and energy per worker due to the sharply rising energy prices. The tool chosen to test this hypothesis is an aggregate Cobb-Douglas production function characterized by technical change embodied in the gross investment in new machinery and equipment. The estimation of this model shows energy as a cornerstone of productivity growth independent of capital and new technology.