Information technology and economic performance in U.S industries

Abstract .  We study the relationship between information technology (IT) and economic performance, to explore whether IT-capital promotes productivity growth. We use a data set similar to that of previous researchers, but employ non-parametric estimation techniques in order to directly estimate the output elasticities of IT for each industry and time period. We find that IT has a positive effect on productivity, which varies among industries and time. Moreover, adjustment costs are important when identifying this effect. Finally, IT-capital growth appears to be raising income in all industries used in our sample, even those that experienced output reduction.     

Social learning,neighborhood effects,and investment in human capital: Evidence from Green-Revolution India

This paper empirically identifies social learning and neighborhood effects in schooling investments in a new technology regime. Social learning implies that learning is most efficient when observed heterogeneity in schooling is greatest. The estimates of learning-investment rule, from farm household panel data at the onset of the Green Revolution in India, show that (i) agents learn about schooling returns from income realizations of their neighbors, and (ii) the speed of learning is high when the variation of schooling is large. Thus, schooling distribution of the parents' generation in a community has externalities to schooling investments in children. Simulations show that the variations in schooling within and across communities generate variations in child enrollment rate and average household income.     

Social Affiliation and the Demand for Health Services: Caste and Child Health in South India

This paper assesses the role of social affiliation, measured by caste, in shaping investments in child health. The special setting that we have chosen for the analysis - tea estates in the South Indian High Range - allows us to control nonparametrically for differences in income, access to health services, and patterns of morbidity across low caste and high caste households. In this controlled setting, low caste households spend more on their children's health than high caste households, reversing the pattern we would expect to find elsewhere in India. Moreover, health expenditures do not vary by gender within either caste group, in contrast once again with the male preference documented throughout the country. A simple explanation, based on differences in the returns to human capital across castes in the tea estates is proposed to explain these striking results.     

Women as agents of change: Female income and mobility in India

Economic globalization will give many women in developing countries access to steady and relatively remunerative employment for the first time, potentially shifting bargaining power within their households and changing the choices that are made for their children. This paper exploits a unique setting — a group of tea plantations in South India where women are employed in permanent wage labor and where incomes do not vary by caste — to anticipate the impact of globalization on mobility across social groups in the future. The main result of the paper is that a relative increase in female income weakens the family's ties to the ancestral community and the traditional economy, but these mobility enhancing effects are obtained for certain historically disadvantaged castes alone. Although the paper provides a context-specific explanation for why the women from these castes emerge as agents of change, the first general implication of the analysis is that the incentive and the ability of women to use their earnings to influence household decisions depends importantly on their social background. The second implication is that historically disadvantaged groups may, in fact, be especially responsive to new opportunities precisely because they have fewer ties to the traditional economy to hold them back.     

Moral hazard and Marshallian inefficiency: Evidence from Tunisia

We formalize the link between optimal cost-sharing contracts and the production technology in the presence of moral hazard by appealing to several well-known results from duality theory. Building on intuitions from the interlinkage literature, we show that optimal contractual structure is determined by the (i) substitution possibilities that exist between different observable factor inputs, as well as (ii) between these inputs and unobservable effort. We endogenize contractual choice using landlord characteristics as instruments, exploiting the fact that, in our dataset, landlords interact with several tenants and vice versa. The approach is applied to an unbalanced plot-level panel of cost-sharing contracts in a Tunisian village, using a translog representation of the restricted profit function. Contractual terms are found to be a significant determinant of input use and therefore lead to Marshallian inefficiency, while the optimality of the underlying contractual structure is rejected.     

Directional measurement of technical efficiency of production: An axiomatic approach

This contribution revisits the debate on the axiomatic properties satisfied by various radial versus non-radial measures of technical efficiency in production. This issue arises whenever isoquant and efficient subset of technology diverge and hence traditional radial measurement does not comply with Koopmans' definition of technical efficiency. This axiomatic approach to technical efficiency measurement is revisited within the framework of the more recently introduced directional distance function. This analysis provides the opportunity to define some new directional efficiency measures.     

Schooling as a Lottery: Racial Differences in School Advancement in Urban South Africa

This paper analyzes the large racial differences in progress through secondary school in South Africa. Using recently collected longitudinal data we find that grade advancement is strongly associated with scores on a baseline literacy and numeracy test. In grades 8-11 the effect of these scores on grade progression is much stronger for white and coloured students than for African students, while there is no racial difference in the impact of the scores on passing the nationally standardized grade 12 matriculation exam. We develop a stochastic model of grade repetition that generates predictions consistent with these results. The model predicts that a larger stochastic component in the link between learning and measured performance will generate higher enrollment, higher failure rates, and a weaker link between ability and grade progression. The results suggest that grade progression in African schools is poorly linked to actual ability and learning. The results point to the importance of considering the stochastic component of grade repetition in analyzing school systems with high failure rates.     

Technical efficiency in the Chinese banking sector

This paper applies an innovative DEA (Data Envelopment Analysis) model, the Inverse B-convex model, in order to investigate the technical efficiency of a representative sample of Chinese banks. The banks are ranked according to their efficiency over the period 1998-2008. The results paint a mixed picture of the Chinese banks' performance. The influence of firm size and ownership on bank efficiency is not observed. However, the study shows that overall efficiency improved over time, especially after the entry of China into the WTO. Policy implications are derived.     

Why is child labor illegal?

We present a theory of the emergence of laws restricting child labor or imposing mandatory education that is consistent with the fact that poor parents tend to oppose such laws. We find that if altruistic parents are unable to commit to educating their children, child-labor laws can increase the welfare of higher-income parents in an ex ante sense. On the basis of an empirical analysis of Latin-American household surveys, we demonstrate that per capita income in the country of residence has the predicted effect on child labor supply, even after controlling for other household characteristics.     

The empirical content of Cournot competition

We consider the testable implications of the Cournot model of market competition. Our approach is nonparametric in the sense that we abstain from imposing any functional specification on market demand and firm cost functions. We derive necessary and sufficient conditions for (reduced form) equilibrium market price and quantity functions to be consistent with the Cournot model. In addition, we present identification results for the corresponding inverse market demand function and the firm cost functions. Finally, we use our approach to derive testable restrictions for the models of perfect competition, collusion and conjectural variations. This identifies the conditions under which these different models are empirically distinguishable from the Cournot model. We also investigate empirical issues (measurement error and omitted variables) related to bringing our testable restrictions to data.     

Second thoughts on the exporter productivity premium

Abstract Contrary to the prevailing interpretation, this paper shows that the central models of trade with heterogeneous firms ( Melitz 2003 ; Bernard et al. 2003 ) exhibit ambiguous predictions for the exporter productivity premium. This prospect arises because of differences between theoretical and empirical representations of firm productivity. Instead of marginal productivity, we examine in both models the theoretical equivalent of empirically observable productivity (value‐added per employee). Given the presence of fixed export costs or heterogeneous mark‐ups and trade costs, the observable productivity of exporters in proximity to the export‐indifferent firm turns out to be lower than that of non‐exporters; that is, the productivity distributions overlap. The paper reviews empirical literature that reports non‐positive exporter productivity premia in firm‐level data and discusses implications for empirical research on exporter performance, including learning and the role of non‐parametric regressions (stochastic dominance, quantile regressions), fixed costs, and productivity distributions.     

Intergenerational mobility and macroeconomic history dependence

A large literature on ‘endogenous inequality’ has argued that persistent differences in macroeconomic performance across countries can be explained by historical inequality, owing to indivisibilities in occupational choice and borrowing constraints. These models are characterized by homogenous agents, a continuum of steady states (SSs) and lack of mobility in every SS. We show that introducing (even a little) heterogeneity in order to generate SS mobility shrinks the SS set dramatically. Mobile SSs are generically locally unique and finite in number. Sufficient conditions for global uniqueness and convergence of competitive equilibrium dynamics are provided.     

The Luenberger productivity indicator: An economic specification leading to infeasibilities

This contribution points out an error in the specification of technology when computing the Luenberger productivity indicator that has been hitherto ignored in the literature. The solution of this problem increases the likelihood that the directional distance functions underlying this productivity indicator are ill-defined.     

Microfinance and competition for external funding

In this paper we examine a one-period model in which poverty minimizing microfinance lenders must raise external funding from a profit maximizing investor. Assuming that the lenders vary in their operating costs, we find that competition between lenders for external funds can lead to higher aggregate poverty reduction.