Productivity in manufacturing and the length of the working day: evidence from the 1880 census of manufactures

Using micro-level data from the 1880 Census of Manufacturing, we estimate the elasticity of annual output with respect to the length of the working day. Holding labor and capital inputs constant and controlling for days of operation per month and months per year, this elasticity was positive but less than one, indicating diminishing returns. We also find diminishing returns to days per month and months per year, but these elasticities were significantly larger. Thus, decreases in daily hours coupled with an offsetting rise in annual days of operation would increase productive efficiency—precisely the kinds of changes then actually taking place.     

Was Malthus right? The relationship between population and real wages in Italian history, 1320 to 1870

In this article we investigate the relation between population and real wages in the Italian economy during the period 1320–1870. The main result is that the positive check is strong and statistically significant but the other equilibrating mechanism in the Malthusian model – the preventive check – based on the positive relationship between fertility and real wages does not operate in pre-industrial Italy. In contrast to the Malthusian hypothesis, we find a negative feedback from wage to population. The empirical result is clearly consistent with the theoretical framework of the “old age security motive”. We show, with a simple overlapping-generation model, that by allowing for substitution in a pre-industrial economy between child quantity and other assets (such as new seeds, better soybean quality, and new cultivation and irrigation methods) fertility may be negatively affected whenever income rises.     

Between Malthus and the industrial take-off: regional inequality in Sweden, 1571–1850

The causes and extent of regional inequality in the process of economic growth are at the core of historical economic research. So far, much attention has been devoted to studying the role of industrialization in driving regional divergence. However, empirical studies on relatively unequal countries such as Italy and Spain show that inequality was already high at the outset of modern industrialization. Using new estimates of Swedish regional GDP, this article looks for the first time at regional inequality in a pre-industrial European economy. Its findings show that inequality increased dramatically between 1571 and 1750 and stayed high until the mid-nineteenth century. This result refutes the classical view that the industrial take-off was the main driver of regional divergence. Decomposing the Theil index for GDP per worker, we find that the bulk of inequality from 1750 onwards was driven by structural differences across sectors rather than different regional productivity within sectors. We show that counties with higher agricultural productivity followed a classic Malthusian pattern when experiencing technological advancement, while those with higher industrial productivity did not. We suggest that institutional factors, such as the creation of the Swedish Empire, Stockholm's trading rights, and a protective industrial policy, amplified this exceptional pattern.     

Aid,Policies, and Growth in Developing Countries: A New Look at the Empirics

The relationship between foreign aid and economic growth has been the subject of much controversy. A recent theme suggesting that aid promotes growth, but only in a good policy environment has ratcheted up that debate. In this paper, we assess the importance of policy and aid in generating growth when the aid, policy, and growth relationship is nonlinear. This allows us to examine the varying effects of aid and policy in different data segments, which we do without imposing any particular structure on the underlying relationship. We find that policy is an important determinant of growth. We also find partial corroboration of the view that aid is growth enhancing in a good policy environment, and some evidence of diminishing returns to aid. These findings suggest that nonlinearities if not appropriately addressed fail to capture the detailed underlying dynamics and thereby mask some key features of the aid-policy-growth relationship.     

A Comparison of Menu Costs in Open and Closed Economies with a Mixed Industrial Structure

In this paper we develop Dixon and Hansen (1997) to allow for two-sector small open economy in which the non-traded sector is monopolistic. The closed economy version of the model generalises Dixon/Hansen to allow for diminishing returns on the traded sector. We compare the short-run impact of menu costs on the economy and also the size of menu costs needed to sustain nominal rigidity in both the open and closed economies. We find that whilst the welfare gains from monetary expansion are of a similar magnitude, nominal rigidity can occur for much smaller menu costs than in the closed economy case. Hence we argue that menu costs and the resultant nominal rigidities are more likely to be important in an open economy.     

The increasing returns to scale CES production function and the law of diminishing marginal returns

This article analyzes the constant elasticity of substitution (CES) production function when there are increasing returns to scale and the elasticity of substitution exceeds 1, which I refer to as the explosive case of the CES. For this explosive case of the CES, the article demonstrates a new and surprising result: marginal and average products of labor and capital approach infinity as either labor or capital approach infinity. Obviously, in this explosive case of the CES, the law of diminishing marginal returns is eventually violated in a dramatic way. Some implications of this result for growth theory are discussed. The article concludes by deriving, for this explosive case of the CES, lower and upper bounds for the capital labor ratio which are consistent with the law of diminishing marginal returns.     

报酬变化规律视角的自然垄断产业规制

报酬递减规律和报酬递增规律共同存在于自然垄断产业发展过程中,并对自然垄断产业产生了不同的影响,进而引发了相应规制的差异性。对报酬递减规律支配型自然垄断产业而言,应以限制性规制为主,建立规制风险预警机制来加以防范规制风险。对报酬递增规律支配型自然垄断产业而言,应以激励型规制为主;并对网络性较强的自然垄断产业实施价格规制,放大整个产业报酬递增规律效应。     

Returns to school resources in the Jim Crow South

We estimate returns to school resources in the Jim Crow era, as measured by young males' 1940 wage earnings, occupational status, and cognitive aptitude scores. Results point to a 16 cent annual return on each $1 invested in public schools. To the question of whether some school inputs mattered more than others, we find comparable 25–32 cent returns per dollar invested in extended school years, teacher salaries, and smaller classes. School spending and inputs had much more bearing on labor market outcomes than aptitude scores. We document diminishing returns to school expenditures, which, in combination with segregated schools, resulted in higher returns to expenditures in black schools relative to white.     

Trade and international factor mobility

Conclusion The comparative statics of the 3 × 2 mobile factor model prove intuitively robust. Major results from the 2 × 2 trade model carry over for the immobile factors into the expanded model. The internationally mobile factor exhibits general equilibrium diminishing marginal returns, while its endogenously determined level of employment responds in an intuitive fashion. Changes in the mobile factor's payment have economically meaningful effects. This model, with its internationally mobile factor, proves a useful extension of the model of a small, open economy.     

The rise and fall of worldwide income inequality, 1820–2035

The development process and the demographic changes that are a central element of it explain both the nearly two centuries of increasing income inequality prior to 2000 and the reversal of this trend that followed. There are at least four phases of the development process: (1) Malthusian pre-development, (2) initial growth, (3) improved productivity, and (4) receding growth. Prior to the industrial revolution, the entire world was in the Malthusian Phase 1. During 1820–1950, about 20 countries, mostly in Western Europe, North America, and Oceania, moved out of Phase 1 and began to grow more rapidly. But, per capita income levels in the rest of the world continued to stagnate and worldwide income inequality widened continuously for at least 150 years following the Industrial Revolution. Around 1960, developing countries began to escape the Malthusian trap and move into Phase 2 of development. By the latter part of the 20th century, many developing countries were achieving growth rates equal to or greater than the high-income countries, slowing the rise in inequality. By 2000–2015 most developing countries were in either Phases 2 or 3 of development, while most of the high-income countries were moving into Phase 4, leading to a sharp reduction in worldwide income inequality. The recent reductions in worldwide income inequality are likely to continue in the near term because of the continuation of the more favorable demographic changes in developing compared to high-income countries.     

论经济学的边界

有经济学家认为经济学的基本逻辑可以解释人类所有的行为,他们运用经济行为模式对其他学科的传统“领地”簪越扩张,进行“经济学帝国主义”,试图用经济学的基本分析法方代替所有社会科学。但是随着经济学的扩张,经济学的解释力减弱,扩张的边际收益递减;同时,要求的理论创新加大,即边际成本递增。当两者相等时就达到了一种扩张的均衡,由此可以确立经济学的合理边界。     

More Detail on the Pattern of Returns to Educational Signals

This paper develops a multiperiod model in which workers are matched with jobs according to imperfect educational signals, and their subsequent productivities depend on both their inherent ability and on the quality of the job match. The model outlines a sequential process in which underpaid employees reveal their true productivities and overpaid employees are detected by the firm until every match is perfect. The model produces increasing returns to above median educational signals early in a worker's career—a new feature that earlier models did not capture. Estimates using data from the Current Population Survey are consistent with the theoretical result and are suggestive of a concave time pattern for the returns to educational signals.     

Aid,Policy and Growth: Does Aid Modality Matter?

This paper contributes to the empirics of aid and growth by investigating whether aid modality matters in explaining its effectiveness. For this purpose, we include the four main aid modalities (project aid, financial program aid, technical assistance grants, and food aid) as explanatory variables in an endogenous growth model. We find that project aid affects positively and significantly growth, albeit with diminishing returns. Our results also show that financial program aid generally impacts on growth negatively, while the impacts of technical assistance and food aid are statistically insignificant. Moreover, we find that climate-related conditions influence the effect of project aid. JEL no.  C2, F3     

Returns to scale in producing human capital from schooling

This study examines a crucial assumption in much of the recentwork on endogenous growth, namely, constant returns to scalein producing human capital. A simple model is constructed toshow that the returns to scale in human capital production canbe inferred from the relationship between the wage rate andyears of schooling. A large international micro dataset is usedto estimate this relationship. The empirical evidence indicatesthat human capital production displays significant increasingreturns at low levels of educational attainment, and significantdecreasing returns at high levels of educational attainment.     

Adopting a new technology: potatoes and population growth in the periphery

Sweden's population doubled in size between 1750 and 1850 despite a century of stagnating per capita incomes and real wages, which has led many historians to attribute the population explosion to the introduction of the potato. This article provides the first systematic evidence on the potato's contribution to Swedish living standards and population growth. Potatoes at least doubled output per acre, and welfare ratios that account for potato consumption imply that they raised living standards significantly for labourers. Estimates that exploit regional differences in the suitability of land for cultivating potatoes further show that cities, counties, and rural parishes with more land suitable for potato cultivation experienced a sharp relative acceleration in population growth as the potato spread in the early nineteenth century. An expansion of the population was mainly driven by relative increases in fertility and, consistent with Malthusian predictions, there was no long‐run impact on per capita incomes. According to these estimates, the introduction and spread of the potato can account for one‐tenth of population growth between 1800 and 1850, thus suggesting that it was an important catalyst for the Swedish population explosion.     

Volatility and Volume in Chinese Stock Markets

The fact that stock market returns in Europe and the USA are characterised by conditional heteroscedasticity is by now well documented in a large literature. We address the question of whether the same is true of the four Chinese stock markets (Shanghai and Shenzhen A and B) over the period from 25 November 1994 to 27 April 2001. Using daily index data, we make two departures from the standard GARCH(1,1) model. First, we use exponential GARCH (EGARCH) to allow for asymmetry in the volatility, which may be present as a result of leverage effects. Second, we respond to evidence of two-way causality between volume and return (and return volatility) by introducing a simultaneous equation model of the relationship. The results of estimating the model indicate that asymmetry does not seem to be present to a significant degree, possibly as a result of lack of information or concern among Chinese investors. We find that volume appears to play a significant part in determining index volatility, which may reflect information arrival effects or may alternatively result from the direct impact of trading on volatility. At the same time, we also find that both the level of returns and their conditional variance have an impact on trade volume, probably because positive (negative) returns tend to attract (deter) investors into the markets.     

Measuring returns to scale in nineteenth-century French industry

Were nineteenth-century French firms too small? Previous research has found either constant returns to scale throughout (Nye, 1987) or increasing returns to scale for most industries (Sicsic, 1994). This research sheds some light on these contradictory results by proposing and estimating a series of models that consider previously ignored econometric issues. My analysis of the 1839-1847 census suggests that there were increasing returns to scale for some industries and constant returns for others, while the analysis of the 1861-1865 census suggests constant returns to scale throughout. Assessing the economic implications of the estimated returns to scale, I argue that there were significant unexploited scale economies in the first half of the nineteenth century. In the second half of the nineteenth century, though, France had little to gain from scale economies.     

Agricultural productivity in China

A stylized fact of Chinese agricultural production is a persistently rising cost share of industrial inputs, reflecting the law of diminishing returns. An alternative approach is presented to estimate agricultural productivity by incorporating this characteristic with a CES production function. We find that the elasticity of substitution affects significantly the size of total factor productivity. Our results suggest that the role of industrial inputs may have been underestimated; most of the gain in total factor productivity is attributable to the evolving mix of agricultural output, and the contribution of household farming may not be as large as previously claimed.     

The relationship between liquidity and returns on the Chinese stock market

The goal of this paper is to examine the impact of liquidity on returns on the Shanghai stock exchange (SHSE) and the Shenzhen stock exchange (SZSE). We proxy liquidity with the trading volume (TV), the turnover rate (TR), and the trading probability (TP). Using daily data for the period January 1997 and December 2003, we find mixed results on the relationship between liquidity and returns. There is greater evidence of liquidity having a negative effect on returns on the SHSE than on the SZSE. However, this evidence is not robust across the three proxies for liquidity that we use.     

Dynamic Comovements Between Housing and Oil Markets in the US over 1859 to 2013: a Note

In this study, we examine the dynamic comovements between housing and oil market returns in the United States over the period 1859–2013, while controlling for real gross domestic product growth, inflation, interest rates, and real stock, gold and silver returns that are known to affect both these markets. As such, we provide a bird’s-eye view on the interdependencies between these two markets from a historical perspective. The results of our empirical analysis reveal that comovements between housing and oil market returns are consistently negative over time, apart from several recessions the U.S. economy experienced in the 19th century, wherein correlations were positive.