Skills,Tasks and the Scarcity of Talent in a Global Economy

The scarcity of talent is a tremendous challenge for firms in the globalized world. This paper investigates the role of labor market imperfection in open economies for the usage of talent in the production process of firms. For this purpose, I set up a heterogeneous firms model, where production consists of a continuum of tasks that differ in complexity. Firms hire low‐skilled and high‐skilled workers to perform these tasks. How firms assign workers to tasks depends on factor prices for the two skill types and the productivity advantage of high‐skilled workers in the performance of complex tasks. I study the firms’ assignment problem under two labor market regimes, which capture the polar cases of fully flexible wages and a binding minimum wage for low‐skilled workers. Since the minimum wage lowers the skill premium, it increases the range of tasks performed by high‐skilled workers, which enhances the stock of knowledge within firms to solve complex tasks and reduces the mass of active firms. In a setting with fully flexible wages trade does not affect the firm‐internal assignment of workers to tasks. On the contrary, if low‐skilled wages are fixed by a minimum wage, trade renders high‐skilled workers a scarce resource and reduces the range of tasks performed by this skill type with negative consequences for the human capital stock within firms. In this case, trade leads to higher per‐capita income for both skill types and thus to higher welfare in the open than in the closed economy, whereas – somewhat counter‐intuitive – inequality between the two skill types decreases, as more low‐skilled workers find employment in the production process.     

Externalities,Productivity and Sustained Growth

This paper shows that the existence of endogenous growth, in the closed‐form solution, in a single sector economy with a convex technology in an overlapping generations (OLG) framework, which attempts to fill the current gap in endogenous growth theory. It finds there is an unbounded growth when trade, in the form of knowledge spillover, affects labor productivity through the formation of human capital with self‐education that is not an independent sector but builds the human capital here. This conclusion holds even though there is the “limited income” expressed as the “non‐increasing wage/investment ratio” for each generation. Moreover, it shows the convergence of growth rates for each country, which is unique and constant, while the growth rate per capita negatively relates with each country's population growth rate. Also, there is no “poverty trap” with the introduction of externalities that is different from existing literature.     

International outsourcing when labour markets are unionized

Abstract. We consider the implications of international outsourcing in a simple general equilibrium model where the wage rate is the outcome of negotiations between a firm and a trade union. The effects of potential, but non‐realized, international outsourcing, is a reduction in the wage rate and an increase in employment. Aggregate welfare increases, but the trade union becomes worse off while owners of capital become better off. Realized international outsourcing gives rise to an increase in the wage rate and a reduction in employment. Aggregate welfare decreases, but the trade union becomes better off, while owners of capital become worse off.     

Who is afraid of capital mobility? on taxation of labor income and the level of public services in an open economy

This paper deals with the effects of international capital mobility on the taxation of labor income and on the size of the public sector. It employs a model of the labor market where national trade unions set the wage level in their country and national governments set the tax rate of a proportional labor-income tax. The tax revenues are used to finance a public good and unemployment benefits. In this model, competition between the national trade unions caused by international capital mobility leads to full employment, and the governments supply the public good on the first best level. As no unemployment benefits have to be financed, the tax on labor income may decline with the introduction of capital mobility. These tax cuts may even overcompensate the unions for the wage decline.     

The Transmission of Sustained Growth through the Terms of Trade in an Endogenous Growth Model

This paper develops a two‐country model of endogenous growth and international trade in intermediate goods. In autarky just one of the economies enjoys sustained growth. The trade situation may be characterized by complete specialization of both countries, or by incomplete specialization of the growing economy. In either case, trade transmits perpetual growth to the stagnant economy because of the permanent improvements in its terms of trade. The existence of a non‐reproducible factor in the growing economy is crucial to ensure propagation of growth. Moreover, under incomplete specialization countries converge in per capita income. This result relies on two assumptions. First, there must be a large enough share of world income to pay for the input in which the stagnant economy has comparative advantage. Second, all technologies producing intermediate goods should be equally intensive in the non‐reproducible factor.     

International trade and industrialization in a non-scale model of economic growth

The relationship between international trade, growth, and industrialization is analyzed in a two-sector non-scale growth model. The counterfactual prediction of new growth theories regarding a positive effect of population growth on per capita income growth is shown to be alleviated by allowing for international trade. While the growth-trade linkage is positive in most cases, it is negative if the rate of population growth is relatively large and the initial capital stock is relatively small. As the timing of the switch from autarky to free trade affects the process of industrialization, trade policy can influence structural change and long-run growth rates even in non-scale growth models.     

Structural Change and Economic Growth

This paper presents a model in which a country's measured average propensity to save endogenously rises when its economy industrializes. The model has agricultural and manufacturing sectors. Only agriculture uses land. If at early dates income per capita is low, agricultural consumption is important, land is valuable, and capital gains on land may constitute most wealth accumulation, leaving the country's NIPA APS low. If exogenous technological progress raises incomes over time, Engel's law shifts demand to manufactured goods. Then land's portfolio importance relative to reproducible capital diminishes and the national income and products account saving rate can rise.     

OPTIMAL FOREIGN BORROWING REVISITED

Foreign capital has become increasingly important in financing investment and growth in developing countries. Foreign capital flows, however, can be volatile as is evident from the recent financial crises. It has also recently been noted by researchers that there is little systematic empirical evidence that foreign capital contributes to the economic growth of developing countries. In this context, this paper attempts to theoretically reevaluate the borrowing behaviour of a developing economy that relies on foreign borrowing for its capital formation. In particular, this paper investigates the implications of different lending policies of international financial institutions. It is found that no matter whether the borrowing interest rate increases with the level of foreign debt per capita or with the foreign‐capital/total‐capital ratio, the economy always moves toward the stationary state. The result holds even when the representative agent regards the interest rate given as constant. This implies that foreign borrowing does help economic growth, irrespective of lending policies of international financial institutions.     

International Borrowing, Specialization, and Unemployment in a Small Open Economy

The authors show that an increase in international borrowing increases specialization and unemployment in a small open economy that is subject to terms‐of‐trade risks. The economy has a production advantage in the export sector. However, the size of the export sector is limited by the available funds. To insure workers against income fluctuations arising from terms‐of‐trade risks, firms in the export sector offer workers a stable wage rate with the possibility of unemployment. An increase in international borrowing increases specialization in the export sector, which leads to higher unemployment when the terms‐of‐trade shock is bad. A state‐contingent price subsidy can reduce unemployment without inefficiently reducing specialization. The results are robust to the introduction of risk‐averse firms.     

Changes in income distribution over time in a one-sector neoclassical setting

This paper, which is aimed at explaining the endogeneous changes in the income distribution as an economy grows, extends Darity's model and applies it to the Gini decomposition equation developed by Fei, Ranis and Kuo. It defines two types of families, the rich and the poor, both being allowed to own labor and capital but the former being assumed to own more capital and have a higher savings rate than the latter. Total supply is produced according to a neoclassical production function. Consumption demand is determined by the pattern of income distribution, and the excess of total supply over consumption is available for investment, which is an addition to the physical capital stock as well as an increase in the wealth of the rich and poor families. Over time, both families become more wealthy as the economy grows according to enlarged production capacities, meanwhile the wage rate rises and the return to capital falls as capital deepening proceeds. These, along with the distribution of factor ownership between the poor and the rich family, determines the pattern of income distribution. It is then found that: (a) as the economy grows from an initial low-level per capita income towards a long-run steady-state equilibrium, the changes in income distribution over time may follow a variety of patterns, depending mainly on the magnitude of the elasticity of substitution and the situation of the initial position; and (b) only if (i) the initial distribution of the ownership of capital is comparable to or slightly more concentrated in the hands of the rich family than its long-run steady level, and (ii) the elasticity is less than one, will the changes in income distribution over time be consistent with the Kuznets inverted-U pattern.     

Monopolistic Competition and North–South Trade

This paper examines the consequences of opening to international trade for a developing economy with open urban unemployment and rural–urban migration, where the urban sector is monopolistically competitive. It is shown that there exists a threshold level of urbanization prior to which increases in product variety will be reflected in increased urban unemployment, that opening to intra‐industry trade with a high‐wage economy (i.e. North–South trade) will reduce the rate of urban unemployment by a greater amount than intra‐industry trade with a similar economy, and that trade intervention in the South may lower welfare by reducing varieties produced in the North.     

Does Real Exchange Rate Depreciation Boost Capital Accumulation? An Intertemporal Analysis

This paper examines the investment‐enhancing effect of real exchange rate (RER) depreciation in a two‐sector small open economy model where a representative firm in the tradable sector maximises its discounted profit over an infinite planning period. In this framework, a one‐time, permanent, unanticipated depreciation in the RER leads to a higher steady‐state level of capital stock and investment. This consequently increases the optimal investment rate associated with an arbitrary level of capital stock as the saddle path shifts upwards. In the benchmark calibration, the investment‐enhancing effect of RER depreciation is sizeable. One per cent depreciation in the RER leads to an increase of 0.4444 per cent in the rate of capital accumulation.     

Do Natural Resources Depress Income Per Capita?

Most evidence for the resource curse comes from cross‐country growth regressions suffers from bias originating from the high and ever‐evolving volatility in commodity prices. These issues are addressed by providing new cross‐country empirical evidence for the effect of resources in income per capita. Natural resource dependence (resource exports) has a significant negative effect on income per capita, especially in countries with bad rule of law or bad policies, but these results weaken substantially once we allow for endogeneity. However, the more exogenous measure of resource abundance (stock of natural capital) has a significant negative effect on income per capita even after controlling for geography, rule of law and de facto or de jure trade openness. Furthermore, this effect is more severe for countries that have little de jure trade openness. These results are robust to using alternative measures of institutional quality (expropriation and corruption instead of rule of law).     

中国汽车需求预测:基于Gompertz模型的分析

人均收入水平是影响汽车拥有率的决定性因素.本文在前人研究的基础上,运用Gomp-ertz模型研究汽车拥有率和人均收入之间的非线性关系.本文选取的研究对象既包括当今的发达国家,又包括众多发展中国家,尤其是亚洲的欠发达国家.通过对各国的时间序列数据和多国的横截面数据做回归,并对汽车拥有率及其收入弹性做国际比较,研究发现Gompertz方程能够很好地解释各国汽车拥有率发展共有趋势:在一国经济发展过程中,汽车拥有率先加速增长,在经历了一个拐点后,减速增长,最后无限趋近于共有的餍足点,本文设为0.62;而收入弹性呈先上升,在达到最大值后下降的状态.本文重点分析了近年来中国的汽车拥有率问题,并预测出中国的汽车拥有率拐点在人均GDP YIP=12 000,汽车拥有率VIp=0.2281上,假定中国人均GDP的增长速度在3%-7%的范围内,这个拐点将发生在2015-2042年之间,那时的汽车总量将大于259 996 496辆.此外,收入分配不均对中国的汽车拥有率有着重要的影响.     

贸易开放、人力资本与 中国区域收入空间效应* ——基于地级及以上行政区域经验数据分析

本文基于中国326个地级及以上行政区域2010-2012年的数据,利用空间杜宾增长模型（SDM）来测算贸易开放对中国区域人均收入的影响。本文测算了各个区域贸易开放和人力资本对人均收入水平的直接、间接和总影响。结果表明：一个区域的贸易开放程度越高越能促进当地经济的发展,对相邻区域的人均收入也会产生正的影响。同时笔者也发现,人力资本对中国各个区域的经济增长会产生正的直接和间接影响。     

Redistributing Gains from Globalisation*

This paper analyses the effects of redistribution in a model of international trade with heterogeneous firms in which a fair‐wage effort mechanism leads to firm‐specific wage payments and involuntary unemployment. The redistribution scheme is financed by profit taxes and gives the same absolute lump‐sum transfer to all workers. International trade increases aggregate income and income inequality, ceteris paribus. If, however, trade is accompanied by a suitably chosen increase in the profit tax rate, it is possible to achieve higher aggregate income and a more equal income distribution than in autarky, provided that the share of exporters is sufficiently high.     

ON THE OUTPUT EFFECTS OF BARRIERS TO TRADE*

We study the macroeconomic effects of international trade policy by integrating a Hecksher–Ohlin trade model into an optimal‐growth framework. The model predicts that a more open economy will have higher factor productivity. Furthermore, there is a “selective development trap” to which countries may or may not converge, depending on policy. Income at the development trap falls as trade barriers increase. Hence, cross‐country differences in barriers to trade may help explain the dispersion of per capita income observed across countries. The effects are quantified, and we show that protectionism can explain a relevant fraction of TFP and long‐run income differentials across countries.     

An Empirical Analysis of Australian Labour Productivity

This study presents a model capturing sources of Australian aggregate labour productivity using annual time series data from 1970 to 2001. Labour productivity, or real output per hour worked, in this model is determined by real net capital stock in information technology and telecommunications (ITT), real net capital stock in the non-ITT sector, trade openness, human capital, the wage rate, international competitiveness, and the union membership rate. Given the lack of long and consistent time series data, multivariate cointegration techniques are inappropriate as the cointegration results will be sensitive to the lag length, the inclusion or exclusion of the intercept term or a trend in the cointegration equation and/or the vector autoregression (VAR) specification. Therefore, the Engle-Granger representation theorem and the Hausman weak exogeneity test have been employed to determine the short and long-term drivers of Australian productivity. Empirical estimates indicate that, in the long-term, policies aimed at promoting various types of investment, trade openness, international competitiveness, and the use of wage as a stimulant in a decentralised wage negotiation system, will improve labour productivity. In the short term, all the above variables except for human capital and labour reforms, which both need more time to evolve, determine productivity performance.     

Institutional Quality Mediates the Effect of Human Capital on Economic Performance

This paper considers the relationship between institutional quality, educational outcomes, and economic performance. More specifically, we seek to establish the linkages by which government effectiveness affects per capita income via its mediating impact on human capital formation. Our empirical approach adopts a two‐stage strategy that estimates national‐level educational production functions that include government effectiveness as a covariate, and uses these estimates as instruments for human capital in cross‐country regressions of per capita income. Our results identify a significant and positive effect of human capital on per capita income levels, and partially resolves the inconsistency between macro‐ and micro‐level studies of the effect of human capital on income. The results remain robust to alternative specifications, extension to a panel setting, subsamples of the data and fully endogenous institutions.     

International trade and directed search unemployment in general equilibrium

We develop an open economy general equilibrium model, with auction‐based directed search unemployment, to study the interactions of trade and unemployment. The theory ascribes all outcomes purely to the fundamentals of technology and endowment. If countries differ by endowment, trade makes both the unemployment rate and the rental in the capital‐(labour‐) abundant country rise (decline) but does not lead to equalization. If, alternatively, countries differ by technology, trade increases (decreases) the unemployment rate in the country whose technology is relatively superior (inferior) for producing the capital‐intensive good.