Exploitation,skills, and inequality

Abstract

This paper uses a computational framework to analyse the equilibrium dynamics of exploitation and inequality in accumulation economies with heterogeneous labour. A novel index is presented which measures the intensity of exploitation at the individual level and the dynamics of the distribution of exploitation intensity is analysed. Various taxation schemes are analysed which may reduce exploitation or inequalities in income and wealth. It is shown that relatively small taxation rates may have significant cumulative effects on wealth and income inequalities. Further, taxation schemes that eliminate exploitation also reduce disparities in income and wealth but in the presence of heterogeneous skills, do not necessarily eliminate them. The inegalitarian effects of different abilities need to be tackled with a progressive education policy that compensates for unfavourable circumstances.     

Market Reform, Division of Labor, and Increasing Advantage of Small-Scale Enterprises: The Case of the Machine Tool Industry in China

Using survey data of machine tool manufacturing enterprises in China, this paper explores the effect of market reform on production efficiency by estimating a production function that includes dependence on purchased parts as an explanatory variable. According to the estimation results, the effect of purchased parts on production efficiency was insignificant in the early reform period but became significantly positive later. Further, we found that the dependence on purchased parts decreased with the size of enterprises, implying that the production efficiency became higher in smaller enterprises, including newly established township-village enterprises.