In this paper, the concept of social capital is introduced and illustrated, its forms are described, the social structural conditions under which it arises are examined, and it is used in an analys...

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Social Capital in the Creation of Human Capital

This paper examines whether the Solow growth model is consistent with the international variation in the standard of living. It shows that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data. The paper also examines the implications of the Solow model for convergence in standards of living, that is, for whether poor countries tend to grow faster than rich countries. The evidence indicates that, holding population growth and capital accumulation constant, countries converge at about the rate the augmented Solow model predicts. This paper takes Robert Solow seriously. In his classic 1956 article Solow proposed that we begin the study of economic growth by assuming a standard neoclassical production function with decreasing returns to capital. Taking the rates of saving and population growth as exogenous, he showed that these two vari- ables determine the steady-state level of income per capita. Be- cause saving and population growth rates vary across countries, different countries reach different steady states. Solow's model gives simple testable predictions about how these variables influ- ence the steady-state level of income. The higher the rate of saving, the richer the country. The higher the rate of population growth, the poorer the country. This paper argues that the predictions of the Solow model are, to a first approximation, consistent with the evidence. Examining recently available data for a large set of countries, we find that saving and population growth affect income in the directions that Solow predicted. Moreover, more than half of the cross-country variation in income per capita can be explained by these two variables alone. Yet all is not right for the Solow model. Although the model correctly predicts the directions of the effects of saving and

/pdf/a-contribution-to-the-empirics-of-economic-growth-27cl5gkqam.pdf

A Contribution to the Empirics of Economic Growth

Large sample properties of generalized method of moments estimators

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.

/pdf/endogenous-technological-change-4yzdlw043b.pdf

Endogenous Technological Change

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported, and instead, the equilibriumis one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.

https://papers.ssrn.com/sol3/Delivery.cfm/nber_w3210.pdf?abstractid=226703&mirid=1

A Note on Price Systems in Infinite Dimensional Space Author(s): Edward C. Prescott and Robert E. Lucas, Jr. Source: International Economic Review, Vol. 13, No. 2 (Jun., 1972), pp. 416-422 Published by: Blackwell Publishing for the Economics Department of the University of Pennsylvania and Institute of Social and Economic Research -Osaka University Stable URL: http://www.jstor.org/stable/2526035 Accessed: 21/06/2010 20:10

A Note on Price Systems in Infinite Dimensional Space

A general equilibrium model is presented wherein wage labor requires monitoring in order to extract effort. Landlords may also elect to adopt sharetenancy contracts in which workers have an incentive to supply unsupervised effort. Two "distortions" exist: monitoring costs in one sector and a share "tax" in the other. Efficiency statements require second-best comparisons adopting more specific functional forms. This mixed wage-sharetenancy economy is technically efficient and provides greater Benthamite social welfare than a wage-only economy, when private incentives lead to mixing. The incidence of sharetenancy is hypothesized to increase with monitoring costs, density of tenants per landlord, and labor intensity of production.

Sharing, Monitoring, and Incentives: Marshallian Misallocation Reassessed

THIS paper presents a cross-sectional analysis of the distribution across population classes of "types of work" performed in the United States. The novelty of the study resides in its measurement of types of work. The approach adopted is to focus on a matrix of coefficients describing the nature of the task involved in each occupation of a very fine occupational classification, the elements of which matrix are here referred to as "job characteristics." For example, the vector of job characteristics employed includes indicators of physical working conditions, repetitiveness, position on the hierarchy of relationships to people, and skill demands, inherent in a job. Sections II and III describe data sources and the process of compiling a data file, respectively. Section VI compares sample mean job characteristics by race and by sex, these being the mean values of the left-hand variables employed in section VII. The latter reports estimates of functions in the general class Zja= F(ga) + Ea (1) where Zja 1 if the occupation performed by person a has job characteristic j, 0 otherwise, ga a vector of attributes, or personal characteristics, of person a, Ea -a disturbance term. The vector ga includes race, sex, age, schooling and union membership. The particular specification chosen within the general class (1) is given in section IV, and V is a cautionary note on interpreting the results of sections VI and VII.

The distribution of job characteristics

We study the effects of monetary disturbances in an economy in which sellers must deal with potential buyers in sequence, rather than being able to sell their goods in a Walrasian auction market. Because of the structure of trading assumed, the current state of demand is not revealed to sellers until after the process of sequential transactions has concluded. As a consequence, unanticipated changes in nominal spending flows induce less-than-proportional responses in nominal transaction prices, and changes in the same direction in real output. These effects are similar to those obtained if sellers must commit themselves in advance to money prices, but do not depend upon any cost of changing prices. We fully characterize the stationary intertemporal equilibrium of an economy subject to i.i.d. money supply shocks. We show how the ex ante distribution of monetary shocks affects sellers' pricing strategies, and hence the equilibrium relation between the money supply, the distribution of transaction prices, and the degree to which available productive capacity is utilized.

/pdf/real-effects-of-monetary-shocks-in-an-economy-with-9j5tvo464k.pdf

Real Effects of Monetary Shocks in an Economy with Sequential Purchases

I have mixed feelings about Bob Byrd1 saying he’s looking forward to receiving my papers. He’s probably only going to get them when I’m gone: I don’t seem to be able to give up anything out of my file drawers. But when that does happen, my papers will be in the best library for the history of economic thought they can find anywhere, so they will have a happy home. Well, I’m not here to tell people in this group about the history of monetary thought. I guess I’m here as a kind of witness from a vanished culture, the heyday of Keynesian economics. It’s like historians rushing to interview the last former slaves before they died, or the last of the people who remembered growing up in a Polish shtetl. I am going to tell you what it was like growing up in a day when Keynesian economics was taught as a solid basis on which macroeconomics could proceed. My credentials?Was I a Keynesian myself?Absolutely. And does my Chicago training disqualify me for that? No, not at all. David Laidler [who was present at the conference] will agree with me on this, and I will explain in some detail when I talk about my education. Our Keynesian credentials, if we wanted to claim them, were as good as could be obtained in any graduate school in the country in 1963. I thought when I was trying to prepare some notes for this talk that people attending the conference might be arguing about Axel

/pdf/keynote-address-to-the-2003-hope-conference-my-keynesian-25ev4ha7ie.pdf

Robert E. Lucas

Papers

A Note on Price Systems in Infinite Dimensional Space

Sharing, Monitoring, and Incentives: Marshallian Misallocation Reassessed

The distribution of job characteristics

Real Effects of Monetary Shocks in an Economy with Sequential Purchases

Keynote Address to the 2003 HOPE Conference: My Keynesian Education