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

Internal migration in developing countries: A review of theory, evidence, methodology and research priorities : Michael P. Todaro (International Labor Office, Geneva, 1976) pp. vi+106, SwF 20.00.

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.

Real Effects of Monetary Shocks in an Economy with Sequential Purchases

An intergenerational model is developed, nesting heritable earning abilities and credit constraints limiting human capital investments in children. Estimates on a large, Finnish data panel indicate very low transmission from parental earnings, suggesting that the parameter of inherited earning ability is tiny. Family income, particularly during the phase of educating children, is shown to be much more important in shaping children’s lifetime earnings. This influence of parental incomes on children’s earnings rises as the children age because the returns to education rise. Despite Finland’s well-developed welfare state, persistence in economic status across generations is much higher than previously thought.

/pdf/intergenerational-income-immobility-in-finland-contrasting-4v2dl8ucqa.pdf

Intergenerational income immobility in Finland: contrasting roles for parental earnings and family income

Restructuring the Malaysian Economy: Development and Human Resources . By Lucas Robert E. B. and Verry Donald. New York: Palgrave Macmillan, 1999. 346 pp. $75.00 (cloth).

Between 1971 and 1978, wages of more than one-half million nonwhite laborers in the South African mines tripled in real terms. In the same period, the nonwhites employed in the mines switched from being 62 percent foreign to 62 percent domestic.' These changes followed a period-from 1911 to 1971 -during which real wages of black gold miners did not rise, and terminated almost a century of reliance on foreign labor "reserves" for the majority of such labor.2 These dramatic events are examined here in the context of an econometric model of the demand for labor by the South African mining sector from 1946 to 1980. This affords an unusual opportunity to study the demand side of a market for internal and international migrants, in a society where racial discrimination is formalized in the apartheid system, where powerful mining houses wield potential monopsony power, and where political factors in the region are major determinants of economic behavior. To comprehend the derived demand for workers in this sector, it is essential to outline at least certain aspects of the industry's organization and that of the market for labor; this is undertaken in Section I. Section II develops a stylized model, which is then estimated, from data described in Section III, for the gold, diamond, coal, and other minerals sectors separately in Section IV. I. Organization of the Mine Labor Market

Robert E. Lucas

Papers

Internal migration in developing countries: A review of theory, evidence, methodology and research priorities : Michael P. Todaro (International Labor Office, Geneva, 1976) pp. vi+106, SwF 20.00.

Real Effects of Monetary Shocks in an Economy with Sequential Purchases

Intergenerational income immobility in Finland: contrasting roles for parental earnings and family income

Restructuring the Malaysian Economy: Development and Human Resources . By Lucas Robert E. B. and Verry Donald. New York: Palgrave Macmillan, 1999. 346 pp. $75.00 (cloth).

Mines and migrants in South Africa