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...

/pdf/social-capital-in-the-creation-of-human-capital-1836wo2872.pdf

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

Small plants, industrial pollution and poverty: Evidence from Brazil and Mexico

Tariffs, Nontraded Goods, and the Optimal Stabilization Policy

magnitude of the responses should also be equal. The authors' reject the hypothesis of equality but find the rejection reflects significant differences for only two of the nine countries. The integration hypothesis does less well in the case of investment. The coefficients on world and country stock returns are about equal and half the magnitude of world returns in the world rate equation. World money, lagged world investment and real rates are all insignificant. Tested jointly, world variables are insignificant; yet all three countryspecific variables are highly significant. The authors are puzzled by the importance of own-country monetary expansion given the world rate is insignificant and own money has the wrong sign in the rate equation. One possible explanation is that investment shocks, with resultant increases in the country's income, are partially accommodated by the monetary authority. The significant, and \"wrong\" signed coefficient on own money in the rate equation could be similarly explained; since own investment does not appear to affect interest rates the shocks to income would have to be from another source. In some respects the paper is quite successful. The authors have clearly identified important comovements of real rates, investment, stock returns, and oil prices during this 30-year period. Furthermore, they have shown that salient features of economic performance during this period are worldwide, and that some phenomena are best explained from a world perspective. The results, however, do not give strong confirmation of the model. As the authors suggest, there is room to interpret the coefficients on the two major \"exogenous\" variables-stock prices and the relative price of oil-in alternative ways. Their work does add to the evidence that the movements of the stock market are intimately connected with investment and real rates-further whetting the profession's appetite for a satisfying explanation of the market's own behavior. The authors promise to continue working in this fruitful area and I look with anticipation to reading their future work.

[World Real Interest Rates]: Comment

This paper maintains that it is unlikely that the growth in demand for labor in agriculture will substantially outpace population expansion. However, given the absolute size of employment in organized industry, even very major changes regarding the pattern of effective protection, public sector performance, minimum wage laws, demand management including anti-export bias, and the plethora of state controls, would generate only relatively tiny direct effects on the overall demand for labor. About three quarters of the population lives in areas defined as rural, which involves farm as well as non-farm activities. Since many of the activities in the rural non-farm sector are non-tradeable, the linkages with organized industry and agriculture are of critical importance to policy impact in employment prospects. Hence, the author points out that although somewhat faster agricultural growth may not abosrb much labor directly, it may have substantial secondary effects on non-agricultural employment in rural areas and small towns. Finally, it is pointed out that links between the informal sector, agriculture and industry should be an important component of future research.

An overview of the labor market in India

This paper describes the efficient allocation of consumption and work effort in an economy in which workers face idiosyncratic employment risk and considerations of moral hazard prevent full insurance. We impose a lower bound on the expected discounted utility that can be assigned to any agent from any date onward, and show, with this feature added, that the efficient unemployment insurance scheme induces an invariant cross sectional distribution of individual entitlements to utility. The paper thus provides a simple prototype model suited to the study of the normative question: what is the tradeoff between equality and efficiency in resource allocation?

/pdf/effciency-and-equality-in-a-simple-model-of-unemployment-1ltx3ypiql.pdf

Robert E. Lucas

Papers

Small plants, industrial pollution and poverty: Evidence from Brazil and Mexico

Tariffs, Nontraded Goods, and the Optimal Stabilization Policy

[World Real Interest Rates]: Comment

An overview of the labor market in India

Effciency and Equality in a Simple Model of Unemployment Insurance