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

Little evidence exists on the distribution across countries of toxic releases by manufacturing, or on how those patterns change through time. A number of studies have asked whether environmental controls imposed in the industrialized economies are diverting investments in pollution-intensive activities offshore. These studies reach a broad negative conclusion: direct investment does not appear to be stimulated by such regulation, in part because the cost of emission controls is generally a tiny fraction of operating costs. But direct investment reflects only part of what may be happening to world production patterns. Technology transfers may occur with no simultaneous direct investment, and production may readily shift toward a different global distribution without either direct investment or technology transfer. The author presents the evidence on the world distribution of manufacturing production according to pollution density - using data from the World Bank Industrial Pollution Projections Team. He then examines the validity of the claim that free trade would result in greater and more rapid environmental degradation for developing countries. He finds that: (1) The onus is on the higher-income countries to contain the emissions of their increasingly pollution-oriented mix of manufacturing industries. (2) The global trend has been toward an increasingly emission-intensive pattern of production, in relation to both manufacturing and to GDP. This trend has been remarkably constant over three decades and shows no signs of slowing. (3) The upward trend in emission-intensity of manufacturing production has been faster among lower-income nations. If pollution restraints on given industies are progressing more rapidly among the wealthier countries, this disparity would be even sharper than the Bank data suggest. Developing countries that produce coal, crude oil, or natural gas also have more pollution-intensive manufacturing sectors, based on the availability of those raw materials. It may be doubted that fostering such industries always reflects a comparative advantage. Petrochemical industries in the coal-oil-gas-producing countries are often substantially protected or subsidized. Among all developing countries, import protection stimulates a larger chemicals industry and thus more emission-intensive manufacturing. One might guess that less protection of local industrial chemical industries would decrease the pollution-intensity of the developing countries' industry. But merely relocating firms that emit globally damaging toxins clearly misses the point.

Toxic releases by manufacturing : world patterns and trade policies

Over the last two decades a substantial, empirical literature has explored the links between bilateral migration and bilateral trade. Limitations on migration data have meant that the bulk of this evidence pertains only to immigrants into and trade with the OECD countries. Even within this category there is little consensus in the prior findings. This chapter adopts the recently available Global Bilateral Migration Database to explore the trade links, both with immigration and emigration, between 192 countries from 1960 to 2000, with a particular emphasis on the developing countries. Findings include positive emigrant and immigrant links with trade in all four pairings of lower-income and higher-income countries, including south-south trade. In contrast to prior findings it is estimated that the elasticity of this association increases with the level of migration over substantial ranges. The elasticity is also shown to be highest for the highly educated (at least among OECD immigrants), higher for females than males and positive for refugees who have fled from one lower-income country to another. The links prove weaker where the trade partners share a common language or colonial heritage, suggesting a role for migrants in over-coming lack of familiarity and associated incomplete information. Reduction in such barriers promotes openness to trade with a gain in efficiency, but the two-way effects offset, such that the balance of trade for lower-income countries may actually deteriorate. Network effects of third-country nationals is also explored and extended to include mutual emigration to third countries, which is estimated to result in trade diversion.

The migration–trade link in developing economies: a summary and extension of evidence

There is an elegant geometric theory of cities that describes the location of activities and the equilibrium pattern of land prices. In the simplest versions of the theory, production is centered at the city center, and people live at differing distances from their jobs. In choosing a residential location, households face a tradeoff between expensive land near the center with small travel times, and cheap land farther out with large travel costs. Everyone who has looked for housing in any city or suburb knows the reality of this tradeoff. The objective of this paper is to rework the model of a city with a spatial structure imposed on the production externality: The effect of one producer on the productivity of another is assumed to be a decreasing function of the distance between the two. By itself, this postulated force will pull producers together, or pull all of them toward a point I designate the center. The need for land as a factor of production will keep the city from collapsing on this point. The tension between these two factors will generate a land price gradient in equilibrium. (Copyright: Elsevier)

Externalities and Cities

The puzzle of sharecropping: A piece refitted

For the applied economist, the confident and apparently successful
application of Keynesian principles to economic policy which occurred in the
United States in the 1960s was an event of incomparable significance and
satisfaction. These principles led to a set of simple, quantitative relationships
between fiscal policy and economic activity generally, the basic logic of
which could be (and was) explained to the general public, and which could
be applied to yield improvements in economic performance benefiting
everyone. It seemed an economics as free of ideological difficulties as, say,
applied chemistry or physics, promising a straightforward expansion in
economic possibilities. One might argue about how this windfall should be
distributed, but it seemed a simple lapse of logic to oppose the windfall itself.
Understandably and correctly, this promise was met at first with skepticism
by non-economists; the smoothly growing prosperity of the Kennedy-Johnson
years did much to diminish these doubts.

After Keynesian macroeconomics After the Phillips Curve: Persistence of High Inflation and High Unemployment (1978) Boston, MA: Federal Reserve Bank of Boston, pp. 49–72

Robert E. Lucas

Papers

Toxic releases by manufacturing : world patterns and trade policies

The migration–trade link in developing economies: a summary and extension of evidence

Externalities and Cities

The puzzle of sharecropping: A piece refitted

After Keynesian macroeconomics After the Phillips Curve: Persistence of High Inflation and High Unemployment (1978) Boston, MA: Federal Reserve Bank of Boston, pp. 49–72