Factor price

About: Factor price is a research topic. Over the lifetime, 2764 publications have been published within this topic receiving 86176 citations.

Does Female Labor Scarcity Encourage Innovation?: Evidence from China's Gender Imbalance

Abstract: Facing scarcity of a production factor, a firm can develop technologies to either substitute the scarce factor (price effect) or complement the more abundant factors (market size effect). Whether the market size effect or the price effect dominates largely depends on the elasticity of substitution among factors according to the theory of directed technical change. However, it is a great challenge to empirically test the theory because factor prices are often endogenously determined. In this paper, we use imbalanced sex ratios across Chinese provinces as a source of identification strategy to test how female labor scarcity affects corporate innovation based on the matched dataset of annual surveys of industrial firms in China and the national patent database. In regions with a large male population, female-intensive industries face more serious problems finding female workers than their male-intensive counterparts. We find that such female shortages have spurred firms in female-intensive industries to innovate more. The pattern is much more evident in industries with low substitution between female and male workers than in those with high substitution, consistent with the predictions of directed technical change theory.

7 – Comparative Advantage and Development Policy 20 Years Later*

Abstract: Publisher Summary In most developing countries, the early efforts of politicians to raise growth rates and living standards almost always included high trade barriers and a set of policies to foster industrialization through import substitution. These efforts were based largely on an instinctive rejection of the doctrine of comparative advantage, which was understood to imply laissez-faire in all matters pertaining to the trade regime and domestic economic policies. The growth potential of developing countries will inevitably be even greater with more rapid growth of the international economy. Nonetheless, if the major gains from an outer-oriented trade strategy come about because of the effects of that strategy on the domestic economic structure, the costs to developing countries of a deceleration in the growth of world trade will be far smaller than if the technological hypothesis explaining the difference in growth performance under alternative strategies is correct. Distortions in factor prices remain a focal point of concern, though they are more likely to be regarded as the result of government policies than as a constraint on governments. The quantity and quality of productive factors increases still play a central role in development thinking.

Does Trade Reduce Poverty? A View from Africa

Abstract: Although trade liberalization is being actively promoted as a key component in development strategies, theoretically, the impact of trade openness on poverty reduction is ambiguous. A more liberalized trade regime is argued to change relative factor prices in favor of the more abundant factor. If poverty and relative low income stem from abundance of labor, greater trade openness should lead to higher labor prices and a decrease in poverty. However, should the re-allocation of factors be hampered, the expected benefits from freer trade may not materialize. The theoretical ambiguity on the effects of openness is reflected in the available empirical evidence. This paper examines how the effect of trade openness on poverty may depend on complementary reforms that help a country take advantage of international competition. Using a non-linear regression specification that interacts a proxy of trade openness with proxies of various country structural specificities and a panel of 30 African countries over the period 1981-2010, the analysis finds that trade openness tends to reduce poverty in countries where financial sectors are deep, education levels high and governance strong.

Nonhomotheticity and Technological Bias in Production

Abstract: This paper develops an approach to estimating nonhomotheticity and technological bias within the class of nonhomothetic CES production functions. The model is applied to cross-section firm level data covering seven industries in Mexico, Brazil, Colombia, and four Central American countries for the period 1970-74. Positive nonhomotheticity (higher capital intensity for larger plant size given factor price ratios) is found in six industries. Other results are that, once nonhomotheticity is accounted for, technological bias is not predominantly capitalusing, and equality of capital intensity between transnational and domestic firms is pervasive.