Environmental income in economic growth of a large open economy for the era of eco-urbanization

Renewable resource stock changes are determined by marginal consumption utility for future production. The expected utility is highly affected by the gap between different discount rates on individual’s utility maximization and various social welfare optimal level. In a large economy with big international trade, we show that sustainable development fails to be sustained without social production at a certain level dynamically. Only if the growth rate of theoretical innovation and capital accumulation is faster than the speed of renewable resource stock accumulation, the discounted value of renewable resource can be offset. In this dynamic process, when a share of environmental income exists, some renewable resource with distinguished regional characteristics cannot be perfectly substituted. Thus, the relationship between social subjective time preference of international consumers and the structural growth of economic production factors is argued by the fuzzy hypothesis of Environmental Kuznets Curve (EKC). If we consider international resource consumption utility is proportionally driven by the relative income due to the inertia of “conspicuous consumption”, we show that consumption choice on every unit of renewable resource is deterministically affected by relative capital income and premium of every unit of asset (that can be transferred from renewable resource); and spillover effect of consumption externality generated from saving or consuming every unit of renewable resource for social production determines the convergence of efficient capital accumulation to increase the total social production level if all individual utility is transferable from renewable resource consumption; in this case environmental taxation ultimately burdens on international consumption side.

Whether relative income or absolute income could affect subjective well-being has been a bone of contention for years. Life satisfaction and the relative frequency of positive and negative emotions are parts of subjective well-being. According to the prospect theory, hedonic adaptation helps to explain why positive emotion is often so hard to be maintained, and negative emotion wouldn’t be easy to be eliminated. So we expect the relationship between income and positive emotion is different from that between income and negative emotion. Given that regional reference is the main comparison mechanism, effects of regional average income on regional average subjective well-being should be potentially zero if only relative income matters. Using multilevel analysis, we tested the hypotheses with a dataset of 30,144 individuals from 162 counties in China. The results suggested that household income at the individual level is associated with life satisfaction, happiness and negative emotions. On the contrary, at a county level, household income is only associated with negative emotion. In other words, happiness and life satisfaction was only associated with relative income, but negative emotion was associated with relative income and absolute income. Without social comparison, income doesn’t improve happiness, but it could weaken negative emotion. Therefore, it is possible for economic growth to weaken negative emotion without improving happiness. These findings also contribute to the current debate about the “Esterling paradox.”

We combine macro and microeconomic perspectives in an agent-based endogenous growth model that uses individual satisfaction as a driver of human capital accumulation. The micro perspective is based on individual satisfaction: an utility function computed from the income variation in space (relative to others) and time. The macro perspective emerges from micro decisions that, at an aggregate level, determine an important social decision about the share of the working population engaged in producing ideas (i.e. skilled workers). Underlying our analysis is the Easterlin hypothesis (Easterlin, in: David, Melvin (eds) Nations and households in economic growth: essays in Honor of Moses Abramowitz, Academic Press, New York, 1974, J Econ Behav Organ 27(1):35–47, 1995) which states that individuals care much more about their relative income than about increases in their own income, weakening the link between growth and income. Simulations show that growth and satisfaction levels are higher when relative and absolute incomes are equally weighted in satisfaction computation and are lower when satisfaction only depends on relative incomes.

Using data on 697 individuals from 375 rural low income households in India, we test expectations on the effects of relative income and conspicuous consumption on subjective well-being. The results of the multi-level regression analyses show that individuals who spent more on conspicuous consumption report lower levels of subjective well-being. Surprisingly an individual’s relative income position does not affect feelings of well-being. Motivated by positional concerns, people do not passively accept their relative rank but instead consume conspicuous goods to keep up with the Joneses. Conspicuous consumption always comes at the account of the consumption of basic needs. Our analyses point at a positional treadmill effect of the consumption of status goods.

The well-known Easterlin paradox points out that average happiness has remained constant over time despite sharp rises in GNP per head. At the same time, a micro literature has typically found positive correlations between individual income and individual measures of subjective well-being. This paper suggests that these two findings are consistent with the presence of relative income terms in the utility function. Income may be evaluated relative to others (social comparison) or to oneself in the past (habituation). We review the evidence on relative income from the subjective well-being literature. We also discuss the relation (or not) between happiness and utility, and discuss some nonhappiness research (behavioral, experimental, neurological) related to income comparisons. We last consider how relative income in the utility function can affect economic models of behavior in the domains of consumption, investment, economic growth, savings, taxation, labor supply, wages, and migration. Every pitifulest whipster that walks within a skin has had his head filled with the notion that he is, shall be, or by all human and divine laws ought to be, “happy.” Thomas Carlyle

Concerning environmental pollution issues derived from fossil energy consumption, the application of renewable energies plays an important role in countries, especially in their energy sector policymaking. Since determining the relationship between different variables and renewable energy not only has significant policy applications in energy sector but also is necessary in achieving sustainable development goals, this study assesses the impact of effective factors on the development of renewable energy consumption in Iran with emphasis on the role of foreign direct investment (FDI) and financial sector development (especially stock market development). This study applies Auto-Regressive Distributed Lag (ARDL) bounding test method over the period of 1978-2016. The research findings show that there is a causal relationship between foreign direct investment and the stock market and renewable energy consumption in Iran such that the increase of foreign direct investment and stock market development will increase the consumption of renewable energies in Iran. On the other hand, a growth in renewable energies consumption will significantly reduce CO2 emission in the long run. Besides, increasing FDI and stock market development will raise the economic growth of a country and, in return, increase CO2 emission.

The paper aims to empirically assess the effects of technological spillovers on economic growth and to examine the roles of host country absorptive capacity. The empirical analysis was carried out at the country level on a panel of five Asian countries covering the period from 1972 to 2018. As the variable of interest (technological spillovers) and mediator variable (absorptive capacity) are captured with a variety of indicators, hence two empirical models are estimated with different specifications. The study’s findings indicate that technological spillovers through all three channels have a positive effect on economic and TFP growth. Touching on the role of absorptive capacity in technological spillovers and economic growth nexus, study findings reveal that the human capital of the sample countries has no significant role to absorbed imported technology in the growth process of the host country. However, the empirical indication illustrates that a country holding comparatively more domestic R&D expenditure yields the potential gain of technological spillovers in economic growth.

This paper tests the empirical validity of Easterlin’s paradox, the absolute and relative income theorems which underpin it, and investigates associations between subjective well-being (SWB), economic growth and the factors which shape economic development via a series of multilevel mixed-effects regression models. Results show no evidence for the existence of the Easterlin Paradox and are concurrent across multiple measures of SWB – happiness and life satisfaction. The analysis suggests richer countries have greater life satisfaction and are happier than poorer countries. Moreover, both SWB measures are positively correlated with increasing economic growth which goes hand in hand with higher income inequality though the economic significance of this increasing economic development in enhancing life satisfaction is around 3 times greater than it is for happiness. However, minimising economic inequality safeguards the happiness and life satisfaction gains induced by growth more in richer than in poorer countries. Additionally, happiness levels are slightly elevated by the inflation rises accompanying growth despite increasing happiness and economic development in countries over time being conditioned by low inflation. At the individual level, non-linear relationships between income and SWB indicate that the role absolute income plays in governing happiness and life satisfaction is determined by people’s relative incomes.

While the relationship between inequality and economic growth has been studied since last century providing a general picture of the income distribution's influence on economic growth, it hides the relationship's complexity by merely using a single and general inequality statistic. Recently, the consequence of top income inequality has been broadly discussed after the financial crisis and related social movement. Research covering series on top income share has emerged in an international and historical perspective. Some researchers present the relationship between top income and growth recession. But rather than focusing on the short period of stagnation, it is more meaningful to explore what top income performs consistently long time ahead that causes economic growth to a halt. This study fills this gap by a quantitative research of 31 countries from 1950 to 2014, studying top income's relation with the duration of growth spells - periods of high, healthy, per capita growth - indicating sustained growth based on Berg, Ostry and Zettelmeyer (2012) research.Studies show that taken other standard determinants into consideration, income distribution equality is robustly associated with longer growth spells. Thus, will top income inequality has the same influence on growth duration? Will top income's influence change in different stage of growth spells? These are the questions we try to answer.This paper redefines growth spells using Bai and Perron's (1998, 2003, 2006) methodology of structural breaks with improved economic criteria and applies duration analysis to explore the role of top income influencing the duration of growth spells. We find that top inequality is significantly associated with growth duration, and the top inequality's effect changes within growth spells. Results show the initial level of top 1% income share is positively associated with the length of growth spells while its change within spells shortened the length of growth spell. But top income initial's positive effect is relatively more than the negative effect of the change within spells. This study sheds light on top income's role in economic sustained growth, offering a potential solution in avoiding the middle-income trap. At the start of growth spells, top income's larger share can enhance the possibility the economy maintains growing. But as the growth continues, top income's adverse effect begins to show. The government should make the best use of the top income's positive effect at the take-off stage and avoid its adverse effect as the growth continues.

Complementarities between Exports and Human Capital in Economic Growth: Evidence from the Semi‐industrialized Countries

The determinants of an economy's growth path for income per head may vary over time. In this paper, we apply unobserved components analysis to an otherwise standard panel model of economic growth dynamics so that an economy's long‐run relative income per head can change at any point of time. We apply this model to data for US states for 1929–2021 and the world economy for 1970–2019. In both datasets an economy's initial relative income per head is a good predictor of its long‐run relative income per head. Relatively poor economies on average remain relatively poor.

Happiness, long considered a subjective and intangible concept, has become an increasingly prominent subject within the field of economics. This study aims to investigate happiness from an economic perspective, offering a comprehensive analysis of how economic variables influence individual and collective well-being. Using comparative case studies and empirical data analysis, this study explores the multifaceted relationship between income levels, wealth distribution, economic growth, and subjective well-being. Drawing on both empirical data and established theoretical frameworks, the research examines how relative income - rather than absolute wealth - plays a significant role in shaping personal satisfaction, as individuals often assess their happiness in comparison to others within their socioeconomic environment. Additionally, the study delves into the effects of labor market conditions, such as job stability, wage fairness, and unemployment, as well as the importance of social safety nets and public goods in enhancing societal happiness. Evidence suggests that while rising GDP and economic expansion can improve living standards, they do not automatically translate into increased happiness for all. In fact, high levels of inequality and job insecurity can offset the potential benefits of economic growth. The analysis underscores the importance of adopting a broader set of indicators beyond traditional economic measures to better capture the well-being of populations. The study advocates for the integration of happiness and well-being metrics into policy frameworks, encouraging governments to consider long-term quality of life when shaping economic agendas. Ultimately, the findings highlight the potential for economics not only to understand wealth generation, but also to promote human flourishing through more equitable and sustainable development strategies.

Relative income, aspiration, environmental quality, individual and political myopia

The paper examines the impact of skill transfer on economic growth. Even if there are the benefits of backwardness and the ability to absorb them, the South may not exploit them, because the skilled workers in the North are not willing to come to the South owing to their high opportunity cost. It is shown that if the South's relative income is low, the South cannot offer high wages to attract skilled workers from the North, and stays in the low rank. But if its relative income is high enough, exploiting the benefits of backwardness, it attains high growth and converges to a relatively higher position. This prediction is consistent with the evidence that the world distribution of relative income has two peaks. The study also shows that an increase in human capital in the North increases the minimum requirement for human capital in the South to soar.

Which functional mechanism will be more appropriate for regional economic growth in China's economy? this thesis conducts theoretical analysis concerned the functional mechanism conducts empirical test on the various effects of human capital based on the two-way fixed effects panel model and carries out robustness testing based on panel quantile regression. It is found that the direct effects of human capital outweigh its indirect effects with opposite signs, and it is mainly attributed to the poor matching of the technology introduced in the channel of domestic and international technology. There have been abundant theories and assumptions about the effects of human capital on economic growth in the international research field. Nelson (2005) divided the relevant theories into two theoretical systems: accumulation theories and assimilation theories. Accumulation theories deal with the direct influences of human capital on economic growth, which involve the direct input of human capital into the production of end products as a factor of production and assume the contributory role of new human capital in economic growth. This is an exploration of the flow effect of human capital, with the empirical test generally based on the MRW (1992) growth regression framework. While assimilation theories is a theoretical mechanism where human capital exerts indirect effects on economic growth through total factor productivity or technological advances and they emphasize the indirect effects of human capital stock on economic growth, with the empirical tests generally based on the growth regression framework of Benhabib and Spiegel (1994). And the above two kinds of the functional mechanism of human capital can also be called growth effects and level effects (Dowrick, 2003). Besides, the internal mechanism of level effects can be further extended, that is, the influences on technological advances through innovation and technology spillover. And from the perspective of regional level, the source of technology spillover largely contain the source of domestic technology spillover and the source of international technology spillover (Kuo and Yang, 2008; Zhang and Sun, 2012). In addition, human capital can also affect economic growth indirectly through its complementarity with the physical capital. So it can be found that human capital can influence economic growth through various and varied functional mechanisms. But for China's regional economy, which functional mechanism will be more appropriate to account for the facts of different regional economic growth in the current period? In response to this question, this thesis conducts theoretical analysis concerned the functional mechanism of human capital on regional