Function Of Capital Accumulation Research Articles

Production and Learning in Teams

To what extent is a worker's human capital growth affected by the quality of his coworkers? To answer this question, we develop and estimate a model in which the productivity and the human capital growth of an individual depend on the average human capital of his coworkers. The measured production function is supermodular: The marginal product of a more knowledgeable individual is increasing in the human capital of his coworkers. The measured human capital accumulation function is convex: An individual's human capital growth is increasing in coworkers' human capital only when paired with more knowledgeable coworkers, but independent of coworkers' human capital when paired with less knowledgeable coworkers. Learning from coworkers accounts for two thirds of the stock of human capital accumulated on the job. Technological changes that increase production supermodularity lead to labor market segregation and, by reducing the opportunities for low human capital workers to learn from better coworkers, lead to a decline in aggregate human capital and output.

Openness and growth: Is the relationship non‐linear?

AbstractUsing an augmented two‐sector endogenous growth model for a small, open economy characterized by human capital accumulation and productive government expenditure, we analyse the nature of the relationship between openness and growth. External openness enters the human capital accumulation function directly. Productive government expenditure affects human capital accumulation, relying on seigniorage revenue as finance where seigniorage is itself dependent on the level of openness. The findings indicate two, opposing effects of openness on growth ‐ a direct effect of openness on growth through knowledge spillovers that affect human capital accumulation, and an indirect effect of decreasing seigniorage revenue on growth through decreasing productive government expenditure on human capital. We discuss conditions under which the openness‐growth curve can be concave/convex, without specifying theoretical functional forms or values to unknown parameters in the model to provide concise theoretical results. Rather, drawing samples of exact model‐match countries over –, we rely on a semi‐parametric, data‐driven empirical approach to provide empirical impetus to the theoretical outcomes reported. We show the relationship between openness and growth is non‐linear. Specifically, inverted U–shaped. The result suggests that openness only have a positive impact on the growth‐rate until a certain threshold‐level, thereafter, the effect is negative.

The Socio-Political Enigma: The State

The state is a multifaceted administrative-political organization that has various functions in different economic systems. Therefore, a simple definition for the state cannot be given in the face of its different role in different economic systems as well as the polymorphic nature it displays to fulfill its capital accumulation function in capitalism. Confined to its role in the capitalist system, two main functions of the state can be discerned: contribution to capital accumulation and legitimization of the system. That the state needs tax revenue to perform its duties makes it necessary for the state to favor capital to foster economic activity. However, the process of capital accumulation gives rise to “public nuisance” and social harm to some groups in the society. To have a peaceful society and secure a social and political system, the second function of the state takes over the job of putting some measures in effect to legitimize the system. Thus, the state is burdened by two opposing and mutually exclusive public functions that are badly needed in capitalism to have a relatively healthy society. Therefore, the state appears as if it is an enigma in terms of its various functions in different systems and polymorphic nature, especially in capitalism.

Acemoglu Meets Lucas: Institutions, Human Capital and Economic Growth

This paper proposes a reinterpretation of Lucas endogenous growth model (1988), once we add an institutional component as one of its determinants. Firstly, the paper develops a theoretical model that links human capital and institutions. Our modelling strategy establishes the human capital accumulation function as being derived from an endogenous process in which the institutional performance is a booster for the economy’s growth. The essay uses a 40–country panel data of the years 2000, 2005 and 2010 and implements a Pooled Ordinary Least Squares (POLS) analysis – alongside instrumental variables (IV) – aiming to validate empirically the model proposed. We verify that Lucas’ model overestimates the human capital contribution as we evaluate the significant impact that economic and political institutions have on the capability of human capital foment growth. Additionally, our estimations also suggest that human capital is, effectively, institutionally driven and works as a channel for the institutions.

Endogenous growth, human capital and the dynamic costs of recessions

PurposeThe purpose of the paper is twofold: to construct and analyze a novel endogenous growth model, in which unbounded growth is possible without the need to assume increasing returns to scale, and to use the model to estimate the long-run (or dynamic) costs of recessions.Design/methodology/approachIn the proposed model, endogenous technology and human capital accumulation serve as the “twin engines of growth.” Simulations are used to derive growth rates consistent with long-term experience of developed countries, to understand better the differences between balanced growth and unbounded growth and to provide an estimate of the dynamic costs of capacity utilization shocks that produce business cycle-like behavior.FindingsConservative calculations show that the costs of the capacity shocks can be large – about 1.5 percent of the present value of output over a 100-period horizon. The theoretical model also suggests that differences in the technology production and human capital accumulation functions, possibly due to differing institutions, may help explain diverse growth experiences.Originality/valueThe paper, for first time, combines two strands of the economic growth theory – endogenous technology and endogenous human capital production – into a single model. It uses the implications of the model to argue, through simulations, that the benefits of counter-cyclical policies are potentially large in the long run.

Is growth declining in the service economy?

This study extends (Baumol, 1967) two-sector (manufacturing and services) unbalanced growth model to analyze a situation in which, first, services are used for both final consumption and intermediate inputs in manufacturing production, and second, the productivity of the manufacturing and services sectors endogenously evolves. Using this model, we investigate how the employment share of services and economic growth rate evolve through time. Our results are summarized as follows. First, if the human capital accumulation function exhibits constant returns to scale with respect to per capita consumption of services, then we obtain a U-shaped relationship between the employment share of services and the economic growth rate. Second, if the human capital accumulation function exhibits decreasing returns to scale with respect to per capita consumption of services, we obtain an S-shaped relationship between the employment share of services and the economic growth rate: the economic growth rate decreases at first, begins to increase after some time, decreases again, and finally, approaches zero.

The Effect of Foreign Direct Investment on Economic Growth

We develop a theoretical model that studies the effects of FDI on growth in the absence of channels through which the spillover effects of FDI operate. By isolating the effects of FDI, we examine how FDI affects growth through its primary function of capital accumulation. Untangling the growth effects of FDI operating through capital accumulation from the spillover effects of FDI can help explain the ambiguity in the empirical evidence on the subject. The transitional dynamics are characterized by the interdependence of the variables of the source and recipient countries. We study the dynamic system through the model calibration analysis.

Education gap between second-generation migrants and natives and the role of intergenerational transmission of education

PurposeThe purpose of this paper is to analyse the role played by parental education endowments vs intergenerational transmission of education in education differences between second-generation immigrants and natives for the French case.Design/methodology/approachFirst, estimates of human capital accumulation functions are performed by using a representative sample of the French population. Second, the Blinder-Oaxaca decomposition technique is implemented to underline the specific roles of differences in parental education endowments and of differences in intergenerational transmission in education between origins.FindingsThe econometric estimates of human capital accumulation function parameters underline that the determinants of education level (and their magnitude), differ substantially between natives and migrants. They also underline evidence of heterogeneity in the intergenerational transmission of education among the different origins of migrants in France. The Oaxaca-Blinder decomposition results show that parental education endowments account differences for a significant part of the education gaps among origins. No evidence is found that differences in parental transmissions of education explain these gaps.Originality/valueThe paper focusses on France, a country with a rich history of immigration in the twentieth century. The econometric analysis is based on a rich source of data for France that allows studying intergenerational mobility in education and also distinguishing natives from second-generation migrants based on their geographical origin.

Endogenous Growth, Human Capital and the Dynamic Costs of Recessions

The purpose of the paper is two-fold: (i) to construct and analyze a novel endogenous growth model, in which unbounded growth is possible without the need to assume increasing returns to scale, and (ii) to use the model to estimate the long-run (or dynamic) costs of recessions. In our model, endogenous technology and human capital accumulation serve as the twin engines of growth. Simulations are used to derive growth rates consistent with long-term experience of developed countries, to understand better the differences between balanced growth and unbounded growth, and to provide an estimate of the dynamic costs of capacity utilization shocks that produce business-cycle-like behavior. Conservative calculations show that the costs of the capacity shocks can be large – about 1.5% of the present value of output over a 100-period horizon. The theoretical model also suggests that differences in the technology production and human capital accumulation functions, possibly due to differing institutions, may help explain diverse growth experiences. The paper, for first time, combines two strands of the economic growth theory – endogenous technology and endogenous human capital production – into a single model. It uses the implications of the model to argue, through simulations, that the benefits of counter-cyclical policies are potentially large in the long run.

América Latina: la acumulación de capital, la salud y el papel de las instituciones internacionales

During the second half of the 20th century, there have been great transformations in the world's social and political organization. While the colonial system was being dismantled, international institutions were being built and the large multinational enterprises that took on the function of capital accumulation for the new transnational bourgeoisie began to emerge. This paper analyzes such transformation in the health sector and provides information on the role of international institutions in capital accumulation. The World Bank, the International Monetary Fund and the World Trade Organization are used as examples, as well as international cooperation agencies. Two major policies are addressed: health reforms and medicine-related policies. The analysis shows that reforms and medicine-related policies have not aimed at complying with the Latin American countries' constitutional mandate requiring Governments to provide health services to everyone but at accumulating capital. Multinational enterprises have used international institutions to ensure their aim of accumulating capital, and the paper concludes by suggesting that they were created for that purpose.

Politiques éducatives et évasion fiscale dans les pays en développement

L’objectif de cet article est de mettre en évidence les conséquences que peut avoir l’évasion fiscale sur la durée de la scolarisation et les dépenses allouées à l’éducation. Nous ne faisons pas d’hypothèse particulière sur l’origine de l’évasion fiscale. Nous supposons simplement une société composée de deux catégories d’agents hétérogènes, les riches et les pauvres. Parmi les riches, certains déclarent l’intégralité de leur revenu alors que d’autres déclarent percevoir le revenu des pauvres. Faute de moyens de contrôle, l’État n’est pas apte à différencier les riches fraudeurs et les pauvres. De plus, nous introduisons des complémentarités dans la fonction d’accumulation de capital humain en termes de financement de l’éducation. Notre modèle est décliné en deux cas correspondant chacun à des politiques éducatives différentes c’est-à-dire des modes différents de financement de l’éducation. Dans un régime public, l’État collecte des impôts pour financer l’éducation et, dans un régime mixte (privé-public), l’État finance l’éducation par l’impôt tandis que les parents les plus riches peuvent compléter ce financement de manière privée. Nous montrons que la taxation dépend positivement de l’ampleur de l’évasion fiscale mais que cette sous-optimalité peut être compensée, dans le régime mixte, par une durée de scolarisation obligatoire plus importante.

Reading <em>Capital</em>, Reading Historical Capitalisms

Marx's Capital presents a rigorous scientific analysis of the capitalist mode of production and capitalist society, and how they differ from earlier forms. Volume 1 delves into the heart of the problem. It directly clarifies the meaning of the generalization of commodity exchanges between private property owners (and this characteristic is unique to the modern world of capitalism, even if commodity exchanges had existed earlier), specifically the emergence and dominance of value and abstract social labor.… Volume 2 demonstrates why and how capital accumulation functions, more specifically, why and how accumulation successfully integrates the exploitation of labor in its reproduction and overcomes the effects of the social contradiction that it represents.… Volume 3 of Capital is different. Here Marx moves from the analysis of capitalism in its fundamental aspects (its "ideal average") to that of the historical reality of capitalism.… To move from the reading of Capital (and particularly of volumes 1 and 2) to that of historical capitalisms at successive moments of their deployment has its own requirements, even beyond reading all of Marx and Engels.Click here to purchase a PDF version of this article at the Monthly Review website.

Fair allocation of capital growth

Financial investments are usually modelled and analysed by assuming exponential growth. For consistency purposes, we model savings products and interest-bearing securities as multiplicative cooperative games with transferable utility. The agents of these games are time periods and we are interested in a fair decomposition of the total growth factor. Notably, any financial transaction is governed by a suitable capital accumulation function. Therefore, we transfer this concept to cooperative game theory by establishing the notion of an accumulation function for coalitions. This property relates to a no-arbitrage principle and implies the law of one price. In particular, we show that the multiplicative variant of the Shapley value is the only efficient value that is associated with the concept of an accumulation function for coalitions. Using similarity conclusions, the original Shapley value can be uniquely characterised by applying efficiency and an additive accumulation function. Furthermore, the accumulation function coincides with the potential of the Shapley value.

Post-Malthusian Population Model of the British Industrial Revolution in a Lewis Unlimited Supply of Labor Model

To explain the population equilibrium of the British Industrial Revolution, this study proposes a two-sector economy that produces both agricultural foods and manufacturing goods. A Lewis model is used to discuss the interrelations among population increase, capital accumulation, and structural change of the British economy in the 19th century. We place capital accumulation at the center of the model to explain the growth in population size. Structural changes in the economy that are induced by capital accumulation favor the employment of labor in the manufacturing sector and trigger population increase. We examine this hypothesis by applying Granger causality tests to such variables as population size, capital accumulation, trade volume, and structural change in the British economy during the Industrial Revolution.Keywords: Britain's Industrial Revolution, Lewis's model, Capital accumulation, Population increaseJEL Classification: J11, N10(ProQuest: ... denotes formulae omitted.)I. IntroductionThe growth of population size is essential to the transition from a post- Malthusian regime to a modern economy regime. The post-Malthusian implies the stage after the escape from the Malthusian trap. This argument is rooted in the Boserupian viewpoint (1981) on the positive effects of population size on technical progress. Large-scale economies, which result from the increased demand caused by the increase in population size, generate technical progress. The unified growth model of Galor and Weil (1980) demonstrates that large-scale economies lead to economic conditions in which investments on human capital are favored. However, a gap remains between a gpost-Malthusian population economyh and a gmodern economyh with respect to determining population size. How the increase in population is achieved remains unclear, and how such an increase provides economic environments that are conducive for human capital investments is poorly understood.This study employs capital accumulation to determine the gpost- Malthusian population equilibrium,h which can fill the gap in the research on the population equilibrium between the gMalthusian stationary stateh and the gModern neo-classical population equilibriumh of family size choice. The function of capital goods in the context of the British Industrial Revolution as a growth model is rarely discussed. The function of capital goods in the transitional growth path of a unified growth model remains uncertain. Voigtla.nder and Voth (2006) presented a growth model of the British Industrial Revolution. This model considered capital goods. Their study indicated that an Ashton gwave of gadgetsh in the Industrial Revolution generated the growth of the British economy. The endogenous growth model of a gvarietyh kind did not determine the population size.We employ the gUnlimited Supply of Labor modelh of Lewis to discuss the function of capital accumulation during the British Industrial Revolution and relate it to the determination of population size. Yang and Kim (2013) suggested a population equilibrium for the Malthusian economy of a one-sector agricultural economy. Their study emphasized the improvement of the marginal physical productivity of the agricultural worker in escaping the Malthusian trap. The present work retains the biophysical wage rate hypothesis of Fogel. Thus, the post-Malthusian model implies that income significantly affects the choice of family size.The three factors of economic production are land, labor, and capital. Land is specific to the agricultural sector, whereas labor and capital move between the manufacturing and agricultural sectors. Capital and labor are utilized in fixed proportions for agricultural produce but are interchangeable for the production of goods. Land is specific to agricultural produce.An economy is Malthusian when the land factor can effectively constrain population increase. …

Institutions, human capital, and growth: The institutional mechanism

This paper contributes to the debate on the relationship between human capital, institutions, and economic growth. The paper first develops a micro-foundation model linking institutions to human capital. The advantage of our modeling strategy is that the human capital accumulation function is derived from an endogenous process. The theoretical model shows that improvements in the quality of institutions foster human capital accumulation, decrease income inequality and change the historical development path. The paper uses cross-country panel data from 1965 to 2005 to test some of the model's propositions and finds that deep structures or structural institutions – which are very persistent and rooted on the historical development path of an economy – affect long-term economic performance, while political institutions are uncorrelated with productivity and long-term economic growth. The empirical estimates also show that growth of physical and human capital – instead of levels – determines long-run economic growth.

The Speed of Collapse: The Space-Time Dimensions of Capitalism’s First Great Crisis of the 21st Century

The essay analyses the global economic crisis from a critical perspective on the function of capital accumulation in space-time. It argues that the relative ‘speed of collapse’ is a historically new phenomenon that has been generated through the neoliberal and ICT driven mode of capitalism that has dominated since the 1970s. The ‘speed of collapse’, I argue, will be followed by a rapid financially led recovery that signals not that the system is self-stabilizing and durable, but that the system is out of control. This lack of control and the irreconcilable effects of space-time upon a constantly accumulating capital with fewer and fewer profitable outlets mean that a future system crisis is both inevitable and will carry greater destructive resonance.

Operational risk and insurance: a ruin-probabilistic reserving approach

A new methodology for financial and insurance operational risk capital estimation is proposed. It is based on using the finite time probability of (non-)ruin as an operational risk measure, within a general risk model. It allows for inhomogeneous operational loss frequency (dependent inter-arrival times) and dependent loss severities which may have any joint discrete or continuous distribution. Under the proposed methodology, operational risk capital assessment is viewed not as a one off exercise, performed at some moment of time, but as dynamic reserving, following a certain risk capital accumulation function. The latter describes the accumulation of risk capital with time and may be any nondecreasing, mpositive real function hHtL. Under these reasonably general assumptions, the probability of mnon-ruin is explicitly expressed using closed form expressions, derived by Ignatov and Kaishev (2000, 2004, 2007) and Ignatov, Kaishev and Krachunov (2001) and by setting it to a high enough preassigned mvalue, say 0.99, it is possible to obtain not just a value for the capital charge but a (dynamic) risk capital accumulation strategy, hHtL. In view of its generality, the proposed methodology is capable of accommodating any (heavy tailed) mdistributions, such as the Generalized Pareto Distribution, the Lognormal distribution the g-and-h mdistribution and the GB2 distribution. Applying this methodology on numerical examples, we demonstrate that dependence in the loss severities may have a dramatic effect on the estimated risk capital. In addition, we show also that one and the same high enough survival probability may be achieved by mdifferent risk capital accumulation strategies one of which may possibly be preferable to accumulating capital just linearly, as has been assumed by Embrechts et al. (2004). The proposed methodology takes into account also the effect of insurance on operational losses, in which case it is proposed to take the probability of joint survival of the financial institution and the insurance provider as a joint operational risk measure. The risk capital allocation strategy is then obtained in such a way that the probability of joint survival is equal to a preassigned high enough value, say 99.9 %

América Latina: la acumulación de capital, la salud y el papel de las instituciones internacionales

During the second half of the 20th century, there have been great transformations in the world's social and political organization. While the colonial system was being dismantled, international institutions were being built and the large multinational enterprises that took on the function of capital accumulation for the new transnational bourgeoisie began to emerge. This paper analyzes such transformation in the health sector and provides information on the role of international institutions in capital accumulation. The World Bank, the International Monetary Fund and the World Trade Organization are used as examples, as well as international cooperation agencies. Two major policies are addressed: health reforms and medicine-related policies. The analysis shows that reforms and medicine-related policies have not aimed at complying with the Latin American countries' constitutional mandate requiring Governments to provide health services to everyone but at accumulating capital. Multinational enterprises have used international institutions to ensure their aim of accumulating capital, and the paper concludes by suggesting that they were created for that purpose.

The Demand for Higher Education and a Test of the Extreme Screening Hypothesis

This study proposes a model to estimate the demand for higher education. The present model is characterized by an ability‐based distribution of high school graduates who choose between entering the labor market and beginning post‐secondary schooling. In addition to estimating the demand for higher education, this model also derives a test of the extreme screening hypothesis. Moreover, it provides estimates of human capital accumulation functions for both males and females.

Science policy vs. technology policy?

On the higher stage of cognitive evolution, the concept of innovation management shifts toward a strategic design of the conscious socio-technical evolutionary movement. The paper investigates the question of why on this higher stage of human development, conventional science policy confronts engineering concept of technology development? Also, why, despite this, are science and technology policy one in its intention? The concept of a new alliance between science, technology and society is urged, on the grounds that the model of development we use in Europe still contemplates both science and technology as endogenous factors of economy, which they are not. The paper raises the question of whether, on the higher stage of socio-technical evolution, the scientific and technological advances can really be taken as inner resources of economic development, with production of knowledge as a function of capital accumulation. It is argued that either on a corporate or on a governmental level, the matter of an engineering approach to creation and the implementation of technological advantage, and the matter of scientific cognition should be conceptually the same in intention, but separated in accomplishment, because of their different directions. The concept of science and technology policy ought to be reconsidered and separated accordingly.