FACTOR INCOME DISTRIBUTION AND ENDOGENOUS ECONOMIC GROWTH: PIKETTY MEETS ROMER

What is the relationship between the economy's long-run growth rate, its capital-income ratio, and its factor income distribution? A satisfactory answer requires an endogenous growth and savings rate. We scrutinize Piketty's (2014) theory in a richly parameterized variant of Romer's (1990) seminal model with and without population growth. The economy's growth and savings rate are exogenous in Piketty's theory and endogenous in Romer's. In contrast to Piketty's Second Fundamental Law of Capitalism a smaller growth rate may be associated with a smaller capital-income ratio. Moreover, it may go together with a greater or a smaller capital share. (JEL E10,E21,E25,O33,O41)     

The ENDOGENEITY OF MONEY DURING THE GERMAN HYPERINFLATION: A REAPPRAISAL

This paper provides evidence that casts doubt on the conclusioon of several studies of the German hyperinflation that, since government raised most of its revenue from money creation, the money supply process was endogenous. This conclusion in the literature is based on the assumption that the money supply and the price level can be described by linear ARIMA models. It is shown here that the linearity assumption is violated by the data and that relaxing this assumption reverses the earlier results. The paper provides additional evidence in support of the finding that the money supply process may be exogenous.     

A TIME SERIES TEST OF INNOVATION-DRIVEN ENDOGENOUS GROWTH

This article finds evidence that ideas and innovation are a key force explaining postwar growth in the U.S. economy. Utilizing data on patents issued since 1851, I construct a measure of the growth rate of knowledge. Capital stock estimates, human capital estimates, and real gross domestic product per worker growth rates are combined with the knowledge growth series to construct a time series test of endogenous innovation growth models. The results support the endogenous innovation approach but suggest that the accumulation of the per worker capital stock and changes in average human capital per worker are at least as important. (JEL 030 , C32 )     

A FEDERAL FUNDS RATE EQUATION

This paper presents evidence that indicates that U.S. interest rate policy during most of the 1980s can be described by a reaction function in which the federal funds rate rises if real GDP rises above potential GDE if actual inflation accelerates, or if the long-term bond rate rises. Money growth when included in the reaction function is significant, indicating that money also influenced policy. The results presented here however indicate that in recent years the Fed has discounted the leading indicator properties of money. (JEL E5)     

DEMOGRAPHICS, PRODUCTIVITY GROWTH AND THE MACROECONOMIC EQUILIBRIUM

This paper investigates the economic effects of demographics and productivity growth in an intertemporal optimizing model with age-based heterogeneity and induced retirement. Our analysis reveals that the projected "population aging" is likely to increase the growth rate of output and to improve the welfare of the economy, especially if there are no distortional policies which prevent retirement decisions from adjusting endogenously to the demographic changes. The economy also displays different patterns of dynamic adjustment in the quantity and price variables depending upon whether retirement is endogenous.     

Do Differences Matter?

Abstract

Have women members of Congress made a difference? A handful of studies have answered this “so what” question by looking for differences between male and female legislators. We build on previous research and propose an additional way of answering this question. If women members are making a difference, then they should be changing how men behave in Congress. Specifically, if women members are making a difference, then they should be changing how their male colleagues debate the issues. We content-analyze each House floor debate on the Hyde Amendment to see if women are changing how men debate the abortion issue. We find that men and women frame the abortion debate differently, and we find some evidence that women members of Congress have shifted the debate over time to focus less on the morality of abortion and more on the health of the pregnant women. We hope our research stimulates further work that not only looks for differences between men and women legislators, but also looks to see if the differences cause legislatures to change the way they do business.     

Consistent comparison of pro-poor growth

This article contributes to the literature of pro-poor growth measurement by introducing and characterizing a growth-rate consistency axiom. The axiom states that if one growth pattern is judged to be more pro-poor than another growth pattern at a given growth rate, then the pro-poor ranking between the two growth patterns should remain the same at a higher growth rate. We show that summary pro-poor measures such as poverty-growth elasticities may violate this axiom. We then characterize a special dominance condition under which a given summary pro-poor measure will satisfy the growth-rate consistency axiom. Finally, we establish a general growth-rate dominance condition under which all summary pro-poor measures will respect the growth-rate consistency axiom.     

Should I stay or should I go? Sibling effects in household formation

This paper analyzes peer effects among siblings in the decision to leave parental home. Estimating peer effects is challenging because of problems of reflection, endogenous group formation, and correlated unobservables. We overcome these issues using the exogenous variation in siblings’ household formation implied by the eligibility rules for a Spanish rental subsidy. Our results show that sibling effects are negative and that these effects can be explained by the presence of old or ill parents. Sibling effects turn positive for close-in-age siblings, when imitation is more likely to prevail. Our findings indicate that policy makers who aim at fostering household formation should target the household rather than the individual and combine policies for young adults with policies for the elderly.     

LONGEVITY AND PUBLIC OLD-AGE PENSIONS

Using an overlapping generations model with endogenous but uncertain longevity, this article analyzes the effects of public old-age pensions on longevity choice and capital accumulation. When agents are not altruistic, increases in old-age pensions are longevity-neutral for golden rule economies and longevity-decreasing if interest rates exceed population growth, and saving effects are strictly negative. When agents are altruistic, longevity is independent of old-age pensions regardless of the interest rate–population growth relation. On the other hand, the longevity effect of a price subsidy on longevity extending expenditures or an advance in longevity extending technology is positive.(JEL H5 , J1 )     

Social infrastructure and community economic development strategies: the case of self-development and industrial recruitment in rural Iowa

This research examines the relationship between features of community social organization and the existence of two contrasting types of economic development, self-development and industrial recruitment in rural places. Self-development is an endogenous form of development relying primarily on entrepreneurism and local resources. Industrial recruitment is an exogenous form of development that seeks outside investors and firms to locate in the community. Using data collected in a statewide sample of 99 Iowa communities, we hypothesize that social infrastructure, the group-level interactive aspects of community organizations and institutions, is more strongly related to the existence of self-development than industrial recruitment. A key finding is that social infrastructure, measured by the existence of active community organizations, businesses that support local community projects, community-wide fund-raising capacity, and extra-local linkages to peer communities and state government, is positively associated with the existence of self-development. The relationship between social infrastructure and industrial recruitment is also significant but more modest. Findings indicate that a community's social organization can be a resource for development, but may be more appropriate for endogenous development efforts than exogenous ones.     

Exponential-growth bias and overconfidence

There is increasing evidence that people underestimate the magnitude of compounding interest. However, if people were aware of their inability to make such calculations they should demand services to ameliorate the consequences of such deficiencies. In a laboratory experiment, we find that people exhibit substantial exponential-growth bias but, more importantly, that they are overconfident in their ability to answer questions that involve exponential growth. They also exhibit overconfidence in their ability to use a spreadsheet to answer these questions. This evidence explains why a market solution to exponential-growth bias has not been forthcoming. Biased individuals have suboptimally low demand for tools and services that could improve their financial decisions.     

Sexual victimization and substance abuse in psychiatrically hospitalized adolescents

This article investigates the relationship between substance abuse and sexual abuse in a population of 260 psychiatrically hospitalized adolescents. Seven hypotheses are set forth to test a model that uses parental alcohol abuse, sexual abuse status, and gender as exogenous variables, perceived benefit of alcohol or drugs as an endogenous mediating variable, and substance abuse as the dependent variable. Using these variables, a path model was constructed and revised based on empirical testing. The revised model achieved an adjusted R2 of .38, thus explaining 38 percent of the variance in this sample's abuse of alcohol or drugs. The model suggests that within clinical populations, sexually abused adolescents should be screened for substance abuse, and attention should be given to parental alcohol abuse as well as the degree to which adolescents perceive benefits from their alcohol or drug use.     

The changing morphology of the gulf cities in the age of globalisation: the case of Bahrain

Cities in the Gulf region have been witnessing dramatic changes in their morphology and internal structures during the last three decades due to the successive shifts from endogenous to exogenous types of urban growth. In the past, the urban space was mainly shaped by the tribal structure and the economy of subsistence that is based on fishing, pearl trading and/or farming. After the discovery of oil, a first shift towards an exogenous form occurred. Due to the accumulation of wealth, the kingdom adopted a distributive and comprehensive welfare policy, and became a major and unique actor in shaping the city. At present, a second stage of “exogeneity” is occurring due to globalisation. The installation of large multi-national companies, the liberalisation of the economy and the integration with the world banking system are having a direct impact on the socio-economic, cultural and thus, urban morphology. Bahrain seems to reflect the three stages through the changing urban morphology of its two main cities; Muharraq and Manama. Analysed in the light of the endogenous–exogenous model, it opens a debate on the conditions for the survival of the old cities and defines a theoretical framework for the approach to management and planning to be adopted.     

Social work and the penal state

ABSTRACT

The Criminal Justice System (CJS) has historically been a key site of social work intervention. Wacquant argues that the growth of social insecurity and the expansion of the penal state are endogenous features of the neo-liberal political project. The key premises of neo-liberalism have been accepted by parties of both the left and the right. This shift alongside an increase in inequality had led to increasing social anxiety and mistrust. One manifestation of these trends is a decline in the belief that the rehabilitation of offenders is a realisable goal of social and penal policy. The expansion of the penal state: the increasing numbers, poor conditions and the over-representation of minority groups mean that it should be a core social work concern. The paper outlines the ways, in which, risk and managerialism have side lined core social work values in the CJS. It concludes penal policy and conditions can only be reformed if the inherent dignity of offenders is rediscovered and placed at its centre.     

PARENTAL SUBSTANCE USE AND FOSTER CARE: EVIDENCE FROM TWO METHAMPHETAMINE SUPPLY SHOCKS

Foster care caseloads have nearly doubled over the last three decades. Parental methamphetamine (meth) use grew significantly during the same period. While child welfare workers and law enforcement claim that parental meth use contributes to foster care growth, the evidence for a causal effect has not been determined. This paper presents the first evidence of a causal effect of meth on foster care admissions using two exogenous supply‐side interventions in meth markets from the late 1990s for identification. First, we find that restrictions on meth precursor distribution caused meth use (proxied by white meth self‐referred treatment cases) to decline 4.1%. Second, using two‐stage least squares, we estimate a positive elasticity of foster care cases with respect to meth use of 1.54. We also estimate elasticities of 1.03 and 1.49 for cases of child neglect and parental abuse, respectively. These results suggest that child welfare policies should be designed specifically for the children of meth‐using parents. (JEL I12, J13, K42)     

THE POLITICAL ECONOMY OF INTERGENERATIONAL INCOME MOBILITY

The intergenerational elasticity of income is considered one of the best measures of the degree to which a society gives equal opportunity to its members. While much research has been devoted to measuring this reduced‐form parameter, less is known about its underlying structural determinants. Using a model with exogenous talent endowments, endogenous parental investment in children, and endogenous redistributive institutions, we identify the structural parameters that govern the intergenerational elasticity of income. The model clarifies how the interaction between private and collective decisions determines the equilibrium level of social mobility. Two societies with similar economic and biological fundamentals may have vastly different degrees of intergenerational mobility depending on their political institutions. We offer empirical evidence in line with the predictions of the model. We conclude that international comparisons of intergenerational elasticity of income are not particularly informative about fairness without taking into account differences in politico‐economic institutions. (JEL E24, J62, J68, P16)     

Social capital and innovation dynamics in district-based local systems

The idea behind this paper is that social capital (SC) is interpreted as a component of an investment, which implies entangled private and public benefits. Within a theoretical framework that considers SC as the public component of the impure public good R&D we show that the ‘civic culture’ of the district in which a firm is located is not a sufficient incentive for the firm to increase its investment in SC, because SC/networking dynamics might positively and complementarily evolve only if the opportunity cost of investing in innovation is sufficiently low. Consequently, we focus our attention on a specialised biomedical industrial district characterised by a strong pattern of innovative activity. We observe that R&D and networking/social capital arise as complementary driving forces of innovation outputs. When the empirical evidence confirms that this complementarity plays a key role, policy efforts should be targeted toward both market and non-market characteristics, rather than solely to the production of local public goods or innovation inputs as independent elements of firm performance. This is very important in terms of policy effectiveness. In fact, we argue that SC/networking dynamics might positively evolve only if the private opportunity cost of investing in R&D innovation is sufficiently low. Nevertheless, this exogenous economic incentive works as long as complementarity, as defined here, holds.     

Does the sectoral composition of growth affect child stunting reductions?

This article uses a natural experiment based on random and exogenous variations in temperature to examine whether the sectoral composition of growth has an effect on child stunting reductions. Agricultural growth is central to food security strategies in developing countries, as it is often considered the most effective way to fight (child) undernutrition. The evidence base to support the putative superior role of agricultural growth is, however, relatively weak, possibly because studies have ignored growth faltering. Accounting for the latter, we find that while both agricultural and non‐agricultural growth decrease stunting, agricultural growth is significantly superior to non‐agricultural growth in this regard. The estimated impacts are large, in that a 10% increase in agricultural GDP per capita reduces child stunting by 9.6% (as opposed to 8.4% for non‐agricultural).     

Networks — a new paradigm of rural development?

The network concept has become widely utilised in socioeconomic studies of economic life. Following the debates around exogenous and endogenous development, networks may also have particular utility in understanding diverse forms of rural development. This paper assesses whether networks provide a new paradigm of rural development. It seeks to capture a series of differing perspectives on economic networks — including political economy, actor-network theory and theories of innovation and learning — and attempts to show how these perspectives might be applied to different types of rural areas. The paper demarcates two main “bundles” of networks: “vertical” networks — that is, networks that link rural spaces into the agro-food sector — and “horizontal” networks — that is, distributed network forms that link rural spaces into more general and non-agricultural processes of economic change. It is argued that rural development strategies must take heed of network forms in both domains and that rural policy should be recast in network terms.     

An Examination of the Woodwork Effect Using National Medicaid Long-Term Services and Supports Data

A common concern in long-term services and supports (LTSS) policy is the “woodwork effect,” which has two components: (1) more people will use publicly funded services if access to home- and community-based services (HCBS) is expanded; and (2) the additional beneficiaries will increase the growth rate of LTSS expenditures. Medicaid LTSS beneficiary and utilization data starting in 1999 indicate modest growth in beneficiaries and expenditures, after adjusting for inflation and the number of people with functional impairments. The data do not provide strong evidence that the shift in Medicaid funding toward HCBS significantly increased or decreased overall Medicaid LTSS spending.