scholarly journals Trade, Domestic Frictions, and Scale Effects

2016 ◽  
Vol 106 (10) ◽  
pp. 3159-3184 ◽  
Author(s):  
Natalia Ramondo ◽  
Andrés Rodríguez-Clare ◽  
Milagro Saborío-Rodríguez
Keyword(s):  
Scale Effects ◽  
Growth Models ◽  
Relative Income ◽  
Standard Assumption ◽  
Fully Integrated ◽  
Income Levels ◽  
Country Size

Because of scale effects, idea-based growth models imply that larger countries should be much richer than smaller ones. New trade models share the same counterfactual feature. In fact, new trade models exhibit other counterfactual implications associated with scale effects: import shares decrease and relative income levels increase too steeply with country size. We argue that these implications are largely a result of the standard assumption that countries are fully integrated domestically. We depart from this assumption by treating countries as collections of regions that face positive costs to trade among themselves. The resulting model is largely consistent with the data. (JEL F11, F14, F43, O47, R12)

On the Effectiveness of Growth- Enhancing Policies in a Model of Growth Without Scale Effects

2002 ◽  
Vol 3 (3) ◽  
pp. 339-346 ◽  
Author(s):  
Lutz G. Arnold
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Human Capital ◽  
Population Growth ◽  
Capital Accumulation ◽  
Scale Effects ◽  
Growth Models ◽  
Empirical Studies ◽  
Human Capital Accumulation ◽  
Accelerate Growth

Abstract Standard R&D growth models have two disturbing properties: the presence of scale effects (i.e., the prediction that larger economies grow faster) and the implication that there is a multitude of growth-enhancing policies. Recent models of growth without scale effects, such as Segerstrom's (1998), not only remove the counterfactual scale effect, but also imply that the growth rate does not react to any kind of economic policy. They share a different disturbing property, however: economic growth depends positively on population growth, and the economy cannot grow in the absence of population growth. The present paper integrates human capital accumulation into Segerstrom's (1998) model of growth without scale effects. Consistent with many empirical studies, growth is positively related not to population growth, but to investment in human capital. And there is one way to accelerate growth: subsidizing education.

Effectiveness versus Efficiency: Growth-Accelerating Policies in a Model of Growth without Scale Effects

2006 ◽  
Vol 7 (3) ◽  
pp. 297-316 ◽  
Author(s):  
Bettina Büttner
Keyword(s):  
Human Capital ◽  
Capital Accumulation ◽  
Scale Effects ◽  
Growth Models ◽  
Human Capital Accumulation ◽  
Growth Path ◽  
Balanced Growth ◽  
Long Run ◽  
Theoretical Finding ◽  
Balanced Growth Path

Abstract Recent R&D growth models without strong scale effects imply that long-run growth rates depend only on parameters that are usually taken to be exogenous. However, integrating human capital accumulation into models of this type, Arnold (2002) demonstrates that subsidizing education accelerates growth. The present paper addresses welfare issues in Arnold’s model. The main theoretical finding of the paper is that a system of subsidies that implements the optimal balanced growth path as a decentralized equilibrium includes zero subsidies to education, while R&D activity should be either subsidized or taxed. To shed further light on the latter result, the model is calibrated and it turns out that along the balanced growth path, the decentralized economy underinvests in R&D, i.e. R&D activities should be subsidized.

scholarly journals Relative income levels in the Scandinavian countries

1974 ◽  
Vol 17 (1) ◽  
pp. 52-69 ◽  
Author(s):  
Olle Krantz ◽  
Carl-Axel Nilsson
Keyword(s):  
Relative Income ◽  
Income Levels

scholarly journals Rising Inequality in the Egalitarian Nordics

2021 ◽  
pp. 218-245
Author(s):  
Erling Barth ◽  
Kalle Moene ◽  
Axel West Pedersen
Keyword(s):  
Income Inequality ◽  
Labour Market ◽  
Relative Income ◽  
Income Poverty ◽  
Income Levels ◽  
Market Incentives ◽  
Working Age ◽  
Social Transfers ◽  
Working Age Population ◽  
Intended Effect

The chapter demonstrates that while the Nordic countries remain relatively affluent and egalitarian, inequality of disposable household income has been on the rise over the past 30 years. The increase in income inequality and relative income poverty has been strongest in Sweden and more modest in three other countries. In Sweden and, to a lesser extent, in Finland and Denmark, a reduced role for social transfers among the working age population has contributed to a decline in relative income levels enjoyed by the bottom deciles. Often in the wake of serious macroeconomic downturns, politicians have reduced the generosity of social transfers to improve labour market incentives. Even if these reforms have had the intended effect on employment, the increase in earnings has not been sufficient to replace the loss of social transfers.

scholarly journals Evidence for a Power Theory of Personal Income Distribution

2017 ◽  
Author(s):  
Blair Fix
Keyword(s):  
Income Distribution ◽  
Social Power ◽  
Relative Income ◽  
Personal Income ◽  
Standard Assumption ◽  
Power Theory ◽  
Institutional Hierarchy

This paper proposes a new 'power theory' of personal income distribution. Contrary to the standard assumption that income is proportional to productivity, I hypothesize that income is most strongly determined by social power, as indicated by one's position within an institutional hierarchy. While many theorists have proposed a connection between personal income and power, this paper is the first to quantify this relation. I propose that power can be quantified in terms of the number of subordinates below one's position in a hierarchy. Using this definition, I find that relative income within firms scales strongly with hierarchical power. I also find that hierarchical power has a stronger effect on income than any other factor for which data is available. I conclude that this is evidence for a power theory of personal income distribution.

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