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Economics Faculty Publications

Economic development

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Full-Text Articles in Social and Behavioral Sciences

The Choice Of Technology In Economic Development, Lei Wen, Haiwen Zhou Jan 2023

The Choice Of Technology In Economic Development, Lei Wen, Haiwen Zhou

Economics Faculty Publications

The impact of capital accumulation on job creation is an important and interesting issue in economic development. This model provides a general-equilibrium framework for studying technology choice with unemployment in a developing economy based on micro-foundations. Unemployment in the urban sector results from the existence of efficiency wages. Manufacturing firms engage in oligopolistic competition and choose technologies to maximise profits. A more advanced technology uses more capital and less labour. In the steady state, an increase in the amount of capital induces firms to choose more advanced technologies and the wage rate increases. While a higher capital stock always induces …


The Partition Of Production Between Households And Markets, Christopher Colburn, Haiwen Zhou Jan 2022

The Partition Of Production Between Households And Markets, Christopher Colburn, Haiwen Zhou

Economics Faculty Publications

The process of industrialization was accompanied by the switch from household production to firm production. The industrialization process was also a process of population growth, the appearance of general-purpose technologies, and the expansion of international trade. This paper studies the partition of production between households and firms in an analytically tractable general equilibrium model with a continuum of goods. We show that population growth, development of general-purpose technologies, and the opening of international trade increase the percentage of goods produced by firms. However, with the appearance of a technology biased toward home production, the percentage of goods produced by households …


An Overlapping-Generations Model Of Firm Heterogeneity In Economic Development, Yu Chen, Haiwen Zhou Jan 2017

An Overlapping-Generations Model Of Firm Heterogeneity In Economic Development, Yu Chen, Haiwen Zhou

Economics Faculty Publications

We study firm heterogeneity in economic development in an overlapping-generations general equilibrium model in which manufacturing firms engage in oligopolistic competition. Individuals differ in their productivities in the manufacturing sector and choose to become entrepreneurs or workers. The model is surprisingly tractable. In the steady state, an increase in the entry barrier in the manufacturing sector or an increase in the percentage of income spent on the agricultural good decreases the wage rate, but the level of output in the manufacturing sector does not necessarily decrease. An increase in the degree of patience of an individual increases the steady state …


The Big Economic Development Project Question: Is It New Revenue Or A Spending Transfer?, Paul Harris, Ronald Berkebile, Julia Martin, Larry Filer Jan 2016

The Big Economic Development Project Question: Is It New Revenue Or A Spending Transfer?, Paul Harris, Ronald Berkebile, Julia Martin, Larry Filer

Economics Faculty Publications

Most local governments pursue some degree of economic development activity to strengthen their economy by adding jobs and generating tax revenue. Witness the growth in tax increment financing, property tax abatements, tax credits, and exemptions for economic development. These state and local incentives totaled more than $80 billion in 2012. Economic development projects can represent a significant boon for a local economy. Estimating how much money they might generate, however, is not as easy as it initially seems, and jurisdictions can receive far less net new revenue than developers predict. Most consumers have finite incomes, which limits their discretionary spending. …


A Dynamic Model Of The Choice Of Technology In Economic Development, Haiwen Zhou, Ruhai Zhou Jan 2016

A Dynamic Model Of The Choice Of Technology In Economic Development, Haiwen Zhou, Ruhai Zhou

Economics Faculty Publications

In this overlapping-generations model, there is unemployment in the manufacturing sector. Manufacturing firms engage in oligopolistic competition and choose technologies to maximize profits. With capital as a fixed cost of production, increasing returns in the manufacturing sector exist. In the unique steady state, first, when individuals become more patient, the savings rate increases while the level of an individual’s income decreases. Second, an increase in population or percentage of income spent on manufactured goods does not change steady-state technology while the level of an individual’s income decreases. Third, an increase in the wage rate leads manufacturing firms to choose more …


Unemployment And Economic Integration For Developing Countries, Haiwen Zhou Jan 2015

Unemployment And Economic Integration For Developing Countries, Haiwen Zhou

Economics Faculty Publications

While financial or trade integration between countries may increase the size of the market and aid the adoption of more advanced technologies, will it also increase the level of urban unemployment for a developing country? In this model, there is unemployment in the urban sector. Manufacturing firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Financial firms provide capital to manufacturing firms and they also engage in oligopolistic competition. We show that an increase in the wage rate in the manufacturing sector changes neither the level of technology nor the level of employment in the manufacturing …


The Choice Of Technology And Rural-Urban Migration In Economic Development, Haiwen Zhou Jan 2013

The Choice Of Technology And Rural-Urban Migration In Economic Development, Haiwen Zhou

Economics Faculty Publications

This paper studies a general equilibrium model of rural-urban migration in which manufacturing firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Urban residents incur commuting costs to work in the Central Business District. Surprisingly a change in the size of the population or an increase in the exogenously given wage rate will not affect a manufacturing firm’s choice of technology. This helps to explain why firms in developing countries may not adopt labor intensive technologies even under abundant labor supply. An increase in the number of manufacturing firms increases both the employment rate and the …


Schumpeter's Creative Destruction: A Review Of The Evidence, Arthur M. Diamond Jr. Oct 2006

Schumpeter's Creative Destruction: A Review Of The Evidence, Arthur M. Diamond Jr.

Economics Faculty Publications

Thoughtful scholars from Adam Smith to Jared Diamond, have asked the same life-and-death question: why do some societies succeed, and others fail, in producing the goods that make life long, healthy and prosperous? Smith's answer was basically that when societies adopt the rules of market capitalism, their economies grow,:and when they do not adopt the rules of market capitalism, their economies do not. Since Smith, other economists have developed more formal models of economic growth. The classic "Solow growth model" emphasized the investment of capital. Romer's "New Growth Theory," includes knowledge as a variable. What is mainly missing from both …


Mexico's Labor Market : The Importance Of Education - Occupation Matching On Wages And Productivity In Developing Countries, Michael A. Quinn, Stephen Rubb Apr 2006

Mexico's Labor Market : The Importance Of Education - Occupation Matching On Wages And Productivity In Developing Countries, Michael A. Quinn, Stephen Rubb

Economics Faculty Publications

The positive impact of education on earnings , wages, economic growth is well documented, however the issue of education - occupation matching in developing countries has been largely ignored. Since workers 'level of schooling and their occupations ' required level of education both affect wages , policy makers may find it useful to note if such mismatch exist, if they impact wages, and if they can be avoided. Empirical results from Mexico suggest that in order to obtain the maximum economic benefits from increases in educational attainment levels, a developing country needs to take steps to assure increases in occupational …