Where Do Human Capital Externalities End Up To?

Recent literature has aimed at evaluating human capital externalities by estimating the effect of human capital on wages at urban level. We argue that this methodology might not identify properly human capital spillovers. We consider a general equilibrium model based on Roback (1982) where both wages and rents are simultaneously determined at the local level. We show that human capital externalities cannot be identified unless the joint effect of local human capital on both wages and rents is considered. Empirically, we study the effects of local human capital on household-level rents and individual-level wages for a sample of Italian local labor markets. Our results show a positive and robust effect of local human capital on rents. This unambiguously demonstrates that the concentration of human capital at the local level generates positive externalities. As for the relative importance of consumption and production externalities, our results suggest that the two effects have a similar impact on wages.

Where do human capital externalities end up?

Recent literature has aimed at evaluating human capital externalities by estimating the effect of human capital on wages at urban level. We argue that this methodology might not identify properly human capital spillovers. We consider a general equilibrium model based on Roback (1982) where both wages and rents are simultaneously determined at the local level. We show that human capital externalities cannot be identified unless the joint effect of local human capital on both wages and rents is considered. Empirically, we study the effects of local human capital on household-level rents and individual-level wages for a sample of Italian local labour markets. Our results show a positive and robust effect of local human capital on rents. This unambiguously demonstrates that the concentration of human capital at the local level generates positive externalities. As for the relative importance of consumption and production externalities, our results suggest that the two effects have a similar impact on wages.human capital; externalities; local markets

Resources and Incentives to Reform

This paper models the incentives for a self-interested government to implement "good policies." While good policies lead to investment and growth, they also reduce the government's ability to reward its supporters. The model predicts that resource abundance leads to poor policies and, consequently, to low investment. The implications of the model are broadly supported by existing evidence. In particular, countries that are rich in natural resources tend to have low institutional quality and poor macroeconomic and trade policies. Copyright 2003, International Monetary Fund

Skill-Biased Share-Altering Technical Change in Spatial General Equilibrium

The paper consider the skill-biased “share-altering†technical change hypothesis in a spatial general equilibrium model where skilled and unskilled individual may exhibit different preferences for local amenities. A main novelty –both for labour and urban economics- is that, under this hypothesis, skill-biased technical change can be readily represented by simple Cobb-Douglas production functions, rather than CES technologies. We then analyse the local labour markets equilibrium, where the adoption of new technologies may require an adequate proportion of skilled workers. Keywords: skill-biased technical change, share-altering technologies, local labour markets. JEL Classification Numbers: O33, R12, R23, J31.

Skill Polarization in Local Labour Markets under Share-Altering Technical Change

This paper considers the “share-altering” technical change hypothesis in a spatial general equilibrium model where individuals have different levels of skills. Building on a simple Cobb-Douglas production function, our model shows that the implementation of skill-biased technologies requires a sufficient proportion of highly educated individuals. Moreover, areas that experiment this kind of technical change will initially exhibit a rise in local skill premia, but such a trend tends to be reverted over time due to labour mobility. Also, when technical progress is such to disproportionately replace middle-skill jobs, the local distribution of skill will exhibit “fat-tails”, where the proportion of both highly skilled and low-skilled workers increases. These predictions are consistent with recent existing evidence.share-altering technologies, local skill distribution, local wage premium.

Where do human capital externalities end up to

Abstract: Recent literature has aimed at evaluating human capital externalities by estimating the effect of human capital on wages at urban level. We argue that this methodology might not identify properly human capital spillovers. We consider a general equilibrium model based on JEL Classification: R0, J0 , I2. Acknowledgements: We thank Gilles Duranton for stimulating discussions. The views expressed in the paper are those of the authors and do not necessarily correspond to those of the respective organizations

Technological and financial factors in models of wage determination.

The present dissertation develops some theoretical models which analyze the impact on wages of the financial and technological choices operated by firms. Chapter I considers the effects of technological change on efficiency-wages. We adopt Kremer's (1993) "O-Ring" production function, where technical progress can be represented through a change in the number of tasks to be performed in production. More complex production processes imply higher wage levels and higher general equilibrium unemployment. The model is extended to analyze within-group wage dispersion. In Chapter II, we adopt an alternating-calls strategic bargaining model where the incentive to reach an early agreement does not rely on time-preferences, but on intrinsic decay in the cake's size. When outside options remain positive and constant over time and the interval between calls shrinks to zero, the solution to this game converges to the Nash-solution, where the outside options take the status quo positions. This result contrasts with Rubinstein (1982), where outside options can matter only as corner- solutions. The model is extended to consider the role of market factors on wage determination. Chapter III considers the strategic role of debt in wage negotiations. Since debt provides a "credible threat" in bargaining, the entrepreneur can increase her profits by borrowing. Debt, thus, constitutes a (partial) remedy to Grout's (1984) under-investment problem. Chapter IV extends the model developed in Chapter III to analyze the implications that strategic borrowing can have on technological sophistication. We show that debt may have positive effects not only on the quantity of investment, but also on the degree of sophistication of the chosen projects. Chapter V (with G. Marini) analyses the role of foreign debt in promoting investment in Less Developed Countries that are subject to political risks. We show that, when default can trigger trade sanctions, foreign debt reduces the negative effects of political uncertainty on capital accumulation. Chapter VI (with F.Bagliano) contrasts the explanation for mark-up countercyclicality offered by the "price-war" model of Rotemberg and Saloner (1986) with the alternative explanation, based on "liquidity constraints", proposed by Chevalier and Scharfstein (1996)

Sicilian sulphur and mafia: resources, working conditions and the practice of violence

This paper reconsiders the nexus between the abundance of resources and the origins of Sicilian mafia by exploiting a new set of historical data at the municipal level on the Sicilian sulphur industry in the late nineteenth century, obtained from official reports of the Royal Corps of Mining Engineers. Our evidence confirms that sulphur favoured the rise of organized crime, as emphasized in the previous studies. However, we show that the impact of local production on mafia was smaller in the areas richest in sulphur. Moreover, mechanization in the extraction process was associated with lower incidence of mafia. Taken together, our findings suggest that larger lodes encouraged better and more orderly working conditions for the miners, possibly reducing physical and psychic strain and, consequently, their inclination to violence. In other words, the quality of working conditions affected the supply of violent individuals

Effect of sulphur dose on the productivity and quality of onions

Abstract Onions have a high demand for sulphur (S), which affects bulb productivity and quality. S, however, should be carefully applied to onion crops because it may acidify the soil and adversely affect the plants. This study evaluated the effects of S dose (0, 15, 30, 45, 60, and 90 kg ha -1 ) on the soil and the development, productivity, and quality of the 'Perfecta' onion cultivar. The experiment was conducted in Jaboticabal, Brazil, from 30 May to 10 October 2011. Maximum height (0.76 m), number of leaves per plant (7.2), dry weight of leaves (201.6 g), and productivity (79 t ha -1 ) of the 'Perfecta' onions were obtained with doses of 57, 41, 47, and 45 kg S ha -1 , respectively. Onion productivity was 16% lower, when S was not applied. About 47% of total production of bulbs was ranked in classes 3 and 4, with higher commercial value. The highest percentage of bulbs (63%) in classes 3 and 4 was obtained with 47 kg S ha -1 . Maximum pungency (1.5 µmol g -1 ) was obtained with 65 kg S ha -1 , ca. 55% higher than when S was not applied. The levels of pyruvic acid, however, were low in all treatments, which ranked the cultivar as very mild with an extra-sweet flavour when provided with up to 90 kg S ha -1 . The interaction between S dose and period of evaluation influenced the soil pH and S content. The increased S supply increased the levels of foliar N and S-SO 4 2-and decreased Ca 2+ and Mg 2+