How Powerful Are Network Effects? A Skill-Biased Technological Change Approach

Afonso, Óscar; Magalhäes, Manuela

doi:10.1017/s1365100518000524

Cited by 12 publications

(3 citation statements)

References 80 publications

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“…11 The three labour skill types considered in the database are classifications based in the International Standard Classification of Education (ISCED): low-skilled (ISCED categories 1 and 2), medium-skilled (ISCED 3 and 4), and high-skilled (ISCED 5 and 6). Since most literature that include only two skill levels (unskilled and skilled) considers skilled workers as those with some degree of tertiary education (e.g., Afonso & Magalhães, 2020), which corresponds to ISCED 5 and 6, we also follow this approach and consider all medium-skilled workers as unskilled workers.…”

Section: Calibrationmentioning

confidence: 99%

“…These, in turn, are calculated by taking the ratio of earnings of employees to billed hours. Since in the data we have three skill levels (low, medium and high-skilled workers) in which only the latter has some form of tertiary education-See section 3-and the literature with two skill levels considers the latter as high-skilled (or skilled) as well (e.g., Afonso & Magalhães, 2020), we follow the same approach and treat medium-skilled workers as low-skilled (or unskilled). ( 2) the average inflation rate is the time average of the annual variation of the CPI of the value added in each country.…”

Section: Introductionmentioning

confidence: 99%

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Effects of monetary policy on the skill premium and the growth rate in a directed technical change model with heterogeneous cash‐in‐advance constraints

Afonso

Lima

2022

Int. J Fin Econ

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This article analyses the balanced‐growth‐path effects of monetary policy (inflation) on the skill premium and the growth rate in the context of a directed technical change model with cash‐in‐advance (CIA) constraints specific to the unskilled and skilled sectors. Calibrating the model using data from 36 countries, the presence of more stringent CIA constraints in the unskilled sector, as supported by the literature, causes inflation to have a positive effect on the skill premium. Moreover, it also increases the negative impact of inflation on the growth rate in relation to the baseline scenario of homogeneous CIA constraints. A lower labour share and higher inflation in general magnify these effects on both variables while a relative lower importance of the unskilled sector does the opposite with respect to the skill premium. Therefore this article innovates in three important ways: (i) we add an additional channel through which inflation affects inequality; (ii) we highlight the importance of avoiding ignoring differences of liquidity constraints across the economy in the context of endogenous growth models to not underestimate the negative long‐run impacts of inflation; (iii) the results suggest that developing countries that have difficulty in achieving price stability in the long‐run can mitigate the negative effects of inflation by reducing constraints faced by the unskilled sector and promoting the development of the skilled sector.

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Section: Calibrationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Effects of monetary policy on the skill premium and the growth rate in a directed technical change model with heterogeneous cash‐in‐advance constraints

Afonso

Lima

2022

Int. J Fin Econ

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“…The typical values from labor share were taken from Hansen and Prescott (2002) and Galor (2011). Human-capital share is set to Voigtländer and Voth (2006) and Elgin (2012) -see also Afonso and Magalhães (2018) and Neto et al (2018). The fixed time costs of raising children and education costs are set to 0.35 and 0.097.…”

Section: Model Calibrationmentioning

confidence: 99%

The Two Revolutions, Landed Elites, and Education During the Industrial Revolution

2019

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Understanding the causes of the Industrial Revolution, namely the process of transition from a Malthusian equilibrium to modern economic growth, has been the subject of passionate debate. This paper contributes to insights into the process of industrialization and the demographic transition that followed. We present a model that proposes a mechanism behind the claim that landed elites had strong incentives to block education reforms. By applying the theory of interest groups to landownership, landowners could delay education. However, they could not prevent its introduction indefinitely since gains for the landed elites derived from education would at some moment surpass the costs associated with them. We also sustain that improvements in agricultural productivity prior to the Industrial Revolution may have induced a positive impact on the landowners’ decision to educate the population, which led to an earlier introduction of education reforms. The conclusions fit the patterns of the late boom of industrialization and demographic transition and help explain why some countries (e.g., Britain and The Netherlands) had accelerated education reforms and a faster process of industrialization than most continental countries. A theoretical model is presented, and numerical simulations are exhibited to illustrate our claims.

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Losers and losses of COVID-19: a directed technical change analysis with fiscal and monetary policies

Afonso

2023

Econ Change Restruct

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We develop a directed technical change growth model with both public and private sectors. Due to the COVID-19 pandemic, labor productivity and R &D activity in the private sector are considered to have a negative shock. The former shock causes an immediate fall in the private premium, which can be reversed during transition dynamics towards the steady-state. Fiscal policies are materialized in direct and indirect R &D subsidies, and the monetary policies consist of relaxing cash-in-advance restrictions. An appropriate fiscal policy, together or not with monetary policy, can restore the pre-shock situation. Monetary policy is reinforced in the presence of monetary-transaction costs on consumption and of money-in-the-utility function.

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How Powerful Are Network Effects? A Skill-Biased Technological Change Approach

Cited by 12 publications

References 80 publications

Effects of monetary policy on the skill premium and the growth rate in a directed technical change model with heterogeneous cash‐in‐advance constraints

Effects of monetary policy on the skill premium and the growth rate in a directed technical change model with heterogeneous cash‐in‐advance constraints

The Two Revolutions, Landed Elites, and Education During the Industrial Revolution

Losers and losses of COVID-19: a directed technical change analysis with fiscal and monetary policies

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