331-340 of 368 Results

Article

Economics of Rural–Urban Migration  

Pei-Ju Liao and Chong Kee Yip

In the past century, many developing countries have experienced rapid economic development, which is usually associated with a process of structural transformation and urbanization. Rural–urban migration, shifting the labor force from less productive agricultural sectors to more productive industrial sectors in cities, plays an important role in the growth process and thus has drawn economists’ attention. For instance, it is recognized that one of the important sources of China’s growth miracle is rural–urban migration. At the early stage of economic development, an economy usually relies on labor-intensive industries for growth. Rural–urban migrants thus provide the necessary labor force to urban production. Since they are more productive in industrial sectors than in agricultural sectors, aggregate output increases and economic growth accelerates. In addition, abundant migrants affect the rates of return to capital by changing the capital–labor ratio. They also change the skill composition of the urban labor force and hence the relative wage of skilled to unskilled workers. Therefore, rural–urban migration has wide impacts on growth and income distribution of the macroeconomy. What are the forces that drive rural–urban migration? It is well understood that cities attract rural migrants because of better job opportunities, better career prospects, and higher wages. Moreover, enjoying better social benefits such as better medical care in cities is another pull factor that initiates rural–urban migration. Finally, agricultural land scarcity in the countryside plays an important role on the push side for moving labor to cities. The aforementioned driving forces of rural–urban migration are work-based. However, rural–urban migration could be education-based, which is rarely discussed in the literature. In the past decade, it has been proposed that cities are the places for accumulating human capital in work. It is also well established that most of the high-quality education institutions (including universities and specialized schools for art and music) are located in urban areas. A youth may first move to the city to attend college and then stay there for work after graduation. From this point of view, work-based migration does not paint the whole picture of rural–urban migration. In this article, we propose a balanced view that both the work-based and education-based channels are important to rural–urban migration. The migration story could be misleading if any of them is ignored.

Article

Financing and Policy for Long-Term Care  

Alexandrina Stoyanova and David Cantarero-Prieto

Long-term care (LTC) systems entitle frail and disabled people, who experience declines in physical and mental capacities, to quality care and support from an appropriately trained workforce and aim to preserve individual health and promote personal well-being for people of all ages. Myriad social factors pose significant challenges to LTC services and systems worldwide. Leading among these factors is the aging population—that is, the growing proportion of older people, the main recipients of LTC, in the population—and the implications not only for the health and social protection sectors, but almost all other segments of society. The number of elderly citizens has increased significantly in recent years in most countries and regions, and the pace of that growth is expected to accelerate in the forthcoming decades. The rapid demographic evolution has been accompanied by substantial social changes that have modified the traditional pattern of delivery LTC. Although families (and friends) still provide most of the help and care to relatives with functional limitations, changes in the population structure, such as weakened family ties, increased participation of women in the labor market, and withdrawal of early retirement policies, have resulted in a decrease in the provision of informal care. Thus, the growing demands for care, together with a lower potential supply of informal care, is likely to put pressure on the provision of formal care services in terms of both quantity and quality. Other related concerns include the sustainable financing of LTC services, which has declined significantly in recent years, and the pursuit of equity. The current institutional background regarding LTC differs substantially across countries, but they all face similar challenges. Addressing these challenges requires a comprehensive approach that allows for the adoption of the “right” mix of policies between those aiming at informal care and those focusing on the provision and financing of formal LTC services.

Article

Geographic Proximity and Science Parks  

Albert N. Link and John T. Scott

Science parks, also called research parks, technology parks, or technopolis infrastructures, have increased rapidly in number as many countries have adopted the approach of bringing research-based organizations together in a park. A science park’s cluster of research and technology-based organizations is often located on or near a university campus. The juxtaposition of ongoing research of both the university and the park tenants creates a two-way flow of knowledge; knowledge is transferred between the university and firms, and all parties develop knowledge more effectively because of their symbiotic relationship. Theory and evidence support the belief that the geographic proximity provided to the participating organizations by a science park creates a dynamic cluster that accelerates economic growth and international competitiveness through the innovation-enabling exchanges of knowledge and the transfer of technologies. The process of creating innovations is more efficient because of the agglomeration of research and technology-based firms on or near a university campus. The proximity of a park to multiple sources of knowledge provides greater opportunities for the creation and acquisition of knowledge, especially tacit knowledge, and the geographic proximity therefore reduces the search and acquisition costs for that knowledge. The clustering of multiple research and technology-based organizations within a park enables knowledge spillovers, and with greater productivity from research resources and lower costs, prices for new technologies can be lower, stimulating their use and regional development and growth. In addition to the clustering of the organizations within a park, the geographic proximity of universities affiliated with a park matters too. Evidence shows that a park’s employment growth is greater, other things being the same, when its affiliated university is geographically closer, although evidence suggests that effect has lessened in the 21st century because of the information and communications technology revolution. Further stimulating regional growth, university spin-off companies are more prevalent in a park when it is geographically closer to the affiliated university. The two-way flow of knowledge enabled by clusters of research and technology-based firms in science parks benefits firms located on the park and the affiliated universities. Understanding the mechanisms by which the innovative performance of research and technology-based organizations is increased by their geographic proximity in a science park is important for formulating public and private sector policies toward park formations because successful national innovation systems require the two-way knowledge flow, among firms in a park and between firms and universities, that is fostered by the science park infrastructure.

Article

Law, Economics, and Courts  

Nuno Garoupa

Law and economics is an important, growing field of specialization for both legal scholars and economists. It applies efficiency analysis to property, contracts, torts, procedure, and many other areas of the law. The use of economics as a methodology for understanding law is not immune to criticism. The rationality assumption and the efficiency principle have been intensively debated. Overall, the field has advanced in recent years by incorporating insights from psychology and other social sciences. In that respect, many questions concerning the efficiency of legal rules and norms are still open and respond to a multifaceted balance among diverse costs and benefits. The role of courts in explaining economic performance is a more specific area of analysis that emerged in the late 1990s. The relationship between law and economic growth is complex and debatable. An important literature has pointed to significant differences at the macro-level between the Anglo-American common law family and the civil law families. Although these initial results have been heavily scrutinized, other important subjects have surfaced such as convergence of legal systems, transplants, infrastructure of legal systems, rule of law and development, among others.

Article

Economics and Genetics  

Jason M. Fletcher

Two interrelated advances in genetics have occurred which have ushered in the growing field of genoeconomics. The first is a rapid expansion of so-called big data featuring genetic information collected from large population–based samples. The second is enhancements to computational and predictive power to aggregate small genetic effects across the genome into single summary measures called polygenic scores (PGSs). Together, these advances will be incorporated broadly with economic research, with strong possibilities for new insights and methodological techniques.

Article

The Economics of Infectious Diseases  

Katharina Hauck

Economics can make immensely valuable contributions to our understanding of infectious disease transmission and the design of effective policy responses. The one unique characteristic of infectious diseases makes it also particularly complicated to analyze: the fact that it is transmitted from person to person. It explains why individuals’ behavior and externalities are a central topic for the economics of infectious diseases. Many public health interventions are built on the assumption that individuals are altruistic and consider the benefits and costs of their actions to others. This would imply that even infected individuals demand prevention, which stands in conflict with the economic theory of rational behavior. Empirical evidence is conflicting for infected individuals. For healthy individuals, evidence suggests that the demand for prevention is affected by real or perceived risk of infection. However, studies are plagued by underreporting of preventive behavior and non-random selection into testing. Some empirical studies have shown that the impact of prevention interventions could be far greater than one case prevented, resulting in significant externalities. Therefore, economic evaluations need to build on dynamic transmission models in order to correctly estimate these externalities. Future research needs are significant. Economic research needs to improve our understanding of the role of human behavior in disease transmission; support the better integration of economic and epidemiological modeling, evaluation of large-scale public health interventions with quasi-experimental methods, design of optimal subsidies for tackling the global threat of antimicrobial resistance, refocusing the research agenda toward underresearched diseases; and most importantly to assure that progress translates into saved lives on the ground by advising on effective health system strengthening.

Article

Incentives and Performance of Healthcare Professionals  

Martin Chalkley

Economists have long regarded healthcare as a unique and challenging area of economic activity on account of the specialized knowledge of healthcare professionals (HCPs) and the relatively weak market mechanisms that operate. This places a consideration of how motivation and incentives might influence performance at the center of research. As in other domains economists have tended to focus on financial mechanisms and when considering HCPs have therefore examined how existing payment systems and potential alternatives might impact on behavior. There has long been a concern that simple arrangements such as fee-for-service, capitation, and salary payments might induce poor performance, and that has led to extensive investigation, both theoretical and empirical, on the linkage between payment and performance. An extensive and rapidly expanded field in economics, contract theory and mechanism design, had been applied to study these issues. The theory has highlighted both the potential benefits and the risks of incentive schemes to deal with the information asymmetries that abound in healthcare. There has been some expansion of such schemes in practice but these are often limited in application and the evidence for their effectiveness is mixed. Understanding why there is this relatively large gap between concept and application gives a guide to where future research can most productively be focused.

Article

Contemporary Views on Economics of Patents  

Shubha Ghosh

A patent is a legal right to exclude granted by the state to the inventor of a novel and useful invention. Much legal ink has been spilled on the meaning of these terms. “Novel” means that the invention has not been anticipated in the art prior to its creation by the inventor. “Useful” means that the invention has a practical application. The words “inventor” and “invention” are also legal terms of art. An invention is a work that advances a particular field, moving practitioners forward not simply through accretions of knowledge but through concrete implementations. An inventor is someone who contributes to an invention either as an individual or as part of a team. The exclusive right, finally, is not granted gratuitously. The inventor must apply and go through a review process for the invention. Furthermore, a price for the patent being granted is full, clear disclosure by the inventor of how to practice the invention. The public can use this disclosure once the patent expires or through a license during the duration of the patent. These institutional details are common features of all patent systems. What is interesting is the economic justification for patents. As a property right, a patent resolves certain externality problems that arise in markets for knowledge. The establishment of property rights allows for trade in the invention and the dissemination of knowledge. However, the economic case for property rights is made complex because of the institutional need to apply for a patent. While in theory, patent grants could be automatic, inventions must meet certain standards for the grant to be justified. These procedural hurdles create possibilities for gamesmanship in how property rights are allocated. Furthermore, even if granted correctly, property rights can become murky because of the problems of enforcement through litigation. Courts must determine when an invention has been used, made, or sold without permission by a third party in violation of the rights of the patent owner. This legal process can lead to gamesmanship as patent owners try to force settlements from alleged infringers. Meanwhile, third parties may act opportunistically to take advantage of the uncertain boundaries of patent rights and engage in undetectable infringement. Exacerbating these tendencies are the difficulties in determining damages and the possibility of injunctive relief. Some caution against these criticisms through the observation that most patents are not enforced. In fact, most granted patents turn out to be worthless, when gauged in commercial value. But worthless patents still have potential litigation value. While a patent owner might view a worthless patent as a sunk cost, there is incentive to recoup investment through the sale of worthless patents to parties willing to assume the risk of litigation. Hence the phenomenon of “trolling,” or the rise of non-practicing entities, troubles the patent landscape. This phenomenon gives rise to concerns with the anticompetitive uses of patents, demonstrating the need for some limitations on patent enforcement. With all the policy concerns arising from patents, it is no surprise that patent law has been ripe for reform. Economic analysis can inform these reform efforts by identifying ways in which patents fail to create a vibrant market for inventions. Appreciation of the political economy of patents invites a rich academic and policy debate over the direction of patent law.

Article

The Economics of Families and Health  

Susan Averett and Jennifer Kohn

An individual’s health is produced in large part by family investments that start before birth and continue to the end of life. The health of an individual is intertwined with practically every economic decision including education, marriage, fertility, labor market, and investments. These outcomes in turn affect income and wealth and hence have implications for intergenerational transfer of economic advantage or disadvantage. A rich body of theoretical and empirical work considers the role of the family in health production over the life cycle and the role of health in household economic decisions. This literature starts by considering family inputs regarding health at birth, then moves through adolescence and midlife, where relationship decisions affect health. After midlife, health, particularly the health of family members, becomes an input into retirement and investment decisions. The literature on family and health showcases economists’ skills in modeling complex family dynamics, deriving theoretical predictions, and using clever econometric strategies to identify causal effects.

Article

Famines, Hunger, and Later-Life Health  

Gerard J. van den Berg and Maarten Lindeboom

Modern-day famines are caused by unusual impediments or interventions in society, effectively imposing severe market restrictions and preventing the free movement of people and goods. Long-run health effects of exposure to famine are commonly studied to obtain insights into the long-run effects of malnutrition at early ages. This line of research has faced major methodological and data challenges. Recent research in various disciplines, such as economics, epidemiology, and demography, has made great progress in dealing with these issues. Malnutrition around birth affects a range of later-life individual outcomes, including health, educational, and economic outcomes.