Search Results

While the modern theory of international trade allows for many different modeling assumptions, the gains from trade can often be calculated using a common set of statistics. In particular, the share of a country’s output that is consumed domestically, the elasticity of bilateral trade with respect to trade costs, and the relationship between markups and firm size, each have a clear role in the gains from integration. All of these statistics may also be structurally linked to the degree of firm heterogeneity, usually the dispersion in firm-level productivity. Accordingly, the presence of firm heterogeneity may have a meaningful impact on the welfare response to trade liberalization. A quantitative application of a common firm heterogeneity model indicates that increased dispersion of firm-level productivity has a disproportionately large and positive impact on the gains from trade for smaller, less-developed countries.

Population aging, the combined effect of declining fertility and rising life expectancy, is one of the fundamental trends observed in developed counties and, increasingly, in developing countries as well. A key aspect of the aging process is the decline of cognitive ability. Cognitive aging is an important and complex phenomenon, and its risk factors and economic consequences are still not well understood. For instance, the relationship between cognitive aging and productivity matters for long-term economic growth. Cognitive functioning is also crucial for decision-making because it influences individuals’ ability to process information and to make the right choices, and older individuals are increasingly required to make complex financial, health, and long-term-care decisions that might affect their health, resources, and welfare. This article presents evidence from economics and other fields that have investigated this phenomenon from different perspectives. A common empirical finding is the hump-shaped profile of cognitive performance over the life cycle. Another is the large variability of observed age profiles, not only at the individual level but also across sociodemographic groups and countries. The age profiles of cognitive performance also vary depending on the cognitive task considered, reflecting the different combinations of cognitive skills that they require. The literature usually distinguishes between two main types of cognitive skills: fluid intelligence and crystallized intelligence. The first consists of the basic mechanisms of processing new information, while the second reflects acquired knowledge. Unlike fluid intelligence, which declines rapidly as people get older, crystallized intelligence tends to be maintained at older ages. Differences in the age profiles of cognitive performance across tasks partly reflect differences in the importance of these two types of intelligence. For instance, tasks where learning, problem-solving, and processing speed are essential tend to be associated with a faster decline, while tasks where experience matters more tend to be associated with a slower decline. Various life events and behaviors over the life cycle also contribute to the large heterogeneity in the observed age profiles of cognitive performance. This source of variation includes not only early-life events and investments (e.g., formal education), but also midlife and later-life events (e.g., health shocks) and individual choices (e.g., health behaviors or retirement). From an economic viewpoint, cognitive abilities may be regarded as one dimension of human capital, along with education, health, and noncognitive abilities. Economists have mainly focused their attention on human capital accumulation, and much less so on human capital deterioration. One explanation is that early-life investments appears to be more profitable than investments later in life. However, recent evidence from neuropsychology suggests that the human brain is malleable and open to enhancement even later in adulthood. Therefore, more economic research is needed to study how human capital depreciates over the life cycle and whether cognitive decline can be controlled.

Growth econometrics is the application of statistical methods to the study of economic growth and levels of national output or income per head. Researchers often seek to understand why growth rates differ across countries. The field developed rapidly in the 1980s and 1990s, but the early work often proved fragile. Cross-section analyses are limited by the relatively small number of countries in the world and problems of endogeneity, parameter heterogeneity, model uncertainty, and cross-section error dependence. The long-term prospects look better for approaches using panel data. Overall, the quality of the evidence has improved over time, due to better measurement, more data, and new methods. As longer spans of data become available, the methods of growth econometrics will shed light on fundamental questions that are hard to answer any other way.

The key question for the economics of international migration is whether observed real wage differentials across countries for workers with identical intrinsic productivity represent an economic inefficiency sustained by legal barriers to labor mobility between geographies. A simple comparison of the real wages of workers with the same level of formal schooling or performing similar occupations across countries shows massive gaps between rich and poorer countries. These gaps persist after adjusting for observed and unobserved human capital characteristics, suggesting a “place premium”—or space-specific wage differentials that are not due to intrinsic worker productivity but rather are due to a misallocation of labor. If wage gaps are not due to intrinsic worker productivity, then the incentive for workers to move to richer countries is high. The idea of a place premium is corroborated by macroeconomic evidence. National accounts data show large cross-country output per worker differences, driven by the divergence of total factor productivity. The lack of convergence in total factor productivity and corresponding spatial productivity differentials create differences in the marginal product of factors, and hence persistent gaps in the wages of equal productivity workers. These differentials can equalize with factor flows; however their persistence and large magnitude in the case of labor, suggest legal barriers to migration restricting labor flows are in fact constraining significant return on human capital, and leaving billions in unrealized gains to the world’s workers and global economy. A relaxation of these barriers would generate worker welfare gains that dwarf gold-standard poverty reduction programs.

In assessments of modern-day Spain’s economic progress and living standards, inadequate natural resources, inefficient institutions, lack of education and entrepreneurship, and foreign dependency are frequently blamed on poor performance up to the mid-20th century, but no persuasive arguments were provided to explain why such adverse circumstances reversed, giving way to the fast transformation that started in the 1950s. Hence, it is necessary to first inquire how much economic progress has been achieved in Spain and what impact it had on living standards and income distribution since the end of the Peninsular War to the present day, and second to provide an interpretation. Research published in the 2010s supports the view that income per person has improved remarkably, driven by increases in labor productivity, which derived, in turn, from a more intense and efficient use of physical and human capital per worker. Exposure to international competition represented a decisive element behind growth performance. From an European perspective, Spain underperformed until 1950. Thereafter, Spain’s economy managed to catch up with more advanced countries until 2007. Although the distribution of the fruits of growth did not follow a linear trend, but a Kuznetsian inverted U pattern, higher levels of income per capita are matched by lower inequality, suggesting that Spaniards’ material wellbeing improved substantially during the modern era.

The term productivity most commonly applies to word formation, but in principle it can be applied to any linguistic process. A process is said to be productive if it applies without restriction to give rise to novel expressions, for instance, new words. Ideally, speakers apply productive processes without conscious deliberation and in principle they can be applied by any and all competent native speakers. Creative coining of words, by contrast, is typically a one-off intentional act (nonce word creation), often of one individual, and often with the aim of drawing attention to the coined word for the purposes of advertising, humor, and so on. Creative coining often involves extra-grammatical processes which cannot be described deterministically, unlike bona fide linguistic rules. However, many productive processes are restricted in various ways, and some of the extra-grammatical devices are very frequent, so the distinction between productive, grammatical word formation and (nonce) word creation is blurred.

Healthcare cost encompasses expenditures on the totality of scarce resources (implicit and explicit) given up (or allocated) to produce healthcare goods (e.g., drugs and medical devices) and services (e.g., hospital care and physician office services are major components). Healthcare cost accounting components (sources and uses of funds) tend to differ but can be similar enough across most of the world countries. The healthcare cost concept usually differs for consumers, politicians and health policy decision-makers, health insurers, employers, and the government. All else given, inefficient healthcare production implies higher economic cost and lower productivity of the resources deployed in the process. Healthcare productivity varies across health systems of the world countries, the production technologies used, regulatory instruments, and institutional settings. Healthcare production often involves some specific (e.g., drugs and medical devices, information and communication technologies) or general technology for diagnosing, treating, or curing diseases in order to improve or restore human health conditions. In the last half century, the different healthcare systems of the world countries have undergone fundamental transformations in the structural designs, institutional regulations, and socio-economic and demographic dimensions. The nations have allocated a rising share of total economic resources or incomes (i.e., Gross National Product, or GDP) to the healthcare sector and are consequently enjoying substantial increases in population health status and life expectancies. There are complex and interacting linkages among escalating healthcare costs, longer life expectancies, technological progress (or “the march of science”), and sectoral productivities in the health services sectors of the advanced economies. Healthcare policy debates often concentrate on cost-containment strategies and search for improved efficient resource allocation and equitable distribution of the sector’s outputs. Consequently, this contribution is a broad review of the body of literature on technological progress, productivity, and cost: three important dimensions of the evolving modern healthcare systems. It provides a logical integration of three strands of work linking healthcare cost to technology and research evidence on sectoral productivity measurements. Finally, some important aspects of the existing study limitations are noted to motivate new research directions for future investigations to explore in the growing health sector economies.

In recent decades, economic reforms and technological advances have profoundly altered the way employers do business—for instance, the nature of employment relationships, the skills firms demand, and the goods and services they produce and export. In many developing economies, these changes took place concurrently with a substantive rise in work outside of the formal economy. According to International Labour Organization estimates, informal employment can be as high as 88% of total employment in India, almost 50% in Brazil, and around 35% of employment in South Africa. Such informal employment is typically associated with lower wages, lower productivity, poorer working conditions, weaker employment protections, and fewer job benefits and amenities, and these informal workers are often poorer and more vulnerable than their counterparts in the formalized economy. Informal jobs are a consequence of labor market policies—like severance payments or social security contributions—that make the noncompliant informal job cheaper for the employer than a compliant formal job. Each model has a different benefit (or lack of punishment) for employing formal workers, and a distinct mechanism through which international trade shocks alter the benefit-cost of these types of jobs, which in turn results in a change in the informality share. The empirical literature concerning international trade and formality largely points to an unambiguous increase in informal employment in the aftermath of increased import competition. Interestingly, increased access to foreign markets, via liberalization of major trading partners, offers strongly positive implications for formal employment opportunities, decreasing informality. Such effects are moderated by the de facto enforcement of labor regulations. Expansions toward the formal economy and away from informal wage employment in the aftermath of increased access to foreign markets are smaller in strictly enforced areas of the country.

The idea that prices and exchange rates adjust so as to equalize the common-currency price of identical bundles of goods—purchasing power parity (PPP)—is a topic of central importance in international finance. If PPP holds continuously, then nominal exchange rate changes do not influence trade flows. If PPP does not hold in the short run, but does in the long run, then monetary factors can affect the real exchange rate only temporarily. Substantial evidence has accumulated—with the advent of new statistical tests, alternative data sets, and longer spans of data—that purchasing power parity does not typically hold in the short run. One reason why PPP doesn’t hold in the short run might be due to sticky prices, in combination with other factors, such as trade barriers. The evidence is mixed for the longer run. Variations in the real exchange rate in the longer run can also be driven by shocks to demand, arising from changes in government spending, the terms of trade, as well as wealth and debt stocks. At time horizon of decades, trend movements in the real exchange rate—that is, systematically trending deviations in PPP—could be due to the presence of nontraded goods, combined with real factors such as differentials in productivity growth. The well-known positive association between the price level and income levels—also known as the “Penn Effect”—is consistent with this channel. Whether PPP holds then depends on the time period, the time horizon, and the currencies examined.

The scope of classical generative morphology is not clearly determined. All three components need clarification. The boundaries of what counts as generative linguistics are not unambiguously set, but it can be assumed that all generative work in linguistics is inspired by the work of Noam Chomsky. Morphology was a much more prominent component of linguistic theory in earlier approaches, but of course the subject field had to be accounted for also in generative linguistics. The label classical can be seen as restricting the scope both to the more mainstream approaches and to a period that ends before the present. Here, the early 1990s will be taken as the time when classical theorizing gave way to contemporary generative morphology. In the earliest presentations of generative linguistics, there was no lexicon. The introduction of the lexicon made many of the ideas formulated before obsolete. Chomsky’s Lexicalist Hypothesis provided the basis for a new start of research in morphology. Two contrasting elaborations appeared in the early 1970s. Halle proposed a model based on the combination of morphemes, Jackendoff one based on the representation and analysis of full words. Against this background, a number of characteristic issues were discussed in the 1970s and 1980s. One such issue was the form of rules. Here there was a shift from transformations to rewrite rules. This shift can be seen particularly well in the discussion of verbal compounds, e.g., truck driver. The question whether and how morphology should be distinguished from syntax generated a lot of discussion. Another broad question was the degree to which rules of morphology should be thought of as operating in separate components. This can be observed in the issue of the distinction of inflection and derivation and in level ordering. The latter was a proposal to divide affixes into classes with different phonological and other effects on the base they attach to. A side effect of level ordering was the appearance of bracketing paradoxes, where, for instance, generative grammarian has a phonological constituent grammarian but a semantic constituent generative grammar. Another aspect of rule application which can be constructed as a difference between morphology and syntax is productivity. In general, syntactic rules are more productive and morphological rules display blocking effects, where, for instance, unpossible is blocked by the existence of impossible. Being classical, much of the discussions in this period serves as a shared background for the emergence and discussion of current generative approaches in morphology. The transition to these theories started in the 1990s, although some of them appeared only in the early 2000s.

Segment-level alternations that realize morphological properties or that have other morphological significance stand either at an interface or along a continuum between phonology and morphology. The typical source for morphologically correlated sound alternations is the automatic phonology, interacting with discrete morphological operations such as affixation. Traditional morphophonology depends on the association of an alternation with a distinct concatenative marker, but the rise of stem changes that are in themselves morphological markers, be they inflectional or derivational, resides in the fading of phonetic motivation in the conditioning environment, and thus an increase in independence from historical phonological sources. The clearest cases are sole-exponent alternations, such as English man~men or slide~slid, but it is not necessary that the remainder of an earlier conditioning affix be entirely absent, only that synchronic conditioning is fully opaque. Once a sound-structural pattern escapes the unexceptional workings of a language's general phonological patterning, yet reliably serves a signifying function for one or more morphological properties, the morphological component of the grammar bears a primary if not sole responsibility for accounting for the pattern’s distribution. It is not uncommon for the transition of analysis into morphology from (morpho)phonology to be a fitful one. There is an established tendency for phonological theory to hold sway in matters of sound generally, even at the expense of challenging learnability through the introduction of remote representations, ad hoc triggering devices, or putative rules of phonology of very limited generality. On the morphological side, a bias in favor of separable morpheme-like units and syntax-like concatenative dynamics has relegated relations like stem alternations to the margins, no matter how regular, productive, or distinct from general phonological patterns in the language in question overall. This parallel focus of each component on a "specialization" as it were has left exactly morphologically significant stem alternations such as Germanic Ablaut and Celtic initial-consonant mutation poorly served. In both families, these robust sound patterns generally lack reliable synchronic phonological conditioning. Instead, one must crucially refer to grammatical structure and morphological properties in order to account for their distributions. It is no coincidence that such stem alternations look phonological, just as fossils resemble the forms of the organisms that left them. The work of morphology likewise does not depend on alternant segments sharing aspects of sound, but the salience of the system may benefit from perceptible coherence of form. One may observe what sound relations exist between stem alternants, but it is neither necessary nor realistic to oblige a speaker/learner to generate established stem alternations anew from remote underlying representations, as if the alternations were always still arising; to do so constitutes a grafting of the technique of internal reconstruction as a recapitulating simulation within the synchronic grammar.

The use of a sociolinguistic approach in the comparative study of word formation is a quite modern phenomenon. The lack of any continuous documentation for many of the nonstandard Romance varieties results in the still partial nature of such analyses. However, they are undoubtedly of great interest from a comparative point of view. In short, while all the Romance varieties are connected through genetic affinity, contact phenomena have instead caused significant divergences related to status in the realm of word formation. What was the cause and how did this happen? In particular, the lack of an intense and continuous contact with the Greek-Latin cultural superstrate prevented the creation of new formation rules for words of learned origin in the minor Romance varieties and dialects (e.g., Corsican, Occitan, Friulian, Sardinian). This lack of interconnection with the Greek-Latin lexical stock has caused the minor Romance varieties to be distanced from the standard Romance languages (e.g., French, Italian, Spanish) and besides has brought the last ones closer to the learned levels of the main European non-Romance languages.

Theoretical developments in economics, alongside evidence that state-owned enterprises were often inefficient and unresponsive to consumers, led to a substantial program of privatizations from the 1980s. Privatization can take a number of forms, from the outright sale of state-owned assets to private investors to forms of public-private partnership, such as contracting out and franchising of public services. Privatization was promoted in both developed and developing countries, and large-scale privatizations occurred in Europe, Latin America, China, and the former communist economies of Central and Eastern Europe, in particular. Privatization revenues rose substantially from the late 1980s internationally. Taking the years 1988 to 2016, revenues from sales are estimated to have been around $3,634bn. In terms of main sectors of the economy affected, privatizations have particularly occurred in telecommunications, transport and logistics (mainly railways, airlines, and airports), other utility businesses (especially energy companies), and finance. Numerous empirical studies suggest that the performance of the privatized businesses and services has been mixed. While privatization has led to some impressive economic gains, in a number of countries, wider governance issues relating to political and legal systems have led to disappointing outcomes. Privatization has not always led to the removal of state interference in the management of businesses and services. Corruption and cronyism have blighted a number of privatizations. State sell-offs have led to income and wealth redistribution with gainers and losers from the process. Some privatizations have led to spectacular capital gains for investors. The impact of privatization on employment and working conditions remains unclear. There are a number of issues that deserve further investigation, namely the consequences of privatization for technological change and innovation, competition policy, and income and wealth distribution. A further subject for investigation is how the effective and efficient management of state-owned enterprises can be best achieved. The boundary between the private and public sectors remains fluid, with a number of enterprises returning to state ownership as political and economic conditions change.

Happiness has become an important concept in economics as a target for government policy at the national level. This is mirrored in an increasing understanding of the microeconomic effects of increased happiness. While correlational studies have for many years documented a relationship between individual-level happiness and productivity, more recent work provides causal evidence that a positive shock to happiness can boost productivity significantly. These studies include three strands of research. The first provides a number of longitudinal surveys that have generated evidence linking happiness to productivity but run the risk of confounding happiness with other related variables that may be driving the relationship. The second includes laboratory experiments that simulate a workplace under tightly controlled conditions, and this strand has established a clear relationship between positive happiness shocks and rises in productivity. The third involves examining experimental field data, which sacrifices the control of laboratory experiments but offers greater realism. However, there is still work to be done generalizing these findings to more complex work environments, especially those that involve cooperative and team-based tasks where increases in happiness may have other consequences.

A small literature on the relationship between employee training and firm performance is currently emerging. This line of research is particularly promising given the underexplored potential of training to drive productivity, wages, and employment. Until recently, training was regarded as a costly and risky investment because workers may leave their firm after being trained. However, studies on labor and education economics have found that training results in high returns for firms and that the costs of training can be recouped in a relatively short time. These results follow from different econometric identification approaches, including a small but growing number of randomized controlled trials. Moreover, most training is of a general nature and therefore applicable in other firms, which is at odds with the original theory of training but consistent with novel models that emphasize labor market power. There are a number of possibilities for future research, including a better understanding of the heterogeneity and patterns of training contents and formats across firms and workers, the differentiation of the effects of training along such dimensions, the role of labor market competition in driving training, the extent to which the productivity effects of training are shared with employees, the role of labor market institutions (including minimum wage, collective bargaining, and occupational licensing) in the dimensions above, and the firm performance effects of training provided to unemployed job seekers (as opposed to employees). Evaluation of the public training programs developed during the Covid-19 pandemic crisis and new forms of training in the context of the growth of remote work also merit further investigation.

Despite almost three decades of strong and stable growth after World War II, the US economy, like the economies of many developed nations, faced new headwinds and challenges after 1970. Although the United States eventually overcame many of them, and continues to be one of the most dynamic in the world, it could not recover its mid-century economic miracle of rapid and broad-based economic growth. There are three major ways the US economy changed in this period. First, the US economy endured and eventually conquered the problem of high inflation, even as it instituted new policies that prioritized price stability over the so-called “Keynesian” goal of full employment. Although these new policies led to over two decades of moderate inflation and stable growth, the 2008 financial crisis challenged the post-Keynesian consensus and led to new demands for government intervention in downturns. Second, the government’s overall influence on the economy increased dramatically. Although the government deregulated several sectors in the 1970s and 1980s, such as transportation and banking, it also created new types of social and environmental regulation that were more pervasive. And although it occasionally cut spending, on the whole government spending increased substantially in this period, until it reached about 35 percent of the economy. Third, the US economy became more open to the world, and it imported more manufactured goods, even as it became more based on “intangible” products and on services rather than on manufacturing. These shifts created new economic winners and losers. Some institutions that thrived in the older economy, such as unions, which once compromised over a third of the workforce, became shadows of their former selves. The new service economy also created more gains for highly educated workers and for investors in quickly growing businesses, while blue-collar workers’ wages stagnated, at least in relative terms. Most of the trends that affected the US economy in this period were long-standing and continued over decades. Major national and international crises in this period, from the end of the Cold War, to the first Gulf War in 1991, to the September 11 attacks of 2001, seemed to have only a mild or transient impact on the economy. Two events that were of lasting importance were, first, the United States leaving the gold standard in 1971, which led to high inflation in the short term and more stable monetary policy over the long term; and second, the 2008 financial crisis, which seemed to permanently decrease American economic output even while it increased political battles about the involvement of government in the economy. The US economy at the beginning of the third decade of the 21st century was richer than it had ever been, and remained in many respects the envy of the world. But widening income gaps meant many Americans felt left behind in this new economy, and led some to worry that the stability and predictability of the old economy had been lost.

The strong observable correlation between health and economic growth is crucial for economic development and sustained well-being, but the underlying causality and mechanisms are difficult to conceptualize. Three issues are of central concern. First, assessing and disentangling causality between health and economic growth are empirically challenging. Second, the relation between health and economic growth changes over the process of economic development. In less developed countries, poor health often reduces labor force participation, particularly among women, and deters investments in education such that fertility stays high and the economy remains trapped in a stagnation equilibrium. By contrast, in more developed countries, health investments primarily lead to rising longevity, which may not significantly affect labor force participation and workforce productivity. Third, different dimensions of health (mortality vs. morbidity, children’s and women’s health, and health at older ages) relate to different economic effects. By changing the duration and riskiness of the life course, mortality affects individual investment choices, whereas morbidity relates more directly to work productivity and education. Children’s health affects their education and has long-lasting implications for labor force participation and productivity later in life. Women’s health is associated with substantial intergenerational spillover effects and influences women’s empowerment and fertility decisions. Finally, health at older ages has implications for retirement and care.

Conversion is traditionally viewed as a word-formation technique of forming a word from a formally identical but categorically different word without adding a(n explicit) morphological exponent. Despite its apparent formal simplicity manifested first of all in the sameness of the input and the output, the proper understanding of what exactly happens during conversion, morphosyntactically and semantically alike, is by no means an easy matter even in respect of one language, let alone languages representing different typological groups or subgroups. To determine the linguistic status of conversion and its place among other types of word formation is not a simple matter either, and, paradoxically, it is especially so in the case of the most extensively studied English conversion. The reason for this is that the traditional view of conversion has often been called into question, giving rise to a diversity of interpretations of conversion not only in English but also in a cross-linguistic perspective. Conversion research has gone a long way to explore the mechanism of conversion as a kind of word formation; nevertheless, further research is necessary to understand every detail of this mechanism.

Adjectivalization is the derivation of adjectives from a verb, a noun, an adjective, and occasionally from other parts of speech or from phrases. Cross-linguistically, adjectivalization seems to be less frequent than nominalization and verbalization. In most languages adjectivalization involves suffixation, but other adjectivalization devices, such as prefixation, reduplication or zero derivation, are also attested. Adjectivalization by means of suffixation has been studied in depth for English. As for other languages in which suffixation is used for adjectivalization, topics that have been studied for English are the types of suffixes used for adjectivalization, their productivity, their semantic contribution, the category of the base to which they attach, and their etymology. For English an etymological distinction between native suffixes and suffixes with a Romance, more specifically Latinate, origin can be made, related to their bound or non-bound character, the type of base to which they attach, and the prosody of the derived word. One of the major challenges to the idea of word-class changing derivation, in this case adjectivalization, comes from polyfunctional words. Participles may function both as verbs and as adjectives, which leads to the question how these complex forms are formally and semantically related. There are also derivational suffixes that are used for the formation of both adjectives and nouns. For these cases as well the formal and semantic relation has to be established. For several Western European languages a relation has been established, in the theoretical literature, between the polyfunctionality of adjectival/nominal suffixes and their influence on the prosody or the phonological properties of the root, due to their etymology. It seems that the dichotomy between two types of suffixes that is created in this way does not always occur and that there is also a mixed case.