nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2016‒06‒25
twelve papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. "Why has economics turned out this way?": A socio-economic note on the explanation of monism in economics By Heise, Arne
  2. How Does Declining Unionism Affect the American Middle Class and Intergenerational Mobility? By Freeman, Richard Barry; Han, Eunice; Madland, David; Duke, Brendan
  3. The Freedom of the Prices: Hayek's Road to Serfdom Reassessed By Makovi, Michael
  4. Does Inequality Hamper Innovation and Growth? By Caiani, Alessandro; Russo, Alberto; Gallegati, Mauro
  5. Social Accounting Matrices for the EU-27 in 2010. Building a new database for RHOMOLO By María Teresa à lvarez-Martínez; Montserrat López-Cobo
  6. The Disintegrating Force of Rationalism on Economics: What it means for Islamic Economics By Abdulkader Cassim Mahomedy
  7. Narrativity from the Perspectives of Economics and Philosophy: Davis, Ross, Multipleselves Models... and Behavioral Economics By Tom Juille; Dorian Jullien
  8. Social capital, institutions and policymaking By M. Savioli; R. Patuelli
  9. Are constitutional states able to drive the global technological change? By Waśniewski, Krzysztof
  10. Una aplicación de la teoría fuzzy al análisis de la pobreza en Antioquia By Juan Guillermo Bedoya Ospina; Juan Camilo Galvis Ciro
  11. Estimating agglomeration in the EU and the Western Balkan regions By Roman Römisch
  12. Are cooperatives more productive than investor-owned firms? Cross-industry evidence from Portugal By Natália P. Monteiro; Odd Rune Straume

  1. By: Heise, Arne
    Abstract: The economic science has - lamented by some, applauded by others - turned into a monistic discipline. In this short research note, a socio-economic answer to the question of why this happened is provided by combining an economic approach to the market for economic ideas with a sociological approach of a scientific (power) field.
    Keywords: Pluralism,Monism,Standardization,Regulation
    JEL: B59 D43 I23 L15 Z13
    Date: 2016
  2. By: Freeman, Richard Barry; Han, Eunice; Madland, David; Duke, Brendan
    Abstract: This paper examines unionism’s relationship to the size of the middle class and its relationship to intergenerational mobility. Panel Study of Income Dynamics (PSID) 1985 and 2011 files are used to examine the change in the share of workers in a middle-income group (defined by persons having incomes within 50 percent of the median) and use a shift-share decomposition to explore how the decline of unionism contributes to the shrinking middle class. The files are also used to investigate the correlation between parents’ union status and the incomes of their children. Additionally, federal income tax data is used to examine the geographical correlation between union density and intergenerational mobility. Findings include that union workers are disproportionately in the middle-income group or above, and some reach middle-income status due to the union wage premium; the offspring of union parents have higher incomes than the offspring of otherwise comparable non-union parents, especially when the parents are low-skilled; and offspring from communities with higher union density have higher average incomes relative to their parents compared to offspring from communities with lower union density. These findings show a strong, though not necessarily causal, link between unions, the middle class, and intergenerational mobility.
    Date: 2016
  3. By: Makovi, Michael
    Abstract: Recent debate has centered around the contemporary relevance and even the original validity of F. A. Hayek's Road to Serfdom. Was it directed against command socialism only or against welfare-state interventionism as well? Should the book even be read anymore? This essay takes a step back from the dichotomy between socialism and interventionism and explores two specific ideas of Hayek's which deserve renewed attention: first, his claim that economic liberty is the fundamental liberty and that political liberty is merely secondary in value. Second, Hayek's conception of the rule-of-law, which has implications for contemporary command-and-control regulation. Furthermore, that Hayek's philosophical conception of the rule-of-law in the Road to Serfdom is related to his economic theory of prices in “The Use of Knowledge in Society.” While Hayek's specific target in the Road to Serfdom was command socialism, his book embodied arguments which are more widely applicable and relevant today.
    Keywords: rule of law; liberty; freedom; rights; price system
    JEL: A12 B24 B25 B31 B53 D70 D82 K00 P10 P20 P50
    Date: 2016–06–17
  4. By: Caiani, Alessandro; Russo, Alberto; Gallegati, Mauro
    Abstract: The paper builds upon the Agent Based-Stock Flow Consistent model presented in Caiani et al. (2015) to analyze the relationship between income and wealth inequality and economic development. For this sake, the original model has been amended under three main dimensions: first, the households sector has been subdivided into workmen, office workers, researchers, and executives which compete on segmented labor markets. Conversely, firms are now characterized by a hierarchical organization structure which determines, according to firms’ output levels, their demand for each type of workers. Second, in order to account for the impact of income and wealth distribution on consumption patterns, different households classes - also representing different income groups - have diversified average propensities to consume and save. Finally, the model now embeds technological change in an evolutionary flavor, affecting labor productivity evolution in the consumption sector through product innovation in the capital sector, where firms invest in R&D and produce differentiated vintages of machineries. The model is then calibrated using realistic values for both income and wealth distribution across different income groups, and their average propensities to consume. Results of the simulation experiments suggest that more progressive tax schemes and labor market policies aiming to increase low and middle workers’ coordination, and to support their wage levels, concur to foster economic development and to reduce inequality, though the latter seem to be more effective under both respects. The model thus provides some evidence in favor of a wage-led growth regime, where improvements of middle-low levels workers’ conditions create positive systemic effects, which eventually trickle up also to high income-profit earners households.
    Keywords: Innovation, Inequality, Agent Based Macroeconomics, Stock Flow Consistent Models.
    JEL: C63 D31 D33 E32 O33
    Date: 2016–06
  5. By: María Teresa à lvarez-Martínez (European Commission – JRC - IPTS); Montserrat López-Cobo (European Commission – JRC - IPTS)
    Abstract: This paper describes the construction process of a new set of national social accounting matrices (SAMs) for the EU-27 in 2010 that will be regionalized and used in RHOMOLO, the regional computable general equilibrium (CGE) model developed by the European Commission to evaluate the impact of cohesion policies. After a careful analysis of the input-output frameworks available in Eurostat and the World input-output database (WIOD), the latter has been used as the main data source, which is completed with information from national accounts in Eurostat. The structure of the SAM is determined by the sectoral disaggregation in WIOD. It includes a useful disaggregation of labour by skill levels and a disaggregation of the foreign sector in the EU and rest of the world. In the paper it is clearly described how to elaborate a symmetric input-output table product by product at purchasers' prices using supply and use tables and applying the industry technology. It is also described the reallocation of social contributions needed to properly assign tax revenues to government and avoid the problems generated by the second redistribution of income in national accounts. The description of the SAMs and their availability for the EU-27 can be very useful to researchers in applied economics and it may help to better understand the structure of RHOMOLO.
    Keywords: social accounting matrices, national accounts, EU-27
    JEL: D57 E16
    Date: 2016–06
  6. By: Abdulkader Cassim Mahomedy
    Abstract: In the last of this three-part study, the impact of the two dominant epistemologies of modernity on economics is fully explained. The intrusion of their ideas profoundly shaped both the content and methodology of the discipline, eventually instigating the separation of the field from the other social sciences that invariably bear on economic decisions and outcomes. The economists, notwithstanding these interdisciplinary linkages, continued to pattern their field of study after the natural sciences, further alienating the discipline from the humanities. These developments set off several rounds of methodological controversies within economics, which split the profession into irreconcilable camps. These disputes are analysed, helping to clarify why deep divisions within the discipline persist up to this day. Mainstream economics then gravitated further towards quantification and mathematisation, the implications of which have been enormous for the discipline. Ethical and normative considerations were altogether explicitly banished from economic science. To overcome these limitations, Muslim economists attempted to erect a separate discipline of economics based on the ethical values of Islam, whilst remaining largely committed to the methodology of neoclassical economics. They have registered little success in this effort. The reasons for this are explained and an alternative framework, centred on the precept of Tawhid in the unity of knowledge, is then suggested.
    Keywords: Epistemology, Economics, Rationalism, intellectualism, empiricism, Islam, Islamic Economics, unity of knowledge
    JEL: A1 B1 B2 B4 B5 N01 Z1
    Date: 2016
  7. By: Tom Juille (University of Nice Sophia Antipolis; GREDEG CNRS); Dorian Jullien (University of Nice Sophia Antipolis; GREDEG CNRS)
    Abstract: Narrativity broadly refers to the way humans construct and use stories, be them the widely known ones in a given culture or the more private ones people tell to each other or to themselves. The main goal of this paper is to clarify the extent to which the notion of narrativity can play a role in economic analysis with respect to the representation of economic agents in models of individual behaviors. To do so, we scrutinize a set of contributions from a twofold perspective. From the perspective of economics, we seek to clarify the issues regarding which we, as economists, should be interest in narrativity. From the perspective of philosophy, we, as economic methodologists or philosopher of economics, seek to clarify the conceptual issues inherent to the notion of narrativity that are not trivial or can be of some use for economic analysis. To some extent, this twofold perspective on narrativity and economics has already been taken by John Davis (2009; 2011) and Don Ross (2005; 2014), who use the notion of narrativity to account for individuals’ sense of a unified self and identity, notably with respect to the recent surge of multipleselves models in economics. We propose to further Davis’ and Ross’ efforts in at least three respects: firstly, through a comparative study of their contributions focused on narrativity from the perspective of economics; secondly, by discussing the connections between their contributions and the set of existing contributions related to narrativity in behavioral economics that none of them discuss; and, thirdly, by taking, at least for the sake of argument, a philosophically critical perspective on narrativity.
    Keywords: narrativity, economic rationality, multipleselves models, behavioral economics, economics and philosophy
    JEL: B41 B49 D01 D03 E20
    Date: 2016–06
  8. By: M. Savioli; R. Patuelli
    Abstract: Economic processes, consisting of interactions between human beings, exploit the social capital of persons endowed with specific cultures, identities and education. By taking into account this complexity, we focus on the role of institutions and policymaking in the building of social capital and its relevance to the fulfilment of their objectives. Social capital, however, is elusive and has several dimensions with which to interpret its multifaceted functions in economics and society. We cannot forget that social capital is sometimes even undesirable for society, for instance when unethically used. Even so, it is widely accepted that social capital has stable and positive effects.
    JEL: Z13 B52 D78
    Date: 2016–06
  9. By: Waśniewski, Krzysztof
    Abstract: The present paper aims at assessing the possible efficiency of the principle of national contributions, assumed in the 2015 Paris Framework Convention on Climate Change. Strong historical evidence indicates that any significant development of constitutional states used to take place, in the past, on the rising tide of demographic growth. Presently, we are facing global demographic slowdown, and contesters argue that constitutional states are not the right address to write to if we want breakthrough technological change. This paper assumes that the capacity of constitutional states to carry out the obligations declared in the Framework Convention, i.e. to carry out deep technological changes in the global economy, depends on their economic power, which can be estimated as their capacity to appropriate capital. Empirical data, examined in this article, indicates that since the 1980s, constitutional states have been losing their economic power, and that the overall technological progress is more and more disconnected from that economic power of governments. Moreover, constitutional states seem to be losing their capacity to experiment with their own institutions.
    Keywords: Institutions; constitutional state; political economy
    JEL: B0 B5 H0 H1 H3 H8
    Date: 2016–05–25
  10. By: Juan Guillermo Bedoya Ospina; Juan Camilo Galvis Ciro
    Abstract: Este documento tiene como objetivo realizar una aplicación de la metodología fuzzy para el análisis de la pobreza en Antioquia. Para ello se utilizan las mismas dimensiones del índice de pobreza multidimensional del Gobierno colombiano y se realiza un contraste entre los resultados obtenidos con ambas metodologías. En términos de política pública, los resultados de la aplicación metodológica indican que la pertenencia al conjunto de los pobres está determinada por las condiciones de trabajo informal, el analfabetismo, el rezago escolar y condiciones de la vivienda.
    Keywords: Pobreza; teoría fuzzy; política pública.
    JEL: I32 C02 H00
    Date: 2015–12–30
  11. By: Roman Römisch (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract The paper develops a model to consistently estimate agglomeration and agglomeration economies in European NUTS3 regions. It is based on the empirical observation that the size of population across regions as well as of other economic variables tend to follow a Zipf distribution. Furthermore, the model is extended to capture agglomeration effects in traditional regional convergence estimations. Agglomeration is analysed for 25 European countries, including Macedonia and Serbia, and the years 2000 to 2012. Results indicate significant agglomeration effects on the level and growth of regional economic development, with agglomeration and agglomeration economies generally declining in the Western European countries and increasing the Central East and South East European countries.
    Keywords: Zipf’s Law, agglomeration economies, Europe, Western Balkans
    Date: 2015–11
  12. By: Natália P. Monteiro (Department of Economics/NIPE, University of Minho); Odd Rune Straume (Department of Economics/NIPE, University of Minho)
    Abstract: We analyse empirically whether cooperatives and investor-owned fims differ in terms of productive efficiency. Using rich Portuguese panel data covering a wide range of industries, we apply two different empirical approaches to estimate potential diffferences in total factor productivity between the two groups of fi rms. The results from our benchmark random-effects model show that cooperatives are signi cantly less productive, on average, than investor-owned fi rms. This conclusion is to a large extent confi rmed by the results from System-GMM estimations. The lower productivity of cooperatives applies to a wide spectrum of industries. In six out of thirteen industries, cooperatives are outperformed by investor-owned firms in all empirical speci cations considered, while there is no industry in which cooperatives are consistently found to be the more productive type of firm.
    Keywords: Cooperatives; investor-owned fi rms; productive effiiciency
    JEL: D24 J54 P12 P13
    Date: 2016

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