nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2017‒02‒26
thirteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Poverty, employment and inequality in the SDGs: Heterodox discourse, orthodox policies? By Luebker, M.
  2. Tweeting About Sustainability: Can Emotional Nowcasting Discourage Greenwashing? By Andreas G. F. Hoepner; Savio Dimatteo; Joe Schauld; Pei-Shan Yi; Mirco Musolesi
  3. From an idea of a scalable working model: merging economic benefits with social values in Sardex By Giuseppe Littera; Laura Sartori; Paolo Dini; Panayotis Antoniadis
  4. Political Economies and Environmental Futures for the Sharing Economy By Koen Frenken
  5. Breve aproximación a la Pobreza Multidimensional a partir del enfoque de capacidades de Amartya Sen By León Tamayo, Dorian Fernando; Gonzalez, Miller
  6. Modeling Economic Systems as Locally-Constructive Sequential Games By Tesfatsion, Leigh
  7. Causes and Consequences of Hysteresis: Aggregate Demand, Productivity and Employment By Giovanni Dosi; Marcelo C. Pereira; Andrea Roventini; Maria Enrica Virgillito
  8. Health, Human Capital and Domestic Violence By Nicholas W. Papageorge; Gwyn C. Pauley; Mardge Cohen; Tracey E. Wilson; Barton H. Hamilton; Robert A. Pollak
  9. The effect of pro-shareholder income distribution on capital accumulation: evidence from Japanese non-financial firms. By Shimano, Norihito
  10. Feminization of entrepreneurship in developing countries By Molina, Jose Alberto; Ortega, Raquel; Velilla, Jorge
  11. The firm as a common. The case of the accumulation and use of capital resources in co-operative enterprises By Tortia, Ermanno C.
  12. Transformation Capacity of the Innovative Entrepreneur: On the interplay between social structure and agency By Grillitsch, Markus
  13. Moving on Towards a Workable Climate Regime By Jaime DE MELO

  1. By: Luebker, M.
    Abstract: The Sustainable Development Goals (SDGs) put much emphasis on the employment and inequality, a noteworthy shift from the Millennium Development Goals (MDGs) and their focus on poverty eradication. To achieve ‘Sustained, inclusive and sustainable economic growth’, SDG Goal 8 contains targets on productivity-enhancing policies, employment and decent work, and makes reference to three out of the four fundamental labour rights. While these are necessary ingredients for a sustained increase in living standards and important elements of heterodox accounts of development, they are not sufficient conditions to create equitable growth. Drawing on examples from Asia, the paper makes this argument by addressing three orthodox conjectures: that workers benefit from productivity growth through higher wages; that factor shares in national income are roughly constant; and that policy interventions such as minimum wages are bound to fail. The paper concludes with two policy implications: (1) Countries need to adopt fiscal, wage and social protection policies that reduce inequalities of outcome and achieve faster income growth for the poorest – elements which can be found in Goal 10. (2) Effective labour markets governance needs to include the right to freedom of association and collective bargaining, the only fundamental labour right not explicitly mentioned in the SDGs.
    Keywords: SDGs, poverty, productivity, labour market institutions, income inequality, functional distribution of incomes
    JEL: D31 D33 I30 J31 J83
    Date: 2017–02–16
  2. By: Andreas G. F. Hoepner (Henley Business School, University of Reading, UK); Savio Dimatteo (SAP SE, Germany); Joe Schauld (University of St Andrews, Scotland); Pei-Shan Yi (Henley Business School, University of Reading, UK); Mirco Musolesi (University College London, UK)
    Abstract: Fewer than 100 firms worldwide are recognised by Bloomberg to report accurate greenhouse gas emissions. Yet, tens of thousands of people are talking and tweeting about climate change every day. How can this attention be converted into accurate action? We propose that sustainable data science might help, specifically that ‘emotional nowcasting’ of societal responses to sustainability related statements as expressed on Twitter. First, we differentiate between various types of corporate sustainability performance data and highlight the challenge that corporate greenwashing and a potential lack of financial independence of the assessor from the assessed poses for these data sets. Second, we introduce the concept of emotional nowcasting with two case studies of an emotionally non-ambivalent context, the football matches England vs. Germany and England vs. USA at the 2010 world cup. These case studies serve as a proof of concept for emotional nowcasting. Finally, we discuss the potential for emotional nowcasting to mitigate the pandemic of greenwashing currently experienced in sustainability communication. We conclude that emotional nowcasting can serve as one test of greenwashing which is on its own though not necessarily sufficient.
    Keywords: Accounting Independence, Corporate Governance, Emotional Nowcasting, Sustainable Development, Twitter
    Date: 2017–02
  3. By: Giuseppe Littera; Laura Sartori; Paolo Dini; Panayotis Antoniadis
    Abstract: The remarkable growth of Sardex as a local currency throughout the island of Sardinia over the past 5 years motivated an in-depth look at its starting assumptions, design and operational principles, and socioeconomic context. The paper looks at Sardex as a social innovation start-up, a medium of exchange and unit of account, an online and offline mutual credit system, and a closed economic community or ‘circuit’. The analysis relies on semi-structured in-depth interviews of circuit members and benefits from the reflexive point of view of one of its founders. The main findings are that trust was and continues to be fundamentally important for the creation and operation of the mutual credit system, and that Sardex encompasses and mediates both economic and social value(s). Compared to other mutual credit systems, in addition to its unique design features Sardex is distinguished by its federated model of expansion and its strong commitment to keeping a balance between the economic and social aspects. In Sardex, money’s fungibility is defined by market utility and social values at the same time.
    JEL: F3 G3
    Date: 2017–02
  4. By: Koen Frenken
    Abstract: The sudden rise of the sharing economy has sparked an intense public debate about its definition, its effects and its future regulation. Here, I attempt to provide analytical guidance by defining the sharing economy as the practice that consumers grant each other temporary access to their under-utilized physical assets. Using this definition, the rise of the sharing economy can be understood as occurring at the intersection of three salient economic trends: peer-to-peer exchange, access over ownership and circular business models. I shortly discuss some of the environmental impacts of online sharing platforms and then articulate three possible futures of the sharing economy: a capitalist future cumulating into monopolistic super-platforms allowing for seamless services, a state-led future that shifts taxation from labour to capital and redistributes the gains of sharing from winners to losers, and a citizen-led future based on cooperatively owned platforms under democratic control. The nature and size of the social and environmental impacts are expected to differ greatly in each of the three scenarios.
    Keywords: sharing economy, circular economy, access economy, peer-to-peer markets, sustainable consumption, collaborative consumption
    Date: 2017–02
  5. By: León Tamayo, Dorian Fernando; Gonzalez, Miller
    Abstract: La formulación e implementación de políticas públicas orientadas a la disminución de la pobreza económica y multidimensional debe contener un marco centrado en el desarrollo humano; por consiguiente, el presente artículo se plantea como objetivo examinar la importancia de elaborar políticas públicas dentro del llamado enfoque de capacidades en la versión de Amartya Sen. De igual forma, intenta mostrar la importancia de dicho enfoque en el contexto de la política pública presente en municipios en donde el conflicto social armado ha tenido bastante incidencia.
    Keywords: Palabras clave: enfoque de capacidades, desarrollo humano, pobreza multidimensional, Amartya Sen.
    JEL: D63 I31 I32
    Date: 2017–02–05
  6. By: Tesfatsion, Leigh
    Abstract: Real-world economies are open-ended dynamic systems consisting of heterogeneous interacting participants. Human participants are decision-makers who strategically take into account the past actions and potential future actions of other participants. All participants are forced to be locally constructive, meaning their actions at any given time must be based on their local states; and participant actions at any given time affect future local states. Taken together, these properties imply real-world economies are locally-constructive sequential games. This study discusses a modeling approach, agent-based computational economics (ACE), that permits researchers to study economic systems from this point of view. ACE modeling principles and objectives are first concisely presented. The remainder of the study then highlights challenging issues and edgier explorations that ACE researchers are currently pursuing.
    Date: 2017–02–18
  7. By: Giovanni Dosi; Marcelo C. Pereira; Andrea Roventini; Maria Enrica Virgillito
    Abstract: In this work we develop an agent-based model where hysteresis in major macroeconomic variables (e.g. GDP, productivity, unemployment) emerges out of the decentralized interactions of heterogeneous firms and workers. Building upon the model in Dosi et al. (2016, 2017), we specify an endogenous process of accumulation of workers' skills and a state-dependent process of entry, studying their hysteretic impacts. Indeed, hysteresis is ubiquitous. However, this is not due to market imperfections, but rather to the very functioning of decentralised economies characterised by coordination externalities and dynamic increasing returns. So, contrary to the insider-outsider hypothesis (Blanchard and Summers, 1986), the model does not support the findings that rigid industrial relations may foster hysteretic behaviour in aggregate unemployment. On the contrary, in line with the recent discussion in Ball et al. (2014), this contribution provides evidence that during severe downturns, and thus declining aggregate demand, phenomena like lower investment and innovation rates, skills deterioration, and declining entry dynamics are better candidates to explain long-run unemployment spells and lower output growth. In that, more rigid labour markets dampen hysteretic dynamics by supporting aggregate demand, thus making the economy more resilient.
    Keywords: Hysteresis, Aggregate Demand, Multiple Equilibria, Skills Deterioration, Market Entry, Agent-Based Model
    Date: 2017–02–22
  8. By: Nicholas W. Papageorge (John Hopkins University); Gwyn C. Pauley (University of Southern California); Mardge Cohen (Rush University); Tracey E. Wilson (State University of New York); Barton H. Hamilton (Washington University in St. Louis); Robert A. Pollak (Washington University in St. Louis)
    Abstract: We study the impact of health shocks on domestic violence and illicit drug use. We argue that health is a form of human capital that shifts incentives for risky behaviors, such as drug use, and also changes options outside of violent relationships. To estimate causal effects, we examine chronically ill women before and after a medical breakthrough and exploit differences in these women’s health prior to the breakthrough. We show evidence that health improvements induced by the breakthrough reduced domestic violence and illicit drug use. Our findings provide support for the idea that health improvements can have far-reaching implications for costly social problems. The policy relevance of our findings is compounded by the fact that both domestic violence and illicit drug use are social problems often seen as frustratingly impervious to interventions. One possible reason is that the common factors that drive them, such underlying health or labor market human capital, are themselves very persistent over time. Our study provides a unique test of this hypothesis by examining what happens when factors underlying violence or drug use exogenously shift due to a medical technological advancement. Our findings suggest that both violence and drug use could be reduced by improving women’s access to better healthcare.
    Keywords: domestic violence, intimate partner violence, Health, human capital, chronic illness, medical innovation
    JEL: I10 J12 J24 O39
    Date: 2017–02
  9. By: Shimano, Norihito
    Abstract: Over the past decades, there has been a change in the pattern of capital accumulation, especially in developed countries. Although the profit rate and profit share recovered after the 1980s and 1990s, the rate of capital accumulation remained stagnant in many developed countries in the same period. This phenomenon is called “investment-profit puzzle” because the movement of the rate of capital accumulation is thought to be mainly determined by that of the profit rate or profit share. In this study, I examine the effect of financialization on the “investment-profit puzzle” in the Japanese economy. The profit rate and profit share of Japanese NFCs began to recover from the mid-1990s, whereas the rate of capital accumulation did not recover during the same period. This study reveals that pro-shareholder income distribution, namely, the rise in profit share that is evoked by financializationin in Japanese NFCs is the main cause of the “investment-profit puzzle” in the Japanese economy. In Japanese non-manufacturing industries, increasing profit share depress domestic demand and capital accumulation while it contributes to profit rate recovery. The trend of non-manufacturing industries determines the “investment-profit puzzle” in the Japanese economy.
    Keywords: Financialization, capital accumulation, income distribution, investment function, demand regime
    JEL: B50 E12 G31
    Date: 2017–02–16
  10. By: Molina, Jose Alberto; Ortega, Raquel; Velilla, Jorge
    Abstract: We analyze whether male or female individuals have a higher probability of becoming entrepreneurs in developing regions (Africa, Asia, South America), controlling by individuals’ entrepreneurial environment and countries’ macroeconomic context. Using the GEM data, we avoid heterogeneity and the potential confounding problems arising from the definition of entrepreneurship. We find that women tend to become entrepreneurs more often than men in South America and Africa, highlighting the importance of entrepreneurship as a survival labor choice. No gender gaps in entrepreneurial participation are found in Asia.
    Keywords: Entrepreneurship; Gender; Feminist; Developing countries
    JEL: J16 L26 O10 O57
    Date: 2017–02–20
  11. By: Tortia, Ermanno C.
    Abstract: Contemporary literature dealing with the governance of the exploitation of common-pool natural resources was initiated by Elinor Ostrom in 1990, and has been growing fast ever since. On the contrary, within the same research stream, the study of the presence and economic role of common resources in entrepreneurial-organizational is, to date, under-researched. This work endeavours some attempt to fill this gap by: first, spelling out a new-institutionalist framework for the analysis of the accumulation and governance of common capital resources within organizational boundaries; second, by considering co-operative enterprises as the organizational form that, on the basis of historical record, and of behavioural and institutional characteristics, demonstrated to be the most compatible with a substantial role for common and non-divided asset-ownership and with its governance thereof. The economic forces influencing the optimal level of self-financed common capital resources in co-operatives are enquired. Also their governance is brought under the spotlight, evidencing: (i) the constraints that need to be fulfilled, and the potential benefits arising out of their presence; (ii) the compatibility and mutual adaptability between democratic governance in co-operatives and the governance of non-divided assets.
    Keywords: co-operative enterprises; indivisible reserves; common resources; rivalry; non-excludability; capital accumulation; governance
    JEL: B52 J54 K11 P12 P13 P14
    Date: 2017–02–09
  12. By: Grillitsch, Markus (Department of Human Geography & CIRCLE)
    Abstract: Structural change features prominently in public policy and scientific debates. While a large body of work is concerned with barriers to structural change, this paper focusses on the interplay between structure and agency by focussing on the transformation capacity of innovative entrepreneurs. Transformation capacity is defined as the ability to combine knowledge and resources across different social structures and stimulate institutional change. The paper discusses why and to what extent transformation capacity rests on three key mechanisms: multiple positions, positional mobility, and networks across social structures. The paper elaborates on potential unintended consequences and pre-conditions for transformation capacity.
    Keywords: innovation systems; entrepreneurship; radical innovation; structural change; system innovation; institutions
    JEL: L16 O30 R10
    Date: 2017–02–17
  13. By: Jaime DE MELO (Ferdi)
    Abstract: The Paris Agreement (PA) signed by 175 parties is now a Treaty since a quorum of signatories has been obtained. This Treaty is really the first important step taken to limit temperature increase, as pledges, if sustained and far more ambitious beyond 2030, would drastically limit the projected temperature increase from projections in the absence of measures to limit emissions of greenhouse gases. Contributions however fall short of the intentions to limit temperature increase to the +1.5° to +2° Celsius range since the onset of industrialization. Drawing on recent contributions, this paper reviews where we stand in tackling four challenges ahead: (i) taking fuller cognizance of the accumulating scientific evidence calling for urgent action; (ii) designing an architecture that will render effective the blend of ‘bottom-up’ and ‘top-down’ approaches; (iii) choosing policy options and tackling the slow transition to a low-carbon economy, and; (iv) raising finance and addressing burden sharing.
    JEL: O44 F18
    Date: 2016–11

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