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on Heterodox Microeconomics |
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Issue of 2021‒10‒04
seventeen papers chosen by Carlo D’Ippoliti Università degli Studi di Roma “La Sapienza” |
| By: | Tsoulfidis, Lefteris (University of Macedonia) |
| Abstract: | In recent years, the research on capital theory has shifted from reverse capital deepening and reswitching in techniques to a new direction, which goes beyond the near-linearities of price-rates of profit trajectories and wage-rates of profit curves and explicates the reasons behind them. The reswitching issue remains in the background of these studies as a remote, albeit ever-present, possibility. The article contributes some more evidence to the extant literature by utilizing data from the last available benchmark input-output table of the US economy of the year 2012. The derived near-linearities of price trajectories and wage-rate of profit curves are explained by the low effective rank of the economy’s input-output matrices and not from their seemingly random character. These findings shed additional light on a new and more meaningful direction in the research agenda; that is, the possibility of molding the essential features of the economy through dimensionality reduction. |
| Keywords: | price rate of profit trajectories; capital controversies; effective rank; eigendecomposition; eigenvalues |
| JEL: | B24 B51 C67 D46 D57 E11 E32 |
| Date: | 2021–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:ris:sraffa:0051&r= |
| By: | Roth, Steve |
| Abstract: | This paper highlights and unpacks a little-known reality about the Financial Accounts of the United States: the Flows matrix on page 1 of the Federal Reserve’s quarterly Z.1 report does not explain period-to-period changes in the Levels matrix on page 3. The same is true of the sectoral Flow and Levels tables underlying those matrixes. Nor do those tables provide balance-sheet-complete accounting of household or national wealth accumulation. Measures of net saving/investment/capital formation and accumulation, and national wealth accumulation, diverge by tens of trillions of dollars. The discrepancy is explained and resolved by assembling a balance-sheet-complete empirical derivation of comprehensive U.S. “Haig-Simons” income, based on the Integrated Macroeconomic Accounts. The comprehensive measure is 23% higher than national accounts’ “primary” income. Relationships to the Piketty/Saez/Zucman Distributional National Accounts (DINAs) are discussed, along with implications for economic theory and empirical modeling, both mainstream and heterodox/Post-Keynesian. |
| Keywords: | wealth; flow of funds; capital; accumulation; integrated macroeconomic accounts; IMAs; income; gains; holding gains; capital gains; haig-simons |
| JEL: | B4 B5 E21 E22 E25 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109976&r= |
| By: | Florent Bordot; André Lorentz |
| Abstract: | The purpose of this paper is to investigate the mechanisms underlying the relationship between automation and labor market polarization. To do so, we build an agent-based model (ABM) in which workers, heterogeneous in nature and level of skills, interact endogenously on a decentralized labor market with firms producing goods requiring specific set of skills to realize the tasks necessary for the production process. The two scenarios considered, with and without automation, confirm that automation is indeed a key factor in polarizing the structure of skill demand and increasing wage inequality. This result emerges even without reverting to the routine-based technical change (RBTC) hypothesis usually found in the literature, giving some support to the complexity-based technical change (CBTC) hypothesis. Finally, we also highlight that the impact of automation on the distribution of skill demand and wage inequality is correlated with the velocity of technical change. |
| Keywords: | Automation; Wage Polarization ; Technical Change ; Employment ; Agent-Based Model. |
| JEL: | C63 E14 J21 J31 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2021-39&r= |
| By: | Kyle Glenn (Department of Economics, Adams State University) |
| Abstract: | In this paper we explore how economists have addressed consumer behavior. We begin by analyzing the fundamental underpinning of neoclassical consumer behavior, utility maximization. We show how the contributions of behavioral economics, which prides itself on finding moments of nonconformity within the theory of consumer behavior, has put into question the validity of mainstream consumer choice modeling Accepting that the orthodox theory provides a poor model, the question remains: What alternative theories of consumer behavior exist? We discuss two alternative frameworks for consumer behavior: the endogenous preferences literature and the post-Keynesian notion of consumer choice. While both frameworks have provided valuable insights into consumer behavior, we argue that neither theory fully captures the complexities of consumer behavior. As such, we turn to literature in Business and Psychology surrounding how consumers actually behave. We find three common principles in the literature: consumer cannot process all information, preferences are malleable, and preferences are categorized eliciting varied behaviors dependent upon the category. We posit a basic neural network model that captures the three principles and illuminates some of the complexities of consumer behavior. |
| Keywords: | Consumer behavior, network models |
| JEL: | B50 D11 D90 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:2114&r= |
| By: | Florent Bordot; Andre Lorentz |
| Abstract: | The purpose of this paper is to investigate the mechanisms underlying the relationship between automation and labor market polarization. To do so, we build an agent-based model (ABM) in which workers, heterogeneous in nature and level of skills, interact endogenously on a decentralized labor market with firms producing goods requiring specific set of skills to realize the tasks necessary for the production process. The two scenarios considered, with and without automation, confirm that automation is indeed a key factor in polarizing the structure of skill demand and increasing wage inequality. This result emerges even without reverting to the routine-based technical change (RBTC) hypothesis usually found in the literature, giving some support to the complexity-based technical change (CBTC) hypothesis. Finally, we also highlight that the impact of automation on the distribution of skill demand and wage inequality is correlated with the velocity of technical change. |
| Keywords: | Automation; Wage Polarization; Technical Change; Employment; Agent-Based Model. |
| Date: | 2021–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2021/32&r= |
| By: | Duque Garcia, Carlos Alberto |
| Abstract: | In recent decades there has been a growing literature dealing with the empirical estimation of the rate of profit and other Marxian variables in several countries. Nonetheless, there has been a paucity of econometric research about the impact of those Marxian variables on the growth rate in developing countries. This paper seeks to evaluate the rate of profit and the rate of accumulation as determinants of the growth rate in Colombia during 1967-2019, using a VAR model. We find that both variables are statistically significant and, in concordance with Marxian theory predictions, affect positively the growth rate. We also identify direct impacts of growth rate over the profit rate and the accumulation rate as well as an inverse relationship between these last variables. |
| Keywords: | Marxian political economy; rate of profit; time-series analysis; Colombia |
| JEL: | B51 C32 O54 |
| Date: | 2021–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109890&r= |
| By: | Yang, Yingrui |
| Abstract: | There are two major rationality theories in social sciences, such as in economics and psychology, namely, economic rationality and bounded rationality. In terms of theoretical physics, these rationality theories are about accelerated states. This paper proposes a new theory, called ordinary rationality, which refers to ground states. Ordinary rationality theory is a principled theory that includes eight principles. Ordinary rationality also shares three meta-properties with Higgs fields, and its function is modeled by the Higgs mechanism in the standard model of particle physics. The present paper also discusses the relation between the notion of mass in physics and the notion of mass in social sciences: namely, it addresses the issue about P-mass vs. S-mass. |
| Keywords: | ordinary rationality, Higgs mechanism, mass, degenerated states, Goldstone mode |
| JEL: | A10 A12 C6 C60 |
| Date: | 2021–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109912&r= |
| By: | Roos, Michael W. M.; Reccius, Matthias |
| Abstract: | There is growing awareness within the economics profession of the important role narratives play in the economy. Even though empirical approaches that try to quantify economic narratives are getting increasingly popular, there is no theory or even a universally accepted definition of economic arratives underlying this research. First, we review and categorize the economic literature concerned with narratives and work out the different paradigms that are at play. Only a subset of the literature considers narratives to be active drivers of economic activity. In order to solidify the foundation of narrative economics, we propose a definition of collective economic narratives, isolating five important characteristics. We argue that, for a narrative to be economically relevant, it must be a sense-making story that emerges in a social context and suggests action to a social group. We also systematize how a collective economic narrative differs from a topic and from other kinds of narratives that are likely to have less impact on the economy. With regard to the popular use of topic modeling as an empirical strategy, we suggest that the complementary use of other canonical methods from the natural language processing toolkit and the development of new methods is inevitable to go beyond identifying topics and be able to move towards true empirical narrative economics. |
| Keywords: | Narrative economics,complexity economics,narrative turn,textual analysis,NLP |
| JEL: | D91 E44 E71 B55 B41 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:922&r= |
| By: | Kyle Glenn (Department of Economics, Adams State University) |
| Abstract: | Wage theory has long relied upon Human Capital theory as an explanation of skilled wages with labor economists attempting to find the appropriate specification for the return to education. Shaikh and Glenn (2018) construct an alternative model of skilled wages called the Social Labor hypothesis. Instead of returns to education, the Social Labor hypothesis posits wages as a function of social costs of education. This paper tests the empirical validity of the Social Labor hypothesis comparing it against the Human Capital model, finding a remarkable fit to empirical data. The paper also provides a theoretical approach to, and empirical evidence of, labor market discrimination. |
| Keywords: | Skills, wage di erentials, classical theory, human capital theory |
| JEL: | B51 J24 J31 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:2115&r= |
| By: | Angelica Sbardella; Andrea Zaccaria; Luciano Pietronero; Pasquale Scaramozzino |
| Abstract: | This paper applies the Economic Fitness and Complexity approach to analyse the underlying factors behind the wide and persistent economic disparities across the Italian regional units. Measures of regional fitness are obtained from their revealed comparative advantage and from their patent performance. Southern regions tend to be characterised by a lower level of complexity than the regions in the Centre-North of the country. We interpret these results as indicating a lower level of capability endowment in the South. The system-wide approach of the paper is able to identify some critical sectors which display a rich pattern of connections with other sectors and which could play a pivotal role to create additional capabilities and foster a more balanced regional development. |
| Keywords: | Italian regional divide; Economic Fitness and Complexity; Productive and technological capabilities. |
| Date: | 2021–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2021/30&r= |
| By: | Nicolo Barbieri; Davide Consoli; Lorenzo Napolitano; Francois Perruchas; Emanuele Pugliese; Angelica Sbardella |
| Abstract: | The goal of the paper is to elaborate an empirical overview of green technological development in European regions. This is a timely pursuit considering the ambitious commitments stipulated in the recent European Green Deal to achieve climate neutrality by 2050. Our analysis is organised in three steps. First, we map the geographical distribution of innovative activities in Europe and profile regions in terms of technological capabilities. Second, we elaborate a metric to identify regions' green innovation potential. Third, we check whether possessing comparative advantage in specific technological domains is associated with a region's capacity to develop green technologies. |
| Keywords: | Green Technology; European regions; Economic Fitness and Complexity. |
| Date: | 2021–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2021/31&r= |
| By: | Elert, Niklas (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Among contemporary economists, Mariana Mazzucato stands out for her emphasis on the importance of innovation to solve pressing challenges and achieve a greater quality of life. However, the type of mission-oriented innovation policies she promotes usually rely on an overly mechanical view of innovation and economic growth. We employ an ecosystem perspective to demonstrate that innovative entrepreneurship takes place in a collaborative innovation bloc consisting of a myriad of nodes. Entrepreneurs, inventors, early- and later-stage financiers, key personnel, and customers are all actors whose skills and abilities are necessary to realize an entrepreneurial project. When mission-oriented policies play a large role in an industry’s production or financing, connections between actors in the innovation bloc risk being severed, severely curtailing the scope for actors to play their requisite roles. Thus, there is a risk that such policies do more harm than good for innovation and economic growth. |
| Keywords: | Entrepreneurial ecosystems; Collaboration; Entrepreneurship policy; Institutions; Innovation policy |
| JEL: | D20 G32 L23 L26 O33 O38 |
| Date: | 2021–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1406&r= |
| By: | Custódio, Sérgio José |
| Abstract: | The article explores analytical possibilities of the relationship between racism and anti-racism. It does so through occurrences of institutional racism in hotels and corresponding anti-racist actions. The approach is interdisciplinary, covering history, psychology, political sociology, literature, cinema. Is there a variation of racism over time? Is there a variation of anti-racism over time? What remains? Is there a relationship between racism and fascism in Brazil? In what way does this show up? Is there a relationship between anti-racism and public policy? The analysis seeks to reflect on these issues. The article argues that anti-racist action is fundamental for the emergence of public policy and for the fight against fascism, as racism structures fascism. |
| Date: | 2021–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:h6rbn&r= |
| By: | Claudius Graebner-Radkowitsch (Institute for Socio-Economics, University of Duisburg-Essen, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Theresa Hager (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria) |
| Abstract: | This paper studies the conceptualization and quantification of ‘competitiveness’ within the main policy coordination framework of the EU, the European Semester. This topic warrants attention since ‘competitiveness’ is not only of central importance in the European policy discourse, but also a theoretically ambiguous and malleable concept with conflicting accentuations, all of which are subject of considerable academic and political debate. By investigating the translation of competition as a contested theoretical concept into concrete indicators within a legally binding document, the paper produces three main insights that deserve further attention, both scientifically and politically. First, the indicators of the semester mainly measure cost rather than technological competitiveness, indicating a constriction of the concept at the operational level. Second, while EU policy documents regularly stress the competitiveness of the European Union as a whole, the indicators in the semester measure individual country competitiveness. Finally, the indicators in the Semester measure how the competitiveness of single Member States changes over time, not how they perform relative to others. This shallows the heterogeneity of countries, which is problematic given recent findings according to which absolute differentials of competitiveness across Member States is one important driver of accelerating polarization patterns in the Union. |
| Keywords: | European Union; competition; performativity; European semester; political economy |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:ico:wpaper:130&r= |
| By: | Molinder, Jakob (Department of Economic History, Uppsala University); Pihl, Christopher (Department of History, Uppsala University) |
| Abstract: | We use a unique source from the Swedish royal demesnes to examine the work and relative wages of women in sixteenth century Sweden, an economic laggard in the Early Modern period. The source pertains to workers hired on yearly contracts, a type more representative for historical labour markets than day-labour on large construction sites, and allows us to observe directly the food consumed by workers. We speak to the debate on the “Little Divergence” within Europe as women’s work and gender differentials in pay is a key indicator of women’s relative autonomy and seen as a cause for the economic ascendency of the North Sea region during the period. We find small gender differentials among both unskilled and skilled workers, indicating that Sweden was a part of the “golden age” for women. We argue that despite superficial equality, women’s economic outlooks were restrained in many other ways – including their access to higher skilled work and jobs in the expanding parts of the economy – adding important nuance to the discussion about the relationship between women’s social position and economic growth in the Early Modern period. |
| Keywords: | womens work; wages; little divergence; Sweden; gender gap; Early Modern period |
| JEL: | J21 J31 N00 N33 |
| Date: | 2021–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luekhi:0227&r= |
| By: | Schulz, Jan; Mayerhoffer, Daniel M. |
| Abstract: | The nexus between debt and inequality has attracted considerable scholarly attention in the wake of the global financial crisis. One prominent candidate to explain the striking co-evolution of income inequality and private debt in this period has been the theory of upward-looking consumption externalities leading to expenditure cascades. We propose a parsimonious model of upward-looking consumption at the micro level mediated by perception networks with empirically plausible topologies. This allows us to make sense of the ambiguous empirical literature on the relevance of this channel. Up to our knowledge, our approach is the first to make the reference group to which conspicuous consumption relates explicit. Our model, based purely on current income, replicates the major stylised facts regarding micro consumption behaviour and is thus observationally equivalent to the workhorse permanent income hypothesis, without facing its dual problem of 'excess smoothness' and 'excess sensitivity'. We also demonstrate that the network topology and segregation has a significant effect on consumption patterns which has so far been neglected. |
| Keywords: | Agent-Based Computational Economics,Consumption,Inequality,Relative Income Hypothesis,Positional Goods,Aggregation |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bamber:173&r= |
| By: | Romain Bocher (Département d'addictologie et de psychiatrie de liaison [CHU de Nantes] - CHU Nantes - Centre hospitalier universitaire de Nantes) |
| Abstract: | Assuming self-organized criticality to characterize capital markets, this paper seeks to explain why equity implied volatility is a relevant proxy for avalanche intensity. Historical data analysis of the CBOE Volatility Index (VIX) shows that implied volatility spikes are distributed following a power law, making financial stress similar to earthquakes as anticipated long ago by Bak. |
| Keywords: | Implied Volatility,Power Law,Self-Organized Criticality |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03352468&r= |