Search

This paper studies how parental absence and children's gender affect early childhood investment using a new dataset from rural Thailand. We found that relative to boys, girls received more time but less material investment. Relative to children with at least one parent present, children with absent parents received significantly less material investment; however, time investment was not significantly different between the two groups. Based on an economic model of early childhood investment, these results suggest that relative to material investment, time investment is more important for girls than for boys, and for households with absent parents than for households with at least one parent present. The estimation of the elasticity of substitution between time and material investments suggests that both types of investments are surprisingly complementary. [ABSTRACT FROM AUTHOR]

The objective of this paper is to identify determinants of the reductions in the use of labor observed in Argentine agriculture. The paper focuses on the 2002-2018 period, using data from the last two publications of the Censo Nacional Agropecuario (the census undertaken in 2008 is incomplete). The paper summarizes trends of labor use and firm size in Argentina, and presents three possible hypothesis accounting for the observed changes: (a) capital-labor substitution, (b) labor-saving technical change (reduced and no-tillage), and (c) changes in the farm size and the types of capital (machines) used.

We analyze the management input from the perspective of shadow cost minimization. Using Bloom and Van Reenen's management measure, we estimate management's shadow price, dual Morishima elasticities of substitution, and relative price efficiencies. We find that the shadow price of management is about 1.3 million US dollars. Management is a weak dual complement for labor but a strong dual complement for capital. Increases in management reduce the relative income share of labor but not capital. Most firms use too little management, but relative use of management improves over time, with the combination of ownership and control, and competition. [ABSTRACT FROM AUTHOR]

The constant elasticity of substitution (CES for short) is a basic property widely used in some areas of economics that involves a system of second-order nonlinear partial differential equations. One of the most remarkable results in mathematical economics states that under homogeneity condition i.e. the production function is a homogeneous function of a certain degree, there are no other production models with the CES property apart from the famous Cobb–Douglas and Arrow–Chenery–Minhas–Solow production functions. In this paper we generalize this classification result to a much wider framework of production functions under quasi-homogeneity conditions, showing in particular the existence of three new classes of production models with the CES property. [ABSTRACT FROM AUTHOR]

This paper extends the literature on the potential negative employment effects of environmental policy by bringing to the fore a key factor that directly regulates its magnitude: the elasticity of substitution between labor and energy. Using firm-level data from the French manufacturing sector and addressing endogeneity concerns, we provide empirical estimates that point to strong complementarity between labor and energy. We then investigate the empirical relevance of the elasticity of substitution in studying firms' response to changing energy prices. Our findings suggest that the negative employment effects of rising energy prices are largely driven by firms with limited substitution capacity. [ABSTRACT FROM AUTHOR]

The increasing demand of fossil fuels alongside its environmental pollution necessitates the optimal consumption of the fuels. In cold seasons, natural gas consumption increases and power plants of the country need to substitute their consumed fuel in order to supply electricity. This paper evaluated the substitution between consumable fuels in electricity production in six selected regional electricity companies during the years 1389-1386. Cost share equations of conventional fuels in electricity generation were estimated using the seemingly unrelated regression equations (SURE) estimator. Using the results of the estimation, equations of the own-and cross-price elasticities of the substitution of different fuels were calculated. According to the results of calculations, all the own price elasticities were negative and cross price elasticities were positive. The substitute elasticity between natural gas and gasoil was 1.56 and between natural gas and mazut was 1.3. Also, using the calculated elasticities, the substitution of fuels was applied with the aim of reducing CO2 emissions. The application results showed that the substitution of mazut with natural gas would reduce CO2 emissions, but the substitution of gasoil with natural gas would increase CO2 emissions.

China has implemented the energy intensity target (EIT) constraint policy to improve its energy efficiency for more than three decades. Producers in China need to consider factor prices, outputs, and EIT constraint while they plan the number of input factors. Therefore, this article brings the EIT into the conditional input demand function of an input factor and assesses the impacts of the elasticity of substitution between different production factors. By building two-factor substitution elasticity models with and without EIT constraints, this paper examines the impacts of EIT constraint on the elasticity of substitution between input factors in both the fossil fuel production sector and the non-fossil-fuel production sector. The main conclusions are, firstly, EIT constraint influences both own-price elasticity of an input factor and cross-price elasticity between different input factors. Secondly, EIT constraint hinders the responses of some input factors to the price changes of other input factors, and changes relationships between some input factors from complementary to substitute, or vice versa. Two policy implications are obtained. First, producers should consider the impacts of EIT constraint on their investment, labor input, energy input, and raw materials purchase and bring these impacts into their business strategies. Second, reducing energy input by changing prices of other production factors will be ineffective under EIT constraint. [ABSTRACT FROM AUTHOR]

Fertilizer has brought great pressure to sustainable ecological environment. Research on the effect of price on fertilizer use as well as the substitution relationship of fertilizer and other input factors of agricultural production is of great importance for green, efficient, and intensive agricultural production in the world. This study first constructs translog cost functions and models of elasticity, then uses the factor input and price data from 2004 to 2016 to measure the price elasticity of fertilizer demand, and the elasticity of factor substitution in China's maize and cabbage production. The results suggest that: the price elasticity of fertilizer demand is in a low elasticity range; there is a compensation relationship between fertilizer and labour and a substitution relationship between fertilizer and machinery in China's maize production, while these relationships in China's cabbage production are opposite. [ABSTRACT FROM AUTHOR]

We develop a framework to estimate the aggregate capital‐labor elasticity of substitution by aggregating the actions of individual plants. The aggregate elasticity reflects substitution within plants and reallocation across plants; the extent of heterogeneity in capital intensities determines their relative importance. We use micro data on the cross‐section of plants to build up to the aggregate elasticity at a point in time. Interpreting our econometric estimates through the lens of several different models, we find that the aggregate elasticity for the U.S. manufacturing sector is in the range of 0.5–0.7, and has declined slightly since 1970. We use our estimates to measure the bias of technical change and assess the decline in labor's share of income in the U.S. manufacturing sector. Mechanisms that rely on changes in the relative supply of factors, such as an acceleration of capital accumulation, cannot account for the decline. [ABSTRACT FROM AUTHOR]

The influence of climate change on US corn ethanol energy demand by commercial, industry and transportation is examined from 1970 to 2017 using a Translog cost function. The sectorial compensated demand for energy, price, and pure technical substitution elasticities between the three sectors is computed using parameter coefficients from a system of demand shares equations. The commercial sector price is used to normalize the equations and hold the homogeneity and symmetry conditions. Both the U.S. transportation and industry sectors' consumption of ethanol as energy are affected by the climatic factors. The transportation sector's consumption is affected by only the variance of precipitation while that of the industry is affected by both the mean and variance of temperature, and variance of precipitation. All the three sectors have very little flexibility for economic substitution to reduce ethanol use due to very weak technical substitution among sectors except industrial energy for transportation where expenditure is reduced by about 1.3% for a 10% rise in prices. The commercial and industrial sectors' ethanol demand can only be increased through greater improvement in technology. Feedstock availability, due to high consumptive use water has negative effect on demand. • Distribution (downside and upside) of climate and ethanol demand. • Sectorial (commercial, industry, residential and transportation) ethanol demand. • Ethanol Demand Price and Substitution Elasticities. • Feedstock availability, due to high consumptive use water has negative effect on demand. • Empirical application involved panel data, 48 states from 1970 to 2017. [ABSTRACT FROM AUTHOR]

The NEST or potential Emerging and growth-leading economies (EAGLEs) have been playing an increasing role in global growth, but the problems of their long-term growth attract the least attention, specifically the possibility of endogenous growth. The study was conducted to test for the endogenous growth possibility of the 15 NEST economies of the first wave. Based on macro data over 17 years, using the Bayesian non-linear regression method through the Metropolis–Hastings algorithm and Gibbs sampling, the author specified individual Constant elasticity of substitution (CES) functions for the researched economies. The Bayesian non-linear regressions are recognized as appropriate for empirical analysis of growth processes. The research revealed that out of the 15 studied NEST economies, the nine that have probably generated endogenous growth have acquired, on average, the higher magnitude of output growth, capital growth, FDI inflows, HDI, as well as expenditure on R&D. This is because these countries have implemented reasonable growth policies, such as encouraging investments from domestic and foreign companies, accumulating human capital, developing national R&D activities, extensively applying high technologies. Specifically, our findings are consistent with the predictions of Romer’s endogenous growth theory.

The energy transition has shown that fossil generation can be complemented with renewable energy and other resources capable of providing flexibility to the energy system’s operation, in compliance with the wholesale electricity market’s rules. This paper proposes a market-based methodology for introducing flexible demand in the energy dispatch, optimizing the scheduling of electricity system operation in the short-term, and considers the challenge of implementing an incentive scheme for participants in demand-response programs. The scheme includes the criteria of the elasticity of substitution and a renewable energy quota. This methodology is focused on a strategic demand shift to minimize the cost of supply; increase the dispatch of renewable energy; control CO2 emissions; and satisfy the generation, demand, and transmission operating constraints. These conditions encourage the development of a simulation tool that allows a sensitivity analysis to aid decision-making by operators and agents. The proposed methodology optimizes the operational cost of generation supply and specific performance indicators to determine the percentages of demand shift, the amount of CO2 emissions, the ratio of unserved power, the demand benefits obtained from an incentive scheme, and the natural market behavior.

Based on Fenchel's duality theorem and the Young transform, a convolution operation for technologies is constructed, which is used to study the problem of aggregating a nonlinear input–output model with concave positive homogeneous production functions. [ABSTRACT FROM AUTHOR]

The NEST or potential Emerging and growth-leading economies (EAGLEs) have been playing an increasing role in global growth, but the problems of their long-term growth attract the least attention, specifically the possibility of endogenous growth. The study was conducted to test for the endogenous growth possibility of the 15 NEST economies of the first wave. Based on macro data over 17 years, using the Bayesian non-linear regression method through the Metropolis–Hastings algorithm and Gibbs sampling, the author specified individual Constant elasticity of substitution (CES) functions for the researched economies. The Bayesian non-linear regressions are recognized as appropriate for empirical analysis of growth processes. The research revealed that out of the 15 studied NEST economies, the nine that have probably generated endogenous growth have acquired, on average, the higher magnitude of output growth, capital growth, FDI inflows, HDI, as well as expenditure on R&D. This is because these countries have implemented reasonable growth policies, such as encouraging investments from domestic and foreign companies, accumulating human capital, developing national R&D activities, extensively applying high technologies. Specifically, our findings are consistent with the predictions of Romer's endogenous growth theory. [ABSTRACT FROM AUTHOR]

The global COVID-19 pandemic caused various economic contraction in most countries, including all of China's major trading partners. Using a difference-in-differences model, this study examines the impact of the COVID-19 pandemic on China's monthly exports from January 2019 to May 2020. We find strong and robust evidence that China's exports to countries at high risk from the pandemic experienced a larger decline than exports to low-risk countries after the onset of the pandemic, with the prices of exports increasing significantly. Furthermore, the results of a triple differences model show heterogeneous effects across different industries and goods. Chinese industries located upstream in the global value chain are more vulnerable than those located downstream. Industries with high labor and contract intensity (proxies for processing trade) experienced greater declines than other industries. Exports of goods with high import elasticity of substitution experienced higher prices and moderate volume losses due to the pandemic. [ABSTRACT FROM AUTHOR]

Abstract Ten years after the worst financial crisis of the post-war period, Switzerland has established a Too-Big-To-Fail (TBTF) framework. Under this framework, the two large Swiss banks are subject to substantial capital requirements. It is not obvious whether the TBTF capital requirements are sufficient to prevent banks from plunging the country into a financial crisis once again. We estimate the social costs and benefits of higher capital requirements for the two large Swiss banks and derive socially optimal capital ratios from the cost-benefit trade-off. Our results show that Swiss TBTF capital requirements still fall short of socially optimal capital ratios.