Deepankar Basu

Son Targeting Fertility Behavior: Some Consequences and Determinants

This article draws out some implications of son targeting fertility behavior and studies its determinants. We demonstrate that such behavior has two notable implications at the aggregate level: (a) girls have a larger number of siblings (sibling effect), and (b) girls are born at relatively earlier parities within families (birth-order effect). Empirically testing for these effects, we find that both are present in many countries in South Asia, Southeast Asia, and North Africa but are absent in the countries of sub-Saharan Africa. Using maximum likelihood estimation, we study the effect of covariates on son targeting fertility behavior in India, a country that displays significant sibling and birth-order effects. We find that income and geographic location of families significantly affect son targeting behavior.

Is There a Tendency for the Rate of Profit to Fall? Econometric Evidence for the U.S. Economy, 1948-2007

The law of the tendential fall in the rate of profit has been at the center of theoretical and empirical debates within Marxian political economy since the publication of volume III of Capital. An important limitation of this literature is the relative paucity of modern econometric investigations of the behavior of the rate of profit. The central objective of this paper is to remedy this lacuna. We investigate the properties of the profit rate series utilizing the methods of time series econometrics. The evidence suggests that the rate of profit is non-stationary. We also specify a test of Marx’s law of the tendential fall in the rate of profit with a novel econometric model that explicitly accounts for the counter-tendencies and their time series properties. We find weak evidence of a long-run downward trend in the general profit rate for the U.S. economy for the period 1948-2007. JEL Codes: B51, C22, E11.

MARX‐BIASED TECHNICAL CHANGE AND THE NEOCLASSICAL VIEW OF INCOME DISTRIBUTION

This paper empirically tests two competing views about capital–labour substitution at the aggregate level in capitalist economies: the classical model with Marx-biased technical change versus the neoclassical model. Following Foley and Michl (1999), the classical viability condition of technical change is used to draw out two different hypotheses about the profit share in national income corresponding to the two competing models. A stochastic version of the viability condition is empirically tested with data from the Extended Penn World Tables 2.1 using a simple cross-country estimation strategy. It is found that the data overwhelmingly rejects the neoclassical theory.

Replacement Versus Historical Cost Profit Rates: What is the Difference? When Does it Matter?

This paper explains the Bureau of Economic Analysis methodology for computing historical cost and replacement cost measures of the net stock of capital in the US economy. It is demonstrated that there exists a threshold rate of inflation in the price of capital goods that keeps the percentage difference between the two capital stock measures constant. Hence, over periods when average inflation in the price index for capital goods is equal to the threshold value, historical cost and replacement cost profit rates would show equal percentage changes; an example of such a period for the US economy is 1946–2010.

Class struggle and economic fluctuations: VAR analysis of the post-war US economy

Building on Marx’s insights in Chapter 25, Volume I of Capital, an augmented version of the cyclical profit squeeze (CPS) theory offers a plausible explanation of macroeconomic fluctuations under capitalism. The pattern of dynamic interactions that emerges from a 3-variable (profit share, unemployment rate and nonresidential fixed investment) vector autoregression estimated with quarterly data for the postwar U.S. economy is consistent with the CPS theory for the regulated (1949Q4--1975Q1) as well as for the neoliberal periods (starting in 1980 or in 1985). Hence, the CPS mechanism seems to be in operation even under neoliberalism.

Profitability and Investment: Evidence from India's Organized Manufacturing Sector

Using a state-industry panel data set at the 3 digit national industrial classification (NIC) level of disaggregation for 19 major Indian states over the period 1983-84 to 2007-08, we analyze the contemporaneous and long run impacts of the rate of profit and its components - profit share, capacity utilization rate, and capacity-capital ration - on investment. Our results show that: (a) the rate of profit has both short and long run positive impacts on investment; (b) the profit share and capacity-capital ration have only long run positive impacts, and the capacity utilization rate has only a contemporaneous positive impact on investment.

Determinants and impacts of subcontracting: evidence from India’s unorganized manufacturing sector

There are two divergent perspectives on the impact of subcontracting on firms in the informal sector. According to the benign view, formal sector firms prefer linkages with relatively modern firms in the informal sector, and subcontracting enables capital accumulation and technological improvement in the latter. According to the exploitation view, formal sector firms extract surplus from stagnant, asset-poor informal sector firms that use cheap family labour in home-based production. However, direct, firm-level evidence on the determinants and impact of subcontracting is thus far lacking in the literature. We apply a modified Heckman selection model to Indian National Sample Survey data on informal manufacturing enterprises (2005–2006). We find that home-based, relatively asset-poor, and female-owned firms are more likely to be in a subcontracting relationship. Further, we perform selectivity-corrected Oaxaca-Blinder Decomposition and calculate treatment effects to show that subcontracting benefits smaller firms, firms in industrially backward states and rural firms; it is harmful for larger firms, firms in industrially advanced states, and urban firms. Our results suggest that the effects of subcontracting are more complex than those predicted by the divergent perspectives. Policy-makers need to engage with this complexity.

QUANTITATIVE EMPIRICAL RESEARCH IN MARXIST POLITICAL ECONOMY: A SELECTIVE REVIEW

This paper surveys quantitative empirical research in some key areas of Marxist political economy. Following an introductory section on the value controversy, the paper surveys quantitative empirical research on the following topics: (a) Marxist national accounts, (b) classical†Marxist theory of relative prices, (c) probabilistic political economy, (d) profitability analysis and (e) classical†Marxian theories of growth and technical change. I end by highlighting two important puzzles in the extant literature.

The Effect of Public Health Expenditure on Infant Mortality: Evidence from a Panel of Indian States, 1983-84 to 2011-12

Abstract Using a panel data set of Indian states between 1983–1984 and 2011–2012, this paper studies the impact of public health expenditure on the infant mortality rate (IMR), after controlling for other relevant covariates like political competition, per capita income, female literacy, and urbanisation. We find that public expenditure on health care reduces the IMR. Our baseline specification shows that an increase in public health expenditure by 1 per cent of state-level net domestic product is associated with a reduction in the IMR by about nine infant deaths per 1000 live births. We also find that political competition, female literacy and urbanisation reduce the IMR.

Social Hierarchies and Public Distribution of Food in Rural India

Abstract In this paper, we develop a simple model to show that consumption of PDS food grains is significantly different between rich and poor households in states in which the PDS functions relatively well; in states in which the PDS is non-functional, the difference is not significant. Using household-level data from three recent thick rounds of the consumption expenditure survey (2004–2005, 2009–2010, and 2011–2012), we find evidence in support of the predictions from the model. This suggests that one way to make the PDS functional is to make it more accessible to poor and underprivileged households.