Lawrence J. Lau

Transcendental Logarithmic Production Frontiers

Focuses on additive and homogeneous production possibility frontiers that have played an important role in formulating statistical tests of the theory of production. Characterization of the class of production possibility frontiers that are homogenous and additive; Representation of the production possibility frontier; Statistical tests of the theory of production. (Из Ebsco)

Reform Without Losers: An Interpretation of China's Dual-Track Approach to Transition

This paper develops a simple model to analyze the dual‐track approach to market liberalization as a mechanism for implementing efficient Pareto‐improving economic reform, that is, reform achieving efficiency without creating losers. The approach, based on the continued enforcement of the existing plan while simultaneously liberalizing the market, can be understood as a method for making implicit lump‐sum transfers to compensate potential losers of the reform. The model highlights the critical roles of enforcement of the plan for achieving Pareto improvement and full liberalization of the market track for achieving efficiency. We examine how the dual‐track approach has worked in product and labor market liberalization in China.

On identifying the degree of competitiveness from industry price and output data

Abstract Under the assumption that the industry inverse demand and cost functions are twice continuously differentiable, the index of competitiveness of the industry λ cannot be identified from data on industry price P and output Q and other exogenous variables z 1 , z 2 alone if and only if the industry inverse demand function P = f ( Q , z 1 ) is separable in z 1 but does not take the special form P = Q -1/ λ r ( z 1 )+ s ( Q ).

Farmer education and farm efficiency: a survey

Development strategies increasingly emphasize agricultural development, employment, and equity; it is therefore important to examine the role of education in light of these new emphases. The purpose of this paper is to synthesize the conclusions of a number of studies of the effect of a farmers educational level and exposure to extension services on his productivity. Eighteen studies conducted in low-income countries provided 37 sets of farm data that allow a statistical estimation of the effect of education. The overall conclusion of this paper is that farm productivity increases as a result of a farmers completing at least 4 additional years of elementary education rather than none. Also, the effects of education were much more likely to be positive in modernizing agricultural environments than in traditional ones.

A characterization of the normalized restricted profit function

Abstract A duality theorem between production functions and normalized restricted profit functions is derived under the assumptions of joint biconvexity and independence of the production possibilities sets. Biconvexity is a natural generalization of the concept of convexity to the case of overall increasing returns which maintains at the same time the conventional property of diminishing marginal rates of transformation (substitution) amongst certain subsets of commodities. Specializing to the twice differentiable, locally strongly convex case, certain identities linking the Hessians of the production function and the normalized restricted profit function are derived. Using these identities, Le Chateliers principle is demonstrated.

The Relationship between Credit and Productivity in Chinese Agriculture: A Microeconomic Model of Disequilibrium

Credit is an important element in agricultural production systems. It allows producers to satisfy the cash needs induced by the production cycle which characterizes agriculture: preparation, planting, cultivation, and harvesting of the crops are typically done over a period of several months in which very little cash revenue is earned, while expenditures on materials, purchased inputs, and consumption must be made in cash. Cash income is received a short time after the harvest. In the absence of credit markets, farmers would have to maintain cash reserves so as to facilitate production and consumption in the next cycle. The availability of credit allows both greater consumption and greater purchased input use and thus increases welfare of the farmers.

The meta-production function approach to technological change in world agriculture☆

Abstract An alternative meta-production function for agriculture is estimated with the cross-section data for 43 countries and three years (1960, 1970 and 1980) constructed and used by Kawagoe, Hayami and Ruttan and Hayami and Ruttan in their studies. By allowing for country-specific efficiency factors and using a flexible functional form – the transcendental logarithmic production function – strikingly different results from those of Kawagoe, Hayami and Ruttan are obtained. In particular, it is found that elasticity of output with respect to machinery is variable and the degree of local returns to scale is not constant and increases with the usage of machinery.

FUNCTIONAL FORMS IN ECONOMETRIC MODEL BUILDING

Publisher Summary This chapter discusses the criteria for the selection of functional forms and compatibility of the criteria for the selection of functional forms. In the discussion of functional forms, examples are drawn largely from the empirical analyses of production and consumer demand, because the restrictions implied by the respective theories on functional forms are richer. Neither economic theory nor available empirical knowledge provides, in general, a sufficiently complete specification of the economic functional relationship to determine its precise algebraic form. Consequently, the econometrician has wide latitude in deciding which one of many possible algebraic functional forms to use in building an econometric model. The chapter illustrates an example of the incompatibility of a global extrapolative domain of applicability and flexibility and an example of the incompatibility of computational facility and factual conformity. An impossibility theorem stating that there does not exist an algebraic functional form for a unit cost function, which has a global extrapolative domain of applicability and satisfies the criteria of flexibility and computational facility, is proved in the chapter.

Profit, Supply, and Factor Demand Functions

The concept of the profit function provides an alternative approach to the analysis of production. First, a brief exposition of the theory of profit function is presented. Then the profit function and the factor demand functions are formulated within the Cobb-Douglas framework. A statiscal test is devised for testing the hypothesis of constant returns to scale in all factors on the profit function. As an application, both the profit and the factor demand function are estimated jointly, using data from Indian agriculture.

Education and economic growth Some cross-sectional evidence from Brazil☆

Abstract Capital, labor, human capital and technical progress are the four principal sources of growth of aggregate real output. Based on data from individual Brazilian states in 1970 and 1980, an aggregate meta-production function relating aggregate real output of each state to capital, labor, average education and time is estimated. It is found that one additional year of average education per person of the labor force increases real output by approximately 20 percent. However, there is also evidence that this large measured effect of average education may be due to the existence of a threshold effect in average education at between three and four years. Of the four sources of growth, technical progress, or equivalently total factor productivity, is the most important, accounting for approximately 40 percent of the growth in Brazilian output in the 1970s; followed by human capital, accounting for approximately 25 percent. Physical capital and labor together account for the remainder.