Omer Moav

Ability-Biased Technological Transition, Wage Inequality, and Economic Growth

This paper develops a growth model in which the endogenous evolution of technological change and wage inequality is consistent with the observed pattern in the US and several other countries in the last two centuries. The evolution of the economy and its impact on wage inequality is based upon three central elements that appear consistent with empirical evidence.

Intergenerational Mobility and the Process of Development

This paper offers an explanation for some evidence that intergenerational earnings mobility is higher in more developed economies and that mobility is positively correlated with wage equality. In the model mobility promotes economic growth via its effect on the accumulation and allocation of human capital. Growth influences mobility via its effect on incentives to acquire education and its effect on liquidity constraints upon such acquisition. In the process of development mobility increases and the distribution of education becomes better correlated with ability. Redistributive policy has a negative effect on growth in developed economies and a positive effect in developing economies.

Precautionary Demand for Education, Inequality, and Technological Progress

This paper offers an explanation for the evolution of wage inequality within and between industries and education groups over the past several decades. The model is based on the disproportionate depreciation of technology-specific skills versus general skills due to technological progress, which occurs randomly across sectors. Consistent with empirical evidence, the model predicts that increasing randomness is the primary source of inequality growth within uneducated workers, whereas inequality growth within educated workers is determined more by changes in the composition and return to ability. Increasing randomness generates a “precautionary” demand for education, which we show empirically to be significant.

Das Human Kapital

This Paper hypothesizes that the demise of the 19th centurys European class structure reflects a deliberate transformation of society orchestrated by the Capitalists. Contrary to conventional wisdom, it argues that the demise of this class structure has been in part an outcome of a cooperative rather than purely a divisive process. The research suggests that the transition from this class structure may be viewed as the outcome of an optimal reaction process of the Capitalists to the increasing importance of human capital in sustaining their profit rates. The Paper argues that the process of capital accumulation has gradually intensified the relative scarcity of labour and has generated an incentive to augment labour via human capital accumulation. Due to the complementarity between physical and human capital in production, the Capitalists were among the prime beneficiaries of the potential accumulation of human capital by the masses. They had therefore the incentive to financially support public education that would sustain their profit rates and would improve their economic well being, although it would ultimately undermine their dynastys position in the social ladder.

Income Distribution and Macroeconomics: The Persistence of Inequality in a Convex Technology Framework

I show that non-convexities in technology, assumed in the capital market imperfection literature on the relationship between income distribution and economic development, can be replaced by an assumption that the bequest function is convex with respect to income.

Natural Selection and the Evolution of Life Expectancy

This research advances an evolutionary growth theory that captures the pattern of life expectancy in the process of development, shedding new light on the sources of the remarkable rise in life expectancy since the Agricultural Revolution. The theory suggests that social, economic and environmental changes that were associated with the transition from hunter-gatherer tribes to sedentary agricultural communities and ultimately to urban societies affected the nature of the environmental hazards confronted by the human population, triggering an evolutionary process that had a significant impact on the time path of human longevity.

Saving Rates and Poverty: The Role of Conspicuous Consumption and Human Capital

Poor families around the world spend a large fraction of their income consuming goods that do not appear to alleviate poverty, while saving at low rates. We suggest that individuals care about economic status and interpret this behaviour as conspicuous consumption intended to provide a signal about unobserved income. We show that if human capital is observable and correlated with income, then a signalling equilibrium in which poor individuals tend to spend a large fraction of their income on conspicuous consumption can emerge. This equilibrium gives rise to an increasing marginal propensity to save that might generate a poverty trap.

The Neolithic Origins of Contemporary Variations in Life Expectancy

This research advances an evolutionary theory and provides empirical evidence that shed new light on the origins of contemporary differences in life expectancy across countries. The theory suggests that social, economic and environmental changes that were associated with the Neolithic Revolution affected the nature of the environmental hazards confronted by the human population, triggering an evolutionary process that had a significant impact on human longevity. The empirical analysis shows that a significant portion of contemporary variations in life expectancy across countries can be traced to the differences in the time passed since the ancestors of the population of each country experienced the Neolithic Revolution.

Transparency, Appropriability and the Early State

We propose a general theory that explains the extent of the state and accounts for related institutions as byproducts of the states extractive technology. We posit further that this extractive technology is determined by the transparency of the production technology. This theory is applied to examine two principal phases in the evolution of the early state. First, we argue that the common explanation of the emergence of the state as a consequence of the availability of food surplus due to the Neolithic Revolution is flawed, since it ignores Malthusian considerations. In contrast, we suggest that what led to the emergence of the state was a transformation of the tax technology that was induced by the greater transparency of the new farming technology. We then apply our theory to explain key institutional features that distinguished ancient Egypt from ancient Mesopotamia, and, in particular, to explain their different land tenure regimes.

The Quality of Information and Incentives for Effort

We study the relationship between the precision of information about the performance of an agent in a market, and the incentives this agent has for exerting effort to produce high quality. We show that this relationship can be nonmonotonic. There exists an efficient plausible equilibrium that induces a threshold beyond which any further improvement in the precision of information weakens the agents incentive to produce high quality. Accordingly, both very accurate and very inaccurate signals about the agents performance may destroy its incentive to exert effort. A few applications of this result are discussed.