Samuel de Abreu Pessôa

The Evolution of International Output Differences (1960-2000): From Factors to Productivity

This article presents a group of exercises of level and growth decomposition of output per worker using cross-country data from 1960 to 2000. It is shown that at least until 1975 factors of production (capital and education) were the main source of output dispersion across economies and that productivity variance was considerably smaller than in later years. Only after this date did the prominence of productivity start to show up in the data, as the majority of the literature has found. The growth decomposition exercises showed that the reversal of relative importance of productivity vis-a-vis factors is explained by the very good (bad) performance of productivity of fast- (slow-) growing economies. Although growth in the period, is on average, is mostly due to factor accumulation, its variance is explained by productivity.

On the Evolution of Total Factor Productivity in Latin America

Because of several policy distortions, including import‐substitution industrialization, widespread government intervention, and both domestic and international competitive barriers, there has been a general presumption that Latin America has been much less productive than the leading economies in the last decades. In this paper we show, however, that until the late 1970s Latin American countries had high productivity levels relative to the United States. It is only after the late 1970s that we observe a fast decrease of relative total factor productivity (TFP) in Latin America. We also show that the inclusion of human capital in the production function makes a crucial difference in the TFP calculations for Latin America.

Inada conditions imply that production function must be asymptotically Cobb-Douglas

We show that every twice-continuously differentiable and strictly concave function f : R+ → R+ can be bracketed between two C.E.S. functions at each open interval. In particular, for the Inada conditions to hold, a production function must be asymptotically Cobb-Douglas.

The Effects of Longevity and Distortions on Education and Retirement

This article studies the impact of longevity and taxation on life-cycle decisions and long run income. Individuals allocate optimally their total lifetime between education, working and retirement. They also decide at each moment how much to save or consume out of their income, and, after entering the labor market, how to divide their time between labor and leisure. The model incorporates experience-earnings profiles and return to education function that follows evidence from the labor literature. In this setup increases in longevity raises the investment in education - time in school - and retirement. The model is calibrated to the U.S. and is able to reproduce observed schooling trends of the last century. It also reproduces the increase in retirement, as the evidence shows. Simulations show that a country equal to the U.S. but with 20% smaller longevity will be 25% poorer, mostly because of the impact of life expectancy on human capital formation and retirement. In this economy labor taxes has a strong impact on the per capita income, as it decreases labor effort, time at school and retirement age, in addition to the general equilibrium impact over physical capital. (Copyright: Elsevier)

The long run economic impact of AIDS

This paper studies the long-run impact of HIV/AIDS on per capita income and education. We introduce a channel from HIV/AIDS to long-run income that has been overlooked by the literature, the reduction of the incentives to study due to shorter expected longevity. We work with a continuous time overlapping generations mo deI in which life cycle features of savings and education decision play key roles. The simulations predict that the most affected countries in Sub-Saharan Africa will be in the future, on average, a quarter poorer than they would be without AIDS, due only to the direct (human capital reduction) and indirect (decline in savings and investment) effects of life-expectancy reductions. Schooling will decline on average by half. These findings are well above previous results in the literature and indicate that, as pessimistic as they may be, at least in economic terms the worst could be yet to come.

Evolução da Produtividade Total dos Fatores na Economia Brasileira com Ênfase no Capital Humano – 1992-2007

This paper investigates the evolution of total factor productivity (TFP) for the Brazilian economy between 1992 and 2007, using a measure of human capital based on microeconomic data. One of the main contributions of this paper is to construct a specific measure of human capital that allows one to quantify both the evolution of the participation of the different levels of education and experience of the labor force in total hours worked and the variation of its productivity over time. The results show that TFP increased only 11.3% between 1992 and 2007 and accounted for about 22.9% of the growth rate of GDP in the period. Another important result is that the human capital of the labor force in Brazil was almost stationary during the period. This was due to the fact that the increase in the participation component of the labor force was compensated by the reduction in the productivity component. Finally, it is shown that the increase in the supply of more educated workers explains the decline in human capital compensation. In particular, the lack of a better educated labor force does not appear to have imposed a restriction to economic growth, since its supply increased faster than the demand.

On the Tyranny of Numbers: East Asian Miracles in World Perspective

In a widely cited paper, Young (1995) showed that the East Asian miracles (Hong Kong, Korea, Singapore and Taiwan) grew mostly through input accumulation during the period 1966-1990. Using data for 83 countries taken from the Penn World Table, version 6.1, and Barro and Lee (2000), we use a common methodology in order to compare the growth performance of the East Asian miracles with the rest of the world. We find that, even though the TFP growth rates of the four East Asian miracles were not remarkable in absolute values, they were very high in relative terms. We argue that, since Young (1995) focused only on the four East Asian miracles, he did not notice that 1966-1990 was a period of particularly low TFP growth and particularly high factor accumulation in the world. Despite the fact that they had high rates of physical capital accumulation, the distinguishing feature of these miracles was their relative productivity growth performance.

Elasticity of Substitution Between Capital and Labor and its Applications to Growth and Development

This paper estimates the elasticity of substitution of an aggregate production function. The estimating equation is derived from the steady state of a neoclassical growth model. The data comes from the PWT in which different countries face different relative prices of the investment good and exhibit different investment-output ratios. Then, taking advantage of this variation we estimate the long-run elasticity of substitution. Using various estimation techniques, we find that the elasticity of substitution is 0.7, which is lower than the elasticity, 1, that is traditionally used in macro-development exercises. We show that this lower elasticity reinforces the power of the neoclassical model to explain income differences across countries as coming from differential distortions.

Rent‐Seeking and Capital Accumulation

A general model incorporating rent‐seeking activities in the standard neoclassical model of capital accumulation is presented. The welfare of the representative agent is negatively affected by the efficiency of rent‐seeking activities. Although intuitive, this result is not obvious because long‐run income can be positively affected by more efficient rent‐seeking activities. The model is used to provide explanations for some recent experiences in developing countries, including the relative poor performance of economies that experience a move to a more decentralized system and the observed path of total factor productivity (TFP) in countries like Ireland and Venezuela.

THE IMPACT OF AIDS ON INCOME AND HUMAN CAPITAL

This paper studies the impact of HIV/AIDS on per capita income and education. It explores two channels on how HIV/AIDS affects income that have not been sufficiently stressed by previous literature: the reduction of the incentives to stay in school due to shorter expected longevity and the reduction in productivity of experienced workers. In the model, individuals live for three periods, may get infected in the second period, and with some probability die of AIDS before reaching the third period of their lives. Parents care for the welfare of the future generations so that they will maximize lifetime utility of their dynasty. The simulations predict that the most affected countries in Sub-Saharan Africa in the future will be, on average, 30% poorer than they would be without AIDS. Schooling will decline in some cases by 40%. These figures are dramatically reduced with widespread medical treatment, as it increases the survival probability and productivity of infected individuals.