Serge Svizzero

Stability and Cycles in a Cobweb Model with Heterogeneous Expectations

We investigate the dynamics of a cobweb model with heterogeneous beliefs, generalizing the example of Brock and Hommes (1997). We examine situations where the agents form expectations by using either rational expectations, or a type of adaptive expectations with limited memory defined from the last two prices. We specify conditions that generate cycles. These conditions depend on a set of factors that includes the intensity of switching between beliefs and the adaption parameter. We show that both Flip bifurcation and Neimark-Sacker bifurcation can occur as primary bifurcation when the steady state is unstable.

Income inequality between skilled individuals

It is widely agreed that income inequality has increased in OECD countries over the past two decades. Most of the debate has focused on the distinction between skilled and unskilled workers. However inequality increased not only among those with different observable traits but also within groups of workers with the same characteristics such as gender, race, education and experience. This poses a challenge for theories that try to explain the rise in overall earnings inequality. Indeed, is income inequality within groups explained by the same reasons that have led to income inequality between groups? It appears that some reasons are specific to inequality within groups. For instance, greater access to education has led to some confusion about the standard associated with the same educational level. Consequently, innate ability plays an increasing part in the determination of workers’ rewards. Similarly, the reduction of the size of the public sector may have contributed to the rise of the variability of the demand for skills. However, the central reason – innovation, notably the introduction of new technologies – is common to both types of inequality but it acts on within‐group income inequality through specific channels. Among the latter are the role of innate ability, the shift toward a decentralised wage determination system, and the changes of the demand for skills. Therefore, the explanations of within‐group inequality are complementary to the ones associated with between‐group inequality and thus help to explain the rise in overall earnings inequality.

Theories about the Commencement of Agriculture in Prehistoric Societies: A Critical Evaluation

The commencement of agriculture in the Holocene era is usually seen as heralding the beginning of a chain of events that eventually resulted in the Industrial Revolution and in modern economic development. The purpose of this paper is to outline and critically review theories about why and how agriculture first began. It also classifies these theories according to whether they are based on agriculture’s development as a response to food deprivation, to a food surplus, or neither of these factors. Because agriculture began independently in several different geographical centres, it seems unlikely that the switch of early societies from hunting and gathering to agriculture was the result of the same cause in all of these locations. Moreover, the paper provides some new suggestions as to why hunters and gatherers were motivated to commence or increase their dependence on agriculture in some locations. Views about the role of natural resources and institutions in the development of agriculture are also discussed.

Reconciling Globalisation and Technological Change: Growing Income Inequalities and Remedial Policies

Since the mid-1970s wage inequality has increased sharply in OECD countries. Among the factors singled out by economists as possible major contributors to this development are economic globalisation processes and skill-biased technological change. Although these are most commonly considered as independent influences, the present authors argue, after critically outlining views about these factors, that strong interdependence exists between them. The article then examines potential policy responses to this growing inequality.

The long-term decline in terms of trade and the neolithisation of Northern Europe

While agriculture spread quite rapidly from the Levant to most parts of Europe during the sixth millennium, its adoption was delayed to the fourth millennium in Northern Europe, an area inhabited by complex hunter-gatherers (HGs) – mainly the Ertebølle culture. This hiatus leads us to reject diffusion by migration or acculturation. It favours integrationist models of contact between foragers and farmers and attributes the shift to agriculture to social competition between HGs. We provide an alternative explanation of this shift, based on an economic mechanism related to trade between foragers and farmers. We demonstrate that the terms of trade of raw materials extracted and sold by foragers have a tendency to decline in the long term in relation to the food resources produced and sold by farmers. Neolithisation of Northern Europe can therefore be viewed as the outcome of a long-term process based on trade in which HGs voluntarily get involved without forecasting that it will, in the end, constrain most of them to give up their way of life. Such an explanation is consistent with the long period of contact between foragers and farmers provided by archaeological records and recent palaeogenetic studies.

Economic evolution, diversity of societies and stages of economic development: A critique of theories applied to hunters and gatherers and their successors

Abstract Theories of the economic evolution of societies and their diversity are critically examined, paying particular attention to the evolution of hunter-gatherer societies. An interdisciplinary approach drawing on anthropology and economics is adopted. Currently, three main stereotypes of the nature of hunter-gatherer societies exist. While these indicate that they were diverse, they fail to capture the full extent of their diversity. It is argued that this diversity increased with the passage of time and was shaped by the varied local eco-geographic conditions in which these societies evolved. This raises the question of whether this development had the same basis as speciation in the biological theory of natural selection. This is discussed and then particular attention is given to Adam Smith’s vision of the economic evolution of human societies. In conclusion, it is hypothesized that the evolutionary path of modern economies and societies has diverged from that of prehistoric societies—they have become less diverse. Modern societies may also have become more ultrasocial, a process which accelerated following the commencement of agriculture.

INEQUALITY AND WEALTH CREATION IN ANCIENT HISTORY: MALTHUS' THEORY RECONSIDERED

The main purpose of this paper is to propose the hypothesis that inequality was essential for the sustainability and ‘development’ of early agriculturally based societies that developed in Prehistory and Ancient History. This was so for varied reasons: there was a need for some members of societies - the dominant class also called the elite - to escape from the Malthusian trap. In most cases, agriculture produced a bigger economic surplus eventually. Managerial problems – such as the ones associated with storage, the division of labor, irrigation, trade –being part of the consequences of the Neolithic revolution, created pressures to develop more centralized political organizations, a process which led later to the formation of the early states. This process allowed the appearance of powerful local chiefs who changed the nature of their original communities with new forms of social organization, in which one individual and his enlarged family - transformed into a ruling elite - received the benefits of the labor of a large number of serfs belonging to less-favored communities in neighboring areas. Although the surplus appropriated by the elite was used in specific ways – consumption, investments and expenditures on armed forces - it increased the power and wealth of these societies, albeit a solution involving unequally distributed wealth. While this is not the only factor in the growing dominance of agriculturally based societies, it is one of main ones as is evidenced by considering six early civilizations resulting from the Neolithic revolution. This result involves an important modification of Malthus’ theory. However, inequality - though necessary - was not a sufficient condition for the sustainability and economic development of these early societies.

GLOBALIZATION, SOCIAL WELFARE, PUBLIC POLICY AND LABOR INEQUALITIES

Income inequality has increased sharply in higher income and in many lower income countries. Theories attributing this to bifurcation of labor markets in higher income countries are examined. Some theorists attribute this bifurcation primarily to technical change with influence from globalization. Others take an opposite viewpoint. A contrasting view presented here is that globalization is strongly linked with technological change. More significantly even if globalization increases economic efficiency and growth in globalizing countries, it can raise income inequality and reduce social welfare in such countries. International fiscal competitiveness may, it is argued, contribute to income inequality and make all nations worse off. Trends in public social expenditure and in taxation receipts in higher income countries, including Singapore, are examined to determine the extent of empirical support for the theory.

The Ability in Antiquity of Some Agrarian Societies to Avoid the Malthusian Trap and Develop

Abstract This article presents a simple economic theory (and associated evidence) to explain how some early agriculturally based preindustrial societies developed despite most of their population being subject to Malthusian dynamics. Their development depended on a dominant class limiting its membership and extracting an economic surplus which it could use (among other things) to accumulate capital and advance knowledge thereby adding to this surplus. The evolution of urban centers facilitated this development process. Extraction of the agricultural surplus prevented increased population from dissipating this surplus and curtailing development. Examples are given of early economically extractive and non-inclusive societies which were long lasting. Their persistence is at odds with the views of some contemporary development economists about the development prospects of these types of societies.

Economic Management of Minoan and Mycenaean States and Their Development

During the Late Bronze Age, Aegean societies (Minoan and Mycenaean) exhibited strong economic development. This resulted from the implementation by the elite of a centralized and hierarchical administrative and social system in order to manage most economic activities. In these palatial economies, the elite organized the extraction of the surplus, therefore avoiding the Malthusian trap. They also organized the division of labor and the specialization in production and the distribution of the collected surplus by means of staple and wealth finance systems, the latter being based on the production of luxury items controlled by the palace. Trade was also encouraged and this strengthened palatial power.