Capital-skill complementarity in production implies non-trivial interactions between the availability of human capital and financial constraints. Firms that are constrained in their access to finance hire a lower proportion of skilled workers than do unconstrained firms. Conversely, a lack of human capital increases skilled wages, reducing firms’ desired capital intensity and thus loosening firms’ effective financial constraints. To assess the macroeconomic implications of such firm-level interactions, we build an occupational-choice model with capital-skill complementarity in production, which we calibrate to US data. We vary financial frictions, educational attainment, and total factor productivity across countries, and we quantify how aggregate output, wage inequality, and entrepreneurship are affected by these variations. For aggregate output, the joint effect of both factors is, on average 30 % larger than the sum of the individual effects. Taking the educational attainment of the population as given, in countries with a negligible share of tertiary educated workers and low TFP, financial development has only small effects on aggregate output.
{"title":"Human Capital and Financial Development: Firm-Level Interactions and Macroeconomic Implications","authors":"Lian Allub, Pedro Gomes, Zoë Kuehn","doi":"10.1093/ej/uead098","DOIUrl":"https://doi.org/10.1093/ej/uead098","url":null,"abstract":"Capital-skill complementarity in production implies non-trivial interactions between the availability of human capital and financial constraints. Firms that are constrained in their access to finance hire a lower proportion of skilled workers than do unconstrained firms. Conversely, a lack of human capital increases skilled wages, reducing firms’ desired capital intensity and thus loosening firms’ effective financial constraints. To assess the macroeconomic implications of such firm-level interactions, we build an occupational-choice model with capital-skill complementarity in production, which we calibrate to US data. We vary financial frictions, educational attainment, and total factor productivity across countries, and we quantify how aggregate output, wage inequality, and entrepreneurship are affected by these variations. For aggregate output, the joint effect of both factors is, on average 30 % larger than the sum of the individual effects. Taking the educational attainment of the population as given, in countries with a negligible share of tertiary educated workers and low TFP, financial development has only small effects on aggregate output.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"67 2","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138521488","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
People respond quickly when they have a clear preference and slowly when they are close to indifference. The question is whether others exploit this tendency to infer private information. In two-stage bargaining experiments, we observe that the speed with which buyers reject sellers’ offers decreases with the size of the foregone surplus. This should allow sellers to infer buyers’ values from response times (RT), creating an incentive for buyers to manipulate their RT. We experimentally identify distinct conditions under which subjects do, and do not, exhibit such strategic behaviour. These results provide the first insight into the possible use of RT as a strategic variable.
{"title":"Decision Times Reveal Private Information in Strategic Settings: Evidence from Bargaining Experiments","authors":"Arkady Konovalov, Ian Krajbich","doi":"10.1093/ej/uead055","DOIUrl":"https://doi.org/10.1093/ej/uead055","url":null,"abstract":"People respond quickly when they have a clear preference and slowly when they are close to indifference. The question is whether others exploit this tendency to infer private information. In two-stage bargaining experiments, we observe that the speed with which buyers reject sellers’ offers decreases with the size of the foregone surplus. This should allow sellers to infer buyers’ values from response times (RT), creating an incentive for buyers to manipulate their RT. We experimentally identify distinct conditions under which subjects do, and do not, exhibit such strategic behaviour. These results provide the first insight into the possible use of RT as a strategic variable.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"66 9","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138521489","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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