Now showing 1 - 10 of 11
  • Publication
    Brain drain and distance to frontier
    (Tilburg University. Center for Economic Research, 2006-06) ;
    In this paper we investigate the effects of emigration on growth in developing countries. We present a model in which productivity increases either through imitation or innovation, and both activities use the same types of human capital as inputs, albeit with different intensities. Heterogenous agents accumulate human capital responding to economic incentives, and might be able to emigrate. When no migration of skilled workers is allowed, backwards countries converge to the technological frontier. The possibility of migration, however, distorts the optimal accumulation of human capital and slows down, or even hinders, development. This effect is stronger the farther away a developing country is from the technological frontier. Thus, technologically backward countries are more likely to suffer from a negative brain drain effect. Among these countries, those which implement appropriate policies, subsidizing the accumulation of the most useful type of human capital, improve their growth performance. They converge faster, and possibly to a higher productivity level than countries where such policies are neglected.
  • Publication
    Hicks meets Hotelling : the direction of technical change in capital–resource economies
    (Cambridge University Press, 2008-12) ;
    We analyze a two-sector growth model with directed technical change where man-made capital and exhaustible resources are essential for production. The relative profitability of factor-specific innovations endogenously determines whether technical progress will be capital- or resource-augmenting. We show that any balanced growth equilibrium features purely resource-augmenting technical change. This result is compatible with alternative specifications of preferences and innovation technologies, as it hinges on the interplay between productive efficiency in the final sector, and the Hotelling rule characterizing the efficient depletion path for the exhaustible resource. Our result provides sound micro-foundations for the broad class of models of exogenous/endogenous growth where resource-augmenting progress is required to sustain consumption in the long run, contradicting the view that these models are conceptually biased in favor of sustainability.
      604Scopus© Citations 41
  • Publication
    Announced climate policy and the order of resource use
    (Irish Economic Association, 2009-04) ;
    In this paper we study the optimal extraction of two fossil fuels when the economy faces an announced constraint on CO2 emissions a la Kyoto. When high- and low-carbon resources are perfect substitutes, announcement of climate policy induces substitution towards the high-carbon input whenever this resource is abundant. Emissions can then increase at the instant of announcement when the future constraint is not too tight, and the period between announcement and implementation of climate policy is long enough. We present data that suggest that this effect might have occurred in the German electricity industry after announcement of the European Union Emissions Trading Scheme.
  • Publication
    Carbon leakage revisited : unilateral climate policy with directed technical change
    (Tilburg University. Center for Economic Research, 2005-05) ;
    The increase in carbon dioxide emissions by some countries in reaction to an emission reduction by countries with climate policy (carbon leakage) is seen as a serious threat to unilateral climate policy. Using a two-country model where only one of the countries enforces an exogenous cap on emissions, this paper analyzes the effect of technical change that can be directed towards the clean or dirty input, on carbon leakage. We show that, as long as technical change cannot be directed, there will always be carbon leakage through the standard terms-of-trade effect. However, once we allow for directed technical change, a counterbalancing induced technology effect arises and carbon leakage will generally be lower. Moreover, we show that when the relative demand for energy is sufficiently elastic, carbon leakage may be negative: the technology effect induces the unconstrained region to voluntarily reduce its own emissions.
  • Publication
    Hiring incentives and labour force participation in Italy
    (Bocconi University, 2004-11) ; ;
    A long-standing economic tradition maintains that labour supply reacts to market tightness; its sensitivity to job quality has received less attention. If firms hire workers with both temporary and open-ended contracts, does participation increase when more permanent jobs are available? We investigate this relationship within a policy evaluation framework; in particular, we examine how labour supply reacted in Italy to a recent subsidy in favour of open-ended contracts. This subsidy increased labour force participation by 1.4% in 2001 and 2.1% in 2002. This increase was concentrated on males aged 35-54, with a low or at most a secondary schooling level.
  • Publication
    Transaction costs of firms in the EU ETS
    (Irish Economic Association, 2009-04) ; ;
    This paper is a first attempt to empirically measure transaction costs – a composite of administrative costs and trading costs – of firms in the European Union's CO2 Emissions Trading Scheme (EU ETS) during its trial phase (2005-2007). This analysis provides some evidence that transaction costs of firms were mainly of administrative nature. There are also remarkable economies of scale, with the costs per tonne of CO2 lower for participants with larger allocation. The composition of these costs diverges too as the share of early implementation costs tend to be significantly larger emitters. Trading transaction costs were not significant and, hence, trade prohibitive and other factors – self-sufficiency in compliance and low allowance price – played a major role in deciding whether to trade or not during the trial trading period.
  • Publication
    Abatement and allocation in the pilot phase of the EU ETS
    (Irish Economic Association, 2009-04) ; ;
    We use historical industrial emissions data to assess the level of abatement and overallocation that took place across European countries during the pilot phase (2005-2007) of the European Union Emission Trading Scheme. Using a dynamic panel data model, we estimate the counterfactual (business-as-usual) emissions scenario for EU member states. Comparing this baseline to allocated and verified emissions, we conclude that both overallocation and abatement occurred, along with under-allocation and emissions inflation. Over the three trading years of the pilot phase we find over-allocation of approximately 376 million EUAs (6%) and total abatement at the member state level of 107 Mt CO2 (1.8%). However, due to over-allocation and possible uncertainty about future allocation methodologies, we calculate that emissions inflation of approximately 119 Mt CO2 (2%) occurred, resulting in emissions over the pilot phase being approximately 12 Mt CO2 (0.2%) higher than they would have been in the absence of the EU ETS.
  • Publication
    Trade pessimists vs technology optimists : induced technical change and pollution havens
    (Berkeley Electronic Press, 2004) ;
    Our paper focuses on the role of endogenous technology and technology spillovers in explaining cross country differences in pollution and the pollution haven effect of international trade. In our North-South trade model, technology is endogenously developed by the North and imitated by the South. Environmental regulators choose national environmental policies by trading off the income gains and the disutility from a rise in pollution. Differences in environmental stringency are entirely driven by differences in investment opportunities and distortions that follow from the difference in intellectual property rights protection. We show that without goods trade and in the absence of technology subsidies, the North imposes more stringent environmental regulation than the South. When opening up to trade, the South experiences a rise in prices for pollution-intensive goods and tends to raise pollution as in a standard trade model. Induced technical change, however, may reverse this pollution haven effect.