Running / Economy / SPECIAL ISSUE ARTICLE

Manufacturing capital utilisation, firm dynamics and wage inequality

Posted On: Sep 23, 2021   |   Posted By: The World Economy

Abstract
This paper examines the short- and long-run effects of manufacturing capital utilisation on income distribution and social welfare of an economy. A rise in manufacturing capital utilisation lowers the effective cost of capital. This increases the demand for capital in the urban sector, which raises firm output and profitability but reduces the availability of capital in the rural sector. Unskilled wage is lowered. Thus, a rise in manufacturing capital utilisation increases income inequality in the short run. In the long run, due to the firm-entry effect, a rise in manufacturing capital utilisation further exacerbates the inequality situation. Empirical analysis confirms the theoretical findings. In particular, a one per cent increase in manufacturing capital utilisation leads to about 0.58% increase in income inequality, of which the contribution from the firm-entry effect is about 28%.

Continue reading ...

 






The last Posts from The World Economy



FHP: 77-year-old bicyclist killed after being hit from behind by car in Oviedo

FHP: 77-year-old bicyclist killed after being hit from behind by car in Oviedo

A bicyclist is dead after being hit from behind by a car in Oviedo Saturday morning. Read more ...

Silver Alert declared for missing 82-year-old Indiana man

Silver Alert declared for missing 82-year-old Indiana man

The Huntingburg Police Department is investigating the disappearance of Raymond Underwood, an 82-year-old white male, 5 feet 11 inches tall, 185 pounds, gray hair with brown... Read more ...

DOC says Linn County inmate escaped work release

DOC says Linn County inmate escaped work release

Anyone with information about Leo Alan Ray's locations should call police. Read more ...

What's the difference between heat stroke and heat exhaustion?

What's the difference between heat stroke and heat exhaustion?

Stay hydrated and stay in cool areas. Read more ...

Catherine Oxenberg feared daughter had suicide pact with NXIVM sex cult

Catherine Oxenberg feared daughter had suicide pact with NXIVM sex cult

"Dynasty" actress Catherine Oxenberg reveals how she wrested her daughter India away from the clutches of Keith Raniere's sex slave group NXIVM. Read more ...

Biden spending over $2B to halt border wall construction amid migrant crisis

Biden spending over $2B to halt border wall construction amid migrant crisis

A GOP report issued found that at least 20 percent of the $10 billion received by the Pentagon for border wall construction has been spent on guarding construction sides and... Read more ...

Conservative talk show host Larry Elder leads in crowded California guv...

Conservative talk show host Larry Elder leads in crowded California guv recall race

Larry Elder polled at 16 percent while Caitlyn Jenner has 4 percent of backers. While Gov. Gavin Newsom still has 48 percent of support, 43 percent of people polled said they'd... Read more ...

At march for slain National Guard member, family cries out for justice

The family of slain 19-year-old Chrys Carvajal took to the streets Saturday, chanting and asking the community to come forward with tips on who fatally shot the National Guard... Read more ...

No bail for man accused of killing witness in a murder case

A West Humboldt Park man accused of killing a witness set to testify in a murder case was denied bail during a hearing broadcast on You Tube /on/ Saturday. Read more ...

Baltimore firefighter undergoes surgery after falling through floor, union says

The cause of the Penn North fire is under investigation, the fire department said. Read more ...