Since the eastern enlargement of the European Union (EU), the movement from east to west has become the main driver of intra-EU mobility. Recently, the free movement of labour has been contested not only in the debates around Brexit, but also in other receiving countries. It is not on the political agenda, but several studies have highlighted the economic and demographic effects of massive emigration in eastern EU Member States. More recently, the COVID-19 pandemic has disrupted the functioning of free movement. Economic integration theory assumes that migration continues until wages are equalized in the receiving and sending countries. This paper analyses the perception of intra-EU mobility in the literature and empirically tests whether there is a relationship between the dynamism of income growth in the receiving (Germany, Austria and Spain) and sending (Central and Eastern European) countries, and the dynamism of migration. The empirical results do not support the neoclassical assumption that an equalization mechanism can function, even in the long run. To cope with recent challenges, this paper argues that free movement should not be considered as an element of a spontaneous market mechanism, but as an economic-political product, based on a constitutional order.
The idea that socialism depends upon cooperation, as capitalism depends on competition, has always been inherent in the conception of socialism. Yet precise models of market socialism – ones, that is, that are sufficiently articulated so as to be able to discuss and compute an equilibrium in the economy – do not model cooperation in production, or more generally, in economic behavior. We introduce a Kantian optimization protocol, which, in contrast to Nash optimization, models how individuals can cooperate in labor and/or investment decisions. We prove that the ‘cooperative equilibrium’, thus modeled, is Pareto efficient whenever, in addition to receiving wages and rents, profits are distributed not to shareholders, but to workers and investors in proportion to their contributions to the firm. Pareto efficiency is achieved when the firms entire output is distributed to factor owners and shareholders do not exist.
The gains in economic welfare achieved over the last several generations depend on social as much as they do on technological innovations. Although much of the technological and commercial progress in question was driven mainly by self-interest and competition, effective functioning of governmental and legal systems and provision of public goods were crucial to social and economic progress, and these depended partly on social norms and motivations. Research suggests that the strengthening in recent centuries of cooperative dispositions embedded in human social psychology by long run evolutionary forces has played an important part in the escape of an increasing share of humanity from poverty. Behavioral economics and research on economic history, institutions and culture are shedding light on these connections and may provide guidance helpful to preserving late 20th century gains in the now rapidly shifting landscape.
The focus of debate on capital theory still is on the macroeconomic aggregate production function, almost seventy years after Joan Robinson attacked this concept. It has turned out that reswitching is rare in large systems. Reswitching and reverse capital deepening once were the most effective arguments against the production function. Later it was shown that an approximate surrogate production function could be constructed, using the approach of random matrices. This seemed to weaken the critique, but a new one has emerged, which shows that the number of effective techniques on the wage curve is small and that the possibilities of substitution between capital and labour are quite restricted in the relevant range or profit. This paper reconstructs the path by which the new results were arrived at and presents a new variant of the proof of zero substitution.
The complex co-evolution of economics as a scientific discipline is accompanied by two dilemmas which are reflecting ambivalent effects of two ideologies: economism and scientism. Economics may go wrong when certain tendencies occasioned by those inevitable “ideological” influences are ignored. Pertinent problems include pseudo-rationalist conceptions of policy advice and the failure to deal with the limited status of partial analysis and abstractive dichotomies (notably allocation – distribution), the status of core concepts such as scarcity, instrumental rationality, exchange, and contract, as well as the related abstraction from power, distribution, and human sociality relevant for non-contractual interaction in various spheres of social life, including the market economy.
The paper begins with a brief reminder of the origin of economic sociology. It then surveys research by economic sociologists from the 1980s to the present, with a focus on their relation to political economy, which ranges from close to arm's length. Finally, beyond any differences between economic theory and economic sociology, the paper considers how both approaches can be connected in the socio-historical and economic study of economic inequalities by Thomas Piketty, and the use of matching markets by Alvin Roth.
Conventional wisdom has it that Marxian value theory, and labour values themselves, are logically inconsistent, theoretically shaky, and empirically irrelevant. In this paper, we discuss recent research showing that this conclusion is not warranted. While past debates have definitively proved that labour values, or employment multipliers, cannot be used to explain equilibrium prices, this does not mean that a sound, empirically oriented Marxian approach cannot be built which assigns a central role to labour values. To be specific, we argue that they can be used to understand certain fundamental laws of capitalist economies – in particular the relation between profitability, technical progress, and accumulation – and also to construct normatively interesting indices capturing certain inequalities in well-being freedom.
Households supply the workforce for the modern economy, increasingly based on information and communication technology (IT). The access of households to e-devices and e-channels has been continuously growing in the last two decades. The aim of the study is to reflect these theoretical concepts with data-based, econometric causality analysis. Specifically, this study investigates whether the digitalization of households is a factor in their macroeconomic and behavioural indicators. In other words, does households' access to digital devices and channels determine rates of employment, productivity (TFP), level of savings, disposable income, per capita GDP or the growth ratio of GDP, and even such institutional indicators as political stability? The methodology employed is panel Granger causality analysis and Dumitrescu-Hurlin test, and the regional scope is the EU. Causality is tested between the households' digitalization and their macroeconomic, consumer behaviour or institutional indicators using panel Granger causality tests.
Using annual sectoral data for Hungary and Poland covering the period of 2005–2016, this paper assesses the impact of credit market characteristics on labor productivity in manufacturing. Apart from the amount of loans extended to non-financial corporations, which has been extensively studied in the literature, it focuses on credit market stability and tightness. The main results are that the volatility of credit originating from the supply side of the market has a negative influence on labor productivity, while credit market tightness is insignificant. There is no robust evidence that the stock of credit is a critical productivity determinant.