Tag: economic growth

INCREASING RETURNS IN A MODEL WITH CREATIVE AND PHYSICAL CAPITAL: DOES A BALANCED GROWTH PATH EXIST?

Amitrajeet A. BATABYAL

Department of Economics, Rochester Institute of Technology, 92 Lomb Memorial Drive, Rochester, NY 14623-5604, USA.
aabgsh@rit.edu

Abstract

In this note we study aspects of economic growth in a region that produces a final consumption good with creative and physical capital. This consumption good is manufactured with a production function that exhibits increasing returns to scale. Our analysis leads to three results. First, we compute the growth rate of creative capital in our regional economy. Second, we show that despite the presence of increasing returns, the regional economy under study converges to a balanced growth path (BGP). Finally, we compute the growth rates of physical capital and output on the BGP.

Keywords: Balanced Growth Path, Creative Capital, Creative Region, Economic Growth, Increasing Returns

JEL classification: R11, D20
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LABOR ABSORPTION UNDER MINIMUM WAGE POLICY IN INDONESIA

Nur FERIYANTO

Department of Economics, Universitas Islam Indonesia
Condong Catur, Depok, Sleman, Yogyakarta, Indonesia, 55283, Phone number: +62811282632
nurferiyanto@yahoo.com

Jaka SRIYANA

Department of Economics, Universitas Islam Indonesia.
Condong Catur, Depok, Sleman, Yogyakarta, Indonesia, 55283, Phone number: +628328034715
jakasriyana@yahoo.com
(Corresponding author)

Abstract

This study analyzes the impact minimum wage policy and some economic factors on labor absorption in Indonesia. For this purpose, this research used provincial panel data for the period of 2006 to 2013. The study reveals that minimum wage policy across provinces has created unemployment trap in this period. It can be inferred that minimum wage policy failed to support the local economy to better and more stable society welfare. This research also found an unexpected result regarding to the role of economic growth to labor absorption. Economic growth across provinces has not contributed yet to the increasing employment rate in the local economy. Moreover, this finding reveals that provincial labor absorption was also affected by geographical factors. The provinces which are located at the west Indonesia tend to have high empolyment rate. This phenomenon indicates the existence of unbalanced development in the country.

Keywords: wage, employment, policy, investment, economic growth

JEL classification: C21, J23, J30, J31, J38

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