Learning Objectives Define the three factors of production—labor, capital, and natural resources. Explain the role of technology and entrepreneurs in the utilization of the economy’s factors of production. Choices concerning what goods and services to produce are choices about an economy’s use of its factors of production , the resources available to it for the production of goods and services. The value, or satisfaction, that people derive from the goods and services they consume and the activities they pursue is called utility . Ultimately, then, an economy’s factors of production create utility; they serve the interests of people. The factors of production in an economy are its labor, capital, and natural resources. Labor is the human effort that can be applied to the production of goods and services. People who are employed or would like to be are considered part of the labor available to the economy. Capital is a factor of production that has been produced for use in the production of other goods and services. Office buildings, machinery, and tools are examples of capital. Natural resources are the resources of nature that can be used for the production of goods and services. In the next three sections, we will take a closer look at the factors of production we use to produce the goods and services we consume. The three basic building blocks of labor, capital, and natural resources may be used in different ways to produce different goods and services, but they still lie at the core of production. We will then look at the roles played by technology and entrepreneurs in putting these factors of production to work. As economists began to grapple with the problems of scarcity, choice, and opportunity cost two centuries ago, they focused on these concepts, just as they are likely to do two centuries hence. Labor Labor is human effort that can be applied to production. People who work to repair tires, pilot airplanes, teach children, or enforce laws are all part of the economy’s labor. People who would like to work but have not found employment—who are unemployed—are also considered part of the labor available to the economy. In some contexts, it is useful to distinguish two forms of labor. The first is the human equivalent of a natural resource. It is the natural ability an untrained, uneducated person brings to a particular production process. But most workers bring far more. The skills a worker has as a result of education, training, or experience that can be used in production are called human capital . Students who are attending a college or university are acquiring human capital. Workers who are gaining skills through experience or through training are acquiring human capital. Children who are learning to read are acquiring human capital. The amount of labor available to an economy can be increased in two ways. One is to increase the total quantity of labor, either by increasing the number of people available to work or by increasing the average number of hours of work per week. The other is to increase the amount of human capital possessed by workers. Capital Long ago, when the first human beings walked the earth, they produced food by picking leaves or fruit off a plant or by catching an animal and eating it. We know that very early on, however, they began shaping stones into tools, apparently for use in butchering animals. Those tools were the first capital because they were produced for use in producing other goods—food and clothing. Modern versions of the first stone tools include saws, meat cleavers, hooks, and grinders; all are used in butchering animals. Tools such as hammers, screwdrivers, and wrenches are also capital. Transportation equipment, such as cars and trucks, is capital. Facilities such as roads, bridges, ports, and airports are capital. Buildings, too, are capital; they help us to produce goods and services. Capital does not consist solely of physical objects. The score for a new symphony is capital because it will be used to produce concerts. Computer software used by business firms or government agencies to produce goods and services is capital. Capital may thus include physical goods and intellectual discoveries. Any resource is capital if it satisfies two criteria: The resource must have been produced. The resource can be used to produce other goods and services. One thing that is not considered capital is money. A firm cannot use money directly to produce other goods, so money does not satisfy the second criterion for capital. Firms can, however, use money to acquire capital. Money is a form of financial capital. Financial capital includes money and other “paper” assets (such as stocks and bonds) that represent claims on future payments. These financial assets are not capital, but they can be used directly or indirectly to purchase factors of production or goods and services. Natural Resources There are two essential characteristics of natural resources. The first is that they are found in nature—that no human effort has been used to make or alter them. The second is that they can be used for the production of goods and services. That requires knowledge; we must know how to use the things we find in nature before they become resources. Consider oil. Oil in the ground is a natural resource because it is found (not manufactured) and can be used to produce goods and services. However, 250 years ago oil was a nuisance, not a natural resource. Pennsylvania farmers in the eighteenth century who found oil oozing up through their soil were dismayed, not delighted. No one knew what could be done with the oil. It was not until the mid-nineteenth century that a method was found for refining oil into kerosene that could be used to generate energy, transforming oil into a natural resource. Oil is now used to make all sorts of things, including clothing, drugs, gasoline, and plastic. It became a natural resource because people discovered and implemented a way to use it. Defining something as a natural resource only if it can be used to produce goods and services does not mean that a tree has value only for its wood or that a mountain has value only for its minerals. If people gain utility from the existence of a beautiful wilderness area, then that wilderness provides a service. The wilderness is thus a natural resource. The natural resources available to us can be expanded in three ways. One is the discovery of new natural resources, such as the discovery of a deposit of ore containing titanium. The second is the discovery of new uses for resources, as happened when new techniques allowed oil to be put to productive use or sand to be used in manufacturing computer chips. The third is the discovery of new ways to extract natural resources in order to use them. New methods of discovering and mapping oil deposits have increased the world’s supply of this important natural resource. Technology and the Entrepreneur Goods and services are produced using the factors of production available to the economy. Two things play a crucial role in putting these factors of production to work. The first is technology , the knowledge that can be applied to the production of goods and services. The second is an individual who plays a key role in a market economy: the entrepreneur. An entrepreneur is a person who, operating within the context of a market economy, seeks to earn profits by finding new ways to organize factors of production. In non-market economies the role of the entrepreneur is played by bureaucrats and other decision makers who respond to incentives other than profit to guide their choices about resource allocation decisions. The interplay of entrepreneurs and technology affects all our lives. Entrepreneurs put new technologies to work every day, changing the way factors of production are used. Farmers and factory workers, engineers and electricians, technicians and teachers all work differently than they did just a few years ago, using new technologies introduced by entrepreneurs. The music you enjoy, the books you read, the athletic equipment with which you play are produced differently than they were five years ago. The book you are reading was written and manufactured using technologies that did not exist ten years ago. We can dispute whether all the changes have made our lives better. What we cannot dispute is that they have made our lives different. Key Takeaways Factors of production are the resources the economy has available to produce goods and services. Labor is the human effort that can be applied to the production of goods and services. Labor’s contribution to an economy’s output of goods and services can be increased either by increasing the quantity of labor or by increasing human capital. Capital is a factor of production that has been produced for use in the production of other goods and services. Natural resources are those things found in nature that can be used for the production of goods and services. Two keys to the utilization of an economy’s factors of production are technology and, in the case of a market economic system, the efforts of entrepreneurs. Try It! Explain whether each of the following is labor, capital, or a natural resource. An unemployed factory worker A college professor The library building on your campus Yellowstone National Park An untapped deposit of natural gas The White House The local power plant Case in Point: Technology Cuts Costs, Boosts Productivity and Profits Figure 2.1 Selbe Lynn – Oil Platform – CC BY-NC-ND 2.0. Technology can seem an abstract force in the economy—important, but invisible. It is not invisible to the 130 people who work on a Shell Oil Company oil rig called Mars, located in the deep waters of the Gulf of Mexico, about 160 miles southwest of Pensacola, Florida. The name Mars reflects its otherworld appearance—it extends 300 feet above the water’s surface and has steel tendons that reach 3,000 feet to the floor of the gulf. This facility would not exist if it were not for the development of better oil discovery methods that include three-dimensional seismic mapping techniques, satellites that locate oil from space, and drills that can make turns as drilling foremen steer them by monitoring them on computer screens from the comfort of Mars. “We don’t hit as many dry holes,” commented Shell manager Miles Barrett. As a result of these new technologies, over the past two decades, the cost of discovering a barrel of oil dropped from $20 to under $5. And the technologies continue to improve. Three-dimensional surveys are being replaced with four-dimensional ones that allow geologists to see how the oil fields change over time. The Mars project was destroyed by Hurricane Katrina in 2005. Royal Dutch Shell completed repairs in 2006—at a cost of $200 million. But, the facility is again pumping 130,000 barrels of oil per day and 150 million cubic feet of natural gas—the energy equivalent of an additional 26,000 barrels of oil. Technology is doing more than helping energy companies track oil deposits. It is changing the way soft drinks and other grocery items are delivered to retail stores. For example, when a PepsiCo delivery driver arrives at a 7-Eleven, the driver keys into a handheld computer the inventory of soft drinks, chips, and other PepsiCo products. The information is transmitted to a main computer at the warehouse that begins processing the next order for that store. The result is that the driver can visit more stores in a day and PepsiCo can cover a given territory with fewer drivers and trucks. New technology is even helping to produce more milk from cows. Ed Larsen, who owns a 1,200-cow dairy farm in Wisconsin, never gets up before dawn to milk the cows, the way he did as a boy. Rather, the cows are hooked up to electronic milkers. Computers measure each cow’s output, and cows producing little milk are sent to a “hospital wing” for treatment. With the help of such technology, as well as better feed, today’s dairy cows produce 50% more milk than did cows 20 years ago. Even though the number of dairy cows in the United States in the last 20 years has fallen 17%, milk output has increased 25%. Who benefits from technological progress? Consumers gain from lower prices and better service. Workers gain: Their greater ability to produce goods and services translates into higher wages. And firms gain: Lower production costs mean higher profits. Of course, some people lose as technology advances. Some jobs are eliminated, and some firms find their services are no longer needed. One can argue about whether particular technological changes have improved our lives, but they have clearly made—and will continue to make—them far different. Sources: David Ballingrud, “Drilling in the Gulf: Life on Mars,” St. Petersburg Times (Florida), August 5, 2001, p. 1A; Barbara Hagenbaugh, “Dairy Farms Evolve to Survive,” USA Today , August 7, 2003, p. 1B; Del Jones and Barbara Hansen, “Special Report: A Who’s Who of Productivity,” USA Today , August 30, 2001, p. 1B; and Christopher Helman, Shell Shocked, Forbes Online , July 27, 2006. Answers to Try It! Problems An unemployed factory worker could be put to work; he or she counts as labor. A college professor is labor. The library building on your campus is part of capital. Yellowstone National Park. Those areas of the park left in their natural state are a natural resource. Facilities such as visitors’ centers, roads, and campgrounds are capital. An untapped deposit of natural gas is a natural resource. Once extracted and put in a storage tank, natural gas is capital. The White House is capital. The local power plant is capital. 搜索 复制
文章已发布于文库，请移步讨论。 https://bbs.pinggu.org/thread-3591765-1-1.html To impress you with Economics’ imperialism, Ifeel like introducing a few papers ofeconomichistorywhich most peopleconfuse with history of economic thoughts. If I were asked how economicscontributes to thestudy of history, my answer would be: economics sheds light on how history persists. Enjoy! The "African Dummy"in the title refers to a "discriminating"identificationstrategythat when dealing with observations on countries, economistsalways add anindicator variable of Africa tothe regressors. Itreflects the fact that Africaneconomiesare consistentlylagging the performance of the rest of world. What is the reason for that? What’s unique on the Africa continent in history? The onlyanswerappears slave trade. But through which specific channel did the slave trade operate to reduce Africa’s productivity? Nathan Nunn and Leonard Wantchekon’s paper, The Slave Trade and the Origins of Mistrust in Africa , discussed one possible channel-mistrust. Their main argumentis that individuals that belong to an ethnic group from which more slaves were taken during the trans-Atlantic slave trade exhibit lower levels of trust today.The s econdary channelis thatindividuals living in areas from which moreslaves were taken exhibit lower levels of trust today. They have individualsurvey data on contemporary level of trust and the slave data is from Nunn’s another paper (2008).Then the estimationis to regress measures of the individual's trustonmeasures of slave exports for the ethnicity to which the individual belongs. But reverse causality is likely: moreslaves were taken from populations that were less trusting at the beginning (and thus less trusting today) . One solution is IV estimate. They use distance from the coast as an instrument for slave trade, a similar strategy to Nunn’s previous study (2008). Butit seems to me that the exclusion restriction is not satisfied. The other solutionthey came up with is an inspiration. They did a falsification test based on the logic thatif their story is correct, we should find no influence of distance from the coast on trust in locations other than Africa. Of course the results survived.
I have been always enchanted with Edward Glaeser’s writing, ranging from his best-selling book Triumph of the City (城市的胜利) to papers published in academic journals. Edward Glaeser, a pioneer in urban economics, reshapes how we perceive and understand cities.Luckily, I am taking a course given by one of Glaeser’s students and co-authors and I can tell how he has been influenced by Glaeser. In my first blog as a contributing blogger, I am happy to share with you Glaeser's recent paper,Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines, published in Review of Economics and Statistics. It is the entrepreneurship that nurtures urban growth, argue Urban economists. However, there are several factors that jointly affect a city’s level of initial entrepreneurship and its subsequent growth. Hence, we can hardly make causality inference without identifying the exogenous sources of variation in local entrepreneurship. This paper focuses on solving this problem with IV strategy. The kernel of this paper are sections 3 and 4 starting from page 18 where a city’s historical mineral and coal deposits are used as instruments for modern entrepreneurship. The previous OLS regressions used two metrics of entrepreneurship: the average establishment size of cities in 1982 and the share of employment in start-ups in 1982-1986. The larger establishment size is, the lower level of entrepreneurship is; the higher share of employment in start-ups is, the higher level of entrepreneurship is. The proxy for urban growth is employment growth from 1982 to 2002. The story told with IV sounds like an early version of natural resource curse: more access to coal results in lower level of entrepreneurship and so lower employment growth. For the instrument to be valid, two restrictions have to be satisfied. First, mineral and coal deposits should be correlated with level of entrepreneurship (measured with two metrics above). The empirical result shows that the first stage is solid and the mechanism is first discussed by Chinitz (White 1928). The major concern lies in the second restriction: mineral and coal deposits can only influence urban growth through entrepreneurship. Since mineral and coal deposits are likely associated with other variables that can impact economic growth, the exclusive restriction may be violated. Some observable variables can be controlled for while the unobservable remains uninvestigated. The correlation between mineral and coal deposits and employment growth may just reflect the decline of Rust Belt regions in US. Section 4 revolves around two approaches to this problem. The first approach is to focus on the United States’ growing regions (warmer regions). It is still found that historical mines dampened employment growth. They also include Bartik-style controls for robust check. The second approach is instrument variable quantile regression method, which allows us to seewhether the effects of entrepreneurship vary between rapidly and slowly growing cities. The basic idea of quantile regression is that cities at various points throughout the conditional city growth distribution would receive various weights during the IVQR. Beyond the introduction of the paper, I have something else to share: 1. There seems to be a subtle difference between a proxy andan instrument . In this paper, historical mineral and coal deposits is an instruments for modern entrepreneurship which is the bridge between mines and employment growth, while in another paper, it would be a proxy for an independent variable that directly explains urban growth. Is it fair to assert that whether it’s a proxy or an instrument depends on which story you are telling? 2. The methodology used in this paper can apply to China if data is available. The causality between entrepreneurship and urban growth may explain why Northeast China has been lagging behind in recent years and why the transition of heavy-industry center is painful. 第一篇很高兴能够介绍Glaeser的文章，他是我的heroooo! 文章已经贴在我和好朋友的文库Economic Oil on Canvas，论文的链接也在那儿，欢迎大家在下边评论呀！ https://bbs.pinggu.org/thread-3589316-1-1.html
Re search P apers in Ec onomics General principles RePEc ( Re search P apers in Ec onomics) is a collaborative effort of hundreds of volunteers in 75 countries to enhance the dissemination of research in Economics and related sciences. The heart of the project is a decentralized bibliographic database of working papers, journal articles, books, books chapters and software components, all maintained by volunteers. The collected data is then used in various services as described below. So far, over 1400 archives from 75 countries have contributed about 1.2 million research pieces from 1,500 journals and 3,300 working paper series. Over 30,000 authors have registered and 70,000 email subscriptions are served every week. See below on how you can be part of this initiative. RePEc servicesThe following are services that use ( principle ) and contribute RePEc data. They also report usage statistics that can be used towards the RePEc rankings . 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