Measuring direct and indirect effects of extending health insurance coverage in developing countries is a key issue for health system development and for attaining universal health coverage. This paper investigates the role played by health insurance in the relationship between parental morbidity and child work decisions. We use a propensity score matching technique combined with hurdle models, using data from Rwanda. The results show that parental health shocks have a substantial influence on child work when households do not have health insurance. Depending on the gender of the sick parent, there is a substitution effect not only between the parent and the child on the labor market, but also between the time the child spends on different work activities. Altogether, results reveal that health insurance protects children against child work in the presence of parental health shocks.

We propose an endogenous growth model incorporating social capital. Social capital serves only as an input in the production of human capital and it involves a cost in terms of the final good. In contrast to alternative specifications, this model ensures that social capital enhances productivity gains by playing the role of a timing belt that drives the transmission and propagation of all productivity shocks. We find that, depending on the measure of social capital, the elasticity of human capital with respect to social capital varies from 6% to 10%. Finally, we investigate the short-term dynamics and imbalance effect properties of the model, depending on the value of this elasticity. In particular, we show that when the substitutability of social capital for human capital increases, the economy is better equipped to surmount initial imbalances, as individuals may allocate more working time to the final good sector without impeding economic growth.

We present a set of theoretical and empirical papers and briefly describe the specific contributions to the Macroeconomic Dynamics special issue on technology aspects in the process of development.

We study a Ramsey problem in infinite and continuous time and space. The problem is discounted both temporally and spatially. Capital flows to locations with higher marginal return. We show that the problem amounts to optimal control of parabolic partial differential equations (PDEs). We rely on the existing related mathematical literature to derive the Pontryagin conditions. Using explicit representations of the solutions to the PDEs, we first show that the resulting dynamic system gives rise to an ill-posed problem in the sense of Hadamard. We then turn to the spatial Ramsey problem with linear utility. The obtained properties are significantly different from those of the nonspatial linear Ramsey model due to the spatial dynamics induced by capital mobility.

This paper provides theoretical foundations to the contemporaneous increase in computer usage, human capital, and multitasking observed in many OECD countries during the 1990s. The links among work organization, technology, and human capital is modelled by establishing the conditions under which firms allocate the workers' time among several productive tasks. Organizational change is then analyzed in a dynamic perspective as the transition from specialization toward multitasking emphasizing its technological and educational determinants. We show that large enough “organizational shocks” can trigger a transition from specialization to multitasking, and this transition obviously should be accompanied by gradual increases in human capital.

We use two-stage optimal control techniques to solve some adoption problems under embodied technical change. We first solve a benchmark problem without learning behavior. At the date of switching, the consumption level is shown to drop, as the relative price of capital goes down (obsolescence). In such a case, the economy sticks to the initial technology, or immediately switches to a new technology with a higher level of embodiment, depending on how the obsolescence costs compare to the induced growth advantage. In a second step, we introduce learning. The learning curve involves fixed costs and incentives to wait as well. Adoption is shown to depend on the growth advantage of switching net of obsolescence and learning fixed costs. The economy will switch if and only if this indicator is positive. If it is big enough to “compensate” the option of waiting, then the economy switches immediately. Otherwise, the economy waits.

We investigate and interpret some of the properties of a multi-sectoral growth model with endogenous embodied technical change in the light of the ongoing debate on the viability of an IT based growth regime. In particular, we illustrate the two main views of the 1995-2000 IT boom in the USA. If it only comes from productivity gains in the production of hardware and/or softwares, and even though these gains are permanent, the story could be just one of temporary massive capital deepening and no long term growth effect. In contrast, if this boom relies on productivity gains in R&D, there is room for a permanent IT growth regime associated with a permanent accumulation of both hardware and software.

We present an intertemporal model of consumption and savings incorporating liquidity constraints and non separable preferences. We solve the problem numerically and characterize the optimal consumption behavior. We explore the traditional puzzles highlighted in the empirical literature as excess smoothness of consumption, its excess sensitivity to current income and its excess persistence. We show that a model with durability and liquidity constraints is able to reproduce some of the stylized facts. Next we show that some of the econometric tests are not robust and can mistake liquidity constraints for habit formation. Hence previous results establishing habit formation on US data should be interpreted with caution.