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Strong Sustainability, Rent and Value-Added Sharing

Author

Listed:
  • Jean-François Fagnart
  • Marc Germain
  • Alphonse Magnus

Abstract

We reassess Ricardo's conjecture of a secular increase in rent in an endogenous growth model with an essential renewable material resource and rising product quality. The model is consistent with the concept of strong sustainability and thus assumes that the resource productivity is bounded. Hence, only qualitative growth (i.e., a secular increase in the quality of final productions) may persist in the long run. We analyse how the scarcity of the resource affects the rent level and the distribution of national income (between resource, capital and labour) in the short and long runs. In the long run, resource scarcity induces a distributive conflict opposing labour to capital and resource, a lower resource stock implying generally a lower labour share and higher capital and rent shares. The transitory dynamics of the economy is analyzed numerically, starting from initial conditions characterized by a low capital stock and a large potential technical progress. Even if initially the rent share may evolve non-monotonically, simulations tend to confirm that Ricardo's conjecture emerges sooner or later during the transitory dynamics: except in the case of a very high dematerialization potential of final output, the rent share will rise as quantitative growth slows down,

Suggested Citation

  • Jean-François Fagnart & Marc Germain & Alphonse Magnus, 2016. "Strong Sustainability, Rent and Value-Added Sharing," Annals of Economics and Statistics, GENES, issue 121-122, pages 309-358.
  • Handle: RePEc:adr:anecst:y:2016:i:121-122:p:309-358
    DOI: 10.15609/annaeconstat2009.121-122.309
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    File URL: http://www.jstor.org/stable/10.15609/annaeconstat2009.121-122.309
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    More about this item

    Keywords

    Growth; Strong Sustainability; Rent; Functional Distribution of Income; Renewable Resource; Dematerialisation.;

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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