Path-Dependence

The intertemporal linkages that both constrain and enable an organization are central to its adaptive properties. The most narrow expression of path-dependence is the process of state-dependence—having a particular asset stock at one point in time impacts the distribution of asset stocks that can be reached at a subsequent period. Development, how an organizational form unfolds over time, can change those dynamics. A considerable literature has sprung up around the idea of “dynamic capabilities.” This broad idea is broken down into five distinct facets: accessibility of organizational states, robustness of organizations to changes in the state of nature, capacity to influence future states of “nature,” cost of accessing future sets of attributes, and capacity to value the set of organizational attributes. However, this discourse tends to treat “capabilities” as isolated attributes and not to view the organization as a complex adaptive system, a perspective developed here.

The Long-Term Impacts of Grants on Poverty: Nine-Year Evidence from Uganda’s Youth Opportunities Program

In 2008, Uganda gave $400 per person to thousands of young people to help them start skilled trades, work more, and raise incomes. Four years on, an experimental evaluation found grants raised work by 17 percent and earnings by 38 percent (Blattman, Fiala, Martinez 2014). After nine years, we find these gains have dissipated. Grantees’ investment leveled off; controls eventually increased their incomes through business and casual labor; and so both groups converged in employment, earnings, and consumption levels. We see little effect on mortality, fertility, or family health and education. However, grants had lasting impacts on durable asset stocks and skilled work. (JEL H53, I32, I38, O15, O22)

Transitional Dynamics in a Tullock Contest with a General Cost Function

This paper constructs and analyzes open-loop equilibria in an infinitely repeated Tullock contest in which two contestants contribute efforts to accumulate individual asset stocks over time. To investigate the transitional dynamics of the contest in the case of a general cost function, we linearize the model around the steady state. Our analysis shows that optimal asset stocks and their speed of convergence to the steady state crucially depend on the elasticity of marginal effort costs, the discount factor and the depreciation rate. In the case of a cost function with a constant elasticity of marginal costs, a lower discount factor, a higher depreciation rate and a lower elasticity imply a higher speed of convergence to the steady state. We further analyze the effects of second prizes in the contest. A higher prize spread increases individual and aggregate asset stocks, but does not alter the balance of the contest in the long run. During the transition, a higher prize spread increases asset stocks, produces a more balanced contest in each period and increases the speed of convergence to the steady state.