Aleksandra KorostelevaPublished in:
Russian Journal of Labor Economics
– Volume 3, Number 1 (January-March, 2016)

JEL classification: D31, E24, Z10

Keywords: economic activity multiplier, economic man model, final consumption multiplier, joint space method, lagged effect, multiplier effect, multiplier of expenditures of non-profit organizations, workforce productivity multiplier


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Abstract:

The article discusses the necessity to use models of man when analyzing economic development of a society. A unifying idea of the modern homo economicus type is formulated with some simplifications and his possible behavior in the economic activity is described in a certain system of socio-economic coordinates: per capita income, final consumption expenditures, final consumption expenditures of non-profit organizations maintaining households, unemployment rate, and workforce productivity. Geometric representation of multiplier was used as the research method.

Highlights:

► the main factor affecting employees’ income is the level of their education; moreover, intellectual labor is proved to be more productive
► in the medium term, the lack of creative workforce hinders the economic growth
► “the power to create wealth is more important than wealth itself”
► evading labor activity causes the drop in the GDP growth rate and hinders the overcoming of economic recession
► crises, autoregression in residuals, and heteroscedasticity preclude the qualitative assessment of the dependence
► the factors defined as independent models actually change under the influence of latent or lagged interrelations
► a multiplier is a coefficient, which shows the dependency of income from expenditures (investments, public procurement, consumption etc.)
► the multiplier effect characterizes the impact of changes in total expenditures on the national product caused by the changes in consumption, investment volume,
net tax revenues, government expenditures for goods and services, and export volume
► the paradox and problem of Russia’s economic growth lie in the fact that organizations go behind the growth rate of population income, probably,
a part of organizations’ expenditures is in the shadow zone
► the key indicator is workforce productivity which changed due to reduction of final consumption
► the minus sign means that we deal with either concealed salary or loans, or there are elements of shadow economy in the organization’s economic activity
► man has always been and still is the main creative power in the economic and social development of a country

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