Abstract. This paper follows Jones (2005) in his approach to deriving the global production function from microfoundations. His framework is generalized by allowing for dependence between the Pareto distributions of labor-and capital-augmenting developments. Using the Clayton copula family to capture this dependence, we derive a "Clayton-Pareto" class of production functions that nests both the Cobb-Douglas and the CES. Embedding the resultant production function in a neoclassical growth framework, we draw conclusions for the long-run direction of technical change. Jones' result of Cobb-Douglas global production functions and purely laboraugmenting technical change hinges on the assumption of independence of marginal Pareto distributions. In our more general case, the shape of local production functions matters for the shape of the global production function, and technical change augments both factors in the long run. Furthermore, the elasticity of substitution between capital and labor may exceed unity and thus yield endogenous growth.

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We refer to the framework developed by Ijiri and Simon (1977) and to the notion of independent submarkets (Sutton 1998) to provide a simple candidate explanation for the shape of the firm growth distribution based on a model of proportional growth at the level of both the introduction of new products by firms and their size dynamics. We exploit the features of a unique longitudinal data set which covers the entire distribution of products and firms in the worldwide pharmaceutical industry to test the model at different levels of aggregation as well as at different time lags. Econometric investigations show that model's predictions are in good agreement with empirical evidence. *

We investigate the extent to which bridging and bonding social capital as well as social trust and individuals' earnings interdependently affect self-reported happiness. The study is based on cross-sectional World Values Survey 2000 data on individuals from eight Central and Eastern European countries (CEECs). We identify high risk of regressor endogeneity and omitted variables bias in happiness regressions, and eliminate them using instrumental variables and an appropriate set of controls. The endogeneity issue has been generally overlooked in earlier studies. Our study therefore provides novel implications for the general discussion on the causal relationships between the five considered variables. Our results are also discussed in the specific context of socio-economic convergence processes currently taking place in CEECs.