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on Economic Growth |
| By: | Tommaso Porzio (Yale University) |
| Abstract: | This paper develops a matching model - in which heterogeneous individuals form production teams and choose an appropriate technology - to study how the technological environment changes the pattern of matching and the production structure of an economy. I show that if technology improvements are expensive, teams bring high and low skilled individuals together and all teams choose similar technologies. In contrast, if improvements are inexpensive, talent concentrates in teams that choose the most advanced technologies, leading to larger dispersion of economic activity. Then, I apply the theory to study cross-country differences in the allocation of talent. Since relatively poor countries can make cheap and large improvements through technology adoption, the theory predicts that they should have stronger concentration of talent than relatively rich ones. I derive an empirical measure of the concentration of talent from the model to validate this prediction using micro data from several countries; in the cross-section, using a sample of 63 countries, and in the time-series, comparing the growth experiences of South Korea and United States. Finally, a dynamic extension of the theoretical framework demonstrates that endogenous allocation of talent coupled with localized technological progress may prevent cross-country convergence even in the absence of exogenous barriers. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:569&r=gro |
| By: | Valero, Anna; Van Reenen, John |
| Abstract: | We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century. We estimate fixed effects models at the sub-national level between 1950 and 2010 and find that increases in the number of universities are positively associated with future growth of GDP per capita (and this relationship is robust to controlling for a host of observables, as well as unobserved regional trends). Our estimates imply that doubling the number of universities per capita is associated with 4% higher future GDP per capita. Furthermore, there appear to be positive spillover effects from universities to geographically close neighboring regions. We show that the relationship between growth and universities is not simply driven by the direct expenditures of the university, its staff and students. Part of the effect of universities on growth is mediated through an increased supply of human capital and greater innovation (although the magnitudes are not large). We find that within countries, higher historical university presence is associated with stronger pro-democratic attitudes. |
| Keywords: | growth; Human Capital; innovation; Universities |
| JEL: | I23 I25 J24 O10 O31 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11462&r=gro |
| By: | Maestas, Nicole; Mullen, Kathleen J.; Powell, David |
| Abstract: | Population aging is widely assumed to have detrimental effects on economic growth yet there is little empirical evidence about the magnitude of its effects. This paper starts from the observation that many U.S. states have already experienced substantial growth in the size of their older population and much of this growth was predetermined by historical trends in fertility. We use predicted variation in the rate of population aging across U.S. states over the period 1980-2010 to estimate the economic impact of aging on state output per capita. We find that a 10% increase in the fraction of the population ages 60+ decreases the growth rate of GDP per capita by 5.5%. Two-thirds of the reduction is due to slower growth in the labor productivity of workers across the age distribution, while one-third arises from slower labor force growth. Our results imply annual GDP growth will slow by 1.2 percentage points this decade and 0.6 percentage points next decade due to population aging. |
| Keywords: | population aging, GDP growth, demographic transitions |
| JEL: | J11 J14 J23 J26 O47 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:1063-1&r=gro |
| By: | Ingrid Ott; Susanne Soretz |
| Abstract: | We analyse the interdependence between green attitude and equilibrium development of environmental quality in an endogenous growth model. Individuals take only part of their impact on pollution into account, hence there is a negative externality of capital accumulation on environmental quality. Increasing wealth or increasing pollution enhance green attitude and reduce the externality, because individuals care more about the environment if their income is higher or if pollution is more obvious. The time path of pollution as well as the evolution of equilibrium growth are shown to depend crucially on the determinants of green attitude. Ongoing growth may lead to complete internalization of the environmental externality if green attitude improves with increasing wealth, e.g. as a consequence of an increase in environmental education. In contrast, if green attitude is determined exclusively by the level of environmental quality, pollution remains at a suboptimally high level. The interdependence of wealth and pollution in the determination of environmental awareness implies more complex dynamics. Capital growth enhances green attitude and thereby decreases pollution. Improved environmental quality in turn may increase capital growth due to less green attitude and therefore slow down convergence to the sustainable balanced growth path. |
| Keywords: | pollution, endogenous growth, green attitude |
| JEL: | O1 O4 Q2 Q5 |
| Date: | 2016–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:eus:ce3swp:0116&r=gro |
| By: | Kirill Borissov; Mikhail Pakhnin |
| Abstract: | We consider two models of economic growth with exhaustible natural resources, exogenous technical progress and agents heterogeneous in their time preferences. In the first model we assume private ownership of natural resources. We show that every competitive equilibrium in this model converges to a balanced-growth equilibrium. The long-run extraction rate and the rate of growth are determined by the discount factor of the most patient agents. The second model assumes public ownership of natural resources. The resource revenue is equally distributed among agents, who choose the resource extraction rate by voting. We define an intertemporal voting equilibrium and show that it also converges to a balanced-growth equilibrium. The long-run voting equilibrium extraction rate and the rate of growth are determined by the median discount factor. Our results suggest that, other things being equal, the growth rate in the case of private ownership is higher than that of public ownership if the most patient agents do not constitute the majority in population; otherwise there is no difference in the growth rates between the two regimes. However, in the long run private ownership leads to a higher level of inequality than public ownership. If we take into account the detrimental effect of inequality on economic growth, then the public property regime will likely result in a higher long-run rate of growth compared to the private property regime. |
| Keywords: | economic growth, exhaustible resources, heterogeneous agents, voting |
| JEL: | Q32 E13 D91 O40 |
| Date: | 2016–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:eus:wpaper:ec0216&r=gro |
| By: | Samaniego, Roberto |
| Abstract: | We explore the long run impact of policy on the level of economic activity through changes in the vintage distribution of capital, in a model where different vintages coexist in production. Because firms can choose the vintage of capital in which they invest, investment subsidies do not in general affect the vintage structure of capital. In contrast, vintage-specific taxes or subsidies that target the newest vintages of capital can significantly affect output and welfare in the long run, mainly downwards. |
| Keywords: | Embodiment controversy, vintage capital, capital taxation, investment subsidies. |
| JEL: | O11 O14 O41 O43 |
| Date: | 2016–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73348&r=gro |
| By: | Carlos Ballestero; Carlos E. Posada |
| Abstract: | We use the Aguion and Howitt (2009) theoretical model of endogenous economic growth to explain the declining economic growth in developed economies in the period 1981-2009. Aguion and Howitt theoretical framework combines Solownian and Schumpeterian elements in a single scenario, so that labor-augmenting technological progress and capital accumulation per efficiency unit of labor are both caused not only by exogenous changes in the investment rate but also by shocks to the degree of efficiency in the Research and Development (R&D) expenditure process. Empirical results revealed that per worker output growth rates and capital stock per efficiency unit of labor growth rates both have a common panel unit root. Since the panel cointegration tests and estimates revealed a statistical significant negative long-run relationship between per worker output growth rate and capital stock per efficiency unit of labor, the interpretation of the econometric results analized from the Aguion and Howitt ?s theoretical perspective is that labor-augmenting technological progress is endogenously falling over time mainly because of an exogenous deterioration of the environment conditions for the transformation of the investment rate and R&D expenditures in technological progress. |
| Keywords: | Economic growth, Solownian and Schumpeterian models of growth, investment rate, R&D expenditures, Capital stock per efficient unit of labor |
| JEL: | O11 O31 O33 O41 O47 O57 |
| Date: | 2016–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:015012&r=gro |
| By: | Charles Wait; Tafadzwa Ruzive |
| Abstract: | The debate about the influence of financial market development on economic growth has been ongoing for more than a century. Since Schumpeter (1912) wrote about the happenings on Lombard Street, right up to the economists of today, there is growing interest into how financial market development affects economic activity and hence economic growth. With economic growth gaining prominence in respect of development discourse, inquiry into the finance-growth nexus has grown rapidly. The latest advances of the finance-growth nexus show a positive relationship between financial market development and economic growth. In this regard, little research has been done globally pertaining to most recent economic developments, especially concerning the BRICS economies. This research investigates the influence of financial market development on emerging economies, BRICS and non-BRICS and to determine whether the openness of financial markets in BRICS economies contributed to higher growth trajectories compared to their non-BRICS counterparts. The research utilises the Generalised Method of Moments and an extended endogenous growth model to estimate the influence of a set of financial market indicators. The study found that higher levels of credit to the private sector and financial depth in the BRICS economies contributed to the higher levels of economic growth experienced in the BRICS compared to non-BRICs emerging economies. |
| Keywords: | Financial Market Development, economic growth, BRICS |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:625&r=gro |