nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2017‒07‒23
three papers chosen by
Matthew Baker
City University of New York

  1. The Large Fall in Global Fertility: A Quantitative Model By Tiloka de Silva; Silvana Tenreyro
  2. Culture, Diffusion, and Economic Development: The Problem of Observational Equivalence By Harutyunyan, Ani; Özak, Ömer
  3. Trust, Reciprocity and Rules By Rietz, Thomas; Schniter, Eric; Sheremeta, Roman; Shields, Timothy

  1. By: Tiloka de Silva (London School of Economics (LSE); Centre for Macroeconomics (CFM)); Silvana Tenreyro (London School of Economics (LSE); Centre for Macroeconomics (CFM); Centre for Economic Performance (CEP); The Centre for Economic Policy Research (CEPR))
    Abstract: Over the past four decades, fertility rates have fallen dramatically in most middle- and low-income countries around the world. To analyze these developments, we study a quantitative model of endogenous human capital and fertility choice, augmented to allow for social norms over the number of children. The model enables us to gauge the role of human capital accumulation on the decline in fertility and to simulate the implementation of population-control policies aimed at affecting social norms and fostering the use of contraceptive technologies. Using data on several socio-economic variables as well as information on funding of population-control policies to parametrize the model, we find that policies aimed at altering family-size norms have provided a significant impulse to accelerate and strengthen the decline in fertility that would have otherwise gradually taken place as economies move to higher levels of human capital.
    Keywords: Fertility rates, Birth rate, Convergence, Macro-development, Malthusian growth, Population
    Date: 2017–07
  2. By: Harutyunyan, Ani; Özak, Ömer
    Abstract: This research explores the direct and barrier effects of culture on economic development. It shows both theoretically and empirically that whenever the technological frontier is at the top or bottom of the world distribution of a cultural value, there exists an observational equivalence between absolute cultural distances and cultural distances relative to the frontier, preventing the identification of its direct and barrier effects. Since the technological frontier usually has the ``right'' cultural values for development, it tends to be in the extremes of the distribution of cultural traits, generating observational equivalence and confounding the analysis. These results highlight the difficulty of disentangling the direct and barrier effects of culture. The empirical analysis finds suggestive evidence for direct effects of individualism and conformity with hierarchy, and barrier effects of hedonism.
    Keywords: Comparative economic development, cultural differences, barriers to technological diffusion, individualism, power distance, vertical hierarchy, hedonism, linguistic distance, genetic distance
    JEL: F14 F43 O1 O10 O20 O30 O33 O40 O57 Z0 Z10
    Date: 2016–07
  3. By: Rietz, Thomas; Schniter, Eric; Sheremeta, Roman; Shields, Timothy
    Abstract: Many economic interactions rely on trust, which is sometimes violated. The fallout from business fraud and other malfeasance shows serious economic consequences of trust violations. Simple rules mandating minimum standards are attractive because they prevent the most egregious trust violations. However, such rules may undermine more trusting and reciprocal (trustworthy) behavior that otherwise would have occurred and, thus, lead to worse outcomes. We use an experimental trust game to test the efficacy of exogenously imposed minimum standard rules. Rules fail to increase trust and reciprocity, leading to lower economic welfare. Although sufficiently restrictive rules restore welfare, trust and reciprocity never return. The pattern of results is consistent with participants who are not only concerned with payoffs, but also use the game to learn about trust and trustworthiness of others.
    Keywords: Trust, Reciprocity, Minimum Standards, Experiment
    JEL: C72 C90 D63 D64 L51
    Date: 2017–07–19

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