|
on Economic Growth |
| By: | Strulik, Holger (Department of Business and Economics) |
| Abstract: | This study investigates the interaction of the use of modern contraceptives, fertility, education, and long-run growth. It develops an economic model that takes into account that sexual intercourse is utility enhancing and that birth control by modern contraceptives is more efficient and more costly than traditional methods. The study shows how a traditional economy, in which modern contraceptives are not used and fertility is high, gradually converges towards a high growth regime, in which couples use modern contraceptives. Innovations in contraceptive technology at later points in time speed up the fertility transition and the convergence to steady growth. Utility enhancing sexual intercourse provides a “natural” explanation for why net fertility decreases with income. Lower prices or higher efficacy of contraceptives are conducive to an earlier onset of the fertility transition and a quicker convergence but do not effect economic performance (nor sexual intercourse) at the steady state. |
| Keywords: | Fertility; sex; contraceptive use; education; economic development |
| JEL: | I25 J10 N30 O40 |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2014_007&r=gro |
| By: | Caroline Freund (Peterson Institute for International Economics); Mélise Jaud (World Bank) |
| Abstract: | The empirical literature on the relationship between democracy and growth has yielded conflicting results. Cross-country studies have failed to identify a significant impact of democracy on growth, while within-country studies have found a strong positive effect of the transition to democracy on growth. We reconcile the conflicting evidence by showing that the positive effect of democratic transitions results from regime change as opposed to democratization. We identify over 100 transitions in the last half-century with various outcomes: to and from democracy, some partial, and some failed. The variety of experiences allows us to compare the growth outcome of democratic transitions with that of other transitions rather than with a no-transition counterfactual. Conditioning on regime change filters out selection effects and shows that transition to democracy yields no growth dividend compared to other types of regime change. We also show that countries that democratize slowly do not gain from regime change. These results suggest that the growth dividend from political transition results from swift regime change rather than from democratization. |
| Keywords: | political transition, autocracy, event study |
| JEL: | N40 O43 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp14-1&r=gro |
| By: | Vellore Arthi |
| Abstract: | �I use variation in childhood exposure to the Dust Bowl, an environmental shock to health and income, as a natural experiment to explain variation in adult human capital.� I find that the Dust Bowl produced significant adverse impacts in later life, especially when exposure was in utero, increasing rates of poverty and disability, and decreasing rates of fertility and college completion.� Dependence on agriculture exacerbates these effects, suggesting that the Dust Bowl was most damaging via the destruction of farming livelihoods.� This collapse of farm incomes, however, had the positive effect of reducing demand for child farm labor and thus decreasing the opportunity costs of secondary schooling, as evidence by increases in high school completion amongst the exposed. |
| Keywords: | Dust Bowl, environmental shock, human capital formation, early life health |
| Date: | 2014–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:number-129&r=gro |
| By: | Pinkovskiy, Maxim L. (Federal Reserve Bank of New York); Sala-i-Martin, Xavier X. (Federal Reserve Bank of New York) |
| Abstract: | In this paper, we try to understand whether measures of GDP per capita taken from the national accounts or measures of mean income or consumption derived from household surveys better proxy for true income per capita. We propose a data-driven method to assess the relative quality of GDP per capita versus survey means by comparing the evolution of each series to the evolution of satellite-recorded nighttime lights. Our main assumption, which is robust to a variety of specification checks, is that the measurement error in nighttime lights is unrelated to the measurement errors in either national accounts or survey means. We obtain estimates of weights on national accounts and survey means in an optimal proxy for true income; these weights are very large for national accounts and very modest for survey means. We conclusively reject the null hypothesis that the optimal weight on surveys is greater than the optimal weight on national accounts, and we generally fail to reject the null hypothesis that the optimal weight on surveys is zero. Using the estimated optimal weights, we compute estimates of true income per capita and $1-a-day poverty rates for the developing world and its regions. We obtain poverty estimates that are substantially lower and fall substantially faster than those of Chen and Ravallion (2010) specifically or of the survey-based poverty literature more generally. |
| Keywords: | economic growth; development |
| JEL: | D31 E01 O1 O4 |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:669&r=gro |
| By: | Roine, Jesper (Stockholm Institute of Transition Economics); Waldenström, Daniel (Uppsala University) |
| Abstract: | This paper reviews the long run developments in the distribution of personal income and wealth. It also discusses suggested explanations for the observed patterns. We try to answer questions such as: What do we know, and how do we know, about the distribution of income and wealth over time? Are there common trends across countries or over the path of development? How do the facts relate to proposed theories about changes in inequality? We present the main inequality trends, in some cases starting as early as in the late eighteenth century, combining previous research with recent findings in the so-called top income literature and new evidence on wealth concentration. The picture that emerges shows that inequality was historically high almost everywhere at the beginning of the twentieth century. In some countries this situation was preceded by increasing concentration, but in most cases inequality seems to have been relatively constant at a high level in the nineteenth century. Over the twentieth century inequality decreased almost everywhere for the first 80 years, largely due to decreasing wealth concentration and decreasing capital incomes in the top of the distribution. Thereafter trends are more divergent across countries and also different across income and wealth distributions. Econometric evidence over the long run suggests that top shares increase in periods of above average growth while democracy and high marginal tax rates are associated with lower top shares. |
| Keywords: | income inequality, income distribution, wealth distribution, economic history, top incomes, welfare state, taxation |
| JEL: | D31 H2 J3 N3 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8157&r=gro |
| By: | Guner, Duygu (K.U.Leuven); Uysal, Gökce (Bahcesehir University) |
| Abstract: | Does culture affect female labor supply? In this paper, we address this question using a recent approach to measuring the effects of culture on economic outcomes, i.e. the epidemiological approach. We focus on migrants, who come from different cultures, but who share a common economic and institutional set-up today. Controlling for various individual characteristics including parental human capital as well as for current economic and institutional setup, we find that female employment rates in 1970 in a female migrant's province of origin affects her labor supply behavior in 2008. We also show that it is the female employment rates and not male in the province of origin in 1970 that affects the current labor supply behavior. We also extend the epidemiological approach to analyze the effects of religion on female labor supply. More specifically, we use a proxy of parental religiosity, i.e. share of party votes in 1973 elections in Turkey to study female labor supply in 2008. Our findings indicate that female migrants from provinces that had larger (smaller) shares of the religious party votes in 1973 are less (more) likely to participate in the labor market in 2008. An extended model where both cultural and religiosity proxies are included shows that culture and religiosity have separately significant effects on female labor supply behavior. |
| Keywords: | culture, female labor force participation, gender |
| JEL: | J16 J21 Z10 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8132&r=gro |
| By: | Al-Ubaydli, Omar; McCabe, Kevin; Twieg, Peter |
| Abstract: | Several scholars have argued that abundant natural resources can be harmful to economic performance under bad institutions and helpful when institutions are good. These arguments have either been theoretical or based on naturally-occurring variation in natural resource wealth. We test this theory using a laboratory experiment to reap the benefits of randomized control. We conduct this experiment in a virtual world (Second LifeTM) to make institutions more visceral. We find support for the theory. |
| Keywords: | resource curse; institutions; economic development |
| JEL: | D72 D74 O13 Q34 |
| Date: | 2014–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55381&r=gro |
| By: | Elena Shubina (Department of Geography, University of NamurAuthor-Name: Gani Aldashev; Department of Economics and CRED, University of Namur); Sabine Henry (Department of Geography, University of Namur) |
| Abstract: | Technology adoption in agriculture is one of the key factors of change in rural areas of developing countries. Large-scale in-migration by groups using a more advanced production technology often triggers such change in autochthone populations. We analyse the determinants of adoption of new agricultural technology by nomadic pastoralists using unique micro-level data from a historical episode of massive Russian peasant in-migration into Kazakhstan at the turn of the 20th century. We find that distance to Russian settlers is a key determinant of technology adoption, even after controlling for socio-economic and environmental characteristics. This effect is stronger for wealthier and less mobile Kazakh families with pasture land more suitable for agriculture. The adoption of new technology follows a heterogeneous pattern within the autochthone population, with important implications for the evolution of inequality. |
| Keywords: | technology adoption, nomadic pastoralism, migration, Kazakhstan |
| JEL: | N5 O33 O13 Q15 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:nam:wpaper:1407&r=gro |
| By: | Reckendrees, Alfred |
| Abstract: | The economic transition characterizing the process of European industrialization in the 19th century was concentrated on regions rather than on states. In the first half of the 19th century, the region of Aachen (in the west of Prussia) pioneered on the territory of the German states and developed to a powerful industrial district. The implementation and diffusion of the factory system and the economic impact of adapted and new institutions make the core of this paper. Reciprocal interconnections between firms of different clusters shaped the region and created economic dynamics. Investments transgressed the boundaries of single industries and new industries emerged. One important feature of the regional production system was cross-sectional knowledge transfer; a second was institutions supportive to this process. |
| Keywords: | Germany, Industrialization, Factory System, Joint-Stock-Companies, Development |
| JEL: | N63 N94 O14 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55523&r=gro |
| By: | Grimm, Michael (University of Passau); Sparrow, Robert (Australian National University); Tasciotti, Luca (Erasmus University Rotterdam) |
| Abstract: | We analyse various pathways through which access to electricity affects fertility, using a pseudo-panel of Indonesian districts covering the period 1993-2010. Identification of causal effects relies on a district-fixed effects approach and controlling for local economic development. The electrification rate increased by about 65 percent over the study period and our results suggest that the subsequent effects on fertility account for about 18 to 24 percent of the overall decline in the fertility rate, depending on the specification. A key channel through which electrification affects fertility is increased exposure to TV, explaining about a quarter of the total fertility effect. Using in addition several waves of Demographic and Health Surveys, we find suggestive evidence that increased exposure to TV affects in particular fertility preferences and increases the effective use of contraception. Reduced child mortality seems to be another important pathway linking access to electricity and fertility. We find no evidence that changes to direct and indirect costs of children play a role. Overall, the results suggest that electrification contributes substantially to the fertility decline. In a context in which family planning policy still plays an important role this second order effect should be taken into account in cost benefit analyses of publicly funded grid expansion policies. |
| Keywords: | fertility, fertility transition, electrification, family planning, television, infrastructure, child mortality |
| JEL: | H43 H54 J13 J22 O18 Q40 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8146&r=gro |
| By: | Sequeira, Tiago; Santos, Marcelo; Ferreira-Lopes, Alexandra |
| Abstract: | A fruitful recent theoretical literature has related human capital and technological development with income (and wages) inequality. However, empirical assessments on the relationship are still scarce. We relate human capital and total factor productivity (TFP) with inequality and discover that, when countries are assumed as heterogeneous and dependent cross-sections, human capital is the most robust determinant of inequality, contributing to increase inequality, as predicted by theory. There is evidence of great heterogeneity on the effects of TFP and Openness across countries. These new empirical results open a wide avenue for theoretical research on the country-specific features conditioning the causal relationship from human capital, technology and trade to inequality. |
| Keywords: | income inequality, human capital, technology |
| JEL: | I24 I32 O10 O33 O50 |
| Date: | 2014–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55471&r=gro |
| By: | Bailey, Roy E. (University of Essex); Hatton, Timothy J. (University of Essex); Inwood, Kris (University of Guelph) |
| Abstract: | We examine the health and height of men born in England and Wales in the 1890s who enlisted in the army at the time of the First World War. We take a sample of the army service records and use this information to find the recruits as children in the 1901 census. Econometric results indicate that adult height was negatively related to the number of children in the household as well as to the share of earners, the degree of crowding, and positively to socioeconomic class. Adding the characteristics of the local registration district has little effect on the household-level effects. But local conditions were important; in particular the industrial character of the district, local housing conditions and the female illiteracy rate. We interpret these as representing the negative effect on height of the local disease environment. The results suggest that changing conditions at both household and locality levels contributed to the increase in height and health in the following decades. |
| Keywords: | heights of recruits, household structure, health in Britain |
| JEL: | I12 J13 N33 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8128&r=gro |
| By: | Theodore R. Breton |
| Abstract: | This paper explains why different studies present widely-varying estimates of the effect of increased schooling on national income. It shows that when correctly-interpreted, these studies support the hypothesis that a one-year increase in average schooling attainment raises national income directly by about 10% and indirectly by about 19%. The increases in national income are larger than the aggregate effect of higher workers’ salaries, because schooling has external effects on national income. Due to the rising cost of additional years of schooling, the national return on investment in schooling is much lower in more educated countries. The estimated real national return on investment in schooling in 2005 ranged from over 40% in the least educated countries to 8.5% in the most educated countries. Average levels of schooling and average test scores at ages 9 to 15 generally rise together, so either measure of human capital can explain differences in national income or growth rates across countries. Since the productivity of physical capital depends on the level of human capital, in a global financial market, the growth in human capital largely determines the growth in physical capital and in national income. ***** Este documento explica por qué diferentes estudios presentan ampliamente diferentes estimaciones sobre el efecto del aumento de la escolarización en la renta nacional. Esto demuestra que cuando se interpreta correctamente, estos estudios apoyan la hipótesis de que un aumento en un año en el nivel medio de escolaridad aumenta el ingreso nacional directamente en un 10% e indirectamente alrededor del 19%. Los aumentos en la renta nacional son más grandes que el efecto agregado de los salarios más altos de los trabajadores, ya que la escolarización tiene efectos externos sobre el ingreso nacional. Debido al creciente costo de los años adicionales de escolaridad, el retorno de la inversión nacional en educación es mucho menor en los países con mayor nivel educativo. El retorno nacional real estimado de la inversión en la educación en 2005 osciló entre el 40% en los países menos educados hasta el 8,5% en los países más cultos. Los niveles promedio de escolaridad y calificaciones de los exámenes a edades promedio de 9 a 15 generalmente aumentan en conjunto, así que o medida de capital humano pueden explicar las diferencias en el ingreso nacional o las tasas de crecimiento entre los países. Dado que la productividad del capital físico depende del nivel de capital humano, en un mercado financiero global, el crecimiento en capital humano determina en gran medida el crecimiento en capital físico y en el ingreso nacional. |
| Keywords: | Schooling; Human Capital; Test Scores; Economic Growth |
| JEL: | O41 I25 |
| Date: | 2014–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:010923&r=gro |
| By: | Theodore R. Breton |
| Abstract: | Using a dynamic augmented Solow model, I estimate the effect of students’ schooling attainment, schooling expenditures, and students’ test scores on growth rates over the period 1985-2005. I also estimate the effect of related measures for human capital stocks on national income in a static model in 2005. Individually all of the measures cause growth, and when included in the same model, more than one is statistically significant. Relative measurement error appears to determine which measure provides the best results. The results support the importance of increases in human capital for growth and the validity of the augmented Solow model. |
| Keywords: | Schooling Attainment; Schooling Expenditures; Test Scores; Economic Growth |
| JEL: | O41 I25 |
| Date: | 2013–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:010941&r=gro |
| By: | Michael Jetter |
| Abstract: | This paper reconsiders the effects of volatile growth rates on growth itself. I show that the underlying endogeneity of government size can hide the net growth effects from volatility. There exists a positive direct and a negative indirect channel, with the latter operating through the size of the public sector. Risk-averse citizens respond to volatility either with precautionary savings (direct effect) or by demanding a stronger public safety net, which in turn lowers growth (indirect effect). However, the indirect channel is only available if the political regime allows citizens to determine their desired level of public services. I test this theory on a balanced panel of 95 countries from 1960 { 2010. The paper reveals the latent endogeneity of government size in a single growth equation framework and offers a simultaneous estimation method as an alternative. Results support the existence of both effects. The direct channel is stronger in autocratic societies, but as a country turns to democracy the indirect channel dominates. Volatility has a positive net effect on growth in autocratic nations, but a negative net effect in democratic societies. This finding explains why previous growth analyses of volatility at times reached contradicting conclusions. |
| Keywords: | Volatility; Business Cycles; Economic Growth |
| JEL: | E32 H11 O40 |
| Date: | 2013–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:010944&r=gro |
| By: | Vivarelli, Marco (Università Cattolica del Sacro Cuore) |
| Abstract: | This paper is intended to provide an updated discussion on a series of issues that the relevant literature suggests to be crucial in dealing with the challenges a middle income country may encounter in its attempts to further catch-up a higher income status. In particular, the conventional economic wisdom – ranging from the Lewis-Kuznets model to the endogenous growth approach – will be contrasted with the Schumpeterian and evolutionary views pointing to the role of capabilities and knowledge, considered as key inputs to foster economic growth. Then, attention will be turned to structural change and innovation, trying to map – using the taxonomies put forward by the innovation literature – the concrete ways through which a middle income country can engage a technological catching-up, having in mind that developing countries are deeply involved into globalized markets where domestic innovation has to be complemented by the role played by international technological transfer. Among the ways how a middle income country can foster domestic innovation and structural change in terms of sectoral diversification and product differentiation, a recent stream of literature underscores the potentials of local innovative entrepreneurship, that will also be discussed bridging entrepreneurial studies with the development literature. Finally, the possible consequences of catching-up in terms of jobs and skills will be discussed. |
| Keywords: | catching-up, structural change, globalization, capabilities, innovation, entrepreneurship |
| JEL: | O14 O33 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8148&r=gro |
| By: | Bhattacharyya, Chandril; Gupta, Manash Ranjan |
| Abstract: | In this paper, a model of endogenous economic growth is developed with special focus on the interaction between unionized labour market and environmental pollution. We introduce a trade union; and use both ‘Efficient Bargaining’ model and ‘Right to Manage’ model to solve the negotiation problem. Environmental pollution is the result of production; and the labour union bargains not only for wage and employment but also for the protection of environment. We derive properties of optimum income tax policy while financing abatement expenditure; and also analyse the effects of unionization on the level of employment and on growth rate. It appears that the optimum rate of income tax varies inversely with the relative bargaining power of the labour union. An increase in the relative bargaining power of the labour union may enhance employment in ‘Efficient Bargaining’ model if the labour union is highly employment oriented. However, the union always forces the firm to raise the spending rate for environment protection. So, unionisation may raise the growth rate, even if the first effect is negative, but the second effect dominates the first effect. |
| Keywords: | Labour union; Environment; Income tax; Abatement expenditure; Endogenous growth |
| JEL: | J51 O44 Q5 Q58 |
| Date: | 2014–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55416&r=gro |
| By: | Jouvet, Pierre-André; Gonand, Frédéric |
| Abstract: | The demographic structure of a country influences economic activity. The "second dividend" modifies growth. Accordingly, in general equilibrium, the second dividend and the demographic structure are interrelated. This paper aims at assessing empirically the "second dividend" in a dynamic, empirical and intertemporal setting that allows for measuring its impact on growth, its intergenerational redistributive effects, and its interaction with the demographic structure. The article uses a general equilibrium model with overlapping generations, an energy module and a public finance module. Policy scenarios compare the consequences of recycling a carbon tax through lowe r proportional income tax rather than higher public lumpsum expenditures. They are computed for two countries with different demographics (France and Germany). Results suggest that the magnitude of the "second dividend" is significantly related with the demographic structure. The more concentrated the demographic structure on cohorts with higher income and saving rate, the stronger the effect on capital supply of the second dividend. The second dividend weighs on the welfare of relatively aged working cohorts. It fosters the wellbeing of young working cohorts and of future generations. The more concentrated the demog raphic structure on aged working cohorts, the higher the intergenerational redistributive effects of the second dividend. |
| Keywords: | Energy transition; intergenerational redistribution; overlapping generations; double dividend; general equilibrium; |
| JEL: | D58 D63 E62 L7 Q28 Q43 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/13160&r=gro |
| By: | Sahbi Farhani; Muhammad Shahbaz; Mohammad Mafizur Rahman |
| Abstract: | The present study investigates the relationship between natural gas consumption and economic growth using Cobb-Douglas production function by incorporating exports, capital and labor as additional factors of production. We apply the ARDL bounds testing approach to test the existence of long run relationship between the series. The VECM Granger approach is implemented to detect the direction of causal relation between the variables. Our results show that variables are cointegrated for long run relationship. The results also indicate that natural gas consumption, exports, capital and labor are contributing factors to domestic production and hence economic growth in case of France. The causality analysis indicates that feedback hypothesis is validated between gas consumption and economic growth which implies that adoption of energy conservation policies should be discouraged. The bidirectional causality is also found between exports and economic growth, gas consumption and exports, capital and energy consumption, exports and capital. This study opens up new direction for policy makers to formulate a comprehensive energy policy to sustain economic growth for long span of time in case of France. |
| Keywords: | Gas Consumption; Economic Growth; Exports; Capital; Labor; France. |
| Date: | 2014–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-226&r=gro |
| By: | Galor, Oded; Klemp, Marc |
| Abstract: | This research explores the biocultural origins of human capital formation. It presents the first evidence that moderate fecundity was conducive for long-run reproductive success within the human species. Exploiting an extensive genealogy record for nearly half a million individuals in Quebec during the seventeenth and eighteenth centuries, the study traces the number of descendants of early inhabitants in the subsequent four generations. Using the time interval between the date of marriage and the first live birth as a measure of reproductive capacity, the research establishes that while a higher fecundity is associated with a larger number of children, an intermediate level maximizes long-run reproductive success. The finding further indicates that the optimal level of fecundity was below the population median, suggesting that the forces of natural selection favored individuals with a lower level of fecundity. The research lends credence to the hypothesis that during the Malthusian epoch, natural selection favored individuals with a larger predisposition towards child quality, contributing to human capital formation, the onset of the demographic transition and the evolution of societies from an epoch of stagnation to sustained economic growth. |
| Keywords: | Demography, Evolution, Human Capital Formation, Natural Selection, Fecundity, Quantity-Quality Trade-Off, Long-Run Reproductive Success |
| JEL: | J10 O10 |
| Date: | 2014–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55636&r=gro |
| By: | Ashraf, Quamrul; Galor, Oded; Klemp, Marc |
| Abstract: | This research establishes that migratory distance from the cradle of anatomically modern humans in East Africa and its effect on the distribution of genetic diversity across countries has a hump-shaped effect on nighttime light intensity per capita as observed by satellites, reflecting the trade-off between the beneficial and the detrimental effects of diversity on productivity. The finding lends further credence to the hypothesis that a significant portion of the variation in the standard of living across the globe can be attributed to factors that were determined in the distant past. |
| Keywords: | Nighttime light intensity, Out of Africa Hypothesis of Comparative Development, Genetic Diversity, Comparative Development, Migratory Distance from Africa |
| JEL: | N10 N30 N50 O10 O50 Z10 |
| Date: | 2014–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55634&r=gro |