nep-gro New Economics Papers
on Economic Growth
Issue of 2014‒11‒01
twenty-one papers chosen by
Marc Patrick Brag Klemp
Brown University

  1. Physiological Constraints and Comparative Economic Development By Carl-Johan Dalgaard; Holger Strulik
  2. Walled Cities in Late Imperial China By Yannis Ioannides; Junfu Zhang
  3. Transition to Clean Technology By Douglas Hanley; Daron Acemoglu; Ufuk Akcigit; William Kerr
  4. Capital Cities, Conflict, and Misgovernance: Theory and Evidence By Filipe R. Campante; Quoc-Anh Do; Bernardo Guimaraes
  5. The Long-Term Effects of the Printing Press in Sub-Saharan Africa By Julia Cage; Valeria Rueda
  6. Family Structure and the Education Gender Gap: Evidence from Italian Provinces By Graziella Bertocchi; Monica Bozzano
  7. The Health Costs of Ethnic Distance: Evidence from Sub-Saharan Africa By Gomes, Joseph
  8. Did Science Cause the Industrial Revolution? By Cormac Ó Gráda
  9. Egalitarianism under population change: age structure does matter By Raouf Boucekkine; Giorgio Fabbri; Fausto Gozzi
  10. Growth Poles: Agglomeration Economies and Economic Growth in Switzerland from 1860 to 2008 By Christian Stohr;
  11. Modern secondary education and economic performance: the introduction of the Gewerbeschule and Realschule in nineteenth-century Bavaria By Semrad, Alexandra
  12. Shocking Labor Supply: A Reassessment of the Role of World War II on Women's Labor Supply By Goldin, Claudia D.; Olivetti, Claudia
  13. Exploring the Population Implications of Male Preference When the Sex Probabilities at Birth Can Be Altered By Frank T. Denton; Byron G. Spencer
  14. Does Public Education Expansion Lead to Trickle-Down Growth? By Böhm, Sebastian; Grossmann, Volker; Steger, Thomas M.
  15. Public Goods, Redistribution, and Growth: A Classical Model By Daniele Tavani; Luca Zamparelli
  16. Indices, Institutions and Economic Growth: In Search of Reliable Indicators (recount) By Konstantin Yanovsky; Rinat Menyashev; Timofey Ginker
  17. Factor substitution, factor-augmenting technical progress, and trending factor shares: the Canadian evidence By Kenneth G. Stewart; Jiang Li
  18. The Nexus between Military Expenditures and Economic Growth in the BRICS and the US: A Bootstrap Panel Causality Test By Ming Zhong; Tsangyao Chang; Samrat Goswami; Rangan Gupta
  19. Human Capital Outflow and Economic Misery: Fresh Evidence for Pakistan By Amjad Ali; NooreenMujahid; Yahya Rashid; Muhammad Shahbaz
  20. Joint-stock companies dynamics, legal institutions and regional economic disparities in Italy (1858-1914) By Pierangelo Toninelli; Claudio Pavese
  21. The Determinants of Growth Rate Volatility in European Regions By Davide fiaschi; Lisa Gianmoena; Angela Parenti

  1. By: Carl-Johan Dalgaard (Department of Economics, Copenhagen University); Holger Strulik (Department of Economics, University of Goettingen)
    Abstract: It is a well known fact that economic development and distance to the equator are positively correlated variables in the world today. It is perhaps less well known that as recently as 1500 C.E. it was the other way around. The present paper provides a theory of why the "latitude gradient" seemingly changed sign in the course of the last half millennium. In particular, we develop a dynamic model of economic and physiological development in which households decide upon the number and nutrition of their offspring. In this setting we demonstrate that relatively high metabolic costs of fertility, which may have emerged due to positive selection towards greater cold tolerance in locations away from the equator, would work to sti fle economic development during pre-industrial times, yet allow for an early onset of sustained growth. As a result, the theory suggests a reversal of fortune whereby economic activity gradually shifts away from the equator in the process of long-term economic development.
    Keywords: long-run growth, evolution, nutrition, fertility, education, comparative development.
    JEL: O11 I12 J13
    Date: 2014–10–08
  2. By: Yannis Ioannides; Junfu Zhang
    Abstract: For thousands of years, the Chinese and many other nations around the workd built defensive walls around their cities. This phenomenon is not well understood from an economic perspective. To rationalize the existence of city walls, we propose a simple model that relates the deimesions of city walls to a set of economic variables. Guided by this model, we conduct an empirical alyalysis using hand-collected and previously unused data on city walls in the Ming (1368-1644) and Qing (1644-1911) Dynasties. Consistent with the model, we find that the circumference of a city wall is positively correlated with population size in the jurisdiction and that frontier cities subject to a higher probability of attack tended to have stronger city walls. Since a city wall imposes a physical boundary around a city, the land area inside the city wall provides a natural proxy of city size. We examine the physical size distribution of walled cities in late imperial Chian. We find that city sizes above a certain cutoff follow Zipf's law, although the Zipf coefficient is sensitive to the choice of the cutoff point. This result complements findigs in the existing literature that focuses almost exclusively on the population size distribution of cities.
    Keywords: City walls, Pareto distribution, Zipf's law, power law, China
    JEL: R12
  3. By: Douglas Hanley; Daron Acemoglu; Ufuk Akcigit; William Kerr
    Abstract: We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation-in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several steps to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model`s quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy heavily relies on research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policy structures. For example, just relying on carbon taxes or delaying intervention both have significant welfare costs--though their implications for medium run temperature increases are quite different.
    Keywords: carbon cycle, directed technological change, environment, innovation, optimal policy
    JEL: O30 O31 O33 C65
    Date: 2014–01
  4. By: Filipe R. Campante (Harvard University); Quoc-Anh Do (Département d'économie); Bernardo Guimaraes (Sao Paulo School of Economics)
    Abstract: We investigate the links between capital cities, conict, and the quality of governance, starting from the assumption that incumbent elites are constrained by the threat of insurrection, and that this threat is rendered less e_ective by distance from the seat of political power. We develop a model that delivers two key predictions: (i) conict is more likely to emerge (and to dislodge incumbents) closer to the capital, and (ii) isolated capital cities are associated with misgovernance. We show evidence that both patterns hold true robustly in the data, as do other ancillary predictions from the model.
    Keywords: Capital Cities; Governance; Institutions; Conflict; Civil War; Revolutions; Insurgencies; Population Concentration; Democracy; Power Sharing; Inefficient Institutions
    JEL: D02 D74 O18 R12
    Date: 2014–10
  5. By: Julia Cage (Département d'économie); Valeria Rueda (Département d'économie (ECON))
    Abstract: This article delves into the relationship between newspaper readership and civic attitudes, and its effect on economic development. To this end, we investigate the long-term consequences of the introduction of the printing press in the 19th century. In sub-Saharan Africa, Protestant missionaries were the first both to import the printing press technology and to allow the indigenous population to use it. We build a new geocoded dataset locating Protestant missions in 1903. This dataset includes, for each mission station, the geographic location and its characteristics, as well as the educational and health-related investments undertaken by the mission. We show that, within regions located close to missions, proximity to a printing press significantly increases newspaper readership today. We also document a strong association between proximity to a printing press and contemporary economic development. Our results are robust to a variety of identification strategies.
    Keywords: historical persistence, printing press, Protestant missions, newspaper readership, political participation, economic development.
    JEL: D72 N37 N77 O33 Z12 Z13
    Date: 2014–10
  6. By: Graziella Bertocchi; Monica Bozzano
    Abstract: We investigate the determinants of the education gender gap in Italy in historical perspective with a focus on the influence of family structure. We capture the latter with two indicators: residential habits (nuclear vs. complex families) and inheritance rules (partition vs. primogeniture). After controlling for economic, institutional, religious, and cultural factors, we find that over the 1861-1901 period family structure is a driver of the education gender gap, with a higher female to male enrollment rate ratio in upper primary schools being associated with nuclear residential habits and equal partition of inheritance. We also find that only the effect of inheritance rules persists over the 1971-2001 period.
    Keywords: Education gender gap, Italian Unification, family types, inheritance, institutions, religion, convergence
    JEL: E02 H75 I25 J16 N33 O15
    Date: 2014–07
  7. By: Gomes, Joseph
    Abstract: We show that ethnic distances can explain the ethnic inequalities in child mortality rates in Africa. Using individual level micro data from DHS surveys for fourteen Sub-Saharan African countries combined with a novel high resolution dataset on the spatial distribution of ethnic groups we show that children whose mothers have a higher linguistic distance from their neighbours have a higher probability of dying. Fractionalization reduces the probability of child death. We argue that fractionalization re ects a higher stock of knowledge and information leading to better health outcomes. Knowledge does not ow smoothly to linguistically distant groups. Linguistically distant mothers also have a lower probability of knowing about the oral rehydration product (ORS) for treating children with diarrhoea.
    Date: 2014–10–17
  8. By: Cormac Ó Gráda (University College Dublin)
    Abstract: This paper reviews debates about the role of science and technology before and during the British Industrial Revolution.
    Keywords: economic history, science, human capital
    JEL: N13 O10 O30
    Date: 2014–10–07
  9. By: Raouf Boucekkine (Aix-Marseille School of Economics, Université Aix-Marseille, France); Giorgio Fabbri (EPEE, Université d’Evry-Val-d’Essonne (TEPP, FR-CNRS 3126), France); Fausto Gozzi (Dipartimento di Scienze Economiche ed Aziendali, Universit`a LUISS - Guido Carli Rome, Italy)
    Abstract: We study the compatibility of the optimal population size concepts produced by different social welfare functions and egalitarianism meant as “equal consumption for all individuals of all generations”. Social welfare functions are parameterized by an altruism parameter generating the Benthamite and Millian criteria as polar cases. The economy considered is in continuous time and is populated by homogeneous cohorts with a given life span. Production functions are linear in labor, (costly) procreation is the unique way to transfer resources forward in time. First, we show that egalitarianism is optimal whatever the degree of altruism in “perpetual youth” model, that’s when lifetime span is finite but age structure does not matter: in this case egalitarianism does not discriminate between the social welfare functions considered. Then we show that, when life span is finite but age structure matters, egalitarianism does not arise systematically as an optimal outcome. In particular, in a growing economy, that is when population growth is optimal in the long-run, this egalitarian rule can only hold when the welfare function is Benthamite. When altruism is impure, egalitarianism is impossible in the context of a growing economy. Either in the Benthamite or impure altruism cases, procreation is never optimal for small enough life spans, leading to finite time extinction and maximal consumption for all existing individuals.
    Keywords: Egalitarianism, age structure, total utilitarianism, impure altruism, endogenous growth
    JEL: D63 D64 C61 O40
    Date: 2014
  10. By: Christian Stohr;
    Abstract: This paper investigates the relation between agglomeration and economic growth in Switzerland from 1860 to 2008. I use a new detailed data set on regional employment, value added and labor productivity for two geographical levels with 97 and 16 regions respectively. I provide a description of spatial concentration and inequality in labor productivity over the entire time period and find that the Swiss economy was very dispersed around 1860 but spatial concentration of economic activity increased rapidly until 1930. Thereafter, a series of institutional settings limited spatial concentration. Regional inequality in terms of labor productivity followed a bell-¬â€shape evolution between 1860 and 1990 followed by a new upswing in regional inequality after 1990. I pursue by estimating the impact of agglomeration on labor productivity and employment growth and find that agglomeration economies contributed significantly to regional economic growth between 1888 and 1930. Thereafter, the Great Depression and regional redistribution policies have limited the effect of agglomeration economies. I argue that rapid urbanization has significantly contributed to Switzerland’s fast growth between 1860 and 1930, while anti-¬â€urban policies have contributed to the Swiss growth slack after 1970.
    Keywords: Switzerland, agglomeration economies, growth poles, historical economic geography
    Date: 2014–09
  11. By: Semrad, Alexandra
    Abstract: Do new school types focusing on practical and business-related knowledge lead to increased economic performance? To analyze this question, this paper examines the introduction of two types of modern secondary education, the Gewerbeschule and its successor, the Realschule, in nineteenth-century Bavaria. Since opening of these schools is arguably endogenous – as it were mainly the prosperous, big cities that opened one – the estimated treatment effect capturing the economic influence of the Gewerbeschule/Realschule will lead to biased results. To alleviate this bias, I adopt propensity score matching to compare relatively alike counties with and without these schools. Using historical county-level data on business formations, tax revenues, employment structure, and patent holdings, OLS regression analysis shows that the opening of a modern secondary school is in general positively associated with economic performance several years later.
    Keywords: human capital; secondary education; economic history; economic development; Bavaria
    JEL: I25 N33
    Date: 2014–08
  12. By: Goldin, Claudia D.; Olivetti, Claudia
    Abstract: The most prominent feature of the female labor force across the past hundred years is its enormous growth. But many believe that the increase was discontinuous. Our purpose is to identify the short- and long-run impacts of WWII on the labor supply of women who were currently married in 1950 and 1960. Using WWII mobilization rates by state, we find a wartime impact on weeks worked and the labor force participation of married white (non-farm) women in both 1950 and 1960. The impact, moreover, was experienced almost entirely by women in the top half of the education distribution.
    Date: 2013
  13. By: Frank T. Denton; Byron G. Spencer
    Abstract: OBJECTIVE: The paper explores the population effects of male preference stopping rules and of alternative combinations of fertility rates and male-biased birth sex ratios. METHODS: The “laboratory” is a closed, stable population with five age groups and a dynamic process represented by a compact Leslie matrix. The new element is sex-selective abortion. We consider nine stopping rules, one with no male preference, two with male preference but no abortion, and six with male preference and the availability of abortion to achieve a desired number of male births. We calculate the probability distribution over the number of births and number of male births for each rule and work out the effects at the population level if the rule were adopted by all women bearing children. We then assess the impact of alternative combinations of fertility rates and male-biased sex ratios on the population. RESULTS: In the absence of sex-selective abortion, stopping rules generally have no effect on the male/female birth proportions in the population, although they can alter the fertility rate, age distribution, and rate of growth. When sex-selective abortion is introduced the effect on male/female proportions may be considerable, and other effects quite different as well. The contribution of this paper is the quantification of effects that might have been predictable in general but which require model-based calculations to see how large they could be. As the paper shows, they could in fact be very large; a population in which sex-selective abortion was widely practised could look quite different from what it would otherwise be.
    Keywords: birth sex probabilities, male preference, population implications
    Date: 2014–10
  14. By: Böhm, Sebastian; Grossmann, Volker; Steger, Thomas M.
    Abstract: The paper revisits the debate on trickle-down growth in view of the widely discussed evolution of the earnings and income distribution that followed a massive expansion of higher education. We propose a dynamic general equilibrium model to dynamically evaluate whether economic growth triggered by an increase in public education expenditure on behalf of those with high learning ability eventually trickles down to low-ability workers and serves them better than redistributive transfers. Our results suggest that, in the shorter run, low-skilled workers lose. They are better off from promoting equally sized redistributive transfers. In the longer run, however, low-skilled workers eventually benefit more from the education policy. Interestingly, although the expansion of education leads to sustained increases in the skill premium, income inequality follows an inverted U-shaped evolution.
    Keywords: Directed Technological Change; Publicly Financed Education; Redistributive Transfers; Transitional Dynamics; Trickle-Down Growth
    JEL: H20 J31 O30
    Date: 2014–10–21
  15. By: Daniele Tavani (Department of Economics, Colorado State University (USA).); Luca Zamparelli (Sapienza, University of Rome)
    Abstract: We extend the basic Classical growth model by introducing a productive and redistributive role for the public sector in an economy populated by two classes, workers (who supply labor, consume, and do not save) and capitalists (who own capital stock, consume and save). The government levies a tax on profits in order to: (i) finance the provision of a public good that augments the production possibilities of the economy, and (ii) integrate labor incomes through a transfer to workers. Following Michl (2009), we focus on two different model ‘closures’, which deliver an endogenous and an exogenous growth rate respectively. In both cases, the analysis of taxation and government spending composition between public goods and transfers requires to specify the government’s preferences. In the endogenous growth model, the government’s choice fixes long-run growth and income distribution. In the exogenous growth model, policy decisions determine income distribution and the employment rate.
    Keywords: Classical growth, functional distribution, redistributive policy.
    JEL: D33 E11 O38
    Date: 2014–10
  16. By: Konstantin Yanovsky (Gaidar Institute for Economic Policy); Rinat Menyashev (National Research University Higher School of Economics); Timofey Ginker (Department of Economics Bar-Ilan University, Israel)
    Abstract: The ratings of economic and political institutions are well-known and widely used in the Social Science literature. These ratings are heavily relied on Experts' evaluations with subjective ordinal ranking (i.g., from -10 to 10 points). Such evaluations can be occasionally driven by ideological considerations. Much worse – they are essentially incompatible with each other, and therefore inapplicable in a comparative study at some one specific point in time chosen for observation (i.e., for a cross-section analysis). In this paper we propose two new indicators of institutional quality for 154 countries. These indicators are constructed in a way that minimizes the subjectivity of the evaluations. Only the presence or absence of a particular institutional phenomenon is identified. This puts much less weight on possible bias and makes it easy to verify. We show that these indices predict economic growth at least not worse, than those commonly used. The indicators proposed, include information about institutions that has been accumulated over a period of approximately two centuries and our expert’s evaluations are less vulnerable to political bias and provide better compatibility of the estimations of various experts for various countries.
    Keywords: Rule of Law, Democracy, Limited Government, Institutions, Indicators, Economic growth
    JEL: P50 N40 O43
    Date: 2014
  17. By: Kenneth G. Stewart (Department of Economics, University of Victoria); Jiang Li
    Abstract: Revised productivity accounts recently released by Statistics Canada are used to estimate a Klump-McAdam-Willman normalized CES supply-side system for the half-century 1961–2010. The model permits distinct rates of factor-augmenting technical change for capital and labour that distinguish between short-term versus long-term effects, as well as a non-unitary elasticity of substitution and timevarying factor shares. The advantage of the Canadian data for this purpose is that they provide a unified treatment of measurement issues that have had to be improvised in the US and European data used by previous researchers. In contrast to the previous US results, we find an elasticity of substitution not significantly less than unity, and an absence of capital-augmenting technical change in both the short and long run. Technical change is thus solely labour augmenting, consistent with Uzawa’s steady state growth theorem. The model also yields plausible TFP estimates, and successfully captures trends in factor shares that have been the subject of recent study in international data.
    Keywords: normalized CES system, aggregate elasticity of substitution, biased technical change
    JEL: C51 E23 E25 O30 O51
    Date: 2014–10–16
  18. By: Ming Zhong (Shanghai University of Finance and Economics,School of Finance, Shanghai, CHINA); Tsangyao Chang (Department of Finance, Feng Chia University Taichung, TAIWAN); Samrat Goswami (Department of Rural Management and Development Tripura University, Tripura, INDIA); Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: This study re-examines the causal linkages between military expenditures and economic growth for the BRICS countries (Brazil, Russia, India, China, and South Africa) and that for the USA for the period 1988-2012. Panel causality was examined to explain dependency and heterogeneity across countries. The results of Granger causality tests show that military expenditures influence economic growth in the United States, economic growth influence military expenditures in both Brazil and India, a feedback between military expenditures and economic growth in Russia, and no causal link exists between military expenditures and economic growth in China and South Africa. These results indicate that the causality between military expenditures and economic growth varies across countries with different conditions. The findings of this study could provide important policy implications for the BRICS countries and also for the United States.
    Keywords: Military Expenditures, Economic Growth, Dependency and Heterogeneity, Bootstrap Panel Granger Causality Test, BRICS Countries
    JEL: H56 O41 C23
    Date: 2014–10
  19. By: Amjad Ali; NooreenMujahid; Yahya Rashid; Muhammad Shahbaz
    Abstract: This paper visits the impact of economic misery on human capital outflow using time series data over the period of 1975-2012. We have applied the combined cointegration tests and innovative accounting approach to examine long run and causal relationship between the variables. Our results affirm the presence of cointegration between the variables. We find that economic misery increases human capital outflow. Foreign remittances add in human capital outflow from Pakistan. The migration from Pakistan to rest of world is boosted by depreciation in local currency. Income inequality is also a major contributor to human capital outflow. The present study is comprehensive effort and may provide new insights to policy makers for handling the issue of human capital outflow by controlling economic misery in Pakistan.
    Keywords: Economic misery, human capital outflow, Pakistan
    Date: 2014–09–25
  20. By: Pierangelo Toninelli; Claudio Pavese
    Abstract: The paper represents the outcome of an ongoing research program on the dynamics of joint stock companies in Italy between the 1861 Unification of the country and World War 1. It is based on a considerable quantity of data, the bulk of which is constituted by the very detailed set covering the 1883-1913 period, which started to be collected many years ago and has a very reliable empirical support, the weekly companies’ official bulletin. Furthermore evidence for the preceding years have requested accurate investigation about the disposable quantitative information, their homogeneity and comparability. Apart from commenting upon the result of this unique collection of quantitative information, the paper will hopefully provide a not negligible contribution to the explanation of the Italian first period of economic growth and - more specifically - to the origins and evolution of the country’s regional inequalities. It is aimed at enlightening internal economic and social disparities also in terms of the diverging rhythm of private capital formation between the northern and southern regions. It will inquire if and how the joint-stock companies long-term dynamics showed unequal regional concentration, therefore penalizing the economic growth of the areas less affected by the phenomenon.
    Keywords: Italy pre-1913, joint stock companies, corporate law
    JEL: N23 N13 K22
    Date: 2014–10
  21. By: Davide fiaschi; Lisa Gianmoena; Angela Parenti
    Abstract: In this paper we analyze the determinants of growth rate volatility (GRV) of per capita GDP of 257 regions belongs to 25 EU coun- tries in the period 1992 − 2008. Among the determinants at regional level the growth rate of employment has a negative impact on GRV, while investment rate, the shares of agriculture, construction, finance and manufacturing, the share of household expenditure on GDP (the latter only for GRV due to positive shocks) have a positive impact; among the determinants at country level, government expenditure has a negative impact on GRV, while share of credit to private sector on GDP and inflation have a positive impact on GRV; finally, among the aggregate determinants, the volatility of the oil price has an asymmet- ric effect on GRV by increasing the volatility generated by negative shocks and reducing the volatility in case of negative shocks, while the participation to EMU only reduces the volatility due to positive shocks.
    Keywords: Asymmetric fluctuation, spatial panel model, generalized spatial two stage least squares, output composition, government ex- penditure.
    JEL: C23 E32 N14 O40
    Date: 2013–10–01

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