nep-gro New Economics Papers
on Economic Growth
Issue of 2015‒06‒20
fifteen papers chosen by
Marc Klemp
Brown University

  1. Does It Matter Where You Came From? Ancestry Composition and Economic Performance of U.S. Counties, 1850-2010 By Scott Fulford; Ivan Petkov; Fabio Schiantarelli
  2. Innovation and Top Income Inequality. By P. Aghion; U. Akcigit; A. Bergeaud; R. Blundell; D. Hémous
  3. Did Longer Lives Buy Economic Growth? From Malthus to Lucas and Ben-Porath By David de la Croix
  4. Internet Use and Ethnic Heterogeneity in a Cross-Section of Countries By Awaworyi Churchill, Sefa; Okai, Davidson; Posso, Alberto
  5. Optimal education in times of ageing: The dependency ratio in the Uzawa-Lucas growth model By Edle von Gaessler A.K.U.; Ziesemer T.H.W.
  6. Assessing Piketty’s laws of capitalism By Jakob B. Madsen; Antonio Minniti; Francesco Venturini
  7. Trust and Quality of Growth: A Note By Simplice A. Asongu; Rangan Gupta
  8. Estimating the shares of secondary- and tertiary-sector output in the age of early modern growth: the case of Japan, 1600-1874 By Saito, Osamu; Takashima, Masanori
  9. Can Recessions be 'Productive'? Schumpeter and the Moderns By Muriel Dal-Pont Legrand; Harald Hagemann
  10. Economic growth and nonrenewable resources: An empirical investigation By Amos James Ibrahim-Shwilima
  11. Does government size affect per-capita income growth? A Hierarchical meta-regression analysis By Awaworyi, Sefa; Yew, Siew Ling; Ugur, Mehmet
  12. The Effect of Energy Consumption and Human Capital on Economic Growth: An Exploration of Oil Exporting and Developed Countries By Fatema Alaali; Jennifer Roberts; Karl Taylor
  13. Effects of Government Education and Health Expenditures on Economic Growth: A Meta-analysis By Awaworyi Churchill, Sefa; Yew, Siew Ling; Ugur, Mehmet
  14. Structural change and total factor productivity: Evidence from germany By Henze, Philipp
  15. Revisiting the Government Spending and Growth analysis in Ghana: A disaggregated Analysis By Adu, Frank; Ackah, Ishmael

  1. By: Scott Fulford (Boston College); Ivan Petkov (Boston College); Fabio Schiantarelli (Boston College; IZA)
    Abstract: The United States provides a unique laboratory for understanding how the cultural, institutional, and human capital endowments of immigrant groups shape economic outcomes. In this paper, we use census micro-sample information to reconstruct the country-of-ancestry distribution for US counties from 1850 to 2010. We also develop a county-level measure of GDP per capita over the same period. Using this novel panel data set, we investigate whether changes in the ancestry composition of a county matter for local economic development and the channels through which the cultural, institutional, and educational legacy of the country of origin affects economic outcomes in the US. Our results show that the evolution of the country-of-origin composition of a county matters. Moreover, the culture, institutions, and human capital that the immigrant groups brought with them and pass on to their children are positively associated with local development in the US. Among these factors, measures of culture that capture attitudes towards cooperation play the most important and robust role. Finally, our results suggest that while fractionalization of ancestry groups is positively related with county GDP, fractionalization in attributes such as trust is negatively related to local economic performance.
    Keywords: Immigration, Ethnicity, Ancestry, Economic Development, Culture, Institutions
    JEL: J15 N31 N32 O10 Z10
    Date: 2015–05–15
  2. By: P. Aghion; U. Akcigit; A. Bergeaud; R. Blundell; D. Hémous
    Abstract: In this paper we use cross-state panel data to show a positive and significant correlation between various measures of innovativeness and top income inequality in the United States over the past decades. Two distinct instrumentation strategies suggest that this correlation (partly) reflects a causality from innovativeness to top income inequality, and the effect is significant: for example, when measured by the number of patent per capita, innovativeness accounts on average across US states for around 17% of the total increase in the top 1% income share between 1975 and 2010. Yet, innovation does not appear to increase other measures of inequality which do not focus on top incomes. Next, we show that the positive effects of innovation on the top 1% income share are dampened in states with higher lobbying intensity. Finally, from cross-section regressions performed at the commuting zone (CZ) level, we find that: (i) innovativeness is positively correlated with upward social mobility; (ii) the positive correlation between innovativeness and social mobility, is driven mainly by entrant innovators and less so by incumbent innovators, and it is dampened in states with higher lobbying intensity. Overall, our findings vindicate the Schumpeterian view whereby the rise in top income shares is partly related to innovation-led growth, where innovation itself fosters social mobility at the top through creative destruction.
    Keywords: Itop income, inequality, innovation, patenting, citations, social mobility, incumbents, entrant
    JEL: O30 O31 O33 O34 O40 O43 O47 D63 J14 J15
    Date: 2015
  3. By: David de la Croix (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: The note provides a summary of the possible impact of increases in adult longevity on economic growth with a focus on two particular channels: the contact time effect and the incentive effect. After documenting empirical evidence concerning the rise of longevity, two methods to measure longevity are presented, namely the Gompertz Law and the BCL Law of Mortality. These methods are then applied qualitatively and quantitatively to various models to show the effect of longevity on growth. Overall, the note concludes that increases in longevity are quantitatively significant for the increases in growth observed over the last two centuries and calls for the consideration of demographic factors when examining determinants of growth.
    Date: 2015–06–11
  4. By: Awaworyi Churchill, Sefa; Okai, Davidson; Posso, Alberto
    Abstract: This paper investigates the association between ethnic heterogeneity and information technology related outcomes such as internet access and internet use. We argue that the global digital divide, as measured by cross-country differences in internet access and use, could be explained by cross-country differences in ethnic heterogeneity. We use indices of ethnic and linguistic fractionalization as measures of ethnic heterogeneity. Using data on a cross-section of 93 countries, we find evidence of a negative association between ethnic heterogeneity and the use and access of internet. Thus, cross-country differences in the global digital divide can be explained by the levels of ethnic fractionalization. Other determinants of the digital divide include income, infrastructure, literacy level, level of urbanization and inequality.
    Keywords: ethnic diversity,digital divide,information inequality,internet
    Date: 2015–06–16
  5. By: Edle von Gaessler A.K.U.; Ziesemer T.H.W. (UNU-MERIT)
    Abstract: The increasing share of retirees puts pressure on the shrinking working generation which will need to produce more output per worker to ensure a constant standard of living. We investigate the influence a changing dependency ratio has on the time individuals spend in education and production. Longer education will increase productivity in the future, but will lower production in the short run, whereas an increase in labour input at the cost of education will provide more production immediately. We introduce an age-independent dependency ratio into a discrete-time Uzawa-Lucas model with international capital movements, human capital externalities and decreasing returns to labour in education. The dependency ratio is defined as the fraction between inactive and active individuals in regard to work or education. By calibration of the model, we find multiple steady states indicated by a u-shaped relation between education time-shares and the growth rate of the dependency ratio. Near the stable, high-level steady state, the optimal response to higher growth of the dependency ratio is more education to enhance productivity. We find evidence for this relation for 16 OECD countries. As a model extension, a debt-dependent interest rate has been introduced and estimated.
    Keywords: Demographic Trends, Macroeconomic Effects, and Forecasts; Economic Development: Human Resources; Human Development; Income Distribution; Migration;
    JEL: O15 J11
    Date: 2015
  6. By: Jakob B. Madsen; Antonio Minniti; Francesco Venturini
    Abstract: This paper tests Piketty's predictions that in the long run (i) the capital-income ratio, K-Y, is driven by the ratio between the rates of saving and income growth, s and g; and that (ii) the capital share of income responds to variations in the s-g ratio, along with the rate of return on capital, r. We assess the two predictions using both Piketty and Zucman's (2014) original data and a new long historical dataset covering 21 OECD countries. Our findings corroborate Piketty’s theory in the very long run (1870-2010), whilst evidence for the latest decades is less robust (1970-2010).
    Date: 2015–05
  7. By: Simplice A. Asongu (African Governance and Development Institute,Yaoundé, Cameroon); Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: The transition from Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs) has substantially shifted the policy debate from growth to inclusive growth. In this short note, we revisit the trust-growth nexus by exploiting a dataset on quality of growth (QG), recently made available to the scientific community. The empirical evidence is based on interactive contemporary and non-contemporary quantile regressions. Inequality and human development modifying variables are used as additional controls. The findings broadly support the positive role of trust in QG. In addition, relatively high thresholds of inequality are needed to change this positive trust-QG nexus in some distributions.
    Keywords: Trust, Inclusive Growth, Conditional Effects
    JEL: A13 I30 O40 Z13
    Date: 2015–06
  8. By: Saito, Osamu; Takashima, Masanori
    Abstract: This paper proposes a new methodology of estimating non-primary sector output shares in early modern growth. By using data from proto-industrial Japan, the paper demonstrates, first, that not just the rate of urbanisation but population density would also work as another predictor of the secondary and tertiary sectoral shares when growth was rural-centred; and second, that regional panel data should be constructed from earliest possible sets of modern data to estimate the coefficients of these two variables on the sectoral shares. In order to apply the coefficients derived from modern data for the calculation of pre-modern estimates, regional panel data are far superior to simple time-series statistics. The paper presents new per-capita GDP estimates thus computed for Japan 1600-1874, together with a brief comparison with previous estimates, especially those by Angus Maddison.
    Date: 2015–05
  9. By: Muriel Dal-Pont Legrand (GREDEG CNRS; University of Nice Sophia Antipolis); Harald Hagemann (University of Hohenheim, Stuttgart)
    Abstract: Joseph A. Schumpeter never ceased to inspire new generations of economists. One of his major contributions concerns his view of business cycles and economic development as closely interrelated dynamics. Among the different lines of research proposed by Schumpeter in order to allow economists to capture how growth and cycle dynamics intertwine, one can find the analysis of the investment decisions during recessions. Schumpeter considered this process of Creative Destruction as “the essential fact about capitalism” since the Industrial Revolution. According to him, the process of liquidation and reallocation of productive resources taking place in the recession and particularly in the depression phase is not only an essential and unavoidable characteristics of capitalist evolution, but also necessary and, finally, beneficial for long-run development. More recently, one can notice in the literature a revival of interest for these questions. This line of research has been developed again in the 1990s by Aghion and Saint-Paul (1991, 1993, 1998) and Saint-Paul (1994) but also Caballero and Hammour (1994, 1996). They elaborated the so-called “productive recessions” analysis respectively the ‘cleansing effect’ of recessions. Focusing exclusively on neo-Schumpeterian contributions which explicitly analyze the impact recessions can have on growth, our purpose is to examine the mechanisms involved in the modern literature mentioned above and to compare them with Schumpeter’s original writings. The objective of this paper is to question the ‘Schumpeterian character’ of this recent literature and then to investigate the degree of continuity as well as the differences. Some focus will be on potential differences with regard to economic policy.
    Keywords: business cycles, growth, creative destruction, productive recessions, Schumpeter
    JEL: B31 O11 O31 O47
    Date: 2015–06
  10. By: Amos James Ibrahim-Shwilima (Graduate School of Economics, Waseda University, Tokyo: Japan)
    Abstract: In this paper, we investigate the role of nonrenewable resources in economic growth from 1995–2010. The surprising result is that the share of nonrenewable resource exports in 1996 GDP was positively associated with subsequent economic growth. In fact, for the period under study, we found no strong evidence of the resource curse, after controlling for other important determinants of economic growth. For the period under study, most economies were open and followed policies that enabled large flows of foreign investment between economies. Our finding suggests that public institutions — measured by using an index of government effectiveness — are of paramount importance to economic growth. This suggests that if a resource-rich economy needs a greater contribution from its resources, it should improve its public- and private-sector institutions.
    Keywords: growth, primary-product exports, nonrenewable resources, institutions
    Date: 2015–01
  11. By: Awaworyi, Sefa; Yew, Siew Ling; Ugur, Mehmet
    Abstract: We conduct a hierarchical meta-regression analysis to review 87 empirical studies that report 769 estimates for the effects of government size on economic growth. We follow best-practice recommendations for meta-analysis of economics research, and address issues of publication selection bias and heterogeneity. When size is measured as the ratio of total government expenditures to GDP, the partial correlation between government size and per-capita GDP growth is negative in developed countries, but insignificant in developing countries. When size is measured as the ratio of consumption expenditures to GDP, the partial correlation is negative in both developed and developing countries, but the effect in developing countries is less adverse. We also report that government size is associated with less adverse effects when primary studies control for endogeneity and are published in journals and more recently, but it is associated with more adverse effects when primary studies use cross-section data. Our findings indicate that the relationship between government size and per-capita GDP growth is context-specific and likely to be biased due to endogeneity between the level of per-capita income and government expenditures.
    Keywords: Economic growth,Government size,Government expenditures,Government consumption,Meta-analysis,Evidence synthesis
    JEL: O40 H50 C1
    Date: 2015–06–15
  12. By: Fatema Alaali (Department of Economics, University of Sheffield); Jennifer Roberts (Department of Economics, University of Sheffield); Karl Taylor (Department of Economics, University of Sheffield)
    Abstract: Energy has long been argued as an essential factor for the development of the economy and therefore it should be brought in line with the other production factors of neoclassical economics, capital and labour. Using panel data for 130 countries from 1981 to 2009, this paper explores the impact of multiple forms of energy consumption and human capital on per capita GDP growth. Generalized method of moments is applied to estimate an augmented neoclassical growth model that includes education and health capital as well as energy consumption. The key outcomes from this study show that education and health capital have a signifficant effect on economic growth. Energy consumption is also found to support higher growth. The results on the differential effects of energy and human capital on the economic growth of the developed and oil exporting countries indicate that energy consumption has a significant positive effect in both types of countries. Education capital affects the developed countries positively while health capital affects the oil exporting countries' economic growth negatively. These results are useful for policy makers, especially in less developed countries encouraging them to implement, for example, compulsory secondary education and child immunizations in order to reach higher standards of living. Moreover, energy must be used more efficiently to ensure sustainable growth.
    Keywords: Growth, Education, Health, Human Capital, Mortality Rates, Energy Consumption.
    JEL: I15 I25 Q43
    Date: 2015–06
  13. By: Awaworyi Churchill, Sefa; Yew, Siew Ling; Ugur, Mehmet
    Abstract: Using a sample of 306 estimates drawn from 31 primary studies, this paper conducts an empirical synthesis of the link between economic growth and government expenditure on education or health using meta-analysis. We also explain the heterogeneity in empirical results. We find that the effect of government education expenditure on growth is positive, whereas the growth effect of government health expenditure is negative. Our meta-regression analysis suggests that factors such as econometric specifications, publication characteristics as well as data characteristics explain the heterogeneity in the literature. We also find no evidence of publication selectivity.
    Keywords: government education expenditure,government health expenditure,human capital,economic growth
    Date: 2015–06–16
  14. By: Henze, Philipp
    Abstract: This paper uses a long time series of German employment data to test the theory of Ngai & Pissarides (2007). The theory suggests that the shift of employment shares from manufacturing to services is due to divergent growth rates of total factor productivity (TFP) in the two sectors. To test the theoretical predictions, I use the "Establishment History Panel" together with sectoral data on total factor productivity. The results confirm the theoretical predictions, i.e. they show a negative relationship between employment growth and TFP growth.
    Keywords: Structural Change,Economic Growth,Total Factor Productivity
    JEL: L16 O14 O40 D24
    Date: 2015
  15. By: Adu, Frank; Ackah, Ishmael
    Abstract: Government’s desire to raise economic growth in Ghana has led to a sharp rise in government spending in Ghana without any significant impact on economic growth. This study set out to investigate the relationship between economic growth and government spending at the disaggregated level with the ARDL model with annual data spanning from 1970 to 2010 to advice policy makers on the dynamics of growth. The study found out that, in both the long run and short run, government capital expenditure has a significant negative impact on economic growth but recurrent expenditure has a positive effect on economic growth in both the long run and the short run though it was not significant in the short run. The study therefore advocates for fiscal discipline and efficiency in the disbursement of capital expenditure to trigger positive benefits in the future
    Keywords: economic growth, government expenditure, Capital expenditure, recurrent expenditure
    JEL: B22 B26
    Date: 2015–06–08

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