nep-gro New Economics Papers
on Economic Growth
Issue of 2015‒10‒10
twenty papers chosen by
Marc Klemp
Brown University

  1. A Theory of Child Marriage By Zaki Wahhaj
  2. Seven centuries of European economic growth and decline By Stephen Broadberry; Roger Fouquet
  3. Cereals, Appropriability and Hierarchy By Joram Mayshar; Omer Moav; Zvika Neeman; Luigi Pascal
  4. Human Capital Investment in a Late-Developing Economy: Evidence from Württemberg, c. 1600 – c. 1900 By Sheilagh Ogilvie and Markus Küpker
  5. The age distribution of Italy’s labor force in 1911 and its implications for the economy’s past: new evidence on the long swing in investment from unification to the Great War. By Pezzuto, Roberto
  6. On the Empirics of Institutions and Quality of Growth: Evidence for Developing Countries By Simplice Asongu; Oasis Kodila-Tedika
  7. Growth (and Segregation) by Rail: How the Railways Shaped Colonial South Africa By Johan Fourie and Alfonso Herranz-Loncan
  8. Finite Lifetimes, Population, and Growth By Bharat Diwakar; Gilad Sorek
  9. The Habakkuk hypothesis in a neoclassical framework By Mehdi Senouci
  10. The nexus of structural transformation, employment and education: Evidence from Mozambique and Tanzania By ANITA V.STANEVAA; THEO SPARREBOOMB; HANY ABDEL-LATIFC
  11. The endogenous direction of technological change in a discrete-time Ramsey model By Mehdi Senouci
  12. Heterogeneous EIS and Wealth Distribution in a Neoclassical Growth Model By Nakamoto, Yasuhiro
  13. Heterogeneous Conformism and Wealth Distribution in a Neoclassical Growth Model By Kazuo MIno; Yasuhiro Nakamoto
  14. Social policy and economic growth in some Latin American countries (1980 – 2010) By Clarimar Pulido; Jose Ustorgio Mora Mora
  15. Where has all the education gone? Nowhere, but too much By HONGCHUN ZHAO
  16. Initiative for Infrastructure Integration in South America : Way toward Regional Convergence By Andrea Bonilla Bolaños
  17. Factor Accumulation and Economic Growth in Pakistan: Incorporating Human Capital By Arshad, Shahzad; Munir, Kashif
  18. Wealth Inequality, or r-g, in the Economic Growth Model By HIRAGUCHI Ryoji
  19. Volatilities of Investment in Human Capital on Iran’s Economic Growth: A Bound Testing approach and GARCH Mod By Mosayeb Pahlavani
  20. Women and Autobiography By Victoria Encica

  1. By: Zaki Wahhaj
    Abstract: The practice of early marriage for women is prevalent in developing countries around the world today, and is believed to cause significant disruption in their accumulation of human capital. This paper develops an overlapping generations model of the marriage market to explain how the practice may be sustained in the absence of any intrinsic preference for young brides. We assume there is a desirable female attribute, relevant for the gains from marriage, that is only noisily observed before a marriage is contracted. We show that, in equilibrium, its prevalence declines with time spent on the marriage market and, thus, age can signal poorer quality and, consistent with the available evidence, require higher marriage payments. Model simulations for the case of Bangladesh show that (i) an intervention that raises the opportunity cost of marriage for adolescent girls can make it more and more attractive for future cohorts to postpone marriage such that its long-term impact on marriage and subsequent life choices may well exceed the impact on the first cohort which is exposed to it; (iii) a small-scale randomised control trial of the same intervention would significantly under-estimate its efficacy by failing to capture equilibrium effects.
    Date: 2015–09
  2. By: Stephen Broadberry; Roger Fouquet
    Abstract: This paper investigates very long run pre-industrial economic development. New annual GDP per capita data for six European countries over the last seven hundred years paint a clearer picture of the history of European economic development. First, the paper confirms that sustained growth has been a recent phenomenon, but rejects the argument that there was no long run growth in living standards before the Industrial Revolution. Instead, the evidence demonstrates the existence of numerous periods of economic growth before the nineteenth century – unsustained, but raising GDP per capita. It also shows that many of these economies experienced substantial economic decline. Thus, rather than being stagnant, pre-nineteenth century European economies experienced a great deal of change. Finally, it offers some evidence that, from the nineteenth century, these economies increased the likelihood of being in a phase of economic growth and reduced the risk of being in a phase of economic decline.
    Date: 2015–09
  3. By: Joram Mayshar; Omer Moav; Zvika Neeman; Luigi Pascal
    Abstract: We propose that the development of social hierarchy following the Neolithic Revolution was an outcome of the ability of the emergent elite to appropriate cereal crops from farmers and not a result of land productivity, as argued by conventional theory. We argue that cereals are easier to appropriate than roots and tubers, and that regional di¤erences in the suitability of land for di¤erent crops explain therefore di¤erences in the formation of hierarchy and states. A simple model illustrates our main theoretical argument. Our empirical investigation shows that land suitability for cereals relative to suitability for tubers explains the formation of hierarchical institutions and states, whereas land productivity does not.
    Keywords: geography, hierarchy, institutions, state capacity
    JEL: D02 D82 H10 O43
    Date: 2015–09
  4. By: Sheilagh Ogilvie and Markus Küpker
    Abstract: Modern growth models view human capital, particularly education, as central to economic growth. But historical evidence has proved elusive. This paper investigates human capital levels in Württemberg, a late-developing German economy, between 1610 and 1899. Württemberg achieved higher and more universal literacy than any other European economy before 1800. A multivariate analysis reveals that this exceptional level of human capital in Württemberg was largely decoupled from economic variables from a very early date. Literacy declined significantly with individuals’ age, suggesting that education was irrelevant to economic life. The Württemberg human capital miracle was unrelated to economic growth or human development indicators, casting doubt on theories that ascribe education a central role in economic growth. economic history; human
    Keywords: capital; education; growth; Germany
    JEL: N33 E24 J24 O15
    Date: 2015–09–29
  5. By: Pezzuto, Roberto
    Abstract: The data on the age distribution of the labor force in the 1911 demographic census have been very largely neglected. This paper provides an initial examination of those data, which shed light on various aspects of the economy of the day -- and on its preceding path. In particular, these data reflect the long cycle in construction, and in the production of construction materials. They further suggest that the long cycle of the engineering industry documented by its aggregate metal consumption was indeed present in the production of construction-related hardware, but notably absent from the production of machinery and, derivatively, industrial investment. This last point denies the empirical premise of the extant interpretations of Italy’s post-Unification industrial growth; but it sits well with the new disaggregated time-series estimates of the engineering industry’s product.
    Keywords: Italy; economic history; cycle; demography; migration
    JEL: N1 N3 N6
    Date: 2015–10
  6. By: Simplice Asongu (Yaoundé/Cameroun); Oasis Kodila-Tedika (University of Kinshasa)
    Abstract: We explore a newly available dataset on quality of growth to investigate the effect of institutions on growth quality in 93 developing countries for the period 1990 to 2011. Quality of institutions is measured in term of political risk. The empirical evidence is based on: (i) Ordinary Least Squares (OLS) and Two Stage Least Squares (2SLS) and (ii) cross-sectional and panel data structures. In order to avail room for more policy implications, the dataset is further disaggregated into income levels, namely: Lower middle income (LMIC), low income (LI) and upper middle income (UMIC). Three main findings are established. First, institutions are positively related to the quality of growth. Second, institutions have significantly contributed to growth quality in increasing order during the following time intervals: 2005-2011, 1995-1999 and 2000-2004. Third, the positive nexus between institutions and growth quality is fundamentally driven by LMIC. Policy implications are discussed.
    Keywords: Quality of growth; Institutions; Social indicators
    JEL: O40 O55 I10
    Date: 2015–10
  7. By: Johan Fourie and Alfonso Herranz-Loncan
    Abstract: The railway played a large part in late nineteenth century and early twentieth century globalization since, to benefit from the international economy, peripheral countries needed cheap inland transport. This paper discusses how the railway transformed the economy of South Africa’s Cape Colony during the first era of globalization. A very large share of the Colony’s GDP came from rail transport – its resource saving effect was one of the highest in the world at that time. We estimate that 46 to 51% of the Colony’s increase in labor productivity between 1873 and 1905 came directly from the railway, whether from investment in the rail network or from savings in transport costs. We argue that it was the boom in diamond production, necessitating the building of the railway to connect the Kimberley diamond fields with the international economy, that weighted the Colony’s economy so heavily towards the rail transport sector. The railway not only boosted the Colony’s growth, it also re-shaped its economic geography, organizing it around the railway lines that connected the diamond mines with the ports. Areas not served by the railway missed out on the benefits of globalization. As these areas were mostly populated by blacks, the railway helped to create a dual economy with a racial social divide and was later instrumental in creating black ‘homelands’ and establishing the apartheid institutions.
    Keywords: railways, Cape Colony, South Africa, social savings, economic geography, segregation
    JEL: N4 H4 O1
    Date: 2015
  8. By: Bharat Diwakar; Gilad Sorek
    Abstract: This work highlights principle differences in the predictions of R&D-based growth theory derived from the infinite horizon framework and the Overlapping Generations (OLG) framework of finitely living agents. In particular we show that the counterfactual positive effect of population growth on output growth presented in the second and third generation R&D-based growth models is eliminated in the corresponding OLG framework with finitely living agents. These differences arise because of the limiting effect of labor income on saving that presents only in the OLG framework. Our results indicate that the counterfactual relations between population and output growth rates presented in current R&D-based growth models are driven by their specific demographic structure.
    Keywords: R&D, Growth; Population; Overlapping Generations
    JEL: O31 O40
    Date: 2015–09
  9. By: Mehdi Senouci (Université Paris Saclay, CentraleSupélec, Laboratoire Genie Industriel)
    Abstract: We present a new way to picture technological change in an otherwise standard Ramsey framework. Technological change takes the form of alterations of the production function itself, rather than changes in total factor productivity. These changes can take two directions that we dub respectively ‘complementation’ and ‘substitution’. Complementation results in a production function that is superior for lower values of capital, while substitution results in a production function that is superior for higher values of capital. Under the most general conditions, when the agent is initially at steady state, both options bring strictly positive utility gains to the agent. We analyze sequence of steady states with exogenous and endogenous direction of technological change. With exogenous growth, we prove that when the production functions are Cobb-Douglas or CES (with the same elasticity of substitution), output and consumption grow asymptotically at a common rate and the capital share tends to one under continual substitution; while continual complementation makes output and consumption converge to a common limit and the capital share tend to nil. With endogenous direction of technological change and under the most general conditions, the agent has a bias towards complementation which brings quicker gains than substitution. We assume that the production functions are Cobb-Douglas and that utility is logarithmic. Then, when the potential rate of complementation is strictly greater than the potential rate of substitution, the labor share oscillates around some endogenous long-run value, determined by the rates of complementation/substitution and by the impatience rate. This growth regime reproduces the Kaldor facts.
    Keywords: endogenous growth theory., capital-labor substitution,Economic growth, labor share
    Date: 2014–09
    Abstract: Africa’s recent economic performance has been quite impressive. However, strong economic growth has not always corresponded to sufficient poverty reduction, partly because it has failed to generate productive employment. This paper compares the experiences of two fast growing African countries and provides an in depth insight on the different growth paths being pursued. In particular, the study aims to examine the role of education in facilitating structural changes in Mozambique and Tanzania. Building from micro-level estimates, we find that major structural change in the employment and economic structure in Tanzania and Mozambique was only to a limited extent translated into higher productivity add and decent work creation.
    Keywords: Structural transformation, returns to education, labour reallocation
    JEL: I2 J6 N3
    Date: 2015–06–01
  11. By: Mehdi Senouci (CentraleSupélec, Laboratoire Genie Industriel, Université Paris Saclay)
    Abstract: The relative price of capital (or equipment) goods with respect to consumption goods is strongly, negatively correlated with income per capita in cross-sections of countries. This stylized fact suggests that economic growth takeoffs are associated with changes in the direction of technical change. It also suggests that increases in productivity that are embodied in capital goods lead to relatively quicker growth. The goal of this paper is to explore the message of the discrete-time Ramsey model with logarithmic utility, augmented with endogenous direction of technical change. We suppose that the representative agent, while initially at steady state, is offered the possibility to increase either labor-augmenting productivity or investment-specific productivity. We derive the marginal increase in utility from each option. We find that when the elasticity of substitution, the capital share and the rate of impatience lie within the usual ranges, investment-specific technological change is relatively undervalued, because its fruits take relatively more time to materialize. This approach reflects some interesting ideas on the macroeconomics of structural change. However, its predictions stand at odds with cross-country evidence as well as with the early British growth experience (~1770–1913). We argue that the fixity of the production function constitutes a major obstacle for a consistent theory of the direction of technological changes on neoclassical bases.
    Keywords: Economic growth, investment-specific technical change, elasticity of substitution
    Date: 2014–03
  12. By: Nakamoto, Yasuhiro
    Abstract: We introduce the heterogeneities of EIS (elasticities of intertemporal substitution) into the Ramsey version of macrodynamic model with a finite number of agents. The assumption that the degrees of EIS differ among agents means that our economy has various growth rate of private consumption. Then, our contributions are as follows. First, we analytically characterize the steady-state levels of individual capital. Second, we analytically examine the role of heterogeneous EIS for the wealth inequality. Finally, we give numerical examples to see the complicated dynamic motion and the steady-state characterization of wealth inequality.
    Keywords: Heterogeneous agents, Elasticity of intertemporal substitution, Convergence speed, Wealth distribution
    JEL: C00 E13 E20
    Date: 2015–08
  13. By: Kazuo MIno (Kyoto University); Yasuhiro Nakamoto (Kansai University)
    Abstract: This paper explores the role of consumption externalities in a neoclassical growth model in which households have heterogeneous preferences. We fi…nd that a higher degree of average conformism accelerates the convergence speed of the economy towards the steady state as in the case of homogeneous conformism. Furthermore, we reveal that the wealth inequality expands or shrinks in the case of heterogeneous conformism, while it does not expand but shrinks in the case of homogeneous conformism.
    Keywords: consumption externalities, heterogeneous agents, wealth distribution
    JEL: D31 E13 E21 O40
    Date: 2015–10
  14. By: Clarimar Pulido; Jose Ustorgio Mora Mora (Faculty of Economics and Management, Pontificia Universidad Javeriana Cali)
    Abstract: This paper analyzes the impact that social public policies might have had on the economic growth of Argentina, Brazil, Colombia, Chile, Mexico, and Venezuela during the period of 1980 to 2010. It also examines the hypothesis of convergence in these countries. To accomplish this goal, it uses panel data analysis on data extracted from the CEPAL and the Penn World Table databases. Empirical results are consistent with those found by Barro and Lee (1991), Caselli, Esquivel, and Lefort (1996), and Barro and Sala-i-Martin (2004). In other words, it was found that social public policies have positively influenced growth in these economies. Particularly, it was found that there are non-observed variables (fixed effects) that positively affect the economic growth in Venezuela and Chile; meanwhile there are other non-observed variables that might be negatively affecting growth in Brazil and Mexico. Regarding the convergence hypothesis, results reveal that the speed of convergence diminishes as real income rises, implying that these countries might be converging to their steady states.
    Keywords: Economic growth, social policy, Latin
    JEL: I25 E24 O54 O47
    Date: 2015–09
    Abstract: Lant Pritchett (2001) asked a famous question, “Where has all the education gone?†bringing the lack of correlation between the growth of measured education and the growth of income in developing countries to broad attention. This finding confirms that after WWII the human capital-output ratios tend to be higher in less developed countries than those in developed countries. I explain this pattern using a dynamic general equilibrium model which explicitly considers that workers with different types have different costs when choosing schooling years and employers are unable to directly observe workers’ types, and find that simulation results with public subsidies to schooling could well mimic the features of data. At last, I make a speculative but reasoned conjecture about the schooling years-output relation in 2040.
    Keywords: education, informational asymmetry, signaling model, general equilibrium, heterogeneity
    JEL: D82 E24 I25 O15 O47
    Date: 2015–05–15
  16. By: Andrea Bonilla Bolaños (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon Saint-Etienne, Ecully, F-69130, France; Université Lyon 2, Lyon, F-69007, France)
    Abstract: This paper studies how the public provision of transportation infrastructure impact output convergence and trade integration in a two-country dynamic general equilibrium model in which the transportation cost between countries is endogenously determined by the stock of public infrastructure in both countries. Because of its particular conception, the so-called « Initiative for the Integration of Regional Infrastructure in South America (IIRSA) » serves as the case study. Data from Argentina and Brazil is thus used to solve the model. Two main results emerge. First, increasing public investment in infrastructure provides an impetus to commercial integration but does not necessarily generate output convergence. Second, the model shows that the only way for the two countries to achieve output convergence (in a winwin economic growth scenario) is to coordinate their increments on public infrastructure, as proposed by IIRSA.
    Keywords: catch up policy, convergence, economic integration, infrastructure integration, IIRSA, South America, steady state
    JEL: C61 F11 F42 O54
    Date: 2015
  17. By: Arshad, Shahzad; Munir, Kashif
    Abstract: The objective of this study is to analyze relationship between factor accumulation and economic growth in Pakistan for the time period of 1973 to 2014 using ARDL bound testing approach to cointegration. Considering human capital as a core factor of production we have constructed a series of human capital as average year of schooling and real capital stock is also generated on the basis of gross fixed capital formation. Under endogenous growth model bound testing approach to cointegration suggest that human capital stock, real physical capital stock per worker and GDP per worker are highly cointegrated. Moreover, human capital and real physical capital stock are highly significant and growth friendly. Our findings are consistent with the endogenous growth model suggesting that developing countries like Pakistan should increase share of education and health in GDP in order to accelerate economic growth.
    Keywords: Growth, Factor Accumulation, Capital Stock, Human Capital, ARDL, Pakistan
    JEL: O11 O15 O47
    Date: 2015–09–30
  18. By: HIRAGUCHI Ryoji
    Abstract: We investigate a simple continuous-time overlapping generations model with a neoclassical production function and technological progress. We demonstrate that the degree of wealth inequality is positively related to the difference between the real interest rate <i>r</i> and the growth rate of income per capita <i>g</i>, and if <i>g</i> falls, the <i>r-g</i> gap widens and inequality worsens. We also argue that a wealth tax reduces the wealth inequality. All of these results are consistent with the famous predictions advanced by Thomas Piketty in <i>Capital in the Twenty-First Century</i> (2014). We next investigate consumption tax and find that it enhances capital accumulation and reduces <i>r-g</i>, and thus wealth inequality.
    Date: 2015–10
  19. By: Mosayeb Pahlavani (University of Sistan and Baluchestan)
    Abstract: In this study, we investigated the effect of "volatility" of investment in human capital on Iran’s economic growth, such that the government expenditure on educational and R & D budget have been replaced as proxies of human capital variable. Volatility of government expenditure on education and volatility in research and development budget have been estimated using the Generalize Autoregressive Conditional Heteroskedasticity (GARCH) Models. Coefficients of the short term and long term are estimated using Auto-Regressive Distributed Lag (ARDL) pattern. The results indicate that the costs of educational and R & D budget have a positive effect on economic growth, but the effect of volatility in these variables on economic growth is negative and significant. More addition, the effect of long term coefficients is more than the short term. Therefore, to achieve a high growth rate, development of human capital and its continuation is essential.
    Keywords: Human capital, Volatility, R&D, expenditure on education, Economic growth
    JEL: C32 E24 H52
  20. By: Victoria Encica (University of Bucharest, Romania)
    Abstract: Based on the idea that autobiography (in any form we find it: literary texts, reality-shows, press articles, forums, social networks) is increasingly more attractive to the people all around the world in these latter days, this study tries to demonstrate that there is a special connection between the economic, cultural and intelligence level of a country and its citizens ability to speak in their own names, using the autobiographical expression. More than that it seems that there are some groups, especially women, which prefers the subjective speech for expressing themselves in public. Not only in the Eastern Europe, but all across the continent, there is a special interest into autobiography and intimacy speeches nowadays. Women, less prudish by nature, are finally finding the best way to speak about themselves to the world. The paper will focus on the sphere of literature, but the conclusions it applies to other fields too. Also, this paper intend to present the differences between the autobiography practiced today and the autobiography used by the 20th century writers. Starting from the hypothesis of Ortega y Gasset, who speaks about the intimacy with oneself and about the intimacy with others, we connect the intimacy with the autobiographical discourse because writing at first person is the more appropriate and adequate way to speak about the intus and to show some parts of the hidden dimensions of the self/ego. The people from around the world has different ways to do this. In the second part of this paper, we discuss two interesting theories of some British and Romanian theorists, who says that before 1991 (when the iron curtain falls) a lot of the literatures of the world witnessed the pure autobiographical discourse and after that date it has been seduced by autofiction. Despite these ideas, we believe in an époque of bildungsroman autobiography, specific tot the 19th and 20th centuries, and in an era – which is the contemporary era – characterized by an mock-autobiography.
    Keywords: autobiography, contemporary literature, mock-autobiography, intimacy discourse.
    JEL: Z11 Z00

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