nep-gro New Economics Papers
on Economic Growth
Issue of 2015‒12‒20
seventeen papers chosen by
Marc Klemp
Brown University

  1. Human Capital on the High Seas - Job Mobility and Returns to Technical Skill During Industrialization By Glaser, Darrell; Rahman, Ahmed
  2. Ethnic diversity makes me sick! An examination of ethnic diversity’s effect on health outcomes By Awaworyi Churchill, Sefa; Ocloo, Janet Exornam; Siawor-Robertson, Diana
  3. Transition to clean technology By Acemoglu, Daron; Akcigit , Ufuk; Hanley, Douglas; Kerr, William R.
  4. Honesty and beliefs about honesty in 15 countries By David Hugh-Jones
  5. The Effect of Natural Disasters on Mexico’s Regional Economic Growth:Growing Disparity or Creative Destruction? By Andrea García Tapia, Carlos Muñoz Piña
  6. A Vision of the Growth Process in a Technologically Progressive Economy:the United States, 1899-1941. By Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter
  7. Economic backwardness and social tension By Christa Brunnschweiler; Paivi Lujala
  8. Interrelation between Growth and Inequality By Kang, Jong Woo
  9. On Impatience, Temptation & Ramsey's Conjecture By Jean-Pierre Drugeon; Bertand Wigniolle
  10. 'Threshold Effects of Human Capital: Schooling and Economic Growth' By Humna Ahsana; M. Emranul Haque
  11. Family Patterns and Social Inequality among Children in the United States 1940-2012: A Re-assessment By Tony Fahey
  12. A Simulation Analysis of the Longer-Term Effects of Immigration on Per Capita Income in an Aging Population By Frank T. Denton; Byron G. Spencer
  13. Was Adam Smith Right About Religious Competition? By Peter J. Boettke; Joshua C. Hall; Kathleen M. Sheehan
  14. Economic Growth, Financial Development, and Income Inequality By Park, Donghyun; Shin, Kwanho
  15. Wagner's law versus displacement effect By Funashima, Yoshito
  16. What determines the long-run growth in Sub-Saharan Africa? Exploring the role of energy, trade openness and financial development in six countries By Eléazar Zerbo
  17. Policies for Productivity Growth By Chang-Tai Hsieh

  1. By: Glaser, Darrell; Rahman, Ahmed
    Abstract: This paper examines the effects of engineer-oriented and technical experience on job mobility during an era known for its rapid technological innovation and capital advancements: the late nineteenth and early twentieth centuries. We first develop an on-the-job search model to help us understand factors leading to job switching under rigid payment systems. Then, using longitudinal data on British and American naval officer- and engineer-careers, we demonstrate how ceteris paribus earnings-increases through promotions can decrease the probability of job switching. We also show how different forms of technical experience affect probabilities of job switching. Combining both insights and following a Topel and Ward (1992) based empirical framework, we find various rates of return to engineering and technical experience comparable to rates of return found today. To our knowledge these are the earliest historic estimates of returns to any type of technical skill.
    Keywords: human capital; job mobility; search theory; technological change; military personnel; naval history; skill premium
    JEL: J45 J6 J62 N3
    Date: 2015–11
  2. By: Awaworyi Churchill, Sefa; Ocloo, Janet Exornam; Siawor-Robertson, Diana
    Abstract: This study hypothesizes a relationship between ethnic diversity and health outcomes. We explore the effects of ethnic and linguistic heterogeneity (measured by indices of ethnic and linguistic fractionalization) on 30 health outcome variables in a cross-section of 87 countries. We explore outcomes related to four major categories of health: 1) immunization rates, 2) prevalence of diseases, 3) life expectancy and mortality rates, and 4) health related infrastructure and staff. Across all dimensions examined, evidence suggests that higher heterogeneity is bad for health. We explore several potential mechanisms which could explain the observed negative effects of ethnic and linguistic diversity on health.
    Keywords: health,Fractionalization,linguistic diversity,ethnic diversity
    Date: 2015–12–07
  3. By: Acemoglu, Daron (Massachusetts Institute of Technology and CIFAR); Akcigit , Ufuk (University of Pennsylvania); Hanley, Douglas (University of Pittsburgh); Kerr, William R. (Harvard University)
    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 rungs 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 makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.
    Keywords: carbon cycle; directed technological change; environment; innovation; optimal policy
    JEL: C65 O30 O31 O33
    Date: 2015–12–10
  4. By: David Hugh-Jones (University of East Anglia)
    Abstract: The honesty of resident nationals of 15 countries was measured in two experiments: reporting a coin flip with a reward for "heads", and an online quiz with the possibility of cheating. There are large differences in honesty across countries. Average honesty correlates with per capita GDP: this relationship is driven mostly by GDP differences arising before 1950, rather than by GDP growth since 1950, suggesting that the growth-honesty relationship was more important in earlier periods than today. The experiment also elicited participants' beliefs about honesty in different countries. Beliefs were not correlated with reality. Instead they appear to be driven by cognitive biases, including self-projection.
    Date: 2015–09–25
  5. By: Andrea García Tapia, Carlos Muñoz Piña (Centro Mario Molina para Estudios Estratégicos sobre Energía y Medio Ambiente A.C. (CMM))
    Abstract: Over the last decade, Mexico has experienced a sharp increase in the economic costs associated with hydrometeorological disasters, most notably floods, hurricanes and droughts. This is attributed to the combination of an increasing population and expanding economic activities along Mexico’s coastal areas and arid zones with the mismanagement of its urban growth. To make it worse, risks would only grow in the future under the current basic Climate Change predictions for Mexico. While immediate and short-term costs of disasters are clear, little is known about its longer-run effects on (regional) growth. To address these questions this paper uses an endogenous growth model with panel data for all 31 Mexican states for the period 2002-2007, which includes as explanatory variables all major and medium disasters in this period. Our results show that major disasters, of a magnitude enough to be declared as such by the National Disaster Prevention Center and thus eligible to receive federal relief funds, do have a negative impact on economic growth in the short term, but that this effect gradually fades away and becomes negligible for medium term growth. Thus the opportunity cost of relief funds is not as high as expected as compared to other public spending. However, when analyzing “smaller” disasters, we find a surprisingly counterintuitive effect: we find evidence of a positive effect of disasters on growth, both in the short-run and medium-run terms. This can only be explained by arguments akin to Schumpeter’s creative destruction hypothesis, where capital replacement with embodied technological change is responsible for boosts to productivity after a disaster’s shock. If this holds true in further test we would have new arguments, not to disregard climate resilience, but to favor policies that mimic a disaster’s reconstruction effects on capital replacement, essentially forcing economic agents to forego capital they would not otherwise replace. New questions emerge from these results regarding the interaction of the magnitude of the disaster, the amount of relief support and growth?
    Date: 2014
  6. By: Bakker, Gerben (London School of Economics); Crafts, Nicholas (University of Warwick); Woltjer, Pieter (Wageningen University)
    Abstract: We develop new aggregate and sectoral Total Factor Productivity (TFP) estimates for the United States between 1899 and 1941 through better coverage of sectors and better measured labor quality, and show TFP-growth was lower than previously thought, broadly based across sectors, strongly variant intertemporally, and consistent with many diverse sources of innovation. We then test and reject three prominent claims. First, the 1930s did not have the highest TFP-growth of the twentieth century. Second, TFP-growth was not predominantly caused by four leading sectors. Third, TFP-growth was not caused by a ‘yeast process’ originating in a dominant technology such as electricity.
    Keywords: Harberger diagram; mushrooms; productivity growth; total factor productivity; yeast JEL Classification: N11, N12, O47, O51
    Date: 2015
  7. By: Christa Brunnschweiler (University of East Anglia); Paivi Lujala (Norwegian University of Science and Technology)
    Abstract: We propose that relative economic backwardness contributes to the build-up of social tension and the incidence of both nonviolent and violent forms of opposition to the current political regime. We take inspiration from Gerschenkron's (1962) essay on economic backwardness and more recent findings on international comparisons and status-seeking to develop a testable hypothesis. We use information on a large number of countries and years from a new dataset on episodes of organized mass movements and find that greater economic backwardness is indeed consistently linked to a higher probability of seeing both violent and nonviolent forms of civil unrest. IV estimations using three different instruments, including distance to either London or Washington, D.C., and mailing speeds and telegram charges around 1900, suggest that this relationship is causal.
    Date: 2015–08
  8. By: Kang, Jong Woo (Asian Development Bank)
    Abstract: Inclusive growth should ensure “broad-based” economic growth which characterizes the pattern of growth. Beyond simple association identification implied by the Kuznets curve and cross-country panel regression analyses, this study attempts to shed light on the dynamic causality relationship and impact channel between economic growth and inequality—using vector error correction model (VECM) and vector autoregression (VAR) models for individual economies. If growth has a negative impact on inequality, renewed attention should be paid to curbing inequality. Those economies experiencing inclusive growth can further promote growth with less risk of sacrificing equity. This also provides useful implications for development interventions through designing and monitoring projects and programs. Given the growing challenges of reducing inequality, economies could create a proper inequality target as a binding constraint in pursuing economic growth, instead of using a growth–first and redistribution–later strategy.
    Keywords: dynamic causality; economic growth; inequality
    JEL: C32 O10 O40
    Date: 2015–08–28
  9. By: Jean-Pierre Drugeon (Paris School of Economics); Bertand Wigniolle (Paris School of Economics)
    Abstract: This article is aimed at exploring the implications of the introduction of self-control and temptation motives in inter temporal preferences within an elementary competitive equilibrium with production. Letting heterogeneous agents differ from both their discounting parameters and their temptation motives, this article is interested in the long-run distribution of consumptions and wealths. Results are at odds from the ones obtained in a standard Ramsey benchmark setup in that long-run distributions are commonly non degenerated ones
    Keywords: Impatience; Temptation; Self-Control; Ramsey's Conjecture
    JEL: E32 O41
    Date: 2015–10
  10. By: Humna Ahsana; M. Emranul Haque
    Abstract: Many recent studies have found average years of schooling to be unrelated with economic growth. In this note, we show that the significant positive effect of schooling can only be realised after an economy crosses a threshold level of development.
    Date: 2015
  11. By: Tony Fahey (School of Social Policy, Social Work and Social Justice and Geary Institute for Public Policy, University College Dublin)
    Abstract: This paper points to a sibsize revolution that occurred among children in lower status families in the United States in the closing decades of the twentieth century. It interprets that revolution as a source of social convergence in children’s family contexts that ran counter to trends towards social divergence caused by change in family structure and has implications for how we understand the impact of family change on social inequality. Using micro-data from the Census of Population and Current Population Survey, the paper presents new estimates of differentials in sibsize and family structure by race and maternal education in the United States for the period 1940-2012. The estimates suggest that as the share of lower status children living in mother-headed families rose in the 1970s and 1980s, their average sibsize declined. The paper discusses some substantive and methodological challenges for existing scholarship arising from these cross-cutting movements and points to questions for future research.
    Keywords: height, Family Patterns, Social Inequality, United States, sibsize, family structure,
    Date: 2015–12–07
  12. By: Frank T. Denton; Byron G. Spencer
    Abstract: Immigration is a possible instrument for offsetting longer-run adverse effects of population aging on per capita income. Our “laboratory” is a fictional country Alpha to which we assign demographic characteristics typical of a country experiencing population aging. Simulations indicate that a very high immigration rate with heavy concentration in younger working ages might be required to keep per capita income from declining. More rapid productivity growth would also offset population aging as would higher rates of labour participation of older people. Longer life expectancy, taken alone, would lower per capita real income, as would higher fertility rates.
    Keywords: immigration, per capita income, population aging, age structure, simulation
    JEL: J10 J11 J18
    Date: 2015–12
  13. By: Peter J. Boettke (George Mason University, Department of Economics); Joshua C. Hall (West Virginia University, Department of Economics); Kathleen M. Sheehan (Creighton University, Heider College of Business)
    Abstract: Adam Smith famously argued that increased competition in religion would result in more religious tolerance and that the benefits of competition in the marketplace would also be seen in religious instruction when many religious sects are tolerated. We use a cross-section of a maximum of 167 countries to explore whether increased religious competition results in less governmental regulation of religion and less governmental favoritism of religion. Our measure of religious regulation and favoritism comes from the Association of Religion Data Archives. Our empirical analysis also explores the influence of economic and political factors, including the size of the economy, openness of trade, legal origins, education, the amount of checks and balances on the government and the role of democracy.
    Keywords: religious freedom, regulation, democracy
    JEL: Z12
    Date: 2015–10
  14. By: Park, Donghyun (Asian Development Bank); Shin, Kwanho (Korea University)
    Abstract: The central objective of our paper is to empirically examine the relationship between financial development and income inequality. Theoretically, there are grounds for both a positive and negative relationship between the two variables. Our main finding is that financial development contributes to reducing inequality up to a point, but as financial development proceeds further, it contributes to greater inequality. We also find that when the ratio of primary schooling to total schooling increases and law and order improves, financial development becomes more effective in reducing inequality.
    Keywords: financial development; growth; income inequality
    JEL: D63 G01 O11 O40
    Date: 2015–08–05
  15. By: Funashima, Yoshito
    Abstract: The public sector has grown dramatically over the past few centuries in many developed countries. In this paper, we use wavelet methods to distinguish between two leading explanations for this growth—Wagner's law and the displacement effect. In doing so, we use the long-term data of ten OECD countries for a maximum time span of 1800-2009. We find that the validity of Wagner's law is likely to vary strongly over time for each country. A roughly similar feature in most of the countries is that the law is less valid in the earliest stage of economic development as well as in the advanced stages, with the validity tending to follow an inverted U-shaped pattern with economic development. Further, our results indicate that the long-run growth of government size cannot be adequately explained by Wagner's law. On the other hand, the displacement effect appears to account for the bulk of the growth in most of the countries.
    Keywords: Size of public sector; Wagner's law; Economic development; Displacement effect; Wavelet
    JEL: E62 H50 N40
    Date: 2015–12
  16. By: Eléazar Zerbo (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes)
    Abstract: This paper investigates the effect of energy effciency, international trade and financial development on long-run income per capita growth of six Sub-Sahara African (SSA) countries, namely Botswana, Cameroon, Kenya, Senegal, South Africa and Togo. The Autoregressive Distributed Lag (ARDL) bound approach to cointegration is applied with (possible) structural breaks to examine both the short-term and long-term effects. Furthermore, generalized forecast error variance decomposition is applied to decompose the forecast variance of GDP per capita attributable to the selected independent variables. The long-term results show that trade openness and financial development affect positively and significantly income per capita in South Africa and Kenya, respectively. A compelling evidence of energy effciency involvement in growth is found in Togo. The short-term estimations highlight the significant role of investment and energy in output process in virtually all the countries and the role of trade openness in South Africa and Togo. The findings also provide major policy implications for sustainable economic growth in SSA countries.
    Keywords: Economic Growth, Energy, Trade openness, Financial development, Cointegration, Sub- Saharan Africa
    Date: 2015–12–05
  17. By: Chang-Tai Hsieh
    Abstract: Growth, investment and trade are the outcomes of the processes by which people with ideas start firms. But where does the productive capacity of firms come from? What are the barriers that prevent resources to flow to the firms with the greatest potential? Why is it that not all people that possess entrepreneurial talent choose to start firms? This paper reviews the micro forces that matter for aggregate productivity growth focusing on six issues: costs to reallocating labour and capital, the influence of firm ownership and political connections, informality, the allocation of talent across the economy, barriers to internal trade and the working of housing markets. It concludes that the forces are complex but matter tremendously for macro productivity and addressing them requires a wide combination of policies.<P>Le rôle des politiques publiques pour la croissance de la productivité<BR>La croissance, l’investissement et le commerce découlent de processus par lesquels les personnes qui ont des idées créent des entreprises. Mais d’où vient la capacité productive des entreprises? Quels sont les obstacles qui empêchent la circulation des ressources vers les entreprises ayant le plus grand potentiel? Comment se fait-il que toutes les personnes qui ont un talent d’entrepreneur ne choisissent pas de créer des entreprises? Ce document examine les facteurs microéconomiques qui influencent la croissance de la productivité agrégée en se concentrant principalement sur six d’entre eux : les coûts de la réaffectation du travail et du capital, l’influence de la propriété de l’entreprise et des relations politiques, l’informalité, la répartition des talents à travers l’économie, les obstacles au commerce intérieur et le fonctionnement des marchés du logement. La conclusion est que ces facteurs sont complexes mais ont un effet considérable sur la productivité au niveau macroéconomique et leur traitement exige l’application d’un large éventail de politiques publiques.
    Keywords: productivity, institutions, growth, institutions, productivité, croissance
    JEL: O4 O43 O47
    Date: 2015–12–14

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