nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒03‒10
twelve papers chosen by
Marc Klemp
Brown University

  1. The Nature and Predictive Power of Preferences: Global Evidence By Armin Falk; Anke Becker; Thomas Dohmen; Benjamin Enke; David Huffman; Uwe Sunde
  2. A Brief History of Human Time: Exploring a database of 'notable people' By Olivier Gergaud; Morgane Laouénan; Etienne Wasmer
  3. The impact of investment in human capital on economic development: An empirical exercise based on height and years of schooling in Spain (1881-1998) By Enriqueta Camps
  4. Behind the Fertility-Education Nexus: What Triggered the French Development Process? By Claude Diebolt; Audrey-Rose Menard; Faustine Perrin
  5. Regional inequality and convergence in southern Europe. Evidence from Height in Italy and Spain, 1850-2000. By José Miguel Martínez-Carrión y Ramón María-Dolores; Ramón María-Dolores
  6. Population Aging, Fiscal Sustainability and PAYG Pension Reform By Takaaki Morimoto; Yuta Nakabo; Ken Tabata
  7. A Model of Gender Inequality and Economic Growth By Kim, Jinyoung; Lee, Jong-Wha; Shin, Kwanho
  8. Protectionism and the Education-Fertility Trade-off in Late 19th Century France By Vincent Bignon; Cecilia Garcia-Peñalosa
  9. The Evolution of Gender Gaps in Industrialized Countries By Claudia Olivetti; Barbara Petrongolo
  10. A tale of two globalizations: gains from trade and openness 1800-2010 By Federico, Giovanni; Tena Junguito, Antonio
  11. Which Institutions Promote Growth? Revisiting the Evidence By Kuntal Das; Thomas Quirk
  12. The quest for status and R&D-based growth By Hof, Franz X.; Prettner, Klaus

  1. By: Armin Falk (Universität Bonn); Anke Becker (Bonn Graduate School of Economics); Thomas Dohmen (Universität Bonn); Benjamin Enke (University of Bonn); David Huffman (University of Pittsburgh); Uwe Sunde (University of Munich)
    Abstract: This paper presents the Global Preference Survey, a globally representative dataset on risk and time preferences, positive and negative reciprocity, altruism, and trust. We collected these preference data as well as a rich set of covariates for 80,000 individuals, drawn as representative samples from 76 countries around the world, representing 90 percent of both the world’s population and global income. The global distribution of preferences exhibits substantial variation across countries, which is partly systematic: certain preferences appear in combination, and follow distinct economic, institutional, and geographic patterns. The heterogeneity in preferences across individuals is even more pronounced and varies systematically with age, gender, and cognitive ability. Around the world, our preference measures are predictive of a wide range of individual-level behaviors including savings and schooling decisions, labor market and health choices, prosocial behaviors, and family structure. We also shed light on the cultural origins of preference variation around the globe using data on language structure.
    Keywords: economic preferences, cultural variations
    JEL: D01 D03 F00
    Date: 2016–02
  2. By: Olivier Gergaud (KEDGE BUSINESS SCHOOL); Morgane Laouénan (Sciences Po LIEPP); Etienne Wasmer (Département d'économie)
    Abstract: This paper describes a database of 1,243,776 notable people and 7,184,575 locations (Geolinks) associated with them throughout human history (3000BCE-2015AD). We first describe in details the various approaches and procedures adopted to extract the relevant information from their Wikipedia biographies and then analyze the database. Ten main facts emerge. 1. There has been an exponential growth over time of the database, with more than 60% of notable people still living in 2015, with the exception of a relative decline of the cohort born in the XVIIth century and a local minimum between 1645 and 1655. 2. The average lifespan has increased by 20 years, from 60 to 80 years, between the cohort born in 1400AD and the one born in 1900AD. 3. The share of women in the database follows a U-shape pattern, with a minimum in the XVIIth century and a maximum at 25% for the most recent cohorts. 4. The fraction of notable people in governance occupations has decreased while the fraction in occupations such as arts, literature media and sports has increased over the centuries; sports caught up to arts and literature for cohorts born in 1870 but remained at the same level until the 1950s cohorts; and eventually sports came to dominate the database after 1950. 5. The top 10 visible people born before 1890 are all non-American and have 10 different nationalities. Six out of the top 10 born after 1890 are instead U.S. born citizens. Since 1800, the share of people from Europe and the U.S. in the database declines, the number of people from Asia and the Southern Hemisphere grows to reach 20% of the database in 2000. Coincidentally, in 1637, the exact barycenter of the base was in the small village of Colombey-les-Deux-Eglises (Champagne Region in France), where Charles de Gaulle lived and passed away. Since the 1970s, the barycenter oscillates between Morocco, Algeria and Tunisia. 6. The average distance between places of birth and death follows a U-shape pattern: the median distance was 316km before 500AD, 100km between 500 and 1500AD, and has risen continuously since then. The greatest mobility occurs between the age of 15 and 25. 7. Individuals with the highest levels of visibility tend to be more distant from their birth place, with a median distance of 785km for the top percentile as compared to 389km for the top decile and 176km overall. 8. In all occupations, there has been a rise in international mobility since 1960. The fraction of locations in a country different from the place of birth went from 15% in 1955 to 35% after 2000. 9. There is no positive association between the size of cities and the visibility of people measured at the end of their life. If anything, the correlation is negative. 10. Last and not least, we find a positive correlation between the contemporaneous number of entrepreneurs and the urban growth of the city in which they are located the following decades; more strikingly, the same is also true with the contemporaneous number or share of artists, positively affecting next decades city growth; instead, we find a zero or negative correlation between the contemporaneous share of “militaries, politicians and religious people” and urban growth in the following decades.
    Date: 2016–02
  3. By: Enriqueta Camps
    Abstract: Throughout the 19th century and until the mid-20th century, in terms of long-term investment in human capital and, above all, in education, Spain lagged far behind the international standards and, more specifically, the levels attained by its neighbours in Europe. In 1900, only 55% of the population could read; in 1950, this figure was 93%. This paper provides evidence that these conditions contributed to a pattern of slower economic growth in which the physical strength required for agricultural work, measured here through height, had a larger impact than education on economic growth. It was not until the 1970s, with the arrival of democracy, that the Spanish education system was modernized and the influence of education on economic growth increased.
    Keywords: employment structure, human capital, educational offer, economic growth.
    JEL: I2 I1 J3 J8 N3
    Date: 2016–02
  4. By: Claude Diebolt (BETA, University of Strasbourg Strasbourg, France); Audrey-Rose Menard (BETA, University of Strasbourg Strasbourg, France); Faustine Perrin (Department of Economic History, Lund University)
    Date: 2016
  5. By: José Miguel Martínez-Carrión y Ramón María-Dolores (Universidad de Murcia); Ramón María-Dolores (Universidad de Murcia)
    Abstract: This paper analyzes the growth of height and its regional variability in Spain and Italy, among the generational cohorts of 1850 and 1980. Using male height data drawn from the military enlistment records of the period between 1870 and 2000, this paper explores inequality and regional convergence in the two countries. This long period was characterised by economic growth and the expansion of human welfare. Regional inequality and convergence are analysed using sigma and beta convergence, a methodology based on panel data to obtain the speed of convergence. The results show that in 1850 in both countries the height measurements started at low levels, but the two countries recorded a significant increase in the average height over the long term, which became more intense in Italy as from the beginning of the twentieth century, and in Spain from 1950. Therefore, there was divergence in the first half of the century and strong convergence at the end of the century. The regional inequality was more significant in the Italian case. Processes of regional convergence can be observed in both countries during the second half of the twentieth century, but at the end of the period, inequality was lower in Spain than in Italy.
    Keywords: height, biological welfare, Spain, Italy, economic development, regional inequality, convergence.
    JEL: I14 N33 N94 R13
    Date: 2016–02
  6. By: Takaaki Morimoto (Graduate School of Economics, Osaka University); Yuta Nakabo (Graduate School of Economics, Osaka University); Ken Tabata (School of Economics, Kwansei Gakuin University)
    Abstract: This paper examines how pay-as-you-go (PAYG) pension reform from a defined-benefit scheme to a defined-contribution scheme affects fiscal sustainability and economic growth in an overlapping generations model with endogenous growth. We show that in economies in which the old-age dependency ratio is high and the size of pension benefits under a defined-benefit scheme is large, such a pension reform mitigates the negative effect of population aging on fiscal sustainability and economic growth. However, we also show that this type of pension reform entails an intergenerational conflict of interest between current and future generations. Population aging might exacerbate the extent of this conflict.
    Keywords: Population aging, PAYG pensions, Defined-benefit schemes, Definedcontribution schemes, Fiscal sustainability
    JEL: D91 H55 O41
    Date: 2016–02
  7. By: Kim, Jinyoung (Korea University); Lee, Jong-Wha (Asiatic Research Institute, Korea University); Shin, Kwanho (Department of Economics, Korea University)
    Abstract: This paper introduces a model of gender inequality and economic growth that focuses on the determination of women’s time allocation among market production, home production, child rearing, and child education. The theoretical model is based on Agénor (2012), but differs in several important dimensions. The model is calibrated using microlevel data of Asian economies, and numerous policy experiments are conducted to investigate how various aspects of gender inequality are related to the growth performance of the economy. The analysis shows that improving gender equality can contribute significantly to economic growth by changing females’ time allocation and promoting accumulation of human capital. We find that if gender inequality is completely removed, aggregate income will be about 6.6% and 14.5% higher than the benchmark economy after one and two generations, respectively, while corresponding per capita income will be higher by 30.6% and 71.1% in the hypothetical gender-equality economy. This is because fertility and population decrease as women participate more in the labor market.
    Keywords: economic growth; gender inequality; human capital accumulation; labor market; overlapping generations model
    JEL: E24 E60 J13 J71
    Date: 2016–02–19
  8. By: Vincent Bignon (Banque de France. DGEI-DEMFI-Pomone); Cecilia Garcia-Peñalosa (Aix-Marseille University (Aix Marseille School of Economics), CNRS & EHESS and CESifo. AMSE)
    Abstract: The assumption that education and fertility are endogenous decisions that react to economic circumstances is a cornerstone of the unified growth theory that explains the transition to modern economic growth, yet evidence that such a mechanism was in operation before the 20th century is limited. This paper provides evidence of how protectionism reversed the education and fertility trends that were well under way in late 19th-century France. The Méline tariff, a tariff on cereals introduced in 1892, led to a substantial increase in agricultural wages, thus reducing the relative return to education. Since the importance of cereal production varied across regions, we use these differences to estimate the impact of the tariff. Our findings indicate that the tariff reduced education and increased fertility. The magnitude of these effects was substantial, and in regions with large shares of employment in cereal production the tariff offset the time trend in education for up to 15 years. Our results thus indicate that even in the 19th century, policies that changed the economic prospects of their offspring affected parents’ decisions about the quantity and quality of children.
    Keywords: Education, Fertility, Unified growth theory, Protectionism, France
    JEL: J13 N33 O15
    Date: 2016–01
  9. By: Claudia Olivetti; Barbara Petrongolo
    Abstract: Women in developed economies have made major inroads in labor markets throughout the past century, but remaining gender differences in pay and employment seem remarkably persistent. This paper documents long-run trends in female employment, working hours and relative wages for a wide cross-section of developed economies. It reviews existing work on the factors driving gender convergence, and novel perspectives on remaining gender gaps. The paper finally emphasizes the interplay between gender trends and the evolution of the industry structure. Based on a shift-share decomposition, it shows that the growth in the service share can explain at least half of the overall variation in female hours, both over time and across countries.
    Keywords: Female employment, gender gaps, industry structure
    JEL: E24 J16 J31
    Date: 2016–02
  10. By: Federico, Giovanni; Tena Junguito, Antonio
    Abstract: This paper compares the wave of globalization before the outbreak of the Great Recession in 2007 with its alleged historical antecedent before the outbreak of World War One. We describe trends in trade and openness, estimate the gains from trade and investigate the proximate causes of the growth of openness. We argue that the conventional wisdom has to be revised. The first wave of globalization started around 1820 and culminated around 1870. In the next century, trade continued to grow, with the exception of the Great Depression, but openness and gains fluctuated widely. Growth resumed in the early 1970s. By 2007, the world was more open than a century earlier and its inhabitants gained from trade substantially more than their ancestors did. The current wave of globalization, in spite of some similarities with previous trends, has no historical antecedents.
    Keywords: openness; Trade; welfare gains
    JEL: F14 F43 N70
    Date: 2016–02
  11. By: Kuntal Das (University of Canterbury); Thomas Quirk
    Abstract: Recent research examining the growth impacts of institutions have found that institutions are important in fostering economic growth. By building a framework around the institutional taxonomy proposed by Rodrik (2005), our paper contributes to the literature in the following way. First, we confirm the result that “institutions matter” and show that dfferent types of institutions matter differently for growth. By applying a dynamic panel model, we find that market-creating and market-stabilizing institutions are important in fostering economic growth. We then extend this analysis and investigate whether countries at different levels of development could respond heterogeneously to changes in their institutional structure. We find that poor countries benefit the most from market creating institutions and institutions that support market stability. We also find some evidence that market legitimizing institutions such as “democracy” are not necessarily optimal for growth in poor countries. These results have important implications for countries that decide on the optimal strategy to improve their institutional framework.
    Keywords: Institutions, Growth, Dynamic Panel, System GMM
    JEL: O11 O30 O43 O50
    Date: 2016–02–19
  12. By: Hof, Franz X.; Prettner, Klaus
    Abstract: We analyze the impact of status preferences on technological progress and long-run economic growth. For this purpose, we extend the standard relative wealth approach by allowing the two components of the representative household's wealth, physical capital and shares, to differ with respect to their status relevance. Relative wealth preferences imply that the effective rate of return of saving in the form of a particular asset is the sum of its market rate of return and its status-related extra return. It is shown that the status relevance of shares is of crucial importance: First, an increase in the intensity of the quest for status raises the steady-state economic growth rate only if the status-related extra return of shares is strictly positive. Second, for any given degree of status consciousness, the long-run economic growth rate depends positively on the relative status relevance of shares. Third, while in the standard model the decentralized long-run economic growth rate is less than its socially optimal counterpart, the wealth externalities in our model counterbalance this distortion to some extent provided that shares matter for status.
    Keywords: status concerns,relative wealth,technological progress,long-run economic growth,social optimality
    JEL: D31 D62 O10 O30
    Date: 2016

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