nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒05‒08
eight papers chosen by
Marc Klemp
Brown University

  1. Patience and the Wealth of Nations By Thomas Dohmen; Benjamin Enke; Armin Falk; David Huffman; Uwe Sunde
  2. Is a positive relationship between fertility and economic development emerging at the sub-national regional level? Theoretical considerations and evidence from Europe By Jonathan F. Fox; Sebastian Klüsener; Mikko Myrskylä
  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. Labor supply in the past, present, and future: a balanced-growth perspective By Boppart, Timo; Krusell, Per
  5. Intergenerational Mobility and the Rise and Fall of Inequality: Lessons from Latin America By Guido Neidhöfer
  6. Quantifying the Effects of Patent Protection on Innovation, Imitation, Growth, and Aggregate Productivity By Pedro Bento
  7. Inequality, Debt Servicing, and the Sustainability of Steady State Growth By Mark Setterfield; Yun K. Kim; Jeremy Rees
  8. From Economic Controls to Export Expansion in Postwar Taiwan: 1946-1960 By Tsong-Min WU

  1. By: Thomas Dohmen (Universität Bonn); Benjamin Enke (University of Bonn); Armin Falk (Universität Bonn); David Huffman (University of Pittsburgh); Uwe Sunde (University of Munich)
    Abstract: According to standard dynamic choice theories, patience is a key driving factor behind the accumulation of the proximate determinants of economic development. Using a novel representative data set on time preferences from 80,000 individuals in 76 countries, we investigate the empirical relevance of this hypothesis in the context of a development accounting framework. We find a significant reduced-form relationship between patience and development in terms of contemporary income as well as medium- and long-run growth rates, with patience explaining a substantial fraction of development differences across countries. Consistent with the idea that patience affects national income through accumulation processes, patience also strongly correlates with human and physical capital accumulation, investments into productivity, and institutional quality. Additional results show that the relationship between patience, human capital, and income extends to analyses across regions within countries, and across individuals within regions.
    Keywords: time preference, comparative development, growth, savings, human capital, physical capital, innovation, institutions
    JEL: D03 D90 O10
    Date: 2016–04
  2. By: Jonathan F. Fox (Max Planck Institute for Demographic Research, Rostock, Germany); Sebastian Klüsener (Max Planck Institute for Demographic Research, Rostock, Germany); Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Evidence for nation-states suggests that the long-standing negative relationship between fertility and economic development turns positive at high levels of development. Here we investigate whether such a turnaround could also occur at the sub-national regional level in highly developed countries. In the theoretical section we discuss important trends that might foster the emergence of a positive relationship within such countries. Our empirical analysis focuses on Europe, which is comprised of a number of highly developed countries with comparatively high fertility levels. We investigate data for 20 countries between 1990 and 2012. Using panel regression techniques, we find evidence for the emergence of a positive—or, at the very least, less negative—relationship between fertility and economic development within many countries. These findings do not seem to be driven by postponement effects alone. Moreover, the results indicate that there is substantial variation in the fertility and the economic development levels at which such tendencies toward a reversal are observed.
    Keywords: Europe, economic development, fertility
    JEL: J1 Z0
    Date: 2015–11
  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: 2016–04
  4. By: Boppart, Timo; Krusell, Per
    Abstract: What explains how hard people work? Going back in time, a main fact to address is the steady reduction in hours worked. The long-run data, for the U.S. as well as for other countries, show a striking pattern whereby hours worked fall steadily by a little below a half of a percent per year, accumulating to about a halving of labor supply over 150 years. In this paper, we argue that a stable utility function defined over consumption and leisure can account for this fact, jointly with the movements in the other macroeconomic aggregates, thus allowing us to view falling hours as part of a macroeconomy displaying balanced growth. The key feature of the utility function is an income effect (of higher wages) that slightly outweighs the substitution effect on hours. We also show that our proposed preference class is the only one consistent with the stated facts. The class can be viewed as an enlargement of the well-known "balanced-growth preferences" that dominate the macroeconomic literature and that demand constant (as opposed to falling) hours in the long run. The postwar U.S. experience, over which hours have shown no net decrease and which is the main argument for the use of "balanced-growth preferences", is thus a striking exception more than a representative feature of modern economies.
    Keywords: balanced growth; hours worked; Kaldor facts; Labor Supply; preferences
    JEL: E21 J22 O11 O40
    Date: 2016–04
  5. By: Guido Neidhöfer (School of Business & Economics, Freie Universität Berlin)
    Abstract: Countries with high income inequality also show a strong association between parents’ and children’s economic well-being; i.e. low intergenerational mobility. This study is the first to test this relationship in a between and within country setup, using harmonized micro data from 18 Latin American countries spanning multiple cohorts. It is shown that experiencing higher inequality in childhood has a negative effect on intergenerational mobility as adults. Furthermore, the influence of economic growth and public education is evaluated: both have a positive, significant, and substantial effect on intergenerational mobility.
    JEL: D63 I24 J62 O15
    Date: 2016–04
  6. By: Pedro Bento (Texas A&M University, Department of Economics)
    Abstract: I develop a general equilibrium model in which patent protection can increase or decrease the costs of sequential innovation, original innovation, and imitation. Depending on these relative effects, protection can in theory increase or decrease markups, imitation, innovation, growth, and aggregate productivity. I discipline the model using data from several different sources, and find that weakening protection in the U.S. would lead to no change in markups and imitation, no change in long-run growth, a more than doubling of the number of firms, and an increase in aggregate productivity of 9 percent.
    Keywords: patent protection, firm size, productivity, innovation, imitation, competition
    JEL: O1 O3 O4
    Date: 2016–04–11
  7. By: Mark Setterfield (New School For Social Research,); Yun K. Kim (University of Massachusetts, Boston); Jeremy Rees (Trinity College, Hartford)
    Abstract: We investigate the claim that the way in which debtor households service their debts matters for macroeconomic performance. A Kaleckian growth model is modified to incorporate working households who borrow to finance consumption that is determined, in part, by the desire to emulate the consumption patterns of more affluent households. The impact of this behavior on the sustainability of the growth process is then studied by means of a numerical analysis that captures various dimensions of income inequality. When compared to previous contributions to the literature, our results show that the way in which debtor households service their debt has both quantitative and qualitative effects on the economy’s macrodynamics.
    Keywords: Consumer debt, emulation, income distribution, Golden Age regime, Neoliberal regime, expenditure cascades, growth
    JEL: E12 E44 O41
    Date: 2015–11
  8. By: Tsong-Min WU
    Abstract: During 1955-2000, Taiwan's per capita gross domestic product (GDP) growth rate was the highest in the world. In the first half of the 20th century, the Japanese colonial government laid the basis for economic growth by establishing a modern economic institution in Taiwan. After taking over Taiwan in 1945, however, the Kuomintang (KMT) government adopted economic control policies which caused hyperinflation during 1946-1949. The control policies were continued after the KMT government retreated to Taiwan in late 1949. As a result, economic growth was stagnant. Fortunately, deregulations were initiated in the late 1950s, and Taiwan was able to rapidly expand its export sector. Using the textile industry as an important case, this paper analyzes what policy changes were critical in fostering the postwar export expansion and economic growth.
    Date: 2016–03

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