nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒07‒16
nine papers chosen by
Marc Klemp
Brown University

  1. Achieving the American Dream: Cultural Distance, Cultural Diversity and Economic Performance By Valeria Rueda; Guillaume Laval; Etienne Patin
  2. Women's Liberation as a Financial Innovation By Hazan, Moshe; Weiss, David; Zoabi, Hosny
  3. 'Cultural Persistence' of Health Capital: Evidence from European Migrants By Costa-Font, J.; Sato, A.
  4. The White Man’s Burden: On the Effect of African Resistance to European Domination By Oasis Kodila-Tedika; Simplice Asongu; Matthias Cinyabuguma
  5. Inequality or poverty: which is bad for growth? By Robert Breunig; Omer Majeed
  6. Electoral Accountability and the Natural Resource Curse: Theory and Evidence from India By Amrita Dhillon; Pramila Krishnan; Manasa Patnam; Carlo Perroni
  7. Social mobility during South Africa’s industrial take-off By Jeanne Cilliers and Johan Fourie
  8. Human Capital, Social Capabilities and Economic Growth By Muhammad Ali; Abiodun Egbetokun; Manzoor Hussain Memon
  9. Institutions, Innovation and Economic Growth in European Countries By d'Agostino, Giorgio; Scarlato, Margherita

  1. By: Valeria Rueda (Sciences Po and Pembroke College, Oxford); Guillaume Laval (Institut Pasteur); Etienne Patin (Institut Pasteur)
    Abstract: This article explores the role of individual cultural distance on income, using the genetic distance as a proxy for cultural distance. We show that cultural distance has heterogeneous predictive power.In particular, culturally distant individuals living in regions with other individuals from more trusting ancestries or less xenophobic ones are more likely to be economically successful. First generation migrants seem to be less likely to success the more culturally distant they are, but this e?ect vanishes as time spent in the USA increases. Our research challenges the static view that cultural di?erences are necessarily an obstacle to economic performance in the long-run. Our interpretation of the results is robust to the use of alternative measures for cultural distance.
    Keywords: Cultural Distance, Cultural Diversity, Genetics, Historical Persistence, Labor Participation, Social Capital.
    JEL: J61 N30 O15 Z13
    Date: 2016–02–22
  2. By: Hazan, Moshe; Weiss, David; Zoabi, Hosny
    Abstract: Property rights are at the heart of capitalism's ability to efficiently allocate resources. Historically, married women have been one of the groups with the greatest legal disabilities in this regard, to the benefit of their husbands. Starting in the second half of the 19th century, common law countries, which were entirely dominated by men, gave married women property rights. Before this ``women's liberation,'' married women were subject to the laws of coverture. Coverture had detailed laws as to which spouse had ownership and control over various aspects of property both before and after marriage. These laws created a strong disincentive for women to invest in financial assets, such as stocks, bonds, and even bank deposits. This paper develops a general equilibrium model with endogenous determination of women's rights in which these laws affect portfolio choices, leading to inefficient allocations. We show how technological advancement eventually leads to men granting rights, and in turn how these rights affect development. Exploiting cross-state variation in the timing of rights, we show that increases in non-agricultural TFP predict the granting of rights. The granting of rights in turn leads to a dynamic labor reallocation towards the non-agricultural sector, representing further development. Finally, we show that women's rights are associated with lower interest rates and greater financial intermediation, consistent with an increase in the supply of credit.
    Keywords: Economic Growth; financial innovation; investor protection; political economy
    JEL: E02 E44 G11 J12 K11 K36 N11 N21 O11
    Date: 2016–07
  3. By: Costa-Font, J.; Sato, A.
    Abstract: Culture is an under-studied determinant of health production and seldom measured. This paper empirically examines the persistence and association of health capital assessments of first and second-generation migrants with that of their ancestral countries. We draw on European data from 30 countries, including over 90 countries of birth and control for timing of migration, selective migration and other controls including citizenship and cultural proxies. Our results show robust evidence of cultural persistence of health assessments. Culture persists, rather than fades, and further, appears to strengthen over generations. We estimate a one standard deviation increase in ancestral health assessment increases first generation migrant’s health assessments by an average of 16%, and that of second generation migrants between 11% and 25%. Estimates are heterogeneous by gender (larger for males) and lineage (larger for paternal lineage).
    Keywords: assimilation; health; health assessments; cultural persistence; first generation migrant; second generation migrant;
    JEL: I18 H23 Z13
    Date: 2016–06
  4. By: Oasis Kodila-Tedika (Université de Kinshasa Département d’Eco); Simplice Asongu (Yaoundé/Cameroun); Matthias Cinyabuguma (The World Bank Group)
    Abstract: Are there contemporary development effects of African resistance to European domination? This question is the primary issue addressed by this inquiry. We establish that African resistance has had adverse effects on post-colonial African development and discuss possible channels of such causality. This relationship is robust to alternative model and to controlling for the outliers.
    Keywords: Africa; Colonization; Slavery; Development
    JEL: N17 P48 O11 O43 O55 P14 P17 P51
    Date: 2016–03
  5. By: Robert Breunig; Omer Majeed
    Abstract: Recent research has highlighted a negative impact of inequality on economic growth. We re-evaluate this hypothesis focusing on both inequality and poverty and their interaction. We replicate previous results showing that inequality has a negative impact on growth. However, we show that when we account for both inequality and poverty, the negative effect of inequality on growth appears to be concentrated amongst countries with high poverty. This would argue for policies targeted towards alleviating poverty rather than policies about redistribution.
    Keywords: Inequality, Economic Growth, Poverty, Cross-Country Regressions
    JEL: O47 D63 I39
    Date: 2016–07
  6. By: Amrita Dhillon; Pramila Krishnan; Manasa Patnam; Carlo Perroni
    Abstract: The literature on the effects of natural resource abundance on economic growth is converging to the view that institutions play a central role. In this paper, we exploit the break up of three of the biggest Indian states, comprising areas with some of the largest endowments of natural resources in the country, to explore how the link between electoral accountability and natural resource abundance can explain differences in outcomes. Our theoretical framework shows that while states inheriting a larger share of natural resources after break up are potentially richer, the spatial distribution of these natural resources within these state can worsen economic outcomes by lowering electoral accountability. We employ a sharp regression discontinuity design to estimate the causal effect of secession and concentrated resources on growth and inequality at the sub-regional level, using data on satellite measurements of night-time lights. Consistent with our theoretical predictions, the economic effect of secession is generally favourable. However, states that inherit a large fraction of mineral rich constituencies experience worse outcomes. This may be accounted for by lower electoral accountability in those areas.
    Keywords: Natural Resources and Economic Performance, Political Secession, Fiscal Federalism
    JEL: H77 C72 O13 O43 Q34
    Date: 2016–07–06
  7. By: Jeanne Cilliers and Johan Fourie
    Abstract: In the absence of historical income or education data, the change in occupations over time can be used as a measure of social mobility. This paper investigates intergenerational occupational mobility using a novel genealogical dataset for settler South Africa, spanning its transition from an agricultural to an early industrialized society (1800–1909). We identify fathers and sons for whom we have complete information on occupational attainment. We follow a two-generation discrete approach to measure changes in both absolute and relative mobility over time. Consistent with qualitative evidence of a shift away from agriculture as the economy’s dominant sector, we see the farming class shrinking and the skilled and professional classes growing. Controlling for changes in the structure of the labor market over time, we find increasing upward social mobility, becoming significant following the discovery of minerals in 1868. We find this mobility particularly for semi-skilled workers but virtually no improved mobility for sons of farmers. We also test hypotheses related to the mobility prospects for first-born sons and sons of immigrants.
    Keywords: Intergenerational mobility, Social Mobility, resource curse, industrialization, colonialism, longitudinal data
    JEL: J60 J61 J62 N30 N37
    Date: 2016
  8. By: Muhammad Ali (Friedrich Schiller University Jena, Faculty of Economics and Business Administration); Abiodun Egbetokun (National Centre for Technology Management Federal Ministry of Science and Technology, Nigeria, and Tshwane University of Technology, Pretoria South Africa); Manzoor Hussain Memon (Social Policy and Development Centre (SPDC), Karachi, Pakistan, and Applied Economics Research Centre, University of Karachi, Pakistan)
    Abstract: In this paper we show that inconclusive results in previous empirical studies on human capital and growth might be due to omitted variable bias. Using data for about 130 countries, we show that after inclusion of variables related to the social capabilities concept of Abramovitz (1986) i.e. economic opportunities and quality of legal institutions, the human capital variable turns out to be significant. We also show that economic opportunities significantly moderate the relationship between human capital and growth. The results are robust to different variants of indices for economic opportunities and the quality of legal system.
    Keywords: Human Capital, Economic Growth, Economic Opportunities, Social Capabilities
    JEL: O15 O4
    Date: 2016–07–06
  9. By: d'Agostino, Giorgio; Scarlato, Margherita
    Abstract: This paper provides an empirical analysis of the linkages between the quality of government institutions and economic growth in the European context, highlighting innovation as the intermediate variable that drives this interplay. We use a standard non-scale R&D-based growth model as a theoretical framework and estimate the balanced growth path of per capita GDP for a sample of European countries and the transitional dynamic after a technological shock. Empirical analysis confirms the importance of technology as an instrument for increasing economic growth and suggests that inclusive institutions strongly affect this impact across the European countries. The magnitude of the effect is high: inclusive institutions redouble the effect of a technological shock on the growth rate of per capita GDP. This result suggests that innovation policies should carefully take into account the institutional setting of the contexts in which they are implemented in order to be effective.
    Keywords: Innovation, Economic growth, Institutions
    JEL: O30 O41 O43
    Date: 2016–07–09

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