nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒08‒14
seven papers chosen by
Marc Klemp
Brown University

  1. Fecundity, Fertility and the Formation of Human Capital By Klemp, Marc; Weisdorf, Jacob
  2. Do cognitive skills Impact Growth or Levels of GDP per capita? By Sarid, Assaf; Eckstein, Zvi; Tamir, Yuli (Yael)
  3. Human Capital Formation during the First Industrial Revolution: Evidence from the Use of Steam Engines By Pleijt, Alexandra M. de; Nuvolari, Alessandro; Weisdorf, Jacob
  4. Missing Men:World War II Casualties and Structural Change By christoph Eder
  5. Six Centuries of British Economic Growth: a Time-Series Perspective By Crafts, Nicholas; Mills, Terence C.
  6. Agriculture and Economic Development on the European Frontier : Portugal, 1000-2000 By Lains, Pedro
  7. The Effect of Population Aging on Economic Growth, the Labor Force and Productivity By Nicole Maestas; Kathleen J. Mullen; David Powell

  1. By: Klemp, Marc (Brown University); Weisdorf, Jacob (University of Southern Denmark)
    Abstract: This research explores a fundamental cause of variation in human capital formation across families in the pre-modern period, as well as the mitigating effects of family-level economic prosperity. Exploiting a vast genealogy of English individuals in the 17th to the 19th centuries, the study proposes and tests the hypothesis that lower parental reproductive capacity positively affected the socioeconomic achievements of offspring. In particular, the research establishes an e↵ect of reproductive capacity on offspring human capital in the pre-modern era. Using the time interval between the date of marriage and the first birth as a measure of reproductive capacity, the research establishes that children of parents with lower fecundity were more likely to become literate and employed in skilled and high-wealth professions. The analysis finds that parental fecundity significantly affected the number of siblings, indicating that a trade-off between child quantity and quality was present in England during the industrial revolution and supporting leading theories of the origins of modern economic growth. Furthermore, it finds that the effect was weaker for the socioeconomic elite, who could offset the cost of additional children by raising total investment in offspring human capital.
    Keywords: Human Capital Formation, Child Quantity-Quality Trade-Off, Reproductive Capacity, Fecundity, Demographic Transition, Long-Run Economic Growth JEL Classification: J13, N30, O10
    Date: 2016
  2. By: Sarid, Assaf; Eckstein, Zvi; Tamir, Yuli (Yael)
    Abstract: Incredible policy attention has been given to the claim that an increase in the quality of education as measuredby international tests (e.g. PISA tests) has a significant impact on the GDP long-run growth rate (Hanushek and Woessmann, 2015). This study is based mostly on aggregate data from the second half of the century, and never addresses the question of the current paper, which is whether the impact of the quality of cognitive skills affects the level of GDP per capita or the long run growth rate. Focusing on this question, we construct a variant standard growth model in which cognitive skills have theoretically both a level and growth rate effects by assumption. Estimating this model using standard cross-country data and panel data, cognitive skills measured by the methodology of Hanushek and Woessmann (2015) have a significant level effect on GDP but not a growth effect. Therefore, the cognitive skills improvement impact economic growth is bounded.
    Keywords: Education and Economic Development; Empirical Studies of Economic Growth; Human Capital
    JEL: I20 I25 O15 O47
    Date: 2016–08
  3. By: Pleijt, Alexandra M. de (London School of Economics and Utrecht University); Nuvolari, Alessandro (Sant’ Anna School of Advanced Studies); Weisdorf, Jacob (University of Southern Denmark, CEPR and CAGE)
    Abstract: This paper explores the effect of technological change on human capital formation during the early phases of England’s Industrial Revolution. Following the methodology used in Franck and Galor (2016), we consider the adoption of steam engines as an indicator of technical change, examining the correlation between industrialisation and human capital by performing cross-sectional regression analyses using county-level variation in the number of steam engines installed in England by 1800. Using exogenous variation in carboniferous rock strata as an instrument for the regional distribution of steam engines, we find that technological change as captured by steam technology significantly improved the average working skills of the labour force. In particular, places with more steam engines had lower shares of unskilled workers and higher shares of highly-skilled mechanical workmen deemed important by Mokyr (2005) in the Industrial Revolution. Technological change was, however, not conducive to elementary education. Literacy rates and school enrollment rates were not systematically different in places with more steam engines. This diverse response to new technology highlights the ambiguous effects of early industrialisation on the formation of human capital.
    Keywords: Economic Growth, Education, Human Capital, Industrialisation, Technological Progress, Steam Engines JEL Classification: J82, N33, O14, O33
    Date: 2016
  4. By: christoph Eder (University of Innsbruck, Department of Public Finance, Universitätsstraβe 15/4, 6020 Innsbruck, Austria)
    Abstract: A shock to the sector composition of the local labor market can affect long-run economic development of a location. Because structural change ultimately shifts labor from agriculture to services, an early transition to manufacturing may hamper longrun prosperity. The identification strategy exploits military World War II (WWII) casualties in Austrian municipalities as an exogenous shock to the local labor market. WWII casualties shifted labor out of agriculture into manufacturing in the short-run, which eventually led to a differential path of structural change. In the long-run, I find a strong and robust negative effect of WWII casualties on subsequent economic output.
    Keywords: Spatial equilibrium, local labor markets, structural change, World War II, Austria.
    JEL: R11 R12 J40 N14
    Date: 2016–08
  5. By: Crafts, Nicholas (University of Warwick); Mills, Terence C. (Loughborough University)
    Abstract: This paper provides a time-series analysis of recent annual estimates of real GDP and industrial output covering 1270 to 1913. We show that growth can be regarded as a segmented trend stationary process. On this basis, we find that trend growth of real GDP per person was zero prior to the 1660s but then experienced two significant accelerations, pre- and post-industrial revolution. We also find that the hallmark of the industrial revolution is a substantial increase in the trend rate of growth of industrial output rather than being an episode of difference stationary growth.
    Keywords: growth reversal; industrial revolution; Malthusian model; trend growth JEL Classification: N13; O47
    Date: 2016
  6. By: Lains, Pedro
    Abstract: This chapter follows the steps of renovation of European economic history towards a more unified interpretation of sources of growth and stagnation. To better understand the diversity of patterns of growth, we need to look beyond the study of the industrialization of the core economies, and explore the centuries before it occurred. Portuguese agriculture was hardly ever at the European productivity and technological forefront and the distance from it varied substantially across the second Millennium. Yet if we look at the periods of the Christian Reconquista, the recovery from the Black Death, the response to the globalization of the Renaissance, to the eighteenth century economic enlightenment, or to nineteenth century industrialization, we may conclude that agriculture in this country of the European periphery was often adaptive and dynamic. The fact that economic backwardness was not overcome by the end of the period is no longer the most relevant aspect of that story. Long-term agricultural transformation in Portugal replicate to a large extent what occurred elsewhere in Western Europe, as far as our knowledge of both developments through such a long time span can tell, both in terms of timing and intensity, albeit at a distance. European agrarian transformation was not too different on the southwestern frontier.
    Keywords: Portugal; Europe; Long-term growth; Institutions; Agriculture
    JEL: Q10 O43 O13 N54 N53
    Date: 2016–07
  7. By: Nicole Maestas; Kathleen J. Mullen; David Powell
    Abstract: Population aging is widely assumed to have detrimental effects on economic growth yet there is little empirical evidence about the magnitude of its effects. This paper starts from the observation that many U.S. states have already experienced substantial growth in the size of their older population and much of this growth was predetermined by historical trends in fertility. We use predicted variation in the rate of population aging across U.S. states over the period 1980-2010 to estimate the economic impact of aging on state output per capita. We find that a 10% increase in the fraction of the population ages 60+ decreases the growth rate of GDP per capita by 5.5%. Two-thirds of the reduction is due to slower growth in the labor productivity of workers across the age distribution, while one-third arises from slower labor force growth. Our results imply annual GDP growth will slow by 1.2 percentage points this decade and 0.6 percentage points next decade due to population aging.
    JEL: J11 J14 J23 J26 O47
    Date: 2016–07

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