nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒09‒18
eight papers chosen by
Marc Klemp
Brown University

  1. Long-Run Development and the New Cultural EconomicsS By Boris Gershman
  2. You Reap What You Know: Darwin beats Malthus: Medicalization, Evolutionary Anthropology and the Demographic Transition By Katharina Mühlhoff
  3. Multiple core regions: regional inequality in switzerland, 1860 to 2008 By Stohr, Christian
  4. Distributive Conflict, Growth, and the ‘Entrepreneurial State’. By Daniele Tavani; Luca Zamparelli
  5. Quality Growth: From Process to Product Innovation Along the Path of Development By Esteban Jaimovich
  6. An Asymmetric Melitz Model of Trade and Growth By NAITO Takumi
  7. Gini coefficients of education for 146 countries, 1950-2010 By Ziesemer, Thomas
  8. Urbanization, Growth and Structural Change By Michael Peters; Fabian Eckert

  1. By: Boris Gershman
    Abstract: This paper reviews recent economics literature on culture, with an emphasis on its relation to the field of long-run growth and development. It examines the key issues debated in the new cultural economics: causal effects of culture on economic outcomes, the origins and social costs of culture, as well as cultural transmission, persistence, and change. Some of these topics are illustrated in application to the economic analysis of envy-related culture.
    Keywords: Culture, cultural persistence, cultural transmission, long-run development
    JEL: J15 O10 Z10 Z12 Z13
    Date: 2016
  2. By: Katharina Mühlhoff (Universidad Carlos III de Madrid)
    Abstract: For the better part of human history, life was most fragile and death most imminent during infancy and early childhood. The death of a child may be hardly bearable from a humanitarian perspective. Yet, certain currents in economic theory attach a silver lining to high mortality by claiming that the Malthusian check on population raises per capita income and facilitates the accumulation of capital. The present paper challenges this conventional wisdom. In essence, it argues that high levels of environmental risk produce genetic and behavioral adaptations which induce individuals to have many - in terms of parental investment - cheap offspring. Conversely, stable environments recast the tradeoff between child quantity and quality in favor of more quality-based reproductive strategies. Incorporating these biological relationships into the traditional Barro-Becker model of fertility, the paper finds that both declining extrinsic mortality and increased effectiveness of parenting effort potentially trigger a demographic transition. Thus, the economic benefits of Malthusian population checks are mitigated because high mortality endogenously produces high fertility whereas improved survival encourages human capital investment and fosters long-term growth. To assess whether the theoretical predictions conform with historical reality, I use smallpox vaccination in 19th century Germany as a natural experiment. Performing an econometric analysis of 67 districts in the Granduchy of Baden provides evidence, that comprehensive immunization and advanced medicalization came along with reduced mortality, significantly lower fertility and increased parental care. In sum, it therefore seems that Malthusian mechanisms are at least partly offset by countervailing biological adaptations.
    Keywords: Demographic Transition, Evolutionary Anthropology, Life History Theory, Economic Growth
    JEL: I12 I15 N13 N33 O44
    Date: 2016–09
  3. By: Stohr, Christian
    Abstract: This paper estimates regional GDP for three different geographical levels in Switzerland. My analysis of regional inequality rests on a heuristic model featuring an initial growth impulse in one or several core regions and subsequent diffusion. As a consequence of the existence of multiple core regions Swiss regional inequality has been comparatively low at higher geographical levels. Spatial diffusion of economic growth has occurred across different parts of the country and within different labor market regions at the same time. This resulted in a bell-shape evolution of regional inequality at the micro regional level and convergence at higher geographical levels. In early and in late stages of the development process, productivity differentials were the main drivers of inequality, whereas economic structure was determinant between 1888 and 1941.
    Keywords: Regional data, Inequality, Industrial structure, Productivity, Comparative advantage, Switzerland
    JEL: R10 R11 N93 O14 O18
    Date: 2016
  4. By: Daniele Tavani (Department of Economics, Colorado State University.); Luca Zamparelli (Department of Social Sciences and Economics, Sapienza University of Rome)
    Abstract: In this paper, we introduce a twofold role for the public sector in the Goodwin (1967) growth cycle model. The government collects income taxes in order to: (a) invest in infrastructure capital, which directly affects the production possibilities of the economy; (b) finance publicly funded research, which augments the growth rate of labor productivity. We first focus on a special case in which labor productivity growth depends entirely on public research, and show that: (i) provided that the output-elasticity of infrastructure is greater than the elasticity of labor productivity growth to public R&D, there exists a tax rate tau* that maximizes the long-run labor share, but not a growth-maximizing tax rate; (ii) the long-run labor share is always increasing in the share of public spending in infrastructure, and (iii) the presence of public R&D is not enough to stabilize the distributive conflict. We then study a more general model with induced technical change where, as is well known in the literature, the distributive conflict is resolved in the long run. With induced technical change: (iv) the labor share-maximizing tax rate is the same as in the special case; (v) the long-run share of labor is always increasing in the share of public spending in infrastructure, and (vi) maximizing growth requires to levy a tax rate in excess of tau*.
    Keywords: Public R&D, Goodwin growth cycle, optimal fiscal policy.
    JEL: D33 E11 O38
    Date: 2016–09
  5. By: Esteban Jaimovich (University of Surrey)
    Abstract: We propose a demand-driven growth theory where process innovations and product innovations fulfil sequential roles along the growth path. Process innovations must initially set the economy on a positive growth path. However, process innovations alone cannot fuel growth forever, as their benefits display an inherent tendency to wane. Product innovations are therefore also needed for the economy to keep growing in the long run. When the economy fails to switch from a growth regime steered by process innovation to one driven by product innovation, R&D effort and growth will eventually come to a halt. However, when the switch to a product innovation growth regime does take place, a virtuous circle gets ignited. This happens because product innovation effort not only keeps growth alive when incentives to undertake process innovation diminish, but it also regenerates profit prospects from further process innovation effort.
    JEL: O30 O31 O41
    Date: 2016–07
  6. By: NAITO Takumi
    Abstract: To examine the effects of unilateral trade liberalization on growth and welfare of the liberalizing and partner countries through intraindustry reallocations, we formulate an asymmetric two-country Melitz model of trade and endogenous growth based on capital accumulation. We obtain two general results analytically. First, each country's mass of exported varieties, revenue share of exported varieties, and growth rate increase if and only if its domestic productivity cutoff increases. Second, compared with the old balanced growth path, a permanent fall in any import trade cost raises the growth rates of all countries for all periods, and welfare of all countries.
    Date: 2016–08
  7. By: Ziesemer, Thomas (UNU-MERIT, and Maastricht University, SBE)
    Abstract: We provide Gini coefficients of education based on data from Barro and Lee (2010) for 146 countries for the years 1950-2010. We compare them to an earlier data set and run some related LOESS fit regressions on average years of schooling and GDP per capita, both showing negative slopes, and among the latter two variables. Tertiary education is shown to reduce education inequality. A growth regression shows that tertiary education increases growth, Gini coefficients of education have a u-shaped impact on growth and labour force growth has an inverted u-shape effect on growth.
    Keywords: Human capital, Human capital distribution, education, inequality, growth, new data
    JEL: E24 I24 I25 O15 Y10
    Date: 2016–08–29
  8. By: Michael Peters (Yale University); Fabian Eckert
    Abstract: The process of economic growth has many non-balanced features. Of particular importance are employment changes across sectors of production and population changes across space. This paper makes two contributions. First of all, we systematically document these patterns across many countries of the world using detailed micro data. Secondly, we explore wether a parsimoniously parametrized model of trade and geography featuring demand non-homotheticities can explain the comovement between workers moving out of agricultural production and across space.
    Date: 2016

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