nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒12‒18
nine papers chosen by
Marc Klemp
Brown University

  1. The Deep Roots of Rebellion: Evidence from the Irish Revolution By Gaia Narciso; Battista Severgnini
  2. Further Unbundling Institutions By Braunfels, Elias
  3. The Fading American Dream: Trends in Absolute Income Mobility Since 1940 By Raj Chetty; David Grusky; Maximilian Hell; Nathaniel Hendren; Robert Manduca; Jimmy Narang
  4. The political consequences of ethnic tension: Theory and evidence By Kemal Kivanc Akoz; K Peren Arin; Christina Zenker
  5. Does income inequality matter for economic growth? : An empirical investigation By Chletsos, Michael; Fatouros, Nikolaos
  6. Multiculturalism and Growth: Skill-Specific Evidence from the Post-World War II Period By Frédéric Docquier; Riccardo Turati; Jérôme Valette; Chrysovalantis Vasilakis
  7. Asset Ownership, Windfalls, and Income: Evidence from Oil and Gas Royalties By Brown, Jason; Fitzgerald, Timothy; Weber, Jeremy G.
  8. Education quality and non-convergence By Danilo Paula de Souza; Mauro Rodrigues Junior
  9. How labor regulation affects innovation and investment: A neo-Schumpeterian approach. By Giorgio Calcagnini; Germana Giombini; Giuseppe Travaglini

  1. By: Gaia Narciso (Department of Economics, Trinity College Dublin); Battista Severgnini (Copenhagen Business School)
    Abstract: This paper studies how cultural norms shaped by negative historical shocks can explain conflicts in the long-run. Exploiting a unique dataset constructed from historical archives, we test whether the Irish Famine (1845-1850), one of the most lethal starvation in history, changed political attitudes and contributed to the Irish Revolution (1913-1921). First, we investigate the determinants of joining the rebellion movement on the basis of the 1911 Irish Census and the official lists of rebels. We find that rebels are more likely to be male, young, catholic and literate. Second, we explore whether the famine played a role in the probability of joining rebellion activities. Controlling for the level of economic development and other potential concurring factors, we provide evidence of the role of the great Irish famine as an exceptional legacy of rebellion during the movement of independence.
    Keywords: Z10, F51, N53, N44.
    Date: 2016–12
  2. By: Braunfels, Elias (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: This paper analyzes the effects of institutions on economic development, and focuses on separating political institutions from contracting and economic institutions. For a sample of former European colonies, I find that differences in income levels are strongly a ected by political institutions, which regulate political accountability and constrain political elites. There is some evidence for a positive e ect of economic institutions, which protect property rights, but no evidence for positive e ects of contracting institutions, which facilitate contracting among individuals. A decomposition of GDP reveals that political institutions work through the channel of physical and human Capital accumulation. Economic institutions have a positive impact on total factor productivity. To identify and unbundle effects, I exploit exogenous variation in each of the three institutions using instrumental variables based on Colonial history and geographic endowments. The application of a recently developed test for weak instruments in the multiple endogenous variables setting shows that the e ects of institutions can be separated. The paper adds to the literature by identifying the fundamental importance of political institutions for economic development, and provides an inside into the channels through which speci c institutions a ect income levels.
    Keywords: Institutions; Economic Development; Political Economy; Property Rights; Checks and Balances
    JEL: E02 O11 O17 O43
    Date: 2016–09–19
  3. By: Raj Chetty; David Grusky; Maximilian Hell; Nathaniel Hendren; Robert Manduca; Jimmy Narang
    Abstract: We estimate rates of “absolute income mobility” – the fraction of children who earn more than their parents – by combining historical data from Census and CPS cross-sections with panel data for recent birth cohorts from de-identified tax records. Our approach overcomes the key data limitation that has hampered research on trends in intergenerational mobility: the lack of large panel datasets linking parents and children. We find that rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s. The result that absolute mobility has fallen sharply over the past half century is robust to the choice of price deflator, the definition of income, and accounting for taxes and transfers. In counterfactual simulations, we find that increasing GDP growth rates alone cannot restore absolute mobility to the rates experienced by children born in the 1940s. In contrast, changing the distribution of growth across income groups to the more equal distribution experienced by the 1940 birth cohort would reverse more than 70% of the decline in mobility. These results imply that reviving the “American Dream” of high rates of absolute mobility would require economic growth that is spread more broadly across the income distribution.
    JEL: H0 J0
    Date: 2016–12
  4. By: Kemal Kivanc Akoz; K Peren Arin; Christina Zenker
    Abstract: By counting the number of articles published in major US newspapers containing carefully selected keywords, we construct a time varying measure of ethnic tension. Then, we empirically test the predictions of a theoretical model by using the aforementioned measure, and investigate how ethnic tension affects presidential approval ratings by different ethnic groups. Our results show that while ethnic tension decreases the approval by white voters, the opposite is true for the approval by African American voters. Further scrutiny reveals that this may be explained by the fact that government transfers to African Americans increase as a result of higher ethnic tension.
    Keywords: Ethnic Tension, Presidential Approval, Government Transfers
    JEL: J15 H11 H12 O15
    Date: 2016–12
  5. By: Chletsos, Michael; Fatouros, Nikolaos
    Abstract: In this paper we empirically investigate a possible effect of income inequality on growth. Using a panel of 126 countries for the time-span from 1968 to 2007 we report a positive relationship between income inequality and growth. That occurs through both the taxation and the human capital channels. We estimate our model with several estimation techniques such as fixed effects, GMM and Two stages least squares. Our results suggest that a policy maker has to take into account a certain trade off between making the distribution of income more equal and raising the economy's wealth.
    Keywords: growth, inequality, welfare
    JEL: D63 O11 O40
    Date: 2016–12–07
  6. By: Frédéric Docquier (FNRS, UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FERDI (France)); Riccardo Turati (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Jérôme Valette (CERDI, University of Auvergne (France)); Chrysovalantis Vasilakis (Bangor Business School (United Kingdom))
    Abstract: This paper empirically revisits the impact of multiculturalism (as proxied by indices of birthplace diversity and polarization among immigrants, or by epidemiological terms) on the macroeconomic performance of US states over the 1960-2010 period. We test for skill-specific effects of multiculturalism, controlling for standard growth regressors and a variety of fixed effects, and accounting for the age of entry and legal status of immigrants. To identify causation, we compare various instrumentation strategies used in the existing literature. We provide converging and robust evidence of a positive and significant effect of diversity among college-educated immigrants on GDP per capita. Overall, a 10% increase in high-skilled diversity raises GDP per capita by 6.2%. On the contrary, diversity among less educated immigrants has insignificant effects. Also, we find no evidence of a quadratic effect or a contamination by economic conditions in poor countries.
    Keywords: Immigration, Culture, Birthplace Diversity, Growth
    JEL: F22 J61
    Date: 2016–12–06
  7. By: Brown, Jason (Federal Reserve Bank of Kansas City); Fitzgerald, Timothy; Weber, Jeremy G.
    Abstract: In 2013, total oil and gas royalty-related income exceeded $64 billion. Each dollar in royalties generated an additional $0.52 of local income. Areas with locally owned resources capture $0.29 more of each dollar earned on production.
    Keywords: Oil; Gas; Royalties; Resource ownership; Shale; Income growth
    JEL: D23 Q32 Q33 R11
    Date: 2016–12–08
  8. By: Danilo Paula de Souza; Mauro Rodrigues Junior
    Abstract: This paper assesses the role of education quality in the convergence process of GDP per capita through teachers quality impact in human capital formation. The simple two-period OLG model suggests initial level of teacher's human capital is important to explain non-convergence, even when education quality return is decreasing. This non-convergence arises because an initially low level of teachers' human capital translates into a low level of human capital transferred to students, which means a low level of teachers' human capital in the next period, and so on. It is also shown an education quantity-quality trade-off, despite all dynamics coming from quality evolution. This trade-off helps to explain why developing countries did not reached high GDP levels, despite recent evolution of average years of schooling in these countries. The paper, therefore, provides an alternative explanation for why countries income does not converge, even when differences in other inputs, such as capital stock, are not accounted for.
    Keywords: human capital; education quality; economic growth
    JEL: O40 J24 I25
    Date: 2016–10–24
  9. By: Giorgio Calcagnini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Germana Giombini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo); Giuseppe Travaglini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo)
    Abstract: Theoretical and empirical models provide ambiguous responses on the relationship among labor regulation, innovation and investment. Labor regulation tends to raise frms' adjustment costs. But, also labor regulation stimulates firms to make innovations and investments to recover productivity in the long-run. In this paper we present a neo- Schumpeterian endogenous growth model, which explains how these opposite forces operate over time, and why a stricter labor regulation may positively affect innovation and investment.
    Keywords: Endogenous growth model; Labor regulation; Innovation; Investment
    JEL: O4 J5
    Date: 2016

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