nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒02‒05
nine papers chosen by
Marc Klemp
Brown University

  1. Secular Stagnation? The Effect of Aging on Economic Growth in the Age of Automation By Daron Acemoglu; Pascual Restrepo
  2. A Cliometric Model of Unified Growth. Family Organization and Economic Growth in the Long Run of History By Claude Diebolt; Faustine Perrin
  3. The Effect of the Spanish Reconquest on Iberian Cities By David, Cuberes; Rafael, González-Val
  4. Human capital accumulation in France at the dawn of the XIXth century: Lessons from the Guizot Inquiry By Magali Jaoul-Grammare; Charlotte Le Chapelain
  5. On the origin and consequences of racism By Bonick, Matthew; Farfán-Vallespín, Antonio
  6. Aggregating the Fertility Transition: Intergenerational Dynamics in Quality and Quantity By Tom Vogl
  7. The Mystery of TFP By Nicholas Oulton
  8. Employee Profit Sharing and Labor Extraction in a Classical Model of Distribution and Growth By Jaylson Jair da Silveira; Gilberto Tadeu Lima
  9. Optimal Equilibrium State in Two-Sector Growth Model By Yashin, Pete

  1. By: Daron Acemoglu; Pascual Restrepo
    Abstract: Several recent theories emphasize the negative effects of an aging population on economic growth, either because of the lower labor force participation and productivity of older workers or because aging will create an excess of savings over desired investment, leading to secular stagnation. We show that there is no such negative relationship in the data. If anything, countries experiencing more rapid aging have grown more in recent decades. We suggest that this counterintuitive finding might reflect the more rapid adoption of automation technologies in countries undergoing more pronounced demographic changes, and provide evidence and theoretical underpinnings for this argument.
    JEL: E30 J11 J24 O33 O47 O57
    Date: 2017–01
  2. By: Claude Diebolt; Faustine Perrin
    Abstract: This chapter explores the role of gender equality over the long-run economic and demographic development path of industrialized countries. It accounts for changes in fertility, technology, and income per capita in the transition from stagnation to sustained growth. Our unified cliometric growth model of female empowerment suggests that changes in gender relations, triggered by endogenous skill-biased technological progress, induce women to invest in skilled education and engage a process of human capital accumulation. In parallel, a higher time spent by women in education increases the opportunity cost of having children and reduces fertility. This positive feedback loop generates both a demographic and an economic transition.
    Keywords: Cliometrics, Economic Growth, Gender, Fertility, Human Capital.
    JEL: J1 N3 O4
    Date: 2017
  3. By: David, Cuberes; Rafael, González-Val
    Abstract: This paper studies the effect of the Spanish Reconquest, a military campaign against the Muslims in the medieval Iberian Peninsula that ended up with the expulsion or extermination of most of the Muslim population from this territory. We use this major historical event to study the persistence of population shocks at the city level. We find that the Reconquest had an average significant negative effect on the relative and log-scale population of the main Iberian cities even after controlling for a large set of country and city-specific geographical and economic indicators, as well as city-specific time trends. Nevertheless, our results show that this negative shock was relatively short-lived, vanishing on average within the first one hundred years after the onset of the Reconquest. These results suggest that the locational fundamentals that determined the size of Iberian cities before the Reconquest were more important determinants of the fate of these cities than the direct negative impact that the Reconquest may have had on their population. Our findings can also be interpreted as weak evidence on the negative effect that war and conflict can have on urban population.
    Keywords: locational fundamentals; city growth; lock-in effects; warfare, conflict and cities
    JEL: N9 R12
    Date: 2017–01–21
  4. By: Magali Jaoul-Grammare; Charlotte Le Chapelain
    Abstract: Building on the results of the Guizot Inquiry, carried out in autumn 1833 on the initiative of François Guizot, the minister of public instruction, this article examines the process of human capital accumulation in early nineteenth-century France. We rely on an original proxy for human capital – student achievement – to highlight the high level of heterogeneity in human capital accumulation in this period. We identify two types of schools in the French educational landscape: first, large schools, well-endowed in human and material resources, which contributed a great deal to human capital accumulation; second, small schools, characterised by some degree of amateurism and improvisation, which weakly contributed to human capital formation. We note that the use of literacy rates or school enrollment rates can be misleading with regard to the estimation of French human capital endowments, laying emphasis instead on the heterogeneity in the French educational landscape at the dawn of the nineteenth century, as the country embarked on the process of industrialisation.
    Keywords: Guizot Inquiry, Human Capital Accumulation, France, Nineteenth Century.
    JEL: C10 I21 N33
    Date: 2017
  5. By: Bonick, Matthew; Farfán-Vallespín, Antonio
    Abstract: Using a novel method to measure racism at the individual and country level, we show, our measure of racism has a strong negative and significant impact on economic development, quality of institutions, education and social capital. We test different hypotheses concerning the origin of racism and its channels of impact to establish causality. We find racism is not correlated with measures for the coexistence of different racial or ethnic groups or ethnically- motivated conflicts. Importantly, we show, for former colonies, racism is strongly correlated with the presence of extractive institutions during colonial times, even after controlling for current institutions, GDP per capita and education. We argue, extractive colonial institutions not only had a negative impact on the political and economic institutions but also shaped the cultural values of the population. We claim colonial powers instilled racism among the population of their colonies in order to weaken their ability for collective action.
    Date: 2016
  6. By: Tom Vogl
    Abstract: Fertility change is distinct from other forms of social and economic change because it directly alters the size and composition of the next generation. This paper studies how changes in population composition over the fertility transition feed back into the evolution of average fertility across generations. Theory predicts that changes in the relationship between human capital and fertility first weaken and then strengthen fertility similarities between mothers and daughters, a process that first promotes and then restricts aggregate fertility decline. Consistent with these predictions, microdata from 40 developing countries over the second half of the 20th century show that intergenerational fertility associations strengthen late in the fertility transition, due to the alignment of the education-fertility relationship across generations. As fertility approaches the replacement level, the strengthening of these associations reweights the population to raise aggregate fertility rates, pushing back against aggregate fertility decline.
    JEL: J1 O1 O4
    Date: 2017–01
  7. By: Nicholas Oulton (Centre for Macroeconomics (CFM); National Institute of Economic and Social Research (NIESR))
    Abstract: I analyse TFP growth at the sectoral and aggregate level, using data for 10 industry groups covering the market sector for 18 countries over the period 1970-2007 drawn from the EU KLEMS dataset. TFP growth displays persistence at the aggregate level but not at the industry level, suggesting industry outputs are measured with error. In all countries resources have been shifting away from industries with high TFP growth towards industries with low TFP growth. Nevertheless I find that structural change (as measured by changes in value added shares) has favoured growth in most countries. Errors in measuring capital or in measuring the elasticity of output with respect to capital are unlikely to substantially reduce the role of TFP in explaining growth. The pattern of growth in these 18 countries is more consistent with an underlying two-sector model than with the one-sector (Solow) model. Standard theory suggests that TFP growth induces capital accumulation, at least in the long run. This is not the case with the raw EU KLEMS data used here. But standard theory finds some support when the data are smoothed to remove cyclical effects.
    Date: 2017–01
  8. By: Jaylson Jair da Silveira; Gilberto Tadeu Lima
    Abstract: This paper sets forth a classical model of economic growth in which the distribution of income features the possibility of profit sharing with workers, as firms choose periodically between two labor-extraction compensation strategies. Firms choose to compensate workers with either solely a conventional wage or a share of profits on top of this conventional wage. In accordance with considerable empirical evidence, labor productivity in profit-sharing firms is higher than labor productivity in non-sharing firms. The frequency distribution of labor-extraction compensation strategies and labor productivity across firms is evolutionarily time-varying as driven by satisficing imitation dynamics. We derive two main results which carry relevant implications. First, heterogeneity in labor-extraction compensation strategies across firms can be a stable long-run equilibrium configuration. Second, though the convergence to a long-run, evolutionary equilibrium may occur with either a falling or increasing proportion of profit-sharing firms, the net share of profits in aggregate income and the rates of net profit, capital accumulation and economic growth, all nonetheless converge to their highest possible long-run equilibrium values
    Keywords: Profit sharing; income distribution; economic growth; evolutionary dynamics
    JEL: E11 E25 J33 O41
    Date: 2017–01–25
  9. By: Yashin, Pete
    Abstract: The paper studies a two-sector growth model for two cases: with flexible technology and with fixed coefficients. Different states of economic equilibrium (steady states) are compared. We find that the price of investment goods with respect to the price of consumer goods should be changed if the equilibrium state has shifted. Therefore, the aggregate production function cannot be considered as a purely technical. We assume that the income distribution is determined by the direct proportionality between the profits and the investment. Then the resulting function of aggregate output is continuous and differentiable in the domain of definition, even if the technology is fixed. In the last case the function has diminishing returns of capital under Uzawa capital-intensity condition; the state of economic equilibrium is stable only when this condition is valid. We suggest that the optimal is an equilibrium state that maximizes the total profit. The model with fixed coefficients predicts the possible existence of such an optimum.
    Keywords: two-sector growth model;optimal equilibrium state; aggregate production function; Uzawa capital-intensity condition; profit maximization
    JEL: E00 E10
    Date: 2017–02–01

This nep-gro issue is ©2017 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.