nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒03‒12
ten papers chosen by
Marc Klemp
Brown University

  1. Technology-Skill Complementarity in Early Phases of Industrialization By Franck, Raphael; Galor, Oded
  2. The Macrogenoeconomics of Comparative Development By Ashraf, Quamrul; Galor, Oded
  3. The roles of nature and history in world development By Vernon Henderson; Tim Squires; Adam Storeygard; David Weil
  4. Longevity and technological change By Gehringer, Agnieszka; Prettner, Klaus
  5. Innovation in an Aging Population By Legge, Stefan
  6. Children's health, human capital accumulation, and R&D-based economic growth By Baldanzi, Annarita; Bucci, Alberto; Prettner, Klaus
  7. Institutions vs. Social Interactions in Driving Economic Convergence: Evidence from Colombia By Michele Coscia; Timothy Cheston
  8. Reformulating Technical Change and Growth Theory By Gary Jefferson
  9. On the Dispensability of New Transportation Technologies: Evidence from the Heterogeneous Impact of Railroads in Nigeria By Dozie Okoye; Roland Pongou; Tite Yokossi
  10. Estimating Factor Shares from Nonstationary Panel Data By Juan Aquino-Chávez; N.R. Ramírez-Rondán

  1. By: Franck, Raphael; Galor, Oded
    Abstract: The research explores the effect of industrialization on human capital formation. Exploiting exogenous regional variations in the adoption of steam engines across France, the study establishes that, in contrast to conventional wisdom that views early industrialization as a predominantly deskilling process, the industrial revolution was conducive for human capital formation, generating wide-ranging gains in literacy rates and educational attainment.
    Keywords: Economic Growth; Human Capital; Industrialization; Steam Engine.; Technology-Skill Complementarity
    JEL: N33 N34 O14 O33
    Date: 2017–02
  2. By: Ashraf, Quamrul; Galor, Oded
    Abstract: The importance of evolutionary forces for comparative economic performance across societies has been the focus of a vibrant literature, highlighting the roles played by the Neolithic Revolution and the prehistoric "out of Africa" migration of anatomically modern humans in generating worldwide variations in the composition of human traits. This essay surveys this literature and examines the contribution of a recent hypothesis regarding the evolutionary origins of comparative economic development, set forth in Nicholas Wade's A Troublesome Inheritance: Genes, Race and Human History, to this important line of research.
    Keywords: Comparative development; genes; genetic diversity; human evolution; natural selection; race; the “out of Africa†hypothesis
    JEL: N10 N30 O11 Z10
    Date: 2017–02
  3. By: Vernon Henderson; Tim Squires; Adam Storeygard; David Weil
    Abstract: Vernon Henderson and colleagues explore fundamental determinants of the location of economic activity.
    Keywords: agriculture, physical geography, development
    JEL: O13 O18 R12
    Date: 2017–03
  4. By: Gehringer, Agnieszka; Prettner, Klaus
    Abstract: We analyze the impact of increasing longevity on technological progress within a simple R&D-based growth framework with overlapping generations and test the model's implication on OECD data from 1960 to 2011. The central hypothesis derived in the theoretical part is that - by raising the incentives of households to invest in physical capital and in R&D - decreasing mortality positively impacts upon technological progress and productivity growth. The empirical results clearly confirm the theoretical prediction. This implies that the demographic changes we observed in industrialized economies over the last decades were not detrimental to economic prosperity, at least as far as technological progress and productivity growth are concerned.
    JEL: J11 O11 O41
    Date: 2016
  5. By: Legge, Stefan
    Abstract: What is the effect of population aging on the rate of innovation? In this paper, I examine a new channel and argue that demographic shifts affect the demand for innovative goods. In an overlapping-generations model, it is assumed that individuals must spend time on learning how to use new technology. This creates age-dependent demand structures because older individuals have limited time windows for investments to pay off. The result is that in an aging population a larger fraction of the population does not invest in acquiring new skills. The amount of R&D is reduced as demand for innovative goods falls. Using data from all OECD countries for the period 1978-2010, I find support for these theoretical predictions. Those countries that faced the largest demographic shifts experienced the sharpest growth reduction in patent applications.
    JEL: J11 J31 O41
    Date: 2016
  6. By: Baldanzi, Annarita; Bucci, Alberto; Prettner, Klaus
    Abstract: We analyze the effects of children's health on human capital accumulation and on long-run economic growth. For this purpose we design an R&D-based growth model in which the stock of human capital of the next generation is determined by parental education and health investments. We show that i) there is a complementarity between education and health: if parents want to have better educated children, they also raise health investments and vice versa; ii) parental health investments exert an unambiguously positive effect on long-run economic growth, iii) faster population growth reduces long-run economic growth. These results are consistent with the empirical evidence for modern economies in the twentieth century.
    Keywords: Children's Health,Education,Fertility,Economic Growth,Technological Progress,Long-run Economic Development
    JEL: I15 I25 J10 O30 O41
    Date: 2017
  7. By: Michele Coscia (Center for International Development at Harvard University); Timothy Cheston (Center for International Development at Harvard University)
    Abstract: Are regions poor because they have bad institutions or are they poor because they are disconnected from the social channels through which technology diffuses? This paper tests institutional and technological theories of economic convergence by looking at income convergence across Colombian municipalities. We use formal employment and wage data to estimate growth of income per capita at the municipal level. In Colombia, municipalities are organized into 32 departamentos or states. We use cellphone metadata to cluster municipalities into 32 communication clusters, defined as a set of municipalities that are densely connected through phone calls. We show that these two forms of grouping municipalities are very different. We study the effect on municipal income growth of the characteristics of both the state and the communication cluster to which the municipality belongs. We find that belonging to a richer communication cluster accelerates convergence, while belonging to a richer state does not. This result is robust to controlling for state fixed effects when studying the impact of communication clusters and vice versa. The results point to the importance of social interactions rather than formal institutions in the growth process.
    Date: 2017–02
  8. By: Gary Jefferson (Brandeis University)
    Abstract: This paper clarifies certain errors and inconsistencies that have become embedded in the conventional neoclassical growth model. The paper demonstrates that characterizing technical change in the Solow model as "purely Harrod-neutral labor augmenting" seriously compromises the role of capital and neoclassical principles in framing the process of economic growth. The basic argument of this paper is that by ignoring the actual elements of the so-called "degeneration" of Hicks-neutral or other capital-labor augmenting technical change, conventional presentations of the Solow model have foreclosed avenues for a deeper understanding of key features of economic growth. The paper develops the paradigm of Hick-Harrod technical change that is consistent with steady state growth under a wide range of values of the substitution elasticity, while also enabling a simplification of conditions required for the steady state. By endogenizing significant aspects of the growth process, the model opens the door to possibilities for a more unified theory of neoclassical growth, endogenous growth, and growth accounting.
    Date: 2017–02
  9. By: Dozie Okoye (Department of Economics, Dalhousie University, Halifax, NS); Roland Pongou (Department of Economics, University of Ottawa, Ottawa, ON); Tite Yokossi (Department of Economics, MIT, Cambridge, MA)
    Abstract: Exploring heterogeneity in the impact of a technology is a first step towards understanding conditions under which this technology is conducive to economic development. This article shows that colonial railroads in Nigeria have large long-lasting impacts on individual and local development in the North, but virtually no impact in the South neither in the short run nor in the long run. This heterogeneous impact of the railway can be accounted for by the distance to ports of export. We highlight the fact that the railway had no impact in areas that had access to ports of export, thanks to their proximity to the coast and to their use of waterways, and that those areas barely adopted the railway as it did not reduce their shipping costs. Our analyses rule out the possibility that the heterogeneous impacts are driven by cohort effects, presence of major roads, early cities, or missionary activity, or by crude oil production.
    Keywords: Impact Heterogeneity, Colonial Investments, Railway, Africa, Long-run Effects, Development, Nigeria
    JEL: O15 O18 N30 N37
    Date: 2017
  10. By: Juan Aquino-Chávez (Washington University in St. Louis); N.R. Ramírez-Rondán (Universidad del Pacífico)
    Abstract: The measurement of the sources of economic growth is essential for understanding the long-term perspective of any economy. From an empirical viewpoint, the results from any growth-accounting exercise depend both on the functional form that summarizes the technology set and the factor share values. We estimate the physical capital's share in output implied by a Cobb-Douglas production function. Instead of growth rates, we analyze time series in levels to preserve the long-run information contained in the data. We also make use of the cross-section dimension (between countries) to overcome the low availability of long time series. The Fully Modified OLS (FMOLS) and Dynamic OLS (DOLS) estimators are used in a panel cointegration framework for 109 countries over the 1951-2014 period. For several measures of labor input, our physical capital's share estimates range between 0.46 and 0.56 for the largest set of countries. Our estimates of the physical capital's share in output vary significantly across regions.
    Keywords: production function, factor shares, cointegration, panel data
    JEL: C23 E23
    Date: 2017–02

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