nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒04‒02
sixteen papers chosen by
Marc Klemp
Brown University

  1. Capital-Skill Complementarity and the Emergence of Labor Emancipation By Quamrul H. Ashraf; Francesco Cinnirella; Oded Galor; Boris Gershman; Erik Hornung
  2. Malaria and Early African Development: Evidence from Sickle Cell Trait By Emilio Depetris-Chauvin; David N. Weil
  3. Preaching Democracy By Andersen, Thomas Barnebeck; Jensen, Peter Sandholt
  4. Migrants and the Making of America: The Short and Long Run Effects of Immigration during the Age of Mass Migration By Nunn, Nathan; Qian, Nancy; Sequeira, Sandra
  5. A Brief History of Human Time. Exploring a database of " notable people " By Olivier Gergaud; Morgane Laouenan; Etienne Wasmer
  6. Does ethnic segregation matter for spatial inequality? A cross-country analysis By Ezcurra, Roberto; Rodríguez-Pose, Andrés
  7. Skill Premium and Technological Change in the Very Long Run: 1300-1914 By Rui Luo
  8. Global Population Growth, Technology, and Malthusian Constraints: A Quantitative Growth Theoretic Perspective By Bruno Lanz; Simon Dietz; Tim Swanson
  9. Income Distribution and Growth Under a Synthesis Model of Endogenous and Neoclassical Growth By Kim , Se-Jik
  10. The Relationship Between Growth and Economic Complexity: Evidence from Southeastern and Central Europe By Stojkoski, Viktor; Kocarev, Ljupco
  11. Growth without scale effects due to entropy By Tiago Neves Sequeira; Pedro Mazeda Gil; Óscar Afonso
  12. Russian Industrial Statistics By Suhara, Manabu
  13. Combining Semi-Endogenous and Fully Endogenous Growth: a Generalization. By Cozzi, Guido
  14. Fiscal Policy and Growth By Saima Nawaz; Idrees Khawaja
  15. Endogenous Growth, Semi-endogenous Growth... or Both? A Simple Hybrid Model By Cozzi, Guido
  16. The strong Porter hypothesis in an endogenous growth model with satisficing managers By Bianco, Dominique; Salies, Evens

  1. By: Quamrul H. Ashraf (Williams College); Francesco Cinnirella (Ifo Institute); Oded Galor (Brown University); Boris Gershman (American University); Erik Hornung (University of Bayreuth)
    Abstract: This paper advances a novel hypothesis regarding the historical roots of labor emancipation. It argues that the decline of coercive labor institutions in the industrial phase of development has been an inevitable by-product of the intensification of capital-skill complementarity in the production process. In light of the growing significance of skilled labor for fostering the return to physical capital, elites in society were induced to relinquish their historically profitable coercion of labor in favor of employing free skilled workers, thereby incentivizing the masses to engage in broad-based human capital acquisition, without fear of losing their skill premium to expropriation. In line with the proposed hypothesis, exploiting a plausibly exogenous source of variation in early industrialization across regions of nineteenth-century Prussia, capital abundance is shown to have contributed to the subsequent intensity of de facto serf emancipation.
    Keywords: Labor coercion, serfdom, emancipation, industrialization, physical capital accumulation, capital-skill complementarity, demand for human capital, nineteenth-century Prussia
    JEL: J24 J47 N13 N33 O14 O15 O43
    Date: 2017–03
  2. By: Emilio Depetris-Chauvin; David N. Weil
    Abstract: We examine the effect of malaria on economic development in Africa over the very long run. Using data on the prevalence of the mutation that causes sickle cell disease we measure the impact of malaria on mortality in Africa prior to the period in which formal data were collected. Our estimate is that in the more afflicted regions, malaria lowered the probability of surviving to adulthood by about ten percentage points, which is roughly twice the current burden of the disease. The reduction in malaria mortality has been roughly equal to the reduction in other causes of mortality. We then ask whether the estimated burden of malaria had an effect on economic development in the period before European contact. Examining both mortality and morbidity, we do not find evidence that the impact of malaria would have been very significant. These model-based findings are corroborated by a more statistically-based approach, which shows little evidence of a relationship between malaria ecology and population density or other measures of development, using data measured at the level of ethnic groups.
    Date: 2016
  3. By: Andersen, Thomas Barnebeck (Department of Business and Economics); Jensen, Peter Sandholt (Department of Business and Economics)
    Abstract: This paper presents evidence that the Second Vatican Council (1962-65) exerted a critical influence on the evolution of democracy worldwide, a view first advanced in the seminal work of Huntington (1991). We gather qualitative case-study evidence on how the Catholic Church influenced the post-Conciliar democratization process in different national contexts. We also adopt a difference-in-difference estimation strategy to show that Vatican II strongly predicts different measures of democracy. Taken together, the evidence substantiates Huntington’s dictum that the third wave of democratization was a Catholic wave.
    Keywords: Democracy; third wave; religion; Catholic Church; Second Vatican Council; causal-process observations; difference-in-difference estimation
    JEL: N40 P16
    Date: 2017–03–23
  4. By: Nunn, Nathan; Qian, Nancy; Sequeira, Sandra
    Abstract: We study the effects of European immigration to the United States during the Age of Mass Migration (1850-1920) on economic prosperity today. We exploit variation in the extent of immigration across counties arising from the interaction of fluctuations in aggregate immigrant flows and the gradual expansion of the railway network across the United States. We find that locations with more historical immigration today have higher incomes, less poverty, less unemployment, higher rates of urbanization, and greater educational attainment. The long-run effects appear to arise from the persistence of sizeable short-run benefits, including greater industrialization, increased agricultural productivity, and more innovation.
    Keywords: economic development; historical persistence; Immigration
    JEL: B52 F22 N72 O10 O40
    Date: 2017–03
  5. By: Olivier Gergaud (KEDGE Business School [Talence] - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche); Morgane Laouenan (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Etienne Wasmer (ECON - Département d'économie - Sciences Po)
    Abstract: This paper describes a database of 1,243,776 notable people and 7,184,575 locations (Geolinks) associated with them throughout human history (3000BCE-2015AD). We first describe in details the various approaches and procedures adopted to extract the relevant information from their Wikipedia biographies and then analyze the database. Ten main facts emerge. 1. There has been an exponential growth over time of the database, with more than 60% of notable people still living in 2015, with the exception of a relative decline of the cohort born in the XVIIth century and a local minimum between 1645 and 1655. 2. The average lifespan has increased by 20 years, from 60 to 80 years, between the cohort born in 1400AD and the one born in 1900AD. 3. The share of women in the database follows a U-shape pattern, with a minimum in the XVIIth century and a maximum at 25% for the most recent cohorts. 4. The fraction of notable people in governance occupations has decreased while the fraction in occupations such as arts, literature/media and sports has increased over the centuries; sports caught up to arts and literature for cohorts born in 1870 but remained at the same level until the 1950s cohorts; and eventually sports came to dominate the database after 1950. 5. The top 10 visible people born before 1890 are all non-American and have 10 different nationalities. Six out of the top 10 born after 1890 are instead U.S. born citizens. Since 1800, the share of people from Europe and the U.S. in the database declines, the number of people from Asia and the Southern Hemisphere grows to reach 20% of the database in 2000. Coïncidentally, in 1637, the exact barycenter of the base was in the small village of Colombey-les-Deux-Eglises (Champagne Region in France), where Charles de Gaulle lived and passed away. Since the 1970s, the barycenter oscillates between Morocco, Algeria and Tunisia. 6. The average distance between places of birth and death follows a U-shape pattern: the median distance was 316km before 500AD, 100km between 500 and 1500AD, and has risen continuously since then. The greatest mobility occurs between the age of 15 and 25. 7. Individuals with the highest levels of visibility tend to be more distant from their birth place, with a median distance of 785km for the top percentile as compared to 389km for the top decile and 176km overall. 8. In all occupations, there has been a rise in international mobility since 1960. The fraction of locations in a country different from the place of birth went from 15% in 1955 to 35% after 2000. 9. There is no positive association between the size of cities and the visibility of people measured at the end of their life. If anything, the correlation is negative. 10. Last and not least, we find a positive correlation between the contemporaneous number of entrepreneurs and the urban growth of the city in which they are located the following decades; more strikingly, the same is also true with the contemporaneous number or share of artists, positively affecting next decades city growth; instead, we find a zero or negative correlation between the contemporaneous share of “militaries, politicians and religious people” and urban growth in the following decades.
    Keywords: Big Data,notable people
    Date: 2017–01–19
  6. By: Ezcurra, Roberto; Rodríguez-Pose, Andrés
    Abstract: The paper examines the link between ethnic segregation and spatial inequality in 71 countries with different levels of economic development. The results reveal that ethnic segregation is associated with significantly higher levels of spatial inequality. This finding is not affected by the inclusion of various covariates that may influence both spatial inequality and the geographical distribution of ethnic groups, and is confirmed by a number of robustness tests. The results also suggest that political decentralization and the quality of government could act as transmission channels linking ethnic segregation and spatial inequality.
    Keywords: ethnic segregration; spatial inequality
    JEL: J15 O11 O18 R11
    Date: 2017–03
  7. By: Rui Luo
    Abstract: This paper sets out to explain the historical development of the skill premium in western Europe over a period ranging from the pre-modern era to the modern era (circa 1300 to 1914). We develop a model of the skill premium and technological change over the very long run which endogenously accounts for the transition across different growth regimes in this period. The model integrates two key elements in long-run growth, the human capital investment and the capital-human capital ratio, into the analysis and successfully explains the declining skill premium from 1300 to 1600 and the stable skill premium from 1600 to 1914. The explanation elucidates a number of well-known historical facts that have not been previously examined in the study of the skill premium.
    Keywords: skill premium; technological change; human capital investment; capital-human capital ratio; growth regimes
    JEL: J31 O41 O11
    Date: 2017–03
  8. By: Bruno Lanz; Simon Dietz; Tim Swanson
    Abstract: How much further will the global population expand, will we exhaust natural land reserves, and what is the role in this story of economic growth? We study the interactions between global population, technological progress, per-capita income, and agricultural land expansion from 1960 to 2100. This provides a first integrative view of future population development in the context of modern growth theory, and thus a novel perspective on a key driver of future resource scarcity. We structurally estimate a two-sector Schumpeterian growth model with endogenous fertility and finite natural land reserves, in which a manufacturing sector provides a consumption good and an agricultural sector provides food to sustain contemporaneous population. The model closely replicates 1960-2010 data on world population, GDP, productivity growth and crop land area, and we employ the model to make projections from 2010 to 2100. Results suggests a slowdown of technological progress, and, because it is the main driver of a transition to a regime with low population growth, significant population growth over the whole century. Global population is slightly below 10 billion by 2050, further growing to 12 billion by 2100. As population and per capita income grow, demand for agricultural output almost doubles over the century, but the land constraint does not bind because of capital investment and technological progress.
    Keywords: Aggregate / global model, Growth, Forecasting and projection methods
    Date: 2015–07–01
  9. By: Kim , Se-Jik (International Monetary Fund (IMF))
    Abstract: This paper develops a model which allows us to analyze the effect of policies that influence income distribution between capitalists and workers (such as taxes and market imperfections) on the log-run growth path of an economy. More specifically, we present a heterogeneous agent model where some agents choose to be capitalists to specialize in accumulating physical capital and others become workers accumulating human capital. An important feature of this model is that it can be reduced to either an endogenous growth model or Neoclassical growth model. For a range of the parameters of technology and policy variables, the model generates a balanced growth path where capitalists continue to accumulate physical capital and workers human capital, as in AK model of endogenous growth. For a different range of parameters, the model generates a steady state along which both capitalists and workers do not increase physical or human capital any longer as in Neoclassical growth models. This model, therefore, can be viewed as a synthesis model of endogenous and neoclassical growth. An advantage of this synthesis growth model is that it allows us to explain the shift in the growth path in response to policy shocks that affect the capital-labor income distribution. This growth model explains the change in the path from sustained growth to zero growth as a regime change from endogenous growth to Neoclassical growth regime, and that from zero to sustained growth as a regime shift of the other way around. Based on the synthesis growth model, we show that changes in labor income share or government policies that make such changes may induce a shift in the growth regime and subsequent change in the balanced growth path. The policies of capital-labor income distribution include those of changing labor and capital income tax rates and regulations on monopoly or monopsony. The monopolist firms which have monopsony power in labor market can choose the wage rate rather than take it as given. Thus they may drive the wage rate down below labor productivity, which would induce a decline in labor income share and zero growth. We show that in this situation the government policy of regulating monopoly/monopsony or raising wage rates may raise labor income share, and by doing so, trigger human capital accumulation and an ensuing shift to a path of sustained growth.
    Keywords: Income Distribution Policy; Synthesis Growth Model; Labor Income Share
    Date: 2015–09–04
  10. By: Stojkoski, Viktor; Kocarev, Ljupco
    Abstract: The index of economic complexity is created by analyzing the relations between countries and the products they export. Constructed in such way, it defines the basis for the theory of economic complexity, which reflects the knowledge embedded in the productive structure of an economy. Exactly this knowledge is at the core of the endogenous theory of economic growth. Until now, all econometric analyses for the relationship between economic complexity and growth were done by implementing methods in which each country is valued equally. However, the countries are heterogeneous – they exhibit individual characteristics that directly encourage the complexity, and are in tight relation with growth. Therefore, in this paper the analysis is faced towards one region - Southeastern and Central Europe, and, in the spirit of the endogenous theory, a model is created which adequately captures the long run, as well as the short run relationship between the two variables. The results show that the economic complexity is a statistically significant explanatory variable of growth on the long run, and thus, it creates enormous economic implications. Contrarily, on the short run the productive knowledge has no effect on the income changes in Southeastern and Central Europe. All of this implies that the economic complexity reveals a structure which promotes development of long run strategies in the countries for inventing products. These strategies serve for the purpose of accumulating new capabilities that will help in creating and maintaining long term prosperity and economic growth.
    Keywords: Economic Complexity, Economic Growth, South Eastern and Central Europe, Cointegration, Error Correction Model
    JEL: C51 O11 O3 O4 O40 O47
    Date: 2017
  11. By: Tiago Neves Sequeira (Univ. Beira Interior and CEFAGE-UBI); Pedro Mazeda Gil (University of Porto, Faculty of Economics, and CEF.UP); Óscar Afonso (University of Porto, Faculty of Economics)
    Abstract: We eliminate scale effects in the Balanced Growth Path of an expanding-variety endogenous growth model using the concept of entropy as a complexity effect. This allows us to gradually diminish scaleeffects as the economy develops along the transitional dynamics, which conciliates evidence of the existence of scale effects long ago in history with evidence for no scale effects in today’s economies. We show that empirical evidence supports entropy as a stylized form of the complexity effect. Then we show that the model can replicate well the take-off after the industrial revolution. Finally, we show that a model with both network effects (as spillovers in R&D) and entropy (as complexity effects) can replicate the main facts of the very long-run evolution of the economy since A.D. 1. Future scenarios may help to explain (part of) the growth crises affecting the current generation.
    Keywords: Endogenous economic growth; Network effects; Complexity effects; Entropy.
    JEL: O10 O30 O40 E22
    Date: 2016
  12. By: Suhara, Manabu
    Abstract: Historical Russian statistics on industry are discussed in this paper. Russia attained impressive economic development in the century from the emancipation of Russian serfs to around 1960, although growth was interrupted by the October Revolution, the Civil War, and World War II. The mainspring of Russia’s advancement was industrial growth. The mainly agrarian economy, in which the rural population accounted for about 80% of the total at the end of the 19th century, underwent a complete change in economic structure. This Russian success, however, came to an end at the end of the 1950s and beginning of the 1960s. The mining and manufacturing industries, which until then had led the economy, lost vigor, and the industrial economy as a whole withered. This deterioration led to the collapse of the Soviet Union by the end of the 20th century and the start of systemic transformation to capitalism. In this paper we look back at the history of Russia from the viewpoint of industrial statistics. In the first section, we adopt a general view of industrial statistics in Russia under the Tsarist regime. Some estimates of production indices for the industry of the Russian Empire are presented and compared. Then in the second section, production, labor, and capital statistics for Russian industry in the Soviet era are discussed, followed by the third section, in which changes in industrial statistics for Russia’s new era are summarized.
    Date: 2017–03
  13. By: Cozzi, Guido
    Abstract: This paper shows that combining the semi-endogenous and the fully endogenous growth mechanisms with a general CES aggregator, either growth process can prevail in the balanced growth path depending on their degree of complementarity/substitutability. Policy-induced long-run economic switches to the fully endogenous steady state as the R&D employment ratio surpasses a positive threshold are possible if the two growth engines are gross substitutes.
    Keywords: Strong scale effect; Semi-endogenous growth; Fully endogenous growth.
    JEL: O3 O4
    Date: 2017–03
  14. By: Saima Nawaz; Idrees Khawaja
    Abstract: This study seeks to examine the impact of fiscal policy on growth while accounting the level of development and controlling for the state of institutions. A theoretical framework is developed to examine the impact of fiscal policy on economic growth while controlling for institutionsWe extend the augmented Solow growth model by assuming that technological advancement depends not only upon constant rate of technological progress (as envisaged in the neoclassical model) but also upon fiscal policy and the quality of institutions. This provides a framework to analyze the impact of both the fiscal policy and institutions on economic growth. The empirical investigation uses panel data of 56 countries over 1981-2010. We use fixed effects model and a dynamic panel based on the System Generalized Method of Moments (SYS-GMM).In sum, the disaggregated results suggest that effectiveness of fiscal policy in generating growth is function of the level of development of an economy. Typically, in developed countries more resources are allocated to the sectors considered productive while in developing economies resources are not only misallocated but are also characterized by rent seeking and leakages. This difference in resource allocation is responsible for the different impact that government expenditures cast on growth. The resource allocation in a country, among other things, would depend upon the quality of institutions.
    Keywords: 56 countries: Developed and Developing, Growth, Public finance
    Date: 2015–07–01
  15. By: Cozzi, Guido
    Abstract: First generation endogenous growth models had the counterfactual implication that the long-term growth of per-capita GDP increased with the population size. Two influential growth paradigms, the semi-endogenous and the second generation fully endogenous, eliminated this strong scale effect. Both solutions have useful aspects and insights, but very different policy implications. This paper combines both approaches into a single hybrid model class, and shows that no matter the weight assigned to each paradigm, the long-run predictions of the semi-endogenous policy dominate with high enough population growth rates, while the long-run predictions of the fully endogenous policy dominate at low population growth rates.
    Keywords: Strong scale effect; Semi-endogenous growth; Fully endogenous growth.
    JEL: O3 O4
    Date: 2017–02–24
  16. By: Bianco, Dominique; Salies, Evens
    Abstract: Few endogenous growth models have focused attention on the strong Porter hypothesis, that stricter environmental policies induce innovations, the benefits of which exceed the costs. A key assumption underlying this hypothesis is that policy strictness pushes firms to overcome some obstacles to profit maximization. This paper incorporates pollution and taxation in the Aghion and Griffith's (2005) model of growth with satisficing managers and non-drastic innovation [in Competition and growth: Reconciling Theory and Evidence, The MIT Press, Ch. 2, pp. 36-38]. Our theoretical results predict the strong Porter hypothesis. Furthermore, they suggest that environmental policy and the level of potential competition in the intermediate inputs sector are complementary. Assuming drastic innovation in the model, however, we predict the weak Porter hypothesis. Other departures from the model's initial assumptions are considered.
    Keywords: Strong Porter hypothesis; Environmental policy; Endogenous growth
    JEL: L16 O31 O44
    Date: 2016–01–01

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