nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒07‒23
nine papers chosen by
Marc Klemp
Brown University

  1. Divergence, convergence, and the history-augmented Solow model By Kufenko, Vadim; Prettner, Klaus; Geloso, Vincent
  2. The effects of adult and non-adult mortality on long-run economic development: Evidence from a heterogeneous dynamic and cross-sectionally dependent panel of countries between 1800 and 2010 By Herzer, Dierk; Nagel, Korbinian
  3. Technology, Skill and Long Run Growth By Nancy L Stokey
  4. Population Control Policies and Fertility Convergence By Tiloka de Silva; Silvana Tenreyro
  5. The Slaughter of the North American Bison and Reversal of Fortunes on the Great Plains By Donna Feir,Rob Gillezeau, Maggie Jones
  6. Financial Development and Source of Growth; New Evidence By Sami Ben Naceur; Robert Blotevogel; Mark Fischer; Haiyan Shi
  7. Culture, Diffusion, and Economic Development: The Problem of Observational Equivalence By Harutyunyan, Ani; Özak, Ömer
  8. Vintage effects in human capital: Europe versus the United States By Robert Inklaar; Marianna Papakonstantinou
  9. Human capital and urban growth in Italy, 1981-2001 By Francesco Giffoni; Matteo Gomellini; Dario Pellegrino

  1. By: Kufenko, Vadim; Prettner, Klaus; Geloso, Vincent
    Abstract: We test the history-augmented Solow model with respect to its predictions on the patterns of divergence and convergence between the nowadays industrialized countries of the OECD. We show that the dispersion of incomes increased after the Industrial Revolution, peaked during the Second World War, and decreased afterwards. This pattern is fully consistent with the transitional dynamics implied by the history-augmented Solow model.
    Keywords: history-augmented Solow model,divergence,convergence,cross-country inequality
    JEL: J11 O11 O47
    Date: 2017
  2. By: Herzer, Dierk (Helmut Schmidt University, Hamburg); Nagel, Korbinian (Helmut Schmidt University, Hamburg)
    Abstract: This study examines the effects of adult and non-adult mortality on the long-run level of income in a heterogeneous dynamic and cross-sectionally dependent panel. Employing data for 20 countries between 1800 and 2010, it is found that (i) while non-adult mortality has no long-run effect on GDP per capita, reductions in adult mortality lead to statistically and economically significant increases in the long-run level of per capita income; (ii) there are no significant differences in the long-run effects of adult mortality and non-adult mortality on GDP per capita before and after the onset of the demographic transition; and (iii) mortality in middle adulthood has the greatest impact on economic development, whereas early adulthood mortality and mortality in later adulthood have little to no impact on the long-run level of per capita income.
    Keywords: Life expectancy; Adult mortality; Non-adult mortality; Economic development; Heterogeneous panel data models; Cross-sectional dependence; Demographic transition
    JEL: C23 I15 J11 O11
    Date: 2017–07–13
  3. By: Nancy L Stokey (Department of Economics)
    Abstract: This paper develops a model in which heterogeneous firms invest in technology to increase their profits, and heterogeneous workers invest in human capital to increase their earnings. Production functions are log supermodular in technology and human capital, so the competitive equilibrium features positively assortative matching between firms and workers. Continued investment in technology is profitable only because human capital is growing, and continued investment in human capital is worthwhile only because technology is growing. Both investment technologies have stochastic components, and the balanced growth path has stationary, nondegenerate distributions of technology and human capital, with both growing at a common, constant rate.
    Date: 2017
  4. By: Tiloka de Silva (London School of Economics (LSE); Centre for Macroeconomics (CFM)); Silvana Tenreyro (London School of Economics (LSE); Centre for Macroeconomics (CFM); Centre for Economic Performance (CEP); The Centre for Economic Policy Research (CEPR))
    Abstract: The rapid population growth in developing countries in the middle of the 20th century led to fears of a population explosion and motivated the inception of what effectively became a global population-control program. The initiative, propelled in its beginnings by intellectual elites in the United States, Sweden, and some developing countries, mobilized resources to enact policies aimed at reducing fertility by widening contraception provision and changing family-size norms. In the following five decades, fertility rates fell dramatically, with a majority of countries converging to a fertility rate just above two children per woman, despite large cross-country differences in economic variables such as GDP per capita, education levels, urbanization, and female labour force participation. The fast decline in fertility rates in developing economies stands in sharp contrast with the gradual decline experienced earlier by more mature economies. In this paper, we argue that population-control policies are likely to have played a central role in the global decline in fertility rates in recent decades and can explain some patterns of that fertility decline that are not well accounted for by other socioeconomic factors.
    Keywords: Fertility rates, Birth rate, Convergence, Macro-development, Malthusian growth, Population, Population-control policies
    Date: 2017–04
  5. By: Donna Feir,Rob Gillezeau, Maggie Jones (Department of Economics, University of Victoria)
    Abstract: In the late-19th century, the North American Bison was slaughtered in a dramatic near-extinction episode that occurred in a period of just over ten years. We argue that the rapidity of this slaughter led to a “reversal of fortunes” for the Native American societies that were built on the bison. We exploit regional variation in the speed at which the bison were slaughtered and tribal variation in bison-dependence to show that bison-dependent Native American tribes suffered a significant change in living standards immediately after the bison's near-extinction, as measured by changes in height. Once the tallest people in the world, the generations of bison-dependent people born after the slaughter were amongst the shortest. We show that these effects persist into the present. Previously bison-dependent societies have persistently worse living conditions compared to the average Native American nation, with between 20-40% less income per capita today, and this effect is strongest among the least historically diverse economies. Our results are robust to the inclusion of cultural, colonial, and geographic factors and hold in both Canada and the United States. While the relative living conditions of historically bison-dependent nations improved modestly between 1910 and 2010, as measured by standardized occupational rank, outcomes remain lower than non-bison-dependent nations, particularly for those living on Native American reservations. We suggest that the restrictions on mobility and economic diversification that were placed on Native Americans by federal Indian policy during the 19th and 20th centuries likely hampered the ability of these economies to adjust in the long-run.
    Keywords: North American Bison, Buffalo, Extinction, Economic History, Development, Displacement, Native Americans, Indigenous, Income Shock, Intergenerational Mobility
    JEL: I15 J15 J24 N31 N32
    Date: 2017–07–09
  6. By: Sami Ben Naceur; Robert Blotevogel; Mark Fischer; Haiyan Shi
    Abstract: This paper examines how financial development affects the sources of growth—productivity and investment—using a sample of 145 countries for the period 1960-2011. We employ a range of econometric approaches, focusing on the CCA and MENA countries. The analysis looks beyond financial depth to capture the access, efficiency, stability, and openness dimensions of financial development. Yet even in this broad interpretation, financial development does not appear to be a magic bullet for economic growth. We cannot confirm earlier findings of an unambiguously positive relationship between financial development, investment, and productivity. The relationship is more complex. The influence of the different dimensions of financial development on the sources of growth varies across income levels and regions.
    Date: 2017–06–28
  7. By: Harutyunyan, Ani; Özak, Ömer
    Abstract: This research explores the direct and barrier effects of culture on economic development. It shows both theoretically and empirically that whenever the technological frontier is at the top or bottom of the world distribution of a cultural value, there exists an observational equivalence between absolute cultural distances and cultural distances relative to the frontier, preventing the identification of its direct and barrier effects. Since the technological frontier usually has the ``right'' cultural values for development, it tends to be in the extremes of the distribution of cultural traits, generating observational equivalence and confounding the analysis. These results highlight the difficulty of disentangling the direct and barrier effects of culture. The empirical analysis finds suggestive evidence for direct effects of individualism and conformity with hierarchy, and barrier effects of hedonism.
    Keywords: Comparative economic development, cultural differences, barriers to technological diffusion, individualism, power distance, vertical hierarchy, hedonism, linguistic distance, genetic distance
    JEL: F14 F43 O1 O10 O20 O30 O33 O40 O57 Z0 Z10
    Date: 2016–07
  8. By: Robert Inklaar; Marianna Papakonstantinou
    Abstract: The standard assumption in growth accounting is that an hour worked by a worker of given type delivers a constant quantity of labor services over time. This assumption may be violated due to vintage effects, which were shown to be important in the United States since the early 1980s, leading to an underestimation of the growth of labor input (Bowlus and Robinson, 2012). We apply their method for identifying vintage effects to a comparison between the United States and six European countries. We find that vintage effects led to increases of labor services per hour worked by high-skilled workers in the United States and United Kingdom and decreases in Continental European countries between 1995 and 2005. Rather than productivity growth advantage of the US and UK, the primary difference with Continental European countries was human capital vintage effects instead.
    Date: 2017–05
  9. By: Francesco Giffoni (CSIL); Matteo Gomellini (Bank of Italy); Dario Pellegrino (Bank of Italy)
    Abstract: This paper analyses the contribution of human capital, measured using the share of residents holding a college degree, to urban growth, gauged by the growth in employment, between 1981 and 2001. According to our estimates, starting with a ten per cent higher share of college-educated residents was associated with a higher growth in employment in the 0.5-2.2 per cent range. These results hold when considering both the municipal and the local labour market (LLM) levels, and they are robust to a wide set of urban characteristics. Our findings are confirmed using a measure of education dating back to 1931 as an instrument for human capital. Furthermore, we exploit a spatial localization model with human capital premiums to disentangle the estimated effect into two components related to productivity and life quality respectively. We find that productivity contributed to more than 60 per cent of the effect of human capital on urban growth at municipal level, and to over 90 per cent at the wider LLM level.
    Keywords: urban growth, human capital
    JEL: R11 N94 J24
    Date: 2017–07

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