nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒07‒30
five papers chosen by
Marc Klemp
Brown University

  1. Understanding Cultural Persistence and Change By Paola Giuliano; Nathan Nunn
  2. French Fertility and Education Transition: Rational Choice vs. Cultural Diffusion By Faustine Perrin; David de la Croix
  3. The Relationship between Economic Growth and Democracy: Alternative Representations of Technological Change By Heshmati, Almas; Kim, Nam-Seok
  4. The role of human assets in economic growth: theory and empirics By Diallo, Ibrahima Amadou
  5. Heterogeneous Human Capital, Inequality and Growth: The Role of Patience and Skills By Kirill Borissov; Stefano Bosi; Thai Ha-Huy; Leonor Modesto

  1. By: Paola Giuliano; Nathan Nunn
    Abstract: When does culture persist and when does it change? We examine a determinant that has been put forth in the anthropology literature: the variability of the environment from one generation to the next. A prediction, which emerges from a class of existing models from evolutionary anthropology, is that following the customs of the previous generation is relatively more beneficial in stable environments where the culture that has evolved up to the previous generation is more likely to be relevant for the subsequent generation. We test this hypothesis by measuring the variability of average temperature across 20-year generations from 500–1900. Looking across countries, ethnic groups, and the descendants of immigrants, we find that populations with ancestors who lived in environments with more stability from one generation to the next place a greater importance in maintaining tradition today. These populations also exhibit more persistence in their traditions over time.
    JEL: N10 Q54 Z1
    Date: 2017–07
  2. By: Faustine Perrin (Lund University); David de la Croix (Université catholique Louvain)
    Abstract: We analyze how much a parsimonious rational-choice model can explain the temporal and spatial variation in fertility and school enrollment in France during the 19th century. The originality of our approach is in our reliance on the structural estimation of a system of rst-order conditions to identify the deep parameters. Another new dimension is our use of gendered education data, allowing us to have a richer theory having implications for the gender wage and education gaps. Results indicate that the parsimonious rational-choice model explains 38 percent of the variation of fertility over time and across counties, as well as 71 percent and 83 percent of school enrollment of boys and girls, respectively. The analysis of the residuals (unexplained by the economic model) indicates that additional insights might be gained by considering cross-county differences in family structure and cultural barriers.
    Date: 2017
  3. By: Heshmati, Almas (Jönköping University, Sogang University); Kim, Nam-Seok (Sogang University)
    Abstract: This study investigates the relationship between economic growth and democracy by estimating a nation's production function specified as static and dynamic models using panel data. In estimating the production function, it applies a single time trend, multiple time trends and the general index formulations to the translog production function to capture time effects representing technological changes of unknown forms. In addition to the unknown forms, implementing the technology shifters model enabled this study to find possible known channels between economic growth and democracy. Empirical results based on a panel data of 144 countries observed for 1980–2014 show that democracy had a robust positive impact on economic growth. Credit guarantee is one of the most significant positive links between economic growth and democracy. The marginal effects of credit guarantee and foreign direct investment inflows are stronger in democratic countries than they are in non-democratic ones. In order to check the robustness of these results, a dynamic model constructed with a flexible adjustment speed and a target level of GDP is also tested. The results of this dynamic model also support the positive impacts of democracy on economic growth.
    Keywords: economic growth, democracy, production function, single time trend, multiple time trends, general index, technology shifters, flexible adjustment speed, target level of GDP
    JEL: D24 O43 O47 P16
    Date: 2017–07
  4. By: Diallo, Ibrahima Amadou
    Abstract: In this paper, we introduce a new variable called Human Assets and study its effects on economic growth both theoretically and empirically. The first part builds an endogenous growth model which demonstrates that Human Assets increase economic growth. The second part employs the new Dynamic Common Correlated Effects Estimator for heterogeneous cross-sectionally dependent dynamic panels to empirically study the impact of Human Assets on economic growth. The results corroborate the theoretical predictions that Human Assets act positively on economic growth. The positive impact of Human Assets on growth is maintained when we use small sample bias corrections and sensitivity to the choice of lag orders. The paper also illustrates, theoretically and empirically, that the magnitude of the effect of Human Assets on growth is huge compared to most other determinants of economic growth. Finally, we discover that human capital does not affect the growth rate once we control for Human Assets.
    Keywords: Dynamic Common Correlated Effects Estimator; Heterogeneous Panels; Dynamic Optimization; Endogenous Growth Theory; Human Assets; Undernourishment; Under five mortality; Adult literacy; Secondary Enrolment
    JEL: C61 C63 I15 I25 O15 O41 O47 O50
    Date: 2017–07–23
  5. By: Kirill Borissov; Stefano Bosi; Thai Ha-Huy; Leonor Modesto
    Abstract: We extend the Lucas' 1988 model introducing two classes of agents with heterogeneous skills, discount factors and initial human capital endowments. We consider two regimes according to the planner's political constraints. In the meritocratic regime, the planner faces individual constraints. In the redistributive regime, the planner faces an aggregate constraint. We find that heterogeneity matters, particularly with redistribution. In the meritocratic regime, the optimal solution coincides with the BGP found by Lucas (1988) for the representative agent's case. In contrast, in the redistribution case, the solution for time devoted to capital accumulation is never interior for both agents. Either the less talented agents do not accumulate human capital or the more skilled agents do not work. Moreover, social welfare under the redistribution regime is always higher than under meritocracy and it is optimal to exploit existing differences. Finally, we find that inequality in human capital distribution increases in time and that, in the long run, inequality always promotes growth.
    Keywords: Human capital, Heterogenous patience and skills, Inequality and growth
    JEL: J24 O15 O40
    Date: 2017–06–23

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