nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒12‒11
eleven papers chosen by
Marc Klemp
University of Copenhagen

  1. Emigration during the French Revolution: Consequences in the Short and Longue Durée By Franck, Raphael; Michalopoulos, Stelios
  2. Disease and Fertility: Evidence from the 1918 Influenza Pandemic in Sweden By Boberg-Fazlic, Nina; Ivets, Maryna; Karlsson, Martin; Nilsson, Therese
  3. The lost race against the machine: Automation, education, and inequality in an R&D-based growth model By Prettner, Klaus; Strulik, Holger
  4. Does Economic Freedom Affect The Production Frontier? A Semiparametric Approach With Panel Data By Fan Zhang; Joshua Hall; Feng Yao
  5. Philippine Inequality across the Twentieth Century: Slim Evidence but Fat Questions By Williamson, Jeffrey G
  6. Land, Housing, Growth and Inequality By Luigi Bonatti
  7. Welfare Levels of the Rural Population in Murcia, 1769-1895. Mortality and Demographic and Economic Instability By Enrique Llopis; Elvira Alonso; Paloma Fontanillo; Belén Hípola; Sara Méndez; Javier Ramos
  8. What difference does it make (when a middle-income country is caught in the trap)? An evidence-based survey analysis of the determinants of Middle-Income Traps By Eric Rougier; Riana Razafimandimby Andrianjaka
  9. On the Interaction of Growth, Trade and International Macroeconomics By Clemens C Struck; Clemens C. Struck
  10. Inequality and Growth in the 21st Century By Weijie Luo
  11. Asymmetric Cointegration and Causality between Natural Gas Consumption and Economic Growth in Nigeria By Danladi Galadima, Mukhtar; Wambai Aminu, Abubakar

  1. By: Franck, Raphael (Hebrew University of Jerusalem); Michalopoulos, Stelios (Federal Reserve Bank of Minneapolis)
    Abstract: During the French Revolution, more than 100,000 individuals, predominantly supporters of the Old Regime, fled France. As a result, some areas experienced a significant change in the composition of the local elites whereas in others the pre-revolutionary social structure remained virtually intact. In this study, we trace the consequences of the émigrés flight on economic performance at the local level. We instrument emigration intensity with local temperature shocks during an inflection point of the Revolution, the summer of 1792, marked by the abolition of the constitutional monarchy and bouts of local violence. Our findings suggest that émigrés have a non monotonic effect on comparative development. During the 19th century, there is a significant negative impact on income per capita, which becomes positive from the second half of the 20th century onward. This pattern can be partially attributed to the reduction in the share of the landed elites in high-emigration regions. We show that the resulting fragmentation of agricultural holdings reduced labor productivity, depressing overall income levels in the short run; however, it facilitated the rise in human capital investments, eventually leading to a reversal in the pattern of regional comparative development.
    Keywords: Revolution; Elites; Climate shocks; France; Development
    JEL: N23 N24
    Date: 2017–09–26
  2. By: Boberg-Fazlic, Nina (University of Southern Denmark); Ivets, Maryna (University of Duisburg-Essen); Karlsson, Martin (University of Duisburg-Essen); Nilsson, Therese (Research Institute of Industrial Economics (IFN))
    Abstract: This paper studies the effect of the 1918–19 influenza pandemic on fertility using a historical dataset from Sweden. Our results suggest an immediate reduction in fertility driven by morbidity, and additional behavioral effects driven by mortality. We find some evidence of community rebuilding and replacement fertility, but the net long-term effect is fertility reduction. In districts highly affected by the flu there is also an improvement in parental quality: we observe a relative increase in births to married women and better-off city dwellers. Our findings help understand the link between mortality and fertility, one of the central relations in demography, and show that several factors – including disruptions to marriage and labor markets – contribute to fertility reduction in the long term. Our results are consistent with studies that find a positive fertility response following natural disasters, but with high-quality historical data we show that this effect is short-lived.
    Keywords: 1918–19 influenza pandemic; Influenza and pneumonia mortality; Fertility; Difference-in-Differences
    JEL: I12 J11 J13
    Date: 2017–08–31
  3. By: Prettner, Klaus; Strulik, Holger
    Abstract: We analyze the effects of automation and education on economic growth and inequality in an R&D-based growth model with two types of labor: high-skilled labor that is complementary to machines and low-skilled labor that is a substitute for machines. The model predicts that innovation-driven growth leads to increasing automation, an increasing skill premium, an increasing population share of college graduates, increasing income and wealth inequality, and a declining labor share. In contrast to conventional wisdom, our theory predicts that faster economic growth promotes inequality. Because education and technology are endogenous, redistribution to low-skilled individuals may actually not improve disposable low-skilled income, irrespective of whether it is financed by taxes on labor income or machine input in production. We extend the model by fair wage concerns and show how automation implies involuntary low-skilled unemployment.
    Keywords: Automation,R&D-Based Growth,Inequality,Wealth Concentration,Unemployment,Redistribution
    JEL: E23 E25 O31 O33 O40
    Date: 2017
  4. By: Fan Zhang (Ripon College, Business Management Program); Joshua Hall (West Virginia University, Department of Economics); Feng Yao (Shenzhen University, China Center for Special Economic Zone Research)
    Abstract: This paper applies a multi-step semiparametric stochastic production frontier estimator proposed by Yao et al. (2017) to investigate the effects of economic freedom on the production frontier and technical efficiency. We allow output elasticities and technical efficiency to depend on the economic freedom variable, estimate a smooth coefficient stochastic production frontier, and compare with parametric alternatives, the Cobb-Douglas and translog estimates. Our results add to the literature on economic freedom and growth in three ways. First, our results highlight the flexibility of semiparametric approaches as we find the commonly used parametric approaches to be too restrictive in estimating the marginal productivity of inputs. Second, we find that the output elasticities of labor, human capital, and physical capital vary with the level of economic freedom. Third, our average efficiency estimates are at least 20% higher than those obtained from the parametric counterparts, suggesting that previous papers have mismeasured the impact of economic freedom on technical efficiency.
    Keywords: Economic freedom, Technical efficiency, Semiparametric smooth coefficient model
    JEL: C14 O43
    Date: 2017–11
  5. By: Williamson, Jeffrey G
    Abstract: In spite of persistent debates about income inequality and pro-poor policy in the Philippines, its history over the past century has been ignored, at least by economists. This is surprising given that the Philippines already had its first Census in 1903, long before its neighbors, augmented by other relevant evidence embedded in official documents generated by the American insular government. It is also surprising given that we know that income distributions change only very slowly and must be examined over the long run to identify its drivers. This essay reviews the (thin) historical evidence and proposes explanations. There is no Kuznets Curve, and no Marxian, Pikettian or other grand endogenous inequality theory at work, but there are dramatic episodes of change. It appears that there was an inequality rise up to World War 1, a fall between the World Wars, a rise to high levels by the 1950s, and an almost certain rise up to the end of the century which, due to mismeasurement, looks instead like stasis . We need to collect better evidence to confirm these narratives and to assess competing hypotheses.
    Keywords: inequality; the Philippines; twentieth century
    JEL: D30 N15 N35 O15 O53
    Date: 2017–12
  6. By: Luigi Bonatti
    Abstract: This paper contains a growth model that incorporates productive assets, residential land and residential structures. Moreover, it accounts for the existence of two social classes: the capitalists, who invest both in productive assets and in housing but do not provide labor services, and the workers, who invest only in housing and decide on how much labor effort to provide. Within this formal setup, it is shown that the relative price of land grows in the long run at the same rate as the economy’s GDP, while both the quantity of housing services and their price grow slower than it. Numerical examples show that i) shifting the taxation away from income and towards the property of land enhances long-term GDP growth and leads in the long-run to a more equalitarian (i.e. more favorable to the workers) income and wealth distribution, ii) a marginal increase in the fraction of investment expenditures in residential structures that is tax deductible reduces inequality in the distribution of income and wealth, iii) a change in agents’ preferences that gives more weight in the utility function to residential services leads in the long run to a distribution of income and wealth that is more favorable to the capitalists, iv) changes in taxation or in preferences increasing the fraction of total investment devoted to the accumulation of residential wealth rather than to the accumulation of productive assets brings about a balanced growth path characterized by a higher wealth-income ratio. Moreover, the paper illustrates how endogenous fluctuations may be generated along the equilibrium trajectory converging to the balanced growth path, in a model where housing wealth—as well as residential land—is distinguished from productive capital and only fundamentals (initial endowments, preferences and technologies) drive the economy’s dynamics.
    Keywords: Productive assets, Residential structures, Urban rents, Land value tax
    JEL: H24 O18 O41 R31
    Date: 2017
  7. By: Enrique Llopis (Universidad Complutense de Madrid, Spain); Elvira Alonso (Universidad Complutense de Madrid, Spain); Paloma Fontanillo (Universidad Complutense de Madrid, Spain); Belén Hípola (Universidad Complutense de Madrid, Spain); Sara Méndez (Universidad Complutense de Madrid, Spain); Javier Ramos (Universidad Complutense de Madrid, Spain)
    Abstract: The main objective of this study is to make an estimation of the welfare levels of the Murcian population between the last third of the eighteenth century and the end of the nineteenth century. In order to tackle this topic, we have built several indicators for general mortality, catastrophic mortality, and economic and demographic instability. The main sources that have been used for the development of this research are baptism and burial parish registers, as well as the mercurial of Murcia city. The most relevant conclusions that can be drawn from this essay are: 1st) Murcian welfare levels went through important ups and downs between 1769 and 1889: in the first fifteen years of the 19th century their situation worsened dramatically; there was an improvement between 1815 and 1839 that drove welfare levels above the ones attained during the last quarter of the 18th century; and they deteriorated again from the 1840s till the 1880s, but not as sharply as between 1800 and 1814. 2nd) Almost all the indicators used in this research suggest that the well-being of the regional population had not improved substantially by 1865-1889 when compared with the last quarter of the eighteenth century.
    Keywords: Welfare Levels; Mortality; Economic and Demographic Instability; Murcia; Eighteenth and Nineteenth Centuries
    JEL: E32 I31 N33 R11
    Date: 2017–12
  8. By: Eric Rougier; Riana Razafimandimby Andrianjaka
    Abstract: Middle-Income Trap (MIT) is a growing concern for developing countries\' governments and development banks. This paper uses a mixed approach to identify episodes of MIT in a panel of 132 countries over 1970-2010 and tests empirically three groups of explaining factors advanced by the recent literature on this issue: growth and accumulation regimes, transformation of trade and productive structures and distributional conflicts. We find that the demographic dividend, the patterns of productive change and diversification, skill misallocation, and conflicts help explain why some middle countries underwent persistent growth slowdowns. On the contrary, such frequently evoked explanations as physical and human capital accumulation, democracy, inequality and redistribution did not help differentiating between the middle-income countries caught in the trap and the others. Cumulative effects are also identified since the weakness of employment and innovation capacities dampens the positive effect of human capital and workforce on medium-run growth.
    Keywords: Middle-Income Trap, Growth Transitions, Growth Determinants, Growth Slowdown
    JEL: C33 O40 O54
    Date: 2017
  9. By: Clemens C Struck; Clemens C. Struck
    Abstract: Standard economic theories have severe difficulties in simultaneously explaining a number of key aggregate empirical facts: i) there are substantial differences in capital-labor ratios across time ii) despite continuously increasing capital-labor ratios, both factors still earn non-negligible shares in income iii) labor hours per capita are rather stable amid expanding consumption possibilities iv) price levels are higher in more developed countries v) there are no large gains from factor-proportions trade vi) the world trade-to-output ratio increases over time. I argue that standard economic theories ignore the vast improvements in goods quality and new products. I present an augmented standard model that incorporates these features and jointly rationalizes these six empirical facts.
    Keywords: Engel's law; Product quality and varieties; Structural change; Growth; Trade; Price levels
    JEL: E23 E24 F11 F31 O41
    Date: 2017–11
  10. By: Weijie Luo
    Abstract: This paper distinguishes between income inequality induced by differences in labor productivity and induced by differences in capital income. Persson and Tabellini (1994) argue that productivity-induced income inequality leads to lower growth since distortionary taxes increase and harm capital accumulation. However, if income inequality stems from differences in capital income, then labor tax rates fall, leading to higher growth. Using OECD data, increased capital income inequality (proxied by the top 1% income share) has a significant positive relationship with subsequent economic growth. Controlling for capital income inequality yields a negative relationship between labor income inequality and growth, as originally conjectured.
    Keywords: capital income, inequality, growth
    JEL: D31 E62 O40
    Date: 2017–12
  11. By: Danladi Galadima, Mukhtar; Wambai Aminu, Abubakar
    Abstract: This paper investigates non-linear dynamics, asymmetric cointegration and causality between natural gas consumption and economic growth in Nigeria using the momentum threshold autoregressive (M-TAR) model and momentum threshold error correction model (M-TECM). The results revealed evidence of asymmetric cointegration and bidirectional causality between natural gas consumption and economic growth in Nigeria. The implication of the results is that regime shift has influence on the relationship and that the discrepancies from long term equilibrium resulting from low natural gas consumption are eliminated quickly. Hence, the Nigerian policymakers should be cautious in adopting energy conservation policies because it could affect the growth of the economy, more attention should be paid to the shocks from the decrease in natural gas consumption and should take into account asymmetries in the relationship by incorporating asymmetric adjustment in forecasting natural gas-growth nexus.
    Keywords: Keywords: Asymmetric cointegration, Adjustment behaviour, Causality
    JEL: Q43
    Date: 2017–11–30

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