nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒02‒05
twelve papers chosen by
Marc Klemp
University of Copenhagen

  1. How Far Can Economic Incentives Explain the French Fertility and Education Transition? By de la Croix, David; Perrin, Faustine
  2. Emigration during the French Revolution: Consequences in the Short and Longue Durée By Franck, Raphael; Michalopoulos, Stelios
  3. Which Type of Trust Matters?:Interpersonal vs. Institutional vs. Political Trust By In Do Hwang
  4. Poor country, rich history, many lessons: The evolution of wealth-income ratios in India 1860-2012 By Rishabh Kumar
  5. Weak States: Causes and Consequences of the Sicilian Mafia By Acemoglu, Daron; De Feo, Giuseppe; De Luca, Giacomo
  6. Speed under Sail during the Early Industrial Revolution. By Kelly, Morgan; Ó Gráda, Cormac
  7. The mystery of TFP By Nicholas Oulton
  8. Missing Twins: Fetal Origins, Institutions, and Twin-singleton Mortality Convergence By PONGOU Roland; SHAPIRO David; TENIKUE Michel
  9. Endogenous growth and global divergence in a multi-country agent-based model By Giovanni Dosi; Andrea Roventini; Emanuele Russo
  10. Creative Capital, Information and Communication Technologies, and Economic Growth in Smart Cities By Batabyal, Amitrajeet; Nijkamp, Peter
  11. Falling Behind and Catching up: India's Transition from a Colonial Economy By Gupta, Bishnupriya
  12. Population Aging, Labor Market Frictions, and PAYG Pension By Takaaki Morimoto; Yuta Nakabo; Ken Tabata

  1. By: de la Croix, David; Perrin, Faustine
    Abstract: We analyze how much a core 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 first-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 interacting incentives with cross-county differences in family structure and cultural barriers.
    Keywords: demographic transition; education; Family macroeconomics; France; Gender Gap; Quality-Quantity Tradeoff
    JEL: J13 N33 O11
    Date: 2017–12
  2. By: Franck, Raphael; Michalopoulos, Stelios
    Abstract: During the French Revolution, more than 100,000 supporters of the Old Regime, fled France. Local elites in some departments were dramatically reduced, whereas in others the social structure remained largely unchanged. Instrumenting emigration with temperature shocks during an inflection point of the Revolution, the summer of 1792, we find that émigrés have a non-monotonic impact on comparative development. During the 19th century, the decline of landed elites in high-emigration regions led to the fragmentation of agricultural holdings, depressing labor productivity. Nevertheless, this facilitated the rise in human capital investments, leading to a reversal in economic performance during the 20th century.
    Keywords: Climate Shocks; Development; Elites; France; Revolution
    JEL: N23 N24
    Date: 2018–01
  3. By: In Do Hwang (Economic Research Institute, The Bank of Korea)
    Abstract: Although an increasing number of studies demonstrate the importance of trust in economic growth, they only focus on interpersonal trust. This paper considers various types of trust including interpersonal trust (i.e., trust in people), institutional trust (e.g., trust in the fair administration of justice, or trust in the protection of property rights), and political trust (e.g., trust in government or political parties), and investigates their impacts on growth. Using novel cross-country survey data, this paper finds that institutional trust is most robustly related to the economic growth in a cross-section of 46 countries. This paper also shows that there is a causal relationship between institutional trust and growth using panel data from those 46 countries. Hence, in contrast with the previous trust literature which focuses on trust in "people" as a "time-invariant cultural feature," this paper stresses trust in "social system" as an "institutions- dependent feature."
    Keywords: Institutions and economic growth, Trust, Social capital
    JEL: O17 P16 Z13
    Date: 2017–05–15
  4. By: Rishabh Kumar (Department of Economics, California State University)
    Abstract: The evolution and metamorphoses of wealth underpins historical questions of growth and distribution. This article develops new, homogenized series of the wealth-income ratio in India over fifteen transformational decades: from colonial rule after the demise of the Mughals to the contemporary rise of Indian capitalists on a global scale. Over the long run, there were two major waves of wealth accumulation. The first ended around World War II and was characterized by a Ricardian vision - landlords appropriated surplus value under low productivity conditions, benefiting from a large divergence of asset prices relative to consumer price infl ation. Between 1939 and 2012, the Indian wealth-income ratio mimics the U shaped trend observed in other large economies. The second wave (between 1960 and 2012) is partly explained by capital accumulation but price effects consistently dominate large changes in wealth dynamics. Implications for distribution are noteworthy. Upswings of the wealth-income ratio are nearly always accompanied by rising concentration of economic power. Finally, over the last three decades the structure of national wealth favors private wealth over public capital. These ndings underline an important stylized fact: despite large structural differences between rich and emerging countries, wealth-income ratios are rising everywhere in the twenty first century.
    Keywords: India, Growth, Wealth-Income Ratio
    JEL: E10 D30 D31
    Date: 2018–01
  5. By: Acemoglu, Daron; De Feo, Giuseppe; De Luca, Giacomo
    Abstract: We document that the spread of the Mafia in Sicily at the end of the 19th century was in part shaped by the rise of socialist Peasant Fasci organizations. In an environment with weak state presence, this socialist threat triggered landholders, estate managers and local politicians to turn to the Mafia to resist and combat peasant demands. We show that the location of the Peasant Fasci is significantly affected by an exceptionally severe drought in 1893, and using information on rainfall, we establish the causal effect of the Peasant Fasci on the location of the Mafia in 1900. We provide extensive evidence that rainfall before and after this critical period has no effect on the spread of the Mafia or various economic and political outcomes. In the second part of the paper, we use the source of variation in the location of the Mafia in 1900 to estimate its medium-term and long-term effects. We find significant and quantitatively large negative impacts of the Mafia on literacy and various public goods in the 1910s and 20s. We also show a sizable impact of the Mafia on political competition, which could be one of the channels via which it affected local economic outcomes. We document negative effects of the Mafia on longer-term outcomes (in the 1960s, 70s and 80s) as well, but these are in general weaker and often only marginally significant. One exception is its persistent and strong impact on political competition.
    Keywords: criminal organizations; economic development; Mafia; Political Competition; weak states
    JEL: H11 H75 K42 P16
    Date: 2017–12
  6. By: Kelly, Morgan; Ó Gráda, Cormac
    Abstract: We measure technological progress in oceanic shipping directly by using a large database of daily log entries from British, Dutch, and Spanish ships to estimate daily sailing speed in different wind conditions from 1750 to 1850. Against the consensus among economic (but not maritime) historians that the technology of sailing ships was fairly static during this time, we find that average sailing speeds of British East India Company and navy ships in moderate to strong winds rose considerably after 1770s. Driving this progress was the introduction of coppering in the 1780s but subsequent rises are probably due to a continuous evolution of sails and rigging, and improved hulls that allowed a greater area of sail to be set safely in a given wind. By contrast, speeds of Dutch and Spanish vessels were stagnant. Using separate data on crossing times of Atlantic mail packets, we find steady progress from the 1750s, followed by marked improvements when American packets appeared in the 1820s
    JEL: N0
    Date: 2018–01
  7. By: Nicholas Oulton
    Abstract: I analyse TFP growth at the sectoral and aggregate level, using data for 10 industry groups covering the market sector for 18 countries over the period 1970-2007 drawn from the EU KLEMS dataset. TFP growth displays persistence at the aggregate level but not at the industry level, suggesting industry outputs are measured with error. In all countries resources have been shifting away from industries with high TFP growth towards industries with low TFP growth. Nevertheless I find that structural change (as measured by changes in value added shares) has favoured growth in most countries. Errors in measuring capital or in measuring the elasticity of output with respect to capital are unlikely to substantially reduce the role of TFP in explaining growth. The pattern of growth in these 18 countries is more consistent with an underlying two-sector model than with the one-sector (Solow) model. Standard theory suggests that TFP growth induces capital accumulation, at least in the long run. This is not the case with the raw EU KLEMS data used here. But standard theory finds some support when the data are smoothed to remove cyclical effects.
    Keywords: Total factor productivity, TFP, structural change, measurement error
    JEL: E01 O47 O11 E24
    Date: 2017–10
  8. By: PONGOU Roland; SHAPIRO David; TENIKUE Michel
    Abstract: An important number of twins are missing because of their substantially greater mortality risk in early ages relative to singletons. This paper has a twofold goal. First, it investigates whether, as children age, the twin-singleton inequality in mortality rates vanishes, and if yes, when. Second, it analyzes how the timing of mortality convergence is affected by the quality of political institutions. We use a sample of more than 3 million births from numerous countries in sub-Saharan Africa. Twins represent 3.2% of the sample, and children are followed up to the age of 25. We find that mortality is substantially higher for twins, but the difference persists only to around the age of 5. Importantly, the timing of mortality convergence is shortened by better quality political institutions. The findings yield two major conclusions. First, biology-induced disadvantages can be partially remedied through appropriate policy interventions. Second, the fetal origins hypothesis, which holds that the risk of adult morbidity and mortality is positively affected by intrauterine growth retardation, is not universally valid. In particular, better institutions are likely to offset the short-and long-term consequences of poor intrauterine conditions, attenuating the ?missing twins? problem.
    Keywords: Mortality; twins; singletons; convergence; institutions; sub-Saharan Africa
    JEL: I10 I18
    Date: 2018–01
  9. By: Giovanni Dosi (Scuola Superiore Sant'Anna Pisa Italy); Andrea Roventini (Scuola Superiore Sant'Anna Pisa Italy also OFCE Sciences Po Paris); Emanuele Russo (Superiore Sant'Anna,Pisa Italy & OFCE Sciences Po Paris France)
    Abstract: In this paper we present a multi-country, multi-industry agent-based model investigating the different growth patterns of interdependent economies. Each country features a Schumpeterian engine of endogenous technical change which interacts with Keyneasian/Kaldorian demand generation mechanisms. National growth trajectories are driven by firms’ accumulation of technological knowledge, which in turn also leads to emergent specialization patterns in different industries. Interactions among economies occur via trade flows, stemming from the competition of firms in international markets. Simulation results show the emergence of persistent income divergence among countries leading to polarization and club formation. Moreover, each country experiences a structural transformation of its productive structure during the development process. Such dynamics results from firm-level virtuous (or vicious) cycles between knowledge accumulation, trade performances, and growth dynamics. The model accounts for a rich ensemble of empirical regularities at macro, meso and micro levels of aggregation.
    Keywords: Endogenous growth, structural change, technology-gaps, global divergence, absolute advantages, agent based models
    JEL: F41 F43 O4 O3
    Date: 2018–01–15
  10. By: Batabyal, Amitrajeet; Nijkamp, Peter
    Abstract: We study aspects of economic growth in a stylized smart city with two distinct features. First, the modeled inhabitants of this city are smart because they possess skills. Using the language of Richard Florida, these inhabitants comprise the city’s creative class and hence they possess creative capital. Second, the city is smart because it uses information and communication technologies (ICTs) and we model one specific kind of ICT use. In this setting, we first derive expressions for three growth related metrics. Second, we use these metrics to show that the economy of smart city A converges to a balanced growth path (BGP). Third, we compute the growth rate of output per effective creative capital unit on this BGP. Fourth, we study how heterogeneity in initial conditions affects outcomes on the BGP by introducing a second smart city B into the analysis. At time t=0, two key savings rates in city A are twice as large as in city B. We compute the ratio of the BGP value of income per effective creative capital unit in city A to its value in city B. Finally, we compute the ratio of the BGP value of skills per effective creative capital unit in city A to its value in city B.
    Keywords: Creative Capital, Creative Class, Economic Growth, Skills, Smart City
    JEL: O33 R11
    Date: 2018–01–16
  11. By: Gupta, Bishnupriya
    Abstract: India fell behind during colonial rule. The absolute and relative decline of Indian GDP per capita with respect to Britain began before colonization and coincided with the rising textile trade with Europe in the 18th century. The decline of traditional industries was not the main driver Indian decline and stagnation. Inadequate investment in agriculture and consequent decline in yield per acre stalled economic growth. Modern industries emerged and grew relatively fast. The falling behind was reversed after independence. Policies of industrialization and a green revolution in agriculture increased productivity growth in agriculture and industry, but Indian growth has been led by services. A strong focus on higher education under colonial policy had created an advantage for the service sector, which today has a high concentration of human capital. However, the slow expansion in primary education was a disadvantage in comparison with the high growth East Asian economies.
    Keywords: colonial history; Long-run development; Service Sector led growth
    Date: 2018–01
  12. By: Takaaki Morimoto (Graduate School of Economics, Osaka University); Yuta Nakabo (Graduate School of Economics, Osaka University); Ken Tabata (School of Economics, Kwansei Gakuin University)
    Abstract: Employing a two-period OLG model with labor market frictions and PAYG pension, this paper examines the effects of population aging on the unemployment rate and the per capita output of the economy. We show that in economies in which the population growth rate is already low and the size of PAYG pension is relatively large, a further decline in the population growth rate reduces the unemployment rate and increases the per capita output of the economy in the short run, but it increases the unemployment rate and reduces the per capita output of the economy in the long run.
    Keywords: Population aging, Labor market frictions, Unemployment, PAYG pension
    JEL: D91 E24 H55 O41
    Date: 2018–01

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