nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒02‒12
seventeen papers chosen by
Marc Klemp
University of Copenhagen

  1. Nation-Building, Nationalism, and Wars By Alberto Alesina; Bryony Reich; Alessandro Riboni
  2. Structural Change and the Fertility Transition in the American South By Philipp Ager; Markus Brueckner; Benedikt Herz
  3. Fishermen’s wives: On the cultural origins of violence against women By Vincent Leyaro; Pablo Selaya; Neda Trifkovic
  4. Quality of Schooling: Child Quantity-Quality Tradeoff, Technological Progress and Economic Growth By Saini, Swati; Keswani Mehra, Meeta
  5. Population control policies and fertility convergence By de Silva, Tiloka; Tenreyro, Silvana
  6. The serendipity theorem for an endogenous open economy growth model By Ziesemer, Thomas
  7. The productivity slowdown and the declining labor share: a neoclassical exploration By Grossman, Gene M.; Helpman, Elhanan; Oberfield, Ezra; Sampson, Thomas
  8. Are ideas getting harder to find? By Bloom, Nicholas; Jones, Charles I; Reenen, John Van; Webb, Michael
  9. Endogenous Childlessness and Stages of Development By Thomas TB Baudin; David De la Croix; Paula Eugenia Gobbi
  10. Natural Resources and Political Patronage in Africa: An Ethnicity Level Analysis By Nemera Mamo; Sambit Bhattacharyya
  11. Do political institutions improve the effect of remittances on economic growth? Evidence from South-Mediterranean countries By El Hamma Imad
  12. Testing the growth links of emerging economies: Croatia in a growing world economy By Ziesemer, Thomas
  13. Instability constraints and development traps: An empirical analysis of growth cycles and economic volatility in Latin America By Sartorello Spinola, Danilo
  14. Rainfall Inequality, Political Power, and Ethnic Conflict in Africa By Andrea Guariso; Thorsten Rogall
  15. On the Economics of Risk and Uncertainty: A Historical Perspective By Yasuhiro Sakai
  16. On the financing of higher education, long run growth, and fiscal deficit By Rolando A. Escobar-Posada; Goncalo Monteiro; Goncalo Monteiro
  17. Population Density, Fertility, and Demographic Convergence in Developing Countries By David De la Croix; Paula Eugenia Gobbi

  1. By: Alberto Alesina (Harvard University; Igier); Bryony Reich (Northwestern University); Alessandro Riboni (Ecole Polytechnique; Crest)
    Abstract: This paper explores how the increase in army size observed in early modern times changed the way states conducted wars. Starting in the late 18th century, states switched from mercenaries to a mass army by conscription. We model the incentives of soldiers to exert effort in war and show that as army size increases paying mercenaries is no longer optimal. In order for the population to accept fighting in and enduring war, government elites began to provide public goods, reduced rent extraction, and adopted policies to homogenize the population. We also explore the variety of ways in which homogenization can be implemented, and study its e ects as a function of technological innovation in warfare.
    Keywords: Interstate Conflict, Public Good Provision, Nationalism, Military Revolution, Nation-Building.
    Date: 2017–12–01
  2. By: Philipp Ager; Markus Brueckner; Benedikt Herz
    Abstract: This paper provides new insights on the link between structural change and the fertility transi-tion. In the early 1890s agricultural production in the American South was severely impaired by the spread of an agricultural pest, the boll weevil. We use this plausibly exogenous variation in agricultural production to establish a causal link between changes in earnings opportunities in agriculture and fertility. Our estimates show that lower earnings opportunities in agriculture lead to fewer children. We identify two channels: households staying in agriculture reduced fertility because children are a normal good, and households switching to manufacturing faced higher opportunity costs of raising children. The lower earnings opportunities in agriculture also stimulated human capital formation, which we argue is consistent with the predictions of a quantity-quality model of fertility.
    Keywords: Fertility Transition, Structural Change, Industrialization, Agricultural Income
    JEL: J13 N31 O14
    Date: 2018–01
  3. By: Vincent Leyaro; Pablo Selaya; Neda Trifkovic
    Abstract: We study the roots of violence against women, and propose that it partly originates in cultural norms that derive from (a) characteristics of the traditional subsistence problem in different societies, and (b) differences in the sexual division of labor for solving that problem in each society. We construct this hypothesis on economics and anthropology research showing the potential of traditional livelihoods to shape persistent cultural norms at the local level, and arguing that this concept can be extended to explain outcomes at the domestic level. We test our main hypothesis by examining differences in the incidence of domestic violence across areas with different historical livelihoods in modern-day Tanzania, where we observe a large degree of spatial variation in both attitudes and actions of violence against women. Using rich individual survey and high-resolution georeferenced data, we find systematically less violence against women in traditionally sea-fishing areas vis-à-vis traditionally lake-fishing, agricultural, and pastoralist ones. Our results are consistent with anthropological accounts of the idea that women in sea-fishing societies tend to be comparatively more independent in decision-making, and to acquire skills that are complementary to demands in non-agrarian sectors. We interpret this as evidence for direct mechanisms helping to sustain egalitarian gender norms in general, and less violence against women in particular. By exploiting sub-national variation, this research allows us to move beyond studying the socio-economic and institutional determinants of violence against women, and to analyse the formation of specific cultural traits that explain where and why some women tolerate less violence against them.
    Date: 2017
  4. By: Saini, Swati; Keswani Mehra, Meeta
    Abstract: An overlapping generations version of an R&D-based growth model `a la Diamond (1965) and Jones (1995) is built to examine how improvement in quality of schooling impact technical progress and longrun economic growth of an economy by influencing fertility and education decisions at household level. The results indicate that improvement in schooling quality triggers a child quantity-quality trade-off at household level when quality of schooling exceeds an endogenously determined threshold. At the household level, parents invest more in education of children and have lesser number of children in response to improvement in quality of schooling. This micro-level tradeoff has two opposing effects on aggregate human capital accumulation at macro level. Higher investment in education of a child stimulates the accumulation of human capital which fosters technical progress but the simultaneous decline in fertility rate reduces the total factor productivity growth and economic growth by contracting the pool of available researchers. The first effect prevails over latter only when quality of schooling is higher than the threshold
    Keywords: Human capital;fertility ;quality of schooling; economic growth; innovation ;demographic transition
    JEL: I25 J11 J13 O31
    Date: 2017–12–17
  5. By: de Silva, Tiloka; Tenreyro, Silvana
    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
    JEL: J11 J13 J18 O15 Z13
    Date: 2017–09–01
  6. By: Ziesemer, Thomas (UNU-MERIT, and SBE, Maastricht University)
    Abstract: A Samuelsonian serendipity theorem for an endogenous growth model is derived. The formula for optimal population growth rate deviates from those of the model with exogenous population growth rates in a third best endogenous growth model of the Lucas type with imperfect international capital movements and human capital externalities. Calibration shows that the effect of variation of the exogenous population growth rates on other variables and the deviation of population growth rates from its optimal value are small. The reason is that labour supply, interest rates and technical change are endogenous. There is not much of an incentive for population growth policy unless Frisch parameters change with ageing.
    Keywords: Open economy, endogenous growth, human capital, serendipity theorem, ageing
    JEL: F43 J11 J22 J24 O11 O15 O41
    Date: 2018–01–09
  7. By: Grossman, Gene M.; Helpman, Elhanan; Oberfield, Ezra; Sampson, Thomas
    Abstract: We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation a la Ben Porath (1967) and capital-skill complementarity a la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early post-war period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the US labor share
    Keywords: neoclassical growth; balanced growth; technological progress; capital-skill complementarity; labor share; capital share
    JEL: E25 O40
    Date: 2017–10–01
  8. By: Bloom, Nicholas; Jones, Charles I; Reenen, John Van; Webb, Michael
    Abstract: In many growth models, economic growth arises from people creating ideas, and the long-run growth rate is the product of two terms: the effective number of researchers and their research productivity. We present a wide range of evidence from various industries, products, and firms showing that research effort is rising substantially while research productivity is declining sharply. A good example is Moore’s Law. The number of researchers required today to achieve the famous doubling every two years of the density of computer chips is more than 18 times larger than the number required in the early 1970s. Across a broad range of case studies at various levels of (dis)aggregation, we find that ideas—and in particular the exponential growth they imply — are getting harder and harder to find. Exponential growth results from the large increases in research effort that offset its declining productivity
    Keywords: economic growth; ideas; research effort; research productivity
    JEL: R14 J01
    Date: 2017–09–01
  9. By: Thomas TB Baudin; David De la Croix; Paula Eugenia Gobbi
    Abstract: Although developing countries are characterized by high average fertility rates, they are as concerned by childlessness as developed countries. Beyond natural sterility, there are two main types of childlessness: one driven by poverty and another by the high opportunity cost of child-rearing. We measure the importance of the components of childlessness with a structural model of fertility and marriage. Deep parameters are identified using census data from 36 developing countries. As average education increases, poverty-driven childlessness first decreases to a minimum, and then the opportunity-driven part of childlessness increases. We show that neglecting the endogenous response of marriage and childlessness may lead to a poor understanding of the impact that social progress, such as universal primary education, may have on completed fertility. The same holds for family planning, closing the gender pay gap, and the eradication of child mortality.
    Keywords: poverty, childlessness, marriage, education, fertility, unwanted births, structural estimation
    Date: 2018–01
  10. By: Nemera Mamo (Department of Economics, University of Sussex; SOAS, University of London); Sambit Bhattacharyya (Department of Economics, University of Sussex)
    Abstract: We investigate the effect of resource discoveries on ethnicity level political patronage in Africa using a large geospatial dataset of 254 ethnic groups in 15 countries over the period 1960 to 2004. We find that the first (or single first) resource discovery in a virgin ethnic homeland increases the share of cabinet posts of that ethnicity. The effect is induced by both expectations and rent. Overall the effect is mainly driven by major mineral discoveries as opposed to oil and gas. The discovery shocks do not trigger monopoly or dominant access to power, autonomy, separatism, and exclusion. Our analysis reveals that point source resource (mineral) rents are far more important political currency than diffuse agricultural commodity rents. Furthermore, by ranking ministries into Top and Bottom levels we find some evidence of window dressing politics. Our results survive a battery of robustness tests and controls.
    Keywords: Resource discovery; Political Patronage; Africa
    JEL: D72 O11
    Date: 2018–01
  11. By: El Hamma Imad (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur)
    Abstract: This paper examines the link between remittances, institutions quality and economic growth for 11 South-Mediterranean countries (SMC) over the period 1984–2014. Based on a Generalized Method of Moment (GMM) estimation, the empirical analysis reveals three findings: institutions quality have a positive effect on economic growth, there is no direct link between remittances and economic growth and remittances and institutional quality are complements in enhancing economic growth.
    Keywords: Remittances , institutions quality, economic growth
    Date: 2017
  12. By: Ziesemer, Thomas (UNU-MERIT, and SBE, Maastricht University)
    Abstract: We estimate a dynamic simultaneous equation model for 16 variables of the Croatian economy in order to test the links of growth with education, R&D, trade, savings and FDI. In order to motivate the choice of variables we review the related theories of growth and look at the relevant data. Permanent shocks increasing the intercepts of the equations for education, R&D, trade, savings and FDI show that most of growth links work well in Croatia, but they also enhance foreign imbalances. Policies to balance the two aspects are briefly discussed.
    Keywords: Growth, open economy, education, R&D, Croatia
    JEL: F43 O11 O19 O41 O47
    Date: 2017–12–11
  13. By: Sartorello Spinola, Danilo (UNU-MERIT, Maastricht University)
    Abstract: Latin America is a region marked by an endogenous pattern of volatility that halts its development process. This article consists of empirically testing its volatility characteristics in terms of cycles. This paper (1) uses a filter decomposition to isolate economic cycles of distinct natures on the GDP growth time series for 136 countries covering the period 1950-2016. (2) It calculates each country's cycle GDP volatility (standard deviation), and finally (3) applies clustering methods to classify the results into groups. The main conclusions point that the majority of Latin American countries the relative dominance of the long-run economic cycles explaining the overall volatility. Exceptions to that are Mexico, Colombia and Chile, in which the short-run cycle shows a higher relative importance. Data shows that LAC is not the most volatile region of the world, but it has some characteristics as a region in terms of the origin of their volatility.
    Keywords: Macroeconomic Volatility, Economic Cycles, Time Series, Filter Decomposition
    JEL: C21 C32 O47
    Date: 2018–01–16
  14. By: Andrea Guariso; Thorsten Rogall
    Abstract: Does higher resource inequality between ethnic groups lead to ethnic conflict? In this paper, we empirically investigate this question by constructing a new measure of inequality using rainfall on ethnic homelands during the plant-growing season. Our dataset covers the period 1982-2001 and includes 214 ethnicities, located across 42 African countries. The analysis at the country level shows that one standard-deviation increase in rainfall-based inequality between ethnic groups increases the risk of ethnic conflict by 16 percentage points (or 0.43 standard deviations). This relationship depends on the power relations between the ethnic groups. More specifically, the analysis at the ethnicity level shows that ethnic groups are more likely to engage in civil conflicts whenever they receive less rain than the leading group. This effect does not hold for ethnic groups that share some political power with the leading group and is strongest for groups that have recently lost power. Our findings are consistent with an increase in resource inequality leading to more ethnic conflicts by exacerbating grievances in groups with no political power.
    Keywords: Conflict, Ethnic Inequality, Rainfall, Africa, Ethnic Power Relations
    JEL: D63 D74 E01
    Date: 2017
  15. By: Yasuhiro Sakai (Faculty of Economics, Shiga University)
    Abstract: The economics of risk and uncertainty has a long history over 300 years. This paper aims to systematically summarize and critically reevaluate it, with special reference to John M. Keynes and Frank H. Knight, the two giants in modern times. In our opinion, there are the six stages of development, with each stage vividly reflecting its historical background. The first stage, named the Initial Age, corresponds to a long period before 1700, the one in which statistics was firmly established by B. Pascal as a branch of mathematics but economic theory per se was not well developed. The second stage, called the "B-A" Age, covers the period from 1700 to 1880, is characterized by the two superstars, Daniel Bernoulli and Adam Smith. The third stage from 1880 to 1940 may be named the "K-K" Age because it was dominated by J.M. Keynes and F.H. Knight. The fourth stage, called the "N-M" age, eyewitnesses the birth of game theory, with von Neumann and Morgenstern being its foundering fathers. The fifth stage from 1970 to 2000, named the "A-S" Age, is characterized by several distinguished scholars with their initials "A" or "S". Finally, in 2000 and onward, while many doubts have been raised about existing doctrines, new approaches have not emerged yet, thus being named the Uncertain Age. The relationship between Keynes and Knight is both complex and rather strange. It has a history of separating, approaching, separating again and approaching again. As the saying goes, a new wine should be poured into a new bottle. We would urgently need a Keynes and/or a Knight toward a new horizon of the economics of risk and uncertainty.
    Keywords: Economics of risk and uncertainty, Bernoulli, Keynes, Knight
    Date: 2018–01
  16. By: Rolando A. Escobar-Posada; Goncalo Monteiro; Goncalo Monteiro
    Abstract: Higher education is a channel through which countries produce and appropriate the necessary knowledge for enhancing productivity. However, its financing is a global challenge for governments. This paper considers the growth, welfare and public deficit implications of the way higher education is financed. We develop a two-sector growth model with a final output sector and a human capital sector, which require physical capital, human capital and public goods to produce output. The novelty is that public spending is financed using a flat income tax, and a user fee levied on private spending on public higher education making it, at least, partially excludable. We find that public spending on tertiary education increases growth, but “free” education is not part of a growthmaximizing policy. Instead, education must be at least partially financed by their receivers. Moreover, our numerical simulations show that a government that seeks growth maximization with a determined policy toward “free” universal higher education and low taxes may face a high déficit and low welfare. That is, the growth benefits do not offset the deficit increase and the welfare loss due to the high rate of education spending. The latter result may be affected if agents derive utility not only from consumption but also from quality leisure, where human capital enhances the utility derived from leisure. This topic is not addressed in the present paper, and would be a posible extension of the original model. ****** La educación superior es un canal a través del cual los países producen y se apropian del conocimiento necesario para incrementar la productividad. Sin embargo, su financiación es un reto para los gobiernos en el mundo. Este artículo considera las implicaciones en el crecimiento, el bienestar, y el déficit fiscal en cuanto a la forma de financiación de la educación superior. Se desarrolla un modelo de crecimiento de dos sectores, con un sector de bien final y un sector de capital humano, los cuales requieren capital físico, capital humano, y bienes públicos para producir. La novedad radica en la introducción de tarifas de usuario, además de impuestos de tasa y suma fija, impuestas sobre el gasto privado en educación superior, haciéndola, al menos en parte, excluíble. Dentro de los resultados se encuentra que el gasto público en educación superior incrementa el crecimiento; pero la educación “gratuita” no es parte de una política que intenta maximizar el crecimiento económico. Es decir, esta debe ser, al menos parcialmente, financiada por el beneficiario. Aún más, simulaciones realizadas muestran que un gobierno enfocado en maximizar el crecimiento, y con una política orientada hacia una educación superior “gratuita” y universal, podría enfrentar un alto déficit y un bajo bienestar. Esto implica que los beneficios obtenidos de un mayor crecimiento no equilibran el incremento en el déficit y la pérdida de bienestar debidos al mayor gasto en educación superior. Este último resultado puede verse afectado si los agentes derivan utilidad no solo del consumo sino también de la calidad del ocio, donde el capital humano incrementa la utilidad derivada del tiempo de ocio. Este tema no se estudia en el presente artículo pero podría ser considerado como una extensión del modelo original.
    Keywords: Excludable public inputs, financing of higher education, fiscal policy, growth******Bines públicos excluíbles, financiación de la educación superior, política fiscal, crecimiento económico.
    JEL: H54 I28 O41
    Date: 2017–10–13
  17. By: David De la Croix; Paula Eugenia Gobbi
    Date: 2017

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