nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒02‒26
ten papers chosen by
Marc Klemp
University of Copenhagen

  1. 'Getting to Denmark': the Role of Elites for Development By Jensen, Peter Sandholt; Lampe, Markus; Sharp, Paul; Skovsgaard, Christian
  2. The Origins of the Division of Labor in Pre-modern Times By Emilio Depetris-Chauvin; Ömer Özak
  3. Religions, Fertility, and Growth in South-East Asia By de la Croix, David; Delavallade, Clara
  4. Nepotism, Schooling Outcomes and Economic Development By Marcello Perez-Alvarez; Holger Strulik
  5. Cliometrics By Claude Diebolt
  6. Short- and Long-Run Impacts of Rural Electrification: Evidence from the Historical Rollout of the U.S. Power Grid By Lewis, Joshua; Severnini, Edson R.
  7. A glance at Solow’s growth theory By Schilirò, Daniele
  8. Growth and agglomeration in the heterogeneous space: A generalized AK approach By Boucekkine, R.; Fabbri, G.; Federico, S.; Gozzi, F.
  9. Public debt and economic growth: Further evidence for the euro area By Marta Gómez-Puig; Simón Sosvilla-Rivero
  10. The long-term relationship between economic development and regional inequality: South-West Europe, 1860-2010 By Alfonso Díez-Minguela; Rafael González-Val; Julio Martinez-Galarraga; M. Teresa Sanchis; Daniel A. Tirado

  1. By: Jensen, Peter Sandholt; Lampe, Markus; Sharp, Paul; Skovsgaard, Christian
    Abstract: We explore the role of elites for development and in particular for the spread of cooperative creameries in Denmark in the 1880s, which was a major factor behind that country's rapid economic catch-up. We demonstrate empirically that the location of early proto-modern dairies, so-called hollænderier, introduced onto traditional landed estates as part of the Holstein System of agriculture by landowning elites from the Duchies of Schleswig and Holstein in the eighteenth century, can explain the location of cooperative creameries in 1890, more than a century later, after controlling for other relevant determinants. We interpret this as evidence that areas close to estates which adopted the Holstein System witnessed a gradual spread of modern ideas from the estates to the peasantry. Moreover, we identify a causal relationship by utilizing the nature of the spread of the Holstein System around Denmark, and the distance to the first estate to introduce it, Sofiendal. These results are supported by evidence from a wealth of contemporary sources and are robust to a variety of alternative specifications.
    Keywords: cooperatives; dairying; institutions; technology
    JEL: N53 O13 Q13
    Date: 2018–02
  2. By: Emilio Depetris-Chauvin (Pontificia Universidad Católica de Chile); Ömer Özak (Southern Methodist University)
    Abstract: This research explores the historical roots of the division of labor in pre-modern societies. It advances the hypothesis and establishes empirically that intra-ethnic diversity had a positive effect on the division of labor across ethnicities in the pre-modern era. Exploiting a variety of identification strategies and a novel ethnic level dataset combining geocoded ethnographic, linguistic and genetic data, it establishes that higher levels of intra-ethnic diversity were conducive to economic specialization in the pre-modern era. The findings are robust to a host of geographical, institutional, cultural and historical confounders, and suggest that variation in intra-ethnic diversity is the main predictor of the division of labor in pre-modern times.
    Keywords: Economic Comparative Development, Division of Labor, Economic Specialization, Intra-Ethnic Diversity, Cultural Diversity, Population Diversity, Genetic Diversity, Linguistic Diversity, Serial Founder Effect
    JEL: D74 F10 F14 J24 N10 O10 O11 O12 O40 O43 O44 Z10 Z13
    Date: 2018–02
  3. By: de la Croix, David; Delavallade, Clara
    Abstract: We investigate the extent to which religions' pronatalism is detrimental to growth via the fertility/education channel. Using censuses from South-East Asia, we first estimate an empirical model of fertility and show that having a religious affiliation significantly raises fertility, especially for couples with intermediate to high education levels. We next use these estimates to identify the parameters of a structural model of fertility choice. On average, Catholicism is the most pro-child religion (increasing total spending on children), followed by Buddhism, while Islam has a strong pro-birth component (redirecting spending from quality to quantity). We show that pro-child religions depress growth in the early stages of growth by lowering savings, physical capital, and labor supply. These effects account for 10% to 30% of the actual growth gaps between countries over 1950-1980. At later stages of growth, pro-birth religions lower human capital accumulation, explaining between 10% to 20% of the growth gap between Muslim and Buddhist countries over 1980-2010.
    Keywords: Buddhism; Catholicism; education; indirect inference; Islam; Quality-Quantity Tradeoff
    JEL: J13 O11 Z13
    Date: 2018–01
  4. By: Marcello Perez-Alvarez; Holger Strulik
    Abstract: Schooling outcomes matter for economic development. At the same time, educational policies around the globe often fail to effectively improve them. This paper suggests perceived nepotism as an important barrier to the development of cognitive skills as schooling outcomes. We argue that students in countries that perceive labor markets to be nepotistic experience a weaker economic motive to invest in human capital. To formally motivate this relationship, we develop a dynamic general equilibrium model in which nepotism is explained as an evolving cultural norm. We test the central prediction of the model by relating the PISA scores to an indicator for perceived nepotism at the country level. The findings show that, on average, an increase in one standard deviation of the perceived nepotism indicator decreases the PISA reading scores by 0.21 standard deviations, conditioning for overall corruption perception. Several robustness checks corroborate the stability of our estimate. The analysis implies that recruitment practices in labor markets strongly shape individual's efforts to accumulate human capital. Accordingly, the consideration thereof may enhance educational policy efforts.
    Keywords: nepotism; cognitive skills; human capital; economic growth; norm transmission
    JEL: E24 I21 I25 O10 O40
    Date: 2018
  5. By: Claude Diebolt (University of Strasbourg)
    Date: 2018
  6. By: Lewis, Joshua (University of Montreal); Severnini, Edson R. (Carnegie Mellon University)
    Abstract: Electrification among American farm households increased from less than 10 percent to nearly 100 percent over a three decade span, 1930{1960. We exploit the historical rollout of the U.S. power grid to study the short- and long-run impacts of rural electrification on local economies. In the short run, rural electrification led to increases in agricultural employment, rural farm population, and rural property values, but there was little impact on the local non-agriculture economy. Benefits exceeded historical costs, even in rural areas with low population density. As for the long run, rural counties that gained early access to electricity experienced increased economic growth that persisted for decades after the country was fully electrified. In remote rural areas, local development was driven by a long-run expansion in the agricultural sector, while in rural counties near metropolitan areas, long-run population growth coincided with increases in housing costs and decreases in agricultural employment. This last result suggests that rural electrification stimulated suburban expansion.
    Keywords: rural electrification, short run, long run, agriculture, suburbanization
    JEL: N72 N92 N32 O13 O18 Q48
    Date: 2017–12
  7. By: Schilirò, Daniele
    Abstract: This paper examines the growth theory of Robert Solow , which has been a point of reference of economic growth since the 1950s. First, the article analyzes the path-breaking model of growth contained in Solow’s article “A Contribution to the Theory of Economic Growth” published in The Quarterly Journal of Economics (1956). Second, it looks at the contribution of Solow to growth accounting and to the new method of studying capital formation in economic growth through the vintage approach. Therefore, the work analyzes the article “Technical Change and the Aggregate Production Function” published in The Review of Economics and Statistics (1957). In the latter publication, Solow, through the aggregate production function, tries to measure growth and provide an explanation of the nature of technical progress. The article also examines Solow’s 1960 essay “Investment and Technical Progress” based on the hypothesis of embodied technological progress and the vintage approach.
    Keywords: Aggregate Production Function; Capital Accumulation; Solow’s Models of Growth; Technological Change
    JEL: B22 E10 E23 O10 O33
    Date: 2017–11
  8. By: Boucekkine, R.; Fabbri, G.; Federico, S.; Gozzi, F.
    Abstract: We provide an optimal growth spatio-temporal setting with capital accumulation and diffusion across space in order to study the link between economic growth triggered by capital spatio-temporal dynamics and agglomeration across space. The technology is AK, K being broad capital. The social welfare function is Benthamite. In sharp contrast to the related literature, which considers homogeneous space, we derive optimal location outcomes for any given space distributions for technology and population. Both the transitional spatio-temporal dynamics and the asymptotic spatial distributions are computed in closed form. Concerning the latter, we find, among other results, that: (i) due to inequality aversion, the consumption per capital distribution is much atter than the distribution of capital per capita; (ii) endogeneous spillovers inherent in capital spatio-temporal dynamics occur as capital distribution is much less concentrated than the (pre-specified) technological distribution; (iii) the distance to the center (or to the core) is an essential determinant of the shapes of the asymptotic distributions, that is relative location matters.
    JEL: R1 O4 C61
    Date: 2018
  9. By: Marta Gómez-Puig (Universitat de Barcelona, Department of Economics and Riskcenter. 08034 Barcelona, Spain.); Simón Sosvilla-Rivero (Instituto Complutense de Estudios Internacionales (ICEI). Universidad Complutense de Madrid.)
    Abstract: This paper empirically investigates the short and long run impact of public debt on economic growth. We use annual data from both central and peripheral countries of the euro area (EA) for the 1961-2013 period and estimate a production function augmented with a debt stock term by applying the Autoregressive Distributed Lag (ARDL) bounds testing approach. Our results suggest different patterns across EA countries and tend to support the view that public debt always has a negative impact on the long-run performance of EA member states, whilst its short-run effect may be positive depending on the country.
    Keywords: Public debt; Economic growth; Bounds testing; Euro area; Peripheral euro area countries; Central euro area countries.
    JEL: C22 F33 H63 O40 O52
    Date: 2017
  10. By: Alfonso Díez-Minguela (Universitat de València); Rafael González-Val (Universidad de Zaragoza, IEB); Julio Martinez-Galarraga (Universitat de València); M. Teresa Sanchis (Universitat de València); Daniel A. Tirado (Universitat de València)
    Abstract: This paper analyses the long-term relationship between regional inequality and economic development. Our data set includes information on national and regional per-capita GDP for four countries: France, Italy, Portugal and Spain. Data are compiled on a decadal basis for the period 1860-2010, thus enabling the evolution of regional inequalities throughout the whole process of economic development to be examined. Using parametric and semiparametric regressions, our results confirm the rise and fall of regional inequalities over time, i.e. the existence of an inverted-U curve since the early stages of modern economic growth, as the Williamson hypothesis suggests. We also find evidence that, in recent decades, regional inequalities have been on the rise again. As a result, the long-term relationship between national economic development and spatial inequalities describes an elephant-shaped curve.
    Keywords: Economic development, regional inequalities, Kuznets curve, Europe, economic history
    JEL: N9 O18 R1
    Date: 2017–12

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