nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒10‒22
eight papers chosen by
Marc Klemp
University of Copenhagen

  1. The Role of Novelty-Seeking Traits in Contemporary Knowledge Creation By Gören, Erkan
  2. Factor prices and induced technical change in the Industrial Revolution By Ravshonbek Otojanov and Roger Fouquet
  3. A Workers’ Revolution in Sweden? Exploring Economic Growth and Distributional Change with Detailed Data on Construction Workers’ Wages, 1831–1900 By Ericsson, Johan; Molinder, Jakob
  4. William D. Nordhaus and Paul M. Romer: Integrating nature and knowledge into economics By Committee, Nobel Prize
  5. Wages, income distribution and economic growth in Scandinavia By Bengtsson, Erik; Stockhammer, Engelbert
  6. Men. Roots and Consequences of Masculinity Norms By Baranov, Victoria; de Haas, Ralph; Grosjean, Pauline
  7. Energy Transitions, Directed Technical Change and the British Industrial Revolution By Ravshonbek Otojanov
  8. A New Theory of Demand-Restricted Growth By Gries, Thomas

  1. By: Gören, Erkan
    Abstract: This paper hypothesizes and empirically establishes the persistent effects of novelty-seeking traits on cross-country differences in scientific knowledge creation. I use data on the prevalence of specific allele variants of the human DRD4 exon III gene, which population geneticists have linked to the human phenotype of novelty-seeking behavior to examine its relationship to scientific knowledge creation in society. The results suggest a positive and statistically significant linear relationship between both outcomes that is consistent with the hypothesis that the prevalence of novelty-seeking traits in society facilitates scientific knowledge creation through beneficial human behaviors related to risk-taking and explorative behavior. The empirical findings remain qualitatively unaffected when controlling for additional historical, biogeographical, and socioeconomic factors that appear as additional important determinants in the creation of scientific knowledge in society.
    Keywords: DRD4 Exon III,Novelty-Seeking Traits,Entrepreneurial Activity,Knowledge Creation,Technological Progress,Economic Development,Natural Selection,Genetic Diversity
    JEL: N70 O30 O50 Z10 N70 O30 O50 Z10
    Date: 2018
  2. By: Ravshonbek Otojanov and Roger Fouquet
    Abstract: Allen (2009) has argued that the divergence in factor prices determined the direction of technical change that altered the course of economic growth in Britain. Using historical data for the 1700 – 1914 period, this paper derives and analyses the nature and direction of technical change. The results show that technical change was biased during the Industrial Revolution and that the bias stemmed from the divergence in the cost of labour and energy. In particular, labour saving responded strongly to the acceleration in wage growth in the 1850-1914 period. Overall, technical change was labour-saving, energy-using and hence capital-deepening. Moreover, the evidence shows that the expansion of effective energy supply allowed British economy to sustain output growth in the First Industrial Revolution era. Labour-saving innovations were particularly crucial in the Second Industrial Revolution.
    Keywords: Industrial Revolution; Factor-Saving Technical Change; Induced Technical Change, Productivity, Innovation.
    JEL: N13 O3 O11
  3. By: Ericsson, Johan (Department of History, Uppsala University); Molinder, Jakob (Department of Economic History, Uppsala University)
    Abstract: The impact of the transition to modern economic growth on the distribution of income is widely debated. The experience of early industrializers like Britain and the US has informed much of the debate, lending support to the idea embedded in the models of Kuznets and Lewis that real wages of laborers tend to lag behind the growth of GDP per capita in the early stages of economic development. We examine the impact growth on workers in Sweden using a new dataset on daily wages for helpers, carpenters, masons, and teamsters over the 1831–1900 period. The data has a uniquely detailed geographical coverage, including a broad set of places in the countryside as well as towns. Our new series shows that real wage growth began in the mid-1850s, that the average yearly increase was substantial and superseding GDP per capita growth after 1880, that it was larger for unskilled helpers than higher-skilled groups, and was present in the countryside and urban areas alike. A comparison with Northern Europe shows that unskilled workers in Sweden benefited to a much greater extent from economic growth, highlighting the importance of paying careful attention to distributional issues when comparing living standards across countries.
    Keywords: wages; inequality; distribution; economic development; growth; living standards; Kuznets-curve; Lewis
    JEL: J31 N00 N13 N33 O14
    Date: 2018–10–12
  4. By: Committee, Nobel Prize (Nobel Prize Committee)
    Abstract: This year’s Prize in Economic Sciences rewards the design of methods that address some of the most fundamental and pressing issues of our time: long-run sustainable growth in the global economy and the welfare of the world’s population.
    Keywords: long-term growth;
    JEL: O00
    Date: 2018–10–08
  5. By: Bengtsson, Erik (Department of Economic History, Lund University); Stockhammer, Engelbert (Department of European & International Studies, King's College, London)
    Abstract: Wage restraint plays an important role in the conventional economic history explanation of the post-war golden growth experience of industrialized economies. Conversely, wage increases harming investment and increasing unemployment have been proffered as explanations for some of the high unemployment during the interwar period. This article argues that the conventional account implicitly only considers effects of wage growth on investment and not the advantageous effects on consumption. Thus, the evaluation of the effects on GDP growth is lop-sided. We employ a Post-Keynesian model to estimate effects of growth in the wage share of national income on consumption, investment, exports and imports separately, and weigh the effects together to estimate total effects on GDP growth, in Scandinavia (Denmark, Norway and Sweden) 1900–2010. Furthermore, we estimate the positive effects of wage pressure on productivity, showing it to be significant and positive in all three countries. We show that the postwar wage push had small positive effects on GDP growth in Denmark and Sweden, and a small negative effect in Norway. Thus, wage restraint is not a valid explanation for the postwar growth miracle. We propose a more comprehensive macroeconomic framework for understanding the implications of labour-capital distribution.
    Keywords: functional income distribution; inequality; consumption; investment; Scandinavia; Bhaduri-Marglin model; economic history
    JEL: E12 N14
    Date: 2018–10–11
  6. By: Baranov, Victoria; de Haas, Ralph (Tilburg University, Center For Economic Research); Grosjean, Pauline
    Abstract: Recent research has uncovered the historical roots of gender norms about women and the persistent effect of such norms on economic development. We find similar long-term effects of masculinity norms: beliefs about the proper conduct of men. We exploit a natural historical experiment in which convict transportation in the 18th and 19th century created a variegated spatial pattern of sex ratios across Australia. We show that in areas that were heavily male-biased in the past (though not the present) more Australians recently voted against same-sex marriage, an institution at odds with traditional masculinity norms. Survey data show that this voting pattern is mostly driven by men. Further evidence indicates that these historically male-biased areas also remain characterized by more violence, excessive alcohol consumption, and occupational gender segregation. We interpret these behaviors as manifestations of masculinity norms that emerged due to intense local male-male competition and that persisted over time.
    Keywords: masculinity; sex ratio; natural experiment; cultural persistence; same-sex marriage
    JEL: I31 J12 J16 N37 Z13
    Date: 2018
  7. By: Ravshonbek Otojanov
    Abstract: This paper provides an alternative view on the transition from stagnation to growth by building a two-sector model of the British Industrial Revolution. The sectors differ only in the use of input factors, wood and coal. The model characterises the transition from stagnation to high growth as a direct consequence of the transition from biomass to coal use in Britain. Formalising the accounts of economic historians, technological progress is modelled as an endogenous process driven by the cost differentials between wood and coal. As wood price rises and coal price remains stable it becomes profitable to innovate in coal-using technologies and hence, innovation shifts to the coal-using sector. The model is calibrated to match the main features of the British economy in the transition period between 1550 and 1849. The model reproduces one of the important characteristics of the First Industrial Revolution – transition from low growth to high growth. Counterfactual analyses indicate that, absent coal reserves and low cost coal supplies, growth would have been slower and income per capita would have been 53% of that observed in 1849. Also, the model does a good job in explaining the timing of structural transformations in the British economy.
    Keywords: Industrial Revolution; Economic Growth; Directed Technical Change; Innovation; Energy Transitions.
    JEL: O30 O41 Q43 D50
  8. By: Gries, Thomas
    Abstract: Mainstream growth theory is dominated by variations of the neoclassical approach. Growth is explained fully by elements of the supply side. In this paper we examine the general mechanism of technology growth and capital accumulation. However, instead of following a fully supply-side driven neoclassical approach we suggest a hybrid approach that allows for growth restrictions induced by demand-side elements. We obtain a demand-restricted growth by suggesting an unconventional equilibrium concept in a stochastic environment. We define macroeconomic equilibrium as stationary no-expectation-error equilibrium. This equilibrium concept relates to the Nash idea of individual stationary behavior as long as expectations prove to be realized. No rigidities are introduced. Even if potential growth is generated by technical change and capital accumulation, the level of the path and the growth rate are restricted by effective earnings. Both can be stable below the neoclassical potential growth. The growth rate in the demand restricted regime is semi-endogenous and determined by entrepreneurial conditions and activities. However, the growth process mutates to the neoclassical process if effective earnings are sufficient and the earnings ratio turns to one. As a result, the demand side cannot generate growth, but the demand side can permanently restrict growth which could have been generated by the supply side. Our hybrid model could help to bridge a gap between Keynesian and neoclassical ideas of economic growth.
    Keywords: Demand restricted growth,no-expectation-error equilibrium,neoclassical growth theory
    JEL: E12 E13 O40 E60
    Date: 2018

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