nep-gro New Economics Papers
on Economic Growth
Issue of 2019‒01‒21
eight papers chosen by
Marc Klemp
University of Copenhagen

  1. Geographical Roots of the Coevolution of Cultural and Linguistic Traits By Galor, Oded; Özak, Ömer; Sarid, Assaf
  2. The Rise and Fall of Family Firms in the Process of Development By Maria Rosaria Carillo; Vincenzo Lombardo; Alberto Zazzaro
  3. Childlessness and Economic Development: a Survey By Thomas TB Baudin; David De la Croix; Paula Eugenia Gobbi
  4. Dead men tell no tales: how the Homo sapiens became Homo economicus By Zakharenko, Roman
  5. Artificial Intelligence, Jobs, Inequality and Productivity: Does Aggregate Demand Matter? By Gries, Thomas; Naudé, Wim
  6. Top Lights - Bright Cities and their Contribution to Economic Development By Richard Bluhm; Melanie Krause
  7. Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920 By James J. Feigenbaum; James Lee; Filippo Mezzanotti
  8. Demographic Changes in a Small Open Economy with Endogenous Time Allocation and Age-Dependent Mortality By João Pereira

  1. By: Galor, Oded (Brown University); Özak, Ömer (Southern Methodist University); Sarid, Assaf (University of Haifa)
    Abstract: This research explores the geographical origins of the coevolution of cultural and linguistic traits in the course of human history, relating the geographical roots of long-term orientation to the structure of the future tense, the agricultural determinants of gender bias to the presence of sex-based grammatical gender, and the ecological origins of hierarchical orientation to the existence of politeness distinctions. The study advances the hypothesis and establishes empirically that: (i) geographical characteristics that were conducive to higher natural return to agricultural investment contributed to the existing cross-language variations in the structure of the future tense, (ii) the agricultural determinants of gender gap in agricultural productivity fostered the existence of sex-based grammatical gender, and (iii) the ecological origins of hierarchical societies triggered the emergence of politeness distinctions.
    Keywords: comparative development, cultural evolution, language structures, future tense, politeness distinctions, long-term orientation, grammatical gender, gender bias, hierarchy, emergence of states
    JEL: O10 Z10 Z13
    Date: 2018–11
  2. By: Maria Rosaria Carillo (University of Naples Parthenope); Vincenzo Lombardo (University of Naples Parthenope); Alberto Zazzaro (University of Naples Federico II, CSEF and MoFiR)
    Abstract: This paper explores the causes and the consequences of the evolution of family firms in the growth process. The theory suggests that in early stages of development, valuable family specific human capital stimulated the productivity of family firms and the development process. However, in light of the rise in the importance of managerial talents for firms' productivity in later stages, family firms generated a misallocation of managerial talents, curbing productivity and economic growth. Evidence supports the dual impact of family firms in the development process and the role of socio-cultural characteristics in observed variations in the productivity of family firms.
    Keywords: Family firms, economic development and growth, culture and social structure, allocation of talents, industrialization
    JEL: D2 J62 L26 O14 O33 O4 Z1
    Date: 2019–01
  3. By: Thomas TB Baudin; David De la Croix; Paula Eugenia Gobbi
    Abstract: This paper provides an introduction to the analysis of childlessness, first by describing the stylized facts and the relevant literature, and then by proposing a theoretical framework. We show that both poverty-driven childlessness and opportunity-driven childlessness matter and are essential to a thorough understanding of childlessness as a socioeconomic phenomenon.
    Keywords: Childlessness, fertility, education, marriage, children, sterility, economic development, poverty-driven childlessness, opportunity-driven childlessness, female em- powerment, childcare, Malthusian economy, educational homogamy, reproductive health, demographic economics, developed countries, developing countries, historical childless- ness, quantity and quality of children, inequality.
    Date: 2019–01
  4. By: Zakharenko, Roman
    Abstract: The paper explains long-term changes in birth, death rates and attitude to personal consumption by changing patterns of cultural transmission. When communities are culturally isolated, they are focused on population growth, resulting in large fertility and welfare transfers to children, limited adult consumption and lack of old-age support. With increasing cultural contact across communities, successful cultural traits induce their hosts to attempt becoming celebrities by limiting fertility and increasing longevity via higher consumption and old-age arrangements. Empirical analysis confirms that celebrities have fewer children and live longer; their presence precedes reduced aggregate birth and death rates.
    Keywords: cultural transmission, celebrity, demographic transition
    JEL: J11 J13 J14 Z19
    Date: 2018–12–19
  5. By: Gries, Thomas (University of Paderborn); Naudé, Wim (Maastricht University)
    Abstract: Rapid technological progress in artificial intelligence (AI) has been predicted to lead to mass unemployment, rising inequality, and higher productivity growth through automation. In this paper we critically re-assess these predictions by (i) surveying the recent literature and (ii) incorporating AI-facilitated automation into a product variety-model, frequently used in endogenous growth theory, but modified to allow for demand-side constraints. This is a novel approach, given that endogenous growth models, and including most recent work on AI in economic growth, are largely supply-driven. Our contribution is motivated by two reasons. One is that there are still only very few theoretical models of economic growth that incorporate AI, and moreover an absence of growth models with AI that takes into consideration growth constraints due to insufficient aggregate demand. A second is that the predictions of AI causing massive job losses and faster growth in productivity and GDP are at odds with reality so far: if anything, unemployment in many advanced economies is historically low. However, wage growth and productivity is stagnating and inequality is rising. Our paper provides a theoretical explanation of this in the context of rapid progress in AI.
    Keywords: technology, artificial intelligence, productivity, labour demand, innovation, growth theory
    JEL: O47 O33 J24 E21 E25
    Date: 2018–11
  6. By: Richard Bluhm; Melanie Krause
    Abstract: The commonly-used satellite images of nighttime lights fail to capture the true brightness of most cities. We show that night lights are a reliable proxy for economic activity at the city level, provided they are first corrected for top-coding. We present a stylized model of urban luminosity and empirical evidence which both suggest that these ‘top lights’ follow a Pareto distribution. We then propose a simple correction procedure which recovers the full distribution of city lights. Applying this approach to cities in Sub-Saharan Africa, we find that primate cities are outgrowing secondary cities but are changing from within.
    Keywords: development, urban growth, night lights, top-coding, inequality
    JEL: O10 O18 R11 R12
    Date: 2018
  7. By: James J. Feigenbaum; James Lee; Filippo Mezzanotti
    Abstract: Using General William Sherman’s 1864–65 military march through Georgia, South Carolina, and North Carolina during the American Civil War, this paper studies the effect of capital destruction on medium and long-run local economic activity, and the role of financial markets in the recovery process. We match an 1865 US War Department map of Sherman’s march to county-level demographic, agricultural, and manufacturing data from the 1850-1920 US Censuses. We show that the capital destruction induced by the March led to a large contraction in agricultural investment, farming asset prices, and manufacturing activity. Elements of the decline in agriculture persisted through 1920. Using information on local banks and access to credit, we argue that the underdevelopment of financial markets played a role in weakening the recovery.
    JEL: N21 N41 N51
    Date: 2018–12
  8. By: João Pereira
    Abstract: We calibrate an endogenous overlapping generations model of a small open economy to study the effects of population aging and population decline. In an invariant scenario public and foreign debt explode and GDP growth decreases markedly. Among the tested policies to control public nances, the best for the individuals is an increase in the retirement age, which needs to increase 6 years, a similar magnitude as the increase in life expectancy at birth. However, this increase has to happen before the increase in life expectancy materi- alizes itself. Aging has a stronger negative impact on public debt than population decline. We find a positive, but quantitatively modest, behavioral effect in reaction to a higher life expectancy with an impact on the GDP growth rate of only 2 basis points.
    Keywords: Open Economy; Time Allocation; PAYG pensions; Debt
    JEL: J11 J22 H55 H63
    Date: 2019–01

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