nep-gro New Economics Papers
on Economic Growth
Issue of 2019‒02‒25
fourteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Bite and Divide: Malaria and Ethnolinguistic Diversity By Cervellati, Matteo; Chiovelli, Giorgio; Esposito, Elena
  2. Folklore By Michalopoulos, Stelios; Xue, Melanie Meng
  3. "The Impact of Climate Change on Fertility" By Gregory Casey; Soheil Shayegh; Juan Moreno-Cruz; Martin Bunzl; Oded Galor; Ken Caldeira
  4. Public goods institutions, human capital, and growth: evidence from German history By Dittmar, Jeremiah E.; Meisenzahl, Ralf R.
  5. Innovation, Automation, and Inequality: Policy Challenges in the Race against the Machine By Prettner, Klaus; Strulik, Holger
  6. Natural Resources, Economic Growth and Geography By Rafael González-Val; Fernando Pueyo
  7. Pandemics, Places, and Populations: Evidence from the Black Death By Jedwab, Remi; Johnson, Noel; Koyama, Mark
  8. Non-Renewable Resources and the Possibility of Sustainable Economic Development in a Positive or Negative Population Growth Economy By Sasaki, Hiroaki
  9. Can we have growth when population is stagnant? Testing linear growth rate formulas of non-scale endogenous growth models By Ziesemer, Thomas
  10. Artificial intelligence, jobs, inequality and productivity: Does aggregate demand matter? By Gries, Thomas; Naude, Wim
  11. Natural Disasters and Regional Development - The Case of Earthquakes By Marius Fabian; Christian Leßmann; Tim Sofke
  12. Economic Development Thresholds for a Green Economy in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  13. A theory of structural change that can fit the data By Alder, Simon; Boppart, Timo; Müller, Andreas
  14. Long-term endogenous economic growth and energy transitions. By Victor Court; Pierre-André Jouvet; Frédéric Lantz

  1. By: Cervellati, Matteo; Chiovelli, Giorgio; Esposito, Elena
    Abstract: We investigate the epidemiological origins of ethnic diversity and its persistence. First, we conceptualize the role of malaria for the incentives to voluntary isolation in a Malthusian environment. The theory predicts that interactions in multiple geographically clustered groups with high sexual endogamy allowed limiting disease prevalence and increasing group fitness in pre-modern populations exposed to malaria. Second, using disaggregate level data, we document the hitherto unexplored and robust role of malaria for pre-colonial, historical and contemporaneous ethnic diversity in Africa. Third, falsification tests based on malaria epidemiology and history further allow us to validate the specific predictions of the model. No effect can be detected for other placebo vector-borne diseases. Malaria is a main driver of pre-colonial ethnic diversity in Africa but not in the Americas, where the pathogen was absent before European colonization. Fourth, the effect of ancestral malaria on endogamic cultures is the main predicted channel for the persistence of African ethnicities. Exploiting within village variation across 18 African countries, we find that ancestral malaria, but not malaria today, still affects the differential persistence of ethnicities through its legacy of active endogamic cultures.
    Keywords: African Growth; Cultural and Genetic Selection; Endogamy; Ethnic Groups; Malaria; Malthusian Theory
    JEL: N10 N30 O10 O40 Z10
    Date: 2019–01
  2. By: Michalopoulos, Stelios; Xue, Melanie Meng
    Abstract: Folklore is the collection of traditional beliefs, customs, and stories of a community, passed through the generations by word of mouth. This vast expressive body, studied by the corresponding discipline of folklore, has evaded the attention of economists. In this study we do four things that reveal the tremendous potential of this corpus for understanding comparative development and culture. First, we introduce and describe a unique catalogue of folklore that codes the presence of thousands of motifs for roughly 1,000 pre-industrial societies. Second, we use a dictionary-based approach to elicit group-specific measures of various traits related to the natural environment, institutional framework, and mode of subsistence. We establish that these proxies are in accordance with the ethnographic record, and illustrate how to use a group's oral tradition to quantify non-extant characteristics of preindustrial societies. Third, we use folklore to uncover the historical cultural values of a group. Doing so allows us to test various influential conjectures among social scientists including the original affluent society, the culture of honor among pastoralists, the role of family in extended kinship systems and the intensity of trade and rule-following norms in politically centralized group. Finally, we explore how cultural norms inferred via text analysis of oral traditions predict contemporary attitudes and beliefs.
    Keywords: Culture; Development; Folklore; History; Values
    JEL: O10 Z1 Z10 Z13
    Date: 2019–01
  3. By: Gregory Casey; Soheil Shayegh; Juan Moreno-Cruz; Martin Bunzl; Oded Galor; Ken Caldeira
    Abstract: "We examine the potential for climate change to impact fertility via adaptations in human behaviour. We start by discussing a wide range of economic channels through which climate change might impact fertility, including sectoral reallocation, the gender wage gap, longevity, and child mortality. Then, we build a quantitative model that combines standard economicdemographic theory with existing estimates of the economic consequences of climate change. In the model, increases in global temperature affect agricultural and non-agricultural sectors differently. Near the equator, where many poor countries are located, climate change has a larger negative effect on agriculture. The resulting scarcity in agricultural goods acts as a force towards higher agricultural prices and wages, leading to a labor reallocation into this sector. Since agriculture makes less use of skilled labor, climate damages decrease the return to acquiring skills, inducing parents to invest less resources in the education of each child and to increase fertility. These patterns are reversed at higher latitudes, suggesting that climate change may exacerbate inequities by reducing fertility and increasing education in richer northern countries, while increasing fertility and reducing education in poorer tropical countries. While the model only examines the role of one specific mechanism, it suggests that climate change could have an impact on fertility, indicating the need for future work on this important topic."
    Date: 2019
  4. By: Dittmar, Jeremiah E.; Meisenzahl, Ralf R.
    Abstract: What are the origins and consequences of the state as a provider of public goods? We study public goods provision established through new laws in German cities during the 1500s. Cities that adopted the laws subsequently began to differentially produce and attract human capital and to grow faster. Legal change occurred where ideological competition introduced by the Protestant Reformation interacted with local politics. We study plagues that shifted local politics in a narrow period as sources of exogenous variation in public goods institutions, and find support for a causal interpretation of the relationship between legal change, human capital, and growth.
    Keywords: institutions; political economy; public goods; education; human capital; growth; state capacity
    JEL: I2 N13 O11 O4
    Date: 2020–01–01
  5. By: Prettner, Klaus; Strulik, Holger
    Abstract: We analyze the effects of R&D-driven automation on economic growth, education, and inequality when high-skilled workers are complements to machines and low-skilled workers are substitutes for machines. The model predicts that innovation-driven growth leads to an increasing population share of college graduates, increasing income and wealth inequality, and a declining labor share. We use the model to analyze the effects of redistribution. We show that it is difficult to improve income of low-skilled individuals as long as both technology and education are endogenous. This is true irrespective of whether redistribution is financed by progressive wage taxation or by a robot tax. Only when higher education is stationary, redistribution unambiguously benefits the poor. We show that education subsidies affect the economy differently depending on their mode of funding and that they may actually reduce education. Finally, we extend the model by fair wage concerns and show how automation could induce involuntary low-skilled unemployment.
    Keywords: Automation,Innovation-Driven Growth,Inequality,Wealth Concentration,Unemployment,Policy Responses
    JEL: E23 E25 O31 O33 O40
    Date: 2019
  6. By: Rafael González-Val (Universidad de Zaragoza and Institut d'Economia de Barcelona (IEB)); Fernando Pueyo (Universidad de Zaragoza)
    Abstract: In this paper we discuss the relationship between economic growth and natural resources at a global level, taking into account geography. With this aim, our model integrates elements of the theories of endogenous growth, natural resources and new economic geography. We find that an increase in the world growth rate can lead to a higher depletion of the natural resources following an increase in the world demand due to expansion in population. However, the consideration of geography and growth mechanisms make the relationship between growth and natural resources more complex, and can even lead to the opposite conclusion when the forces behind growth are different from world demand. Indeed, either a reduction in transport costs or an increase in R&D productivity appears to be able to generate a faster growth compatible with a lower depletion of natural resources.
    Keywords: Industrial Location, Endogenous Growth, Renewable Resource, Geography
    JEL: F43 O30 Q20 R12
    Date: 2018–08
  7. By: Jedwab, Remi; Johnson, Noel; Koyama, Mark
    Abstract: The Black Death killed 40% of Europe's population between 1347-1352, making it one of the largest shocks in history. Despite its importance, little is known about its spatial effects and the effects of pandemics more generally. Using a novel dataset that provides information on spatial variation in Plague mortality at the city level, as well as various identification strategies, we explore the short-run and long-run impacts of the Black Death on city growth. On average, cities recovered their pre-Plague populations within two centuries. In addition, aggregate convergence masked heterogeneity in urban recovery. We show that both of these facts are consistent with a Malthusian model in which population returns to high-mortality locations endowed with more rural and urban fixed factors of production. Land suitability and natural and historical trade networks played a vital role in urban recovery. Our study highlights the role played by pandemics in determining both the sizes and placements of populations.
    Keywords: Black Death; cities; growth; Malthusian Theory. Migration; path dependence; Urbanization
    JEL: J11 N00 N13 O11 O47 R11 R12
    Date: 2019–02
  8. By: Sasaki, Hiroaki
    Abstract: The purpose of this study is to investigate how the long-run growth rate of per capita output is determined when an economy is subject to non-renewable resource constraints and the population growth is negative by using a theoretical model. From this, we can examine the effect of population decline and the effect of depletion of natural resources on economic growth. Our results show that irrespective of whether the population growth rate is positive or negative, the long-run growth rate of per capita output can be positive depending on conditions. This result suggests that even an economy with non-renewable resources and declining population can obtain sustainable economic growth.
    Keywords: non-renewable resources; declining population; endogenous growth
    JEL: O13 O44 Q32 Q43
    Date: 2019–02–16
  9. By: Ziesemer, Thomas (UNU-MERIT)
    Abstract: Endogenous growth theory has produced formulas for steady-state growth rates of income per capita, which are linear in the growth rate of the population. Depending on the details of the models, slopes and intercepts are positive, zero or negative. Empirical tests have taken over the assumption of exogenous population growth from the theoretical models and have mostly not distinguished steady-state results from transitional growth. In contrast, (i) we assume that there is the possibility of two-way causality as in unified growth theory, and (ii) we capture the steady-state property by a long-term relation in a series of vector-error-correction models, allowing (iii) successively for more heterogeneity. The average slope and intercepts of the growth equations are positive in this setting but less significant or even negative when allowing for heterogeneity. Intercepts are then positive for a majority of countries, zero for five or six countries, and perhaps negative for at most two countries. Results therefore favour fully- over semi-endogenous growth with and without slope homogeneity. The more frequent case is that long-run growth can remain positive if population stops growing.
    Keywords: Endogenous growth, population growth, panel times series estimation
    JEL: C33 O47
    Date: 2018–11–26
  10. By: Gries, Thomas (Universitat Paderborn); Naude, Wim (UNU-MERIT, and Maastricht University, RWTH Aachen University, IZA Institute of Labor Economics, Bonn.)
    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 insuficient 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: 2018–12–12
  11. By: Marius Fabian; Christian Leßmann; Tim Sofke
    Abstract: We analyze the impact of earthquakes on nighttime lights at a sub-national level, i.e. on grids of different size. We argue that existing studies on the impact of natural disasters on economic development have several important limitations, both at the level of the outcome variable – usually national income or growth – as well as on the level of the independent variable, e.g. the timing of an event and the measuring of its intensity. We aim to overcome these limitations by using geophysical event data on earthquakes together with satellite nighttime lights. Using panel fixed effects regressions covering the entire world for the period 1992-2013 we find that earthquakes reduce both light growth rates and light levels significantly. The effects are persistent for approximately 5 years, but we find no long run effects. The effects are strong and robust in a small grid and gets weaker the larger the unit of observation. National institutions and economic conditions are relevant mediating factors.
    Keywords: natural disasters, earthquakes, event data, satellite nighttime lights, luminosity, grid data, institutions, growth, development
    JEL: O44 Q54
    Date: 2019
  12. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study investigates how increasing economic development affects the green economy in terms of CO2 emissions, using data from 44 countries in the SSA for the period 2000-2012. The Generalised Method of Moments (GMM) is used for the empirical analysis. The following main findings are established. First, relative to CO2 emissions, enhancing economic growth and population growth engenders a U-shaped pattern whereas increasing inclusive human development shows a Kuznets curve. Second, increasing GDP growth beyond 25% of annual growth is unfavorable for a green economy. Third, a population growth rate of above 3.089% (i.e. annual %) has a positive effect of CO2 emissions. Fourth, an inequality-adjusted human development index (IHDI) of above 0.4969 is beneficial for a green economy because it is associated with a reduction in CO2 emissions. The established critical masses have policy relevance because they are situated within the policy ranges of adopted economic development dynamics.
    Keywords: CO2 emissions; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2019–01
  13. By: Alder, Simon; Boppart, Timo; Müller, Andreas
    Abstract: We study structural change in historical consumption expenditure of the United States, the United Kingdom, Canada and Australia over more than a century. To identify preference parameters from aggregate data, we characterize the most general class of preferences in a time-additive setting that admits aggregation of the intertemporal saving decision. We parametrize and estimate such intertemporally aggregable (IA) preferences and discuss their properties in a dynamic general equilibrium framework with sustained growth. Our preferences class is considerably more flexible than the Gorman form or PIGL/PIGLOG, giving rise to a good fit of the non-monotonic pattern of structural change.
    Keywords: aggregation; Multi-sector growth model; non-homothetic preferences; Non-monotonic Engel curves; Relative price effects; structural change
    JEL: E21 L16 O11 O14
    Date: 2019–01
  14. By: Victor Court (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Pierre-André Jouvet (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Frédéric Lantz (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles)
    Abstract: This article builds a bridge between the endogenous economic growth theory, the biophysical economics perspective, and the past and future transitions between renewable and nonrenewable energy forms that economies have had to and will have to accomplish. We provide an endogenous economic growth model subject to the physical limits of the real world, meaning that nonrenewable and renewable energy production costs have functional forms that respect physical constraints, and that technological level is precisely defned as the effciency of primary-to-useful exergy conversion. The model supports the evidence that historical productions of renewable and nonrenewable energy have greatly infuenced past economic growth. Indeed, from an initial almost-renewable-only supply regime we reproduce the increasing reliance on nonrenewable energy that has allowed the global economy to leave the state of economic stagnation that had characterized the largest part of its history. We then study the inevitable transition towards complete renewable energy that human will have to deal with in a not-too-far future since nonrenewable energy comes by defnition from a fnite stock. Through simulation we study in which circumstances this transition could have negative impacts on economic growth (peak followed by degrowth phase). We show that the implementation of a carbon price can partially smooth such unfortunate dynamics, depending on the ways of use of the income generated by the carbon pricing.
    Keywords: Energy transition,Exergy,Technological change,Endogenous economic growth
    Date: 2018–01

This nep-gro issue is ©2019 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.