nep-gro New Economics Papers
on Economic Growth
Issue of 2019‒05‒13
nine papers chosen by
Marc Klemp
University of Copenhagen

  1. Political Geography and Pre-Industrial Development: A Theory and Evidence for Europe 1000-1850 By Cervellati, Matteo; Lazzaroni, Sara; Prarolo, Giovanni; Vanin, Paolo
  2. The knowledge economy in historical perspective By Hippe, Ralph Thomas Klaus; Fouquet, Roger
  3. Stalin and the origins of mistrust By Nikolova, Milena; Popova, Olga; Otrachshenko, Vladimir
  4. Dynastic human capital, inequality and intergenerational mobility By Adrian Adermon; Mikael Lindahl; Marten Palme
  5. Variety, Complexity and Economic Development By Alje van Dam; Koen Frenken
  6. Stagnant wages, sectoral misallocation and slowing productivity growth By Schmöller, Michaela
  7. Schools without a law: primary education in France from the Revolution to the Guizot Law By Adrien Montalbo
  8. The Market Size Effect in Endogenous Growth Reconsidered By Hélène Latzer; Kiminori Matsuyama; Mathieu Parenti
  9. Agricultural and rural transformations in Asian development By Vos Rob

  1. By: Cervellati, Matteo; Lazzaroni, Sara; Prarolo, Giovanni; Vanin, Paolo
    Abstract: We present a theory of the drivers, and a measurement of the patterns, of the evolution of historical sovereign polities over time and space in Europe, and we study their impact on pre-industrial urban development. We model changing state capacity and rule of law over space as resulting from strategic interactions between ruling elites. We characterize the endogenous evolution of equilibrium number, size, borders and type of polities. The framework characterizes the timing and location of appearance (and disappearance) of city states and the transition from domain reigns to modern territorial states. The model predicts the emergence of hard borders and a reversal in the role of locations' centrality for development. We measure the territorial evolution of sovereign polities by assembling geo-referenced yearly panel data on the political geography of each location in Europe for the period 1000-1850 and we investigate its implications for pre-industrial urban growth. Results document a changing role of polity size and type and a reversal of centrality from across to within polities which is associated to increasing importance of domestic market potential after the XVII century.
    Keywords: Borders; Centrality and Location; market potential; Pre-Industrial Development; Sovereign Polities; Space and Territorial Control
    Date: 2019–05
  2. By: Hippe, Ralph Thomas Klaus; Fouquet, Roger
    Abstract: The knowledge economy provides huge opportunities for economic growth and to become the cornerstone of future economic development by turning data into wisdom or human capital. Education, one aspect of the knowledge economy, exhibits a history divided into three stages: the apprenticeship era, the universal schooling era and the (future) life-long learning era. The spread of knowledge has accelerated owing to the different stages of knowledge production, in particular the printing press and now the internet
    JEL: N0
    Date: 2018–03–01
  3. By: Nikolova, Milena; Popova, Olga; Otrachshenko, Vladimir
    Abstract: We show that current differences in trust levels within former Soviet Union countries can be traced back to the system of forced prison labor during Stalin's rule, which was marked by high incarceration rates, repression, and harsh punishments. We argue that those exposed to forced labor camps (gulags) became less trusting and transferred this social norm to their descendants. Combining contemporary individual-level survey data with historical information on the location of forced labor camps, we find that individuals who live near former gulags have low levels of social and institutional trust. Our results are robust to a battery of sensitivity checks, which suggests that the relationship we document is causal. We outline several causal mechanisms and test whether the social norm of mistrust near gulags developed because of political repression or due to fear that inmates bring criminality. As such, we provide novel evidence on the channels through which history matters for current socio-economic outcomes today.
    Keywords: social trust,institutional trust,trustworthiness,forced labor,economic history,former Soviet Union
    JEL: D02 H10 N94 Z13
    Date: 2019
  4. By: Adrian Adermon; Mikael Lindahl; Marten Palme
    Abstract: We study the importance of the extended family – the dynasty – for the persistence in inequality across generations. We use data including the entire Swedish population, linking four generations. This data structure enables us to identify parents’ siblings and cousins, their spouses, and the spouses’ siblings. Using various human capital measures, we show that traditional parent-child estimates of intergenerational persistence miss almost one-third of the persistence found at the dynasty level. To assess the importance of genetic links, we use a sample of adoptees. We then find that the importance of the extended family relative to the parents increases.
    Keywords: intergenerational mobility, extended family, dynasty, human capital
    JEL: I24 J62
    Date: 2019
  5. By: Alje van Dam; Koen Frenken
    Abstract: We propose a combinatorial model of economic development. An economy develops by acquiring new capabilities allowing for the production of an ever greater variety of products of increasingly complex products. Taking into account that economies abandon the least complex products as they develop over time, we show that variety first increases and then decreases in the course of economic development. This is consistent with the empirical pattern known as 'the hump'. Our results question the common association of variety with complexity. We further discuss the implications of our model for future research.
    Keywords: economic complexity, productvariety, relatedness, capabilities, the hump, stages of diversification
    JEL: O10 O40
    Date: 2019–05
  6. By: Schmöller, Michaela
    Abstract: I propose a two-sector endogenous growth model with heterogeneous sectoral productivity and sector-specific, nonlinear hiring costs to analyse the link between sectoral resource allocation, low productivity growth and stagnant real wages. My results suggest that an upward shift in the labor supply, triggered for instance by a labor market reform, as among others implemented in Germany in 2003-2005, is beneficial in the long-run as it raises growth of technology, labor productivity and real wages. I show, however, that in the immediate phase following the labor supply shock, labor productivity and real wages stagnate as employment gains are initially disproportionally allocated to low-productivity sectors, limiting the capacity for technology growth and depressing real wages and productivity. I demonstrate that due to the learning-by-doing growth externality in the high-productivity sector the competitive equilibrium is ineffcient as firms fail to internalize the effect of their labor allocation on aggregate growth. Subsidies to high-productivity sector production can alleviate welfare losses along the transition path.
    JEL: E20 E24 E60 O40 O41
    Date: 2019–05–06
  7. By: Adrien Montalbo (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The French Revolution had a substantial impact on the functioning of primary schools as it suppressed one of their major funding sources, taxes collected by the clergy. Nonetheless, the geographical distribution of schools and enrolment rates remained relatively stable until late into the nineteenth century. In this article, I show that understanding the reorganisation of primary schooling after the Revolution is essential in accounting for these long-lasting variations in educational attainment. By using a new database at the level of primary schools, I first show that municipalities took over the control of instruction in areas well-endowed in economic resources and where schools were more concentrated before the revolutionary time period. Secondly, I demonstrate that, by subsidising schools, municipal authorities acted in favour of a fall in schooling fees, lowering the average cost of education and therefore increasing enrolment rates. Finally, I show that teaching conditions were better and human capital accumulation higher in the schools provided with municipal grants. Public investment in primary schooling is therefore a key element to understand the uneven distribution of schools, enrolment rates and knowledge accumulation in France during the nineteenth century.
    Keywords: Public investment,Nineteenth-century France,Primary education
    Date: 2019–04
  8. By: Hélène Latzer (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, CEREC - Université Saint-Louis - Bruxelles); Kiminori Matsuyama (Northwestern University [Evanston]); Mathieu Parenti (ULB - Université Libre de Bruxelles [Bruxelles])
    Abstract: This paper aims at disentangling two effects of the labor supply size on long-run growth that are traditionally undistinguishable under preference homotheticity: a scale effect, and a market size effect. To reach this goal, we present two horizontal-innovation models of endogenous growth with non-homothetic preferences. We demonstrate in particular that in such set-ups, keeping the economy's total effective labor supply constant, a "richer" country (i.e., with higher labor productivity and a smaller labor force) grows faster than a "poorer" country (i.e., with lower labor productivity and a larger labor force), leading the two countries to diverge.
    Keywords: Divergence,Horizontal Innovation,Knowledge Spillover,Endogenous Growth,Balanced Growth Path,Variable price elasticity,Endogenous Markup,Nonhomotheticity,Direct Explicit Additivity,Indirect Explicit Additivity
    Date: 2018–10
  9. By: Vos Rob
    Abstract: Over the past sixty years, most Asian countries have undergone relatively rapid agricultural transformations that helped jumpstart broader economic development. However, the changes have differed markedly in nature and speed across countries of the region.In much of East and Southeast Asia, the Green Revolution brought a quantum leap in yields of staple crops. Agricultural productivity growth facilitated labour exit and savings transfers, which helped jumpstart industrial growth and urbanization, which in turn induced deeper agrarian change and food system transformations.In South Asia, these transformative changes have lagged in part because of structural hurdles to agrarian change signalled by Gunnar Myrdal in his seminal book Asian Drama of 1968. More recently, South Asian economies also managed to overcome most of those obstacles, inducing accelerated growth of both agriculture and non-agricultural sectors.Vast challenges of still widespread poverty and food insecurity in this part of Asia remain. These challenges remain in a context of relatively advanced urbanization, strongly changed dietary patterns and agri-food systems, and pressing environmental constraints.Consequently, as this paper argues, moving forward, the role and nature of agricultural transformations and structural change in forging economic growth and poverty reduction in still disadvantaged regions of Asia will need to be different as well.
    Keywords: Agricultural productivity,Food policy,structural change,Rural development
    Date: 2018

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