nep-gro New Economics Papers
on Economic Growth
Issue of 2019‒10‒14
eleven papers chosen by
Marc Klemp
University of Copenhagen

  1. Fascistville: Mussolini's New Towns and the Persistence of Neo-Fascism By Carillo, Mario Francesco
  2. Railroads, Reallocation, and the Rise of American Manufacturing By Richard Hornbeck; Martin Rotemberg
  3. Health and Development By Alberto Bucci; Lorenzo Carbonari; Monia Ranalli; Giovanni Trovato
  4. Inequality and Institutional Quality in a Growth Model By Takuma Kunieda; Masashi Takahashi
  5. Sources of Economic Growth in Models with Non-Renewable Resources By Sriket, Hongsilp; Suen, Richard M. H.
  6. Elite Violence and Elite Numeracy in Europe from 500 to 1900 CE: A Co-Evolution? By Baten, Jörg; Keywood, Thomas
  7. Validity of Malthusian Theory of Population in 20th Century in Terms of Using Scientific Technology to the Economic Growth and Strength By Mahfuzur Rahman
  8. Colonial origin, ethnicity, and intergeneration mobility in Africa By Funjika Patricia; Getachew Yoseph
  9. The corruption growth relationship: Do political institutions matter? By Sen Kunal; Saha Shrabani
  10. Decentralisation, quality of government and economic growth in the regions of the EU By Muringani, Jonathan; Dahl Fitjar, Rune; Rodríguez-Pose, Andrés
  11. Engines of Sectoral Labor Productivity Growth By Zsofia Barany; Christian Siegel

  1. By: Carillo, Mario Francesco
    Abstract: This paper studies the link between local public spending and popular support and investigates its persistence across institutional transitions and over the long term. I explore the foundation of Mussolini's New Towns (Città di Fondazione) in Fascist Italy, a major infrastructure investment which played a central role in the fascist propaganda. Employing municipality-level data before and after the intervention, together with information on the timing of each New Town construction, I find that the intervention enhanced the electoral support for the Fascist Party, favoring the emergence of the Regime. Furthermore, I document a positive link between the New Towns and the electoral support for the Neo-Fascist Party, which persisted until the present day. Using individual survey data, I document that respondents near the Fascist New Towns built 70 years ago currently display political attitudes in line with the fascist ideology. Results are not driven by the geographic conditions that induced the location of the New Towns, socioeconomic differences, and migration patterns. Furthermore, I find no spurious effect of the New Towns that were planned but not built. The findings suggest that public spending may have long-lasting effects on political and cultural attitudes, which persist across major institutional changes.
    Keywords: Political attitudes, infrastructures, democratic transitions
    JEL: N0 P0 Z1
    Date: 2018–05–27
  2. By: Richard Hornbeck (University of Chicago and NBER); Martin Rotemberg (New York University)
    Abstract: We examine the impacts of market integration on the development of American manufacturing, as railroads expanded through the latter half of the 19th century. Using county-by-industry data from the Census of Manufacturers, we estimate substantial impacts on manufacturing productivity growth from increases in county market access due to expansion of the railroad network. These productivity impacts are driven by increases in "reallocative efficiency," as input usage increased in areas where value marginal product exceeded marginal cost.
    Date: 2019
  3. By: Alberto Bucci (Università di Milano, DEMM & FinGro Lab); Lorenzo Carbonari (CEIS & DEF, University of Rome "Tor Vergata"); Monia Ranalli (University of Rome "La Sapienza"); Giovanni Trovato (CEIS & DEF, University of Rome "Tor Vergata")
    Abstract: In this paper we examine whether the Solow growth model is consistent with across-countries variations in standard of living once investments in education and health are explicitly and simultaneously taken into account. Using a sample of low- and middle-income economies, we provide evidence that per capita GDP is positively affected by population's health, here proxied by the life expectancy at birth. Public expenditure on health affects indirectly the level of per capita income through its positive effectect on life expectancy. Using a Finite Mixture approach, we also show that richer economies are those where the impact of unobserved factors on the level of per capita income is stronger.
    Keywords: Health, Education and Human Capital, Economic Development and Growth, Finite Mixture Models, Classification
    JEL: I15 I25 J24 O41 C14
    Date: 2019–09–30
  4. By: Takuma Kunieda (School of Economics, Kwansei Gakuin University); Masashi Takahashi (School of Economics, Kwansei Gakuin University)
    Abstract: A macroeconomic growth model of an occupational choice between being a diligent worker and being a criminal is developed. Imperfect protection of property rights renders agents heterogeneous in their holding wealth over time even though they are homogeneous in the initial period. The model is so tractable that one can explicitly derive the distribution of individual wealth and compute the Gini coefficient analytically in the stationary state. Using the Gini coefficient, we investigate how institutional quality affects inequality across agents in the economy. Our ndings are as follows. In the case of a relatively higher capital share, as institutional quality improves, inequality widens in the early stage of development of institutional quality; in contrast, inequality shrinks once institutions have sufficiently matured. In the case of a lower capital share, inequality monotonically shrinks as institutional quality improves. Furthermore, we present government policies that reduce inequality and achieve the first-best outcome.
    Keywords: Inequality, Institutional quality, Heterogeneous agents, Gini coefficient, Economic growth.
    JEL: D23 D63 O11 O41 O43
    Date: 2019–10
  5. By: Sriket, Hongsilp; Suen, Richard M. H.
    Abstract: This paper re-examines the possibility of endogenous long-term economic growth in neoclassical models with non-renewable resources. Instead of using a Cobb-Douglas production function as in most existing studies, we consider a general class of production functions in which physical capital is functionally separable from labour and natural resources. It is shown that if the elasticity of substitution between labour and resources is identical to one, then long-term economic growth is endogenous. But if this elasticity is bounded above or below by one, as suggested by empirical evidence, then long-term economic growth is determined a priori by an exogenous technological factor.
    Keywords: Non-Renewable Resources; Endogenous Growth; Elasticity of Substitution.
    JEL: O13 O41 Q32
    Date: 2019–09–27
  6. By: Baten, Jörg; Keywood, Thomas
    Abstract: We develop a new indicator for elite numeracy in order to investigate trends in European elite numeracy since the 6th century CE and describe its co-evolution with elite violence over this period. During the early medieval period, Western Europe had no advantage over the east, but the development of relative violence levels changed this. After implementing an instrumental variable strategy and a battery of robustness tests, we find a substantial relationship and conclude that violence had a detrimental impact on human capital formation. The drastic increase in human capital since the High Middle Ages was at least partially due to declining violence.
    Keywords: Early Modern Period; elite human capital; elite violence; Europe; Great Divergence; middle ages
    JEL: N00 N13 N33
    Date: 2019–09
  7. By: Mahfuzur Rahman (BRAC University)
    Abstract: In the late eighteenth century, in 1798, England's renowned economist Thomas Malthus, in his book 'Essay on the Principal of Population' 1 , propounded a stirring theory about population, according to his name, it is called the Malthusian Population Theory. [1] Malthus discussed the problem of population increase in the food supply and the scarcity of production rule. According to Malthus, population increases in geometric rates and food production increases at arithmetical rate. In the twentieth century, we will see how logical the population theory of Malthus is in today's world and how unreasonable. Although the population theory of Malthus is somewhat true for the underdeveloped countries. Due to the development and use of science and technology in the present world, the population theory of Malthas has been criticized by various modern economists.
    Keywords: Developed Countries,Malthus,Theory of Population,Growth of Population,Food Production,Developing Countries
    Date: 2018–11–30
  8. By: Funjika Patricia; Getachew Yoseph
    Abstract: This paper estimates the relationship between differences in skills measured among‚ within-country ethnic groups and individual human capital accumulation in eight African‚ countries.Our results show that the skills of an individual in these countries depends more on the‚ human capital levels of their parents¢â‚¬â„¢ ethnic group (ethnic capital) than on parental investment.‚ Therefore, differences in initial levels of ethnic capital may explain the persistence of ethnicitybased‚ differences in educational attainment over time. Birth cohort analysis and the results from‚ an interaction effects model show that ethnic capital has a persistent effect, and that this effect is‚ higher in former British colonies than former French colonies.Using historical religion-based data‚ from the colonial and independence periods as instruments for ethnic capital, we demonstrate‚ large effects of parental ethnicity on an individual¢â‚¬â„¢s human capital skill level and show that colonial‚ origin may be important in understanding intergenerational mobility in African countries.
    Keywords: Intergenerational Mobility,Human capital,Education,Colonialism,Ethnicity
    Date: 2019
  9. By: Sen Kunal; Saha Shrabani
    Abstract: Corruption is widely believed to negatively affect economic growth. However, many East and Southeast Asia countries either achieved or currently are achieving impressively rapid economic growth despite widespread corruption — the ‘East Asian Paradox’. Is this negative relationship equally likely to hold for autocracies and democracies? This paper examines the role of political institutions in mediating the corruption–growth relationship using panel data over one hundred countries for the period 1984–2016. We find clear evidence that corruption–growth relationship differs by the type of political institution, and the growth enhancing effect of corruption is more likely in autocracies than in democracies. The perceived credibility of long-term ruling political elites by promoting economic freedom to do business gives confidence to the firms, vital for investment and growth. Our findings provide suggestive evidence in support of the East Asian Paradox.
    Keywords: Panel data analysis,Democracy,Corruption,Economic growth
    Date: 2019
  10. By: Muringani, Jonathan; Dahl Fitjar, Rune; Rodríguez-Pose, Andrés
    Abstract: The effect of decentralisation on regional economic growth is a hotly debated topic. In theory, decentralisation should entail welfare benefits by bringing government closer to the people. In practice, the benefits of decentralisation have been hard to prove. A problem is that the quality of regional governments is often lacking, or at least varies widely across different regions. Hence, regional governments may not be capable of delivering public goods in an efficient and accountable manner. Previous analyses have, however, neglected how the benefits of decentralisation may depend on the quality of the regional government whose authority is strengthened by such reforms. This paper considers these two dimensions in conjunction, highlighting that the effect of decentralisation on economic performance is highly mediated by the quality of the devolved government. Using panel data for 223 regions in the EU, the results show that the quality of regional government is a better predictor of economic development than decentralisation. Regional government quality also conditions the economic returns to decentralisation, meaning decentralisation works best in regions with a higher quality of government. Accordingly, decentralisation reforms must consider the quality of the regional government to which they would devolve authority.
    Keywords: political institutions; regions; quality of government; regional authority; economic growth; Europe
    JEL: O1 O4
    Date: 2019–01–01
  11. By: Zsofia Barany (Sciences Po, Paris); Christian Siegel (University of Kent)
    Abstract: We study the origins of labor productivity growth and its differences across sectors. In our model, sectors employ workers of different occupations and various forms of capital, none of which are perfect substitutes, and technology evolves at the sector-factor cell level. Using the model we infer technologies from US data over 1960-2017. We find sector-specific routine labor augmenting technological change to be crucial. It is the most important driver of sectoral differences, and has a large and increasing contribution to aggregate labor productivity growth. Neither capital accumulation nor the occupational employment structure within sectors explains much of the sectoral differences.
    Date: 2019

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