nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒06‒22
eleven papers chosen by
Marc Klemp
University of Copenhagen

  1. Ancestral Norms, Legal Origins, and Female Empowerment By Abel Brodeur; Marie Christelle Mabeu; Roland Pongou
  2. Bitter Sugar: Slavery and the Black Family By Graziella Bertocchi; Arcangelo Dimico
  3. The Power of Religion By Bentzen, Jeanet; Gokmen, Gunes
  4. Driven by Institutions, Shaped by Culture: Human Capital and the Secularization of Marriage in Italy By de la Croix, David; Mariani, Fabio; Mercier, Marion
  5. Measuring the Spanish Flu’s Economic Impact Using Historical Macroeconomic Statistics By gregory, paul
  6. Inequality and Panel Income Changes: Conditions for Possibilities and Impossibilities By Robert Duval-Hernandez; Gary S. Fields; George H. Jakubson
  7. Slow Real Wage Growth during the Industrial Revolution: Productivity Paradox or Pro-Rich Growth? By Crafts, Nicholas
  8. Debt and growth: Historical evidence By Breuer, Christian; Colombier, Carsten
  9. Financial Development and Governance: A Panel Data Analysis Incorporating Cross-sectional Dependence By Khalid, Usman; Shafiullah, Muhammad
  10. An Exploratory Study of the Causality between Internet Use, Innovation, and Economic Growth in Tunisia: An indispensable Case Analysis By Bakari, Sayef; Tiba, Sofien; Mabrouki, Mohamed
  11. Past production constrains current energy demands: persistent scaling in global energy consumption and implications for climate change mitigation By Timothy J. Garrett; Matheus R. Grasselli; Stephen Keen

  1. By: Abel Brodeur (Department of Economics, University of Ottawa); Marie Christelle Mabeu (Department of Economics, University of Ottawa, Ottawa, ON); Roland Pongou (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: A large literature documents persistent impacts of formal historical institutions. However, very little is known about how these institutions interact with ancestral traditions to determine long-term economic and social outcomes. This paper addresses this question by studying the persistent effect of legal origins on female economic empowerment in sub-Saharan Africa, and how ancestral cultural norms of gender roles may attenuate or exacerbate this effect. Taking advantage of the arbitrary division of ancestral ethnic homelands across countries with different legal origins, we directly compare women among the same ethnic group living in civil law countries and common law countries. We find that, on average, women in common law countries are significantly more educated, are more likely to work in the professional sector, and are less likely to marry at young age. However, these effects are either absent or significantly lower in settings where ancestral cultural norms do not promote women's rights and empowerment. In particular, we find little effect in bride price societies, patrilocal societies, and societies where women were not involved in agriculture in the past. Our findings imply that to be optimal, the design of formal institutions should account for ancestral traditions.
    Keywords: Legal Origins, Ancestral Norms, Women's Empowerment, Gender Roles.
    JEL: D03 I25 J16 N37
    Date: 2020
  2. By: Graziella Bertocchi; Arcangelo Dimico
    Abstract: We empirically assess the effect of historical slavery on the African American family structure. Our hypothesis is that female single headship among blacks is more likely to emerge in association not with slavery per se, but with slavery in sugar plantations, since the extreme demographic and social conditions prevailing in the latter have persistently affected family formation patterns. By exploiting the exogenous variation in sugar suitability, we establish the following. In 1850, sugar suitability is indeed associated with extreme demographic outcomes within the slave population. Over the period 1880-1940, higher sugar suitability determines a higher likelihood of single female headship. The effect is driven by blacks and starts fading in 1920 in connection with the Great Migration. OLS estimates are complemented with a matching estimator and a fuzzy RDD. Over a linked sample between 1880 and 1930, we identify an even stronger intergenerational legacy of sugar planting for migrants. By 1990, the effect of sugar is replaced by that of slavery and the black share, consistent with the spread of its influence through migration and intermarriage, and black incarceration emerges as a powerful mediator. By matching slaves' ethnic origins with ethnographic data we rule out any infuence of African cultural traditions.
    Keywords: Black family, slavery, sugar, migration, culture
    JEL: J12 J47 N30 O13 Z10
    Date: 2020–05
  3. By: Bentzen, Jeanet; Gokmen, Gunes
    Abstract: Why does religion play a central role in some societies? Rulers have historically used religion to legitimize their power, which incentivized them to embed religion into institutions. This institutionalization of religion thus may explain why religion persists despite modernization. Using data across 1265 premodern societies and 176 countries, we provide evidence supporting divine legitimization and the resulting institutionalization of religion. For identification, we exploit exogenous variation in the incentives to employ religion for power purposes. We document two implications: countries that relied more on divine legitimization are more autocratic today and their populace more religious.
    Keywords: democracy; Divine Legitimization; High Gods; Institutionalization of Religion; Persistence of Religion; religion; Religiosity; Religious Laws; Religious Legitimization; Stratification
    JEL: O1 P48 Z12 Z13
    Date: 2020–05
  4. By: de la Croix, David; Mariani, Fabio; Mercier, Marion
    Abstract: We study the mechanisms behind the process of secularization and how they relate to human capital accumulation. We find a robust, positive correlation between human capital and secularization in marriage. Secularization is more responsive to education (i) in the presence of high levels of social capital and/or weak family ties, and (ii) following the legalization of divorce in 1971. To understand the mechanisms behind these results, we develop a theory of religiosity, education, and marriage choices, in which individuals who divorce face a relatively higher return to human capital compared to religious capital. Our theory suggests that a positive association between human capital and secularization can emerge across individuals (and localities) even in the absence of a direct effect of education on religiosity. Consistent with our empirical findings, the legalization of divorce plays a central role in unleashing the forces of secularization in marriage, and different patterns in the education--secularization nexus can be traced to different systems of incentives, as shaped by civic capital and family ties.
    Keywords: Divorce; Human Capital; Marriage; Secularization
    JEL: I25 J12 N34 O4 Z12
    Date: 2020–05
  5. By: gregory, paul
    Abstract: The Spanish Flu epidemic of 1918-19 is the closest historical parallel to today’s Coronavirus pandemic. Its demographic aspects have been studied in detail, but the huge economic losses of Coronavirus have motivated researchers to pin down the economic costs of the Spanish Flu. The growing literature focuses on the US and uses city and state data to extract its costs with contradictory results. This paper uses historical statistics on GDP and industrial production to assess the economic costs of the Spanish Flu on the US, European, and UK economies. We find relatively small economic effects with the possible exception of the UK. Pandemics affect economic activity through human capital losses, voluntary changes in behavior to avoid infection, and state-decreed measures. The first two channels can produce economic effects similar to a substantial recession, but the third channel is required for the enormous economic losses we face today.
    Keywords: Spanish Flu, Angus Maddison, Kuznets, NPI
    JEL: N12 N13
    Date: 2020–05–04
  6. By: Robert Duval-Hernandez (Open University of Cyprus); Gary S. Fields (Cornell University); George H. Jakubson (Cornell University)
    Abstract: The question of who benefits from economic growth is most commonly assessed by using anonymous data from comparable cross sections to calculate changes in income inequality. An alternative is to utilize longitudinal data and assess the pattern of panel income changes. In this paper, we derive precise theoretical conditions reconciling various measures of rising/falling inequality together with various measures of convergent/divergent panel income changes. We have four main findings: i) for a large number of inequality indices, as well as for Lorenz curves, we derive precise conditions for rising inequality and convergent panel income changes to coexist, ii) we demonstrate that in order to observe both rising inequality and panel convergence, income changes in the panel have to be ``large'' (and in the right direction), where the meaning of ``large'' varies depending on the particular regression under analysis, iii) for a large number of inequality indices, as well as for Lorenz curves, we show that it is impossible to have both falling inequality together with divergent panel income changes in shares or in proportions, iv) we find a precise relationship between convergence/divergence of panel income changes in dollars on the one hand and the coefficient of variation, the correlation coefficient be- tween initial and final incomes, and the aggregate economic growth rate on the other.
    Keywords: Income Inequality; Economic Mobility; Panel Income Changes.
    JEL: J31 D63
    Date: 2020–06
  7. By: Crafts, Nicholas
    Abstract: I examine the implications of technological change for productivity, real wages and factor shares during the industrial revolution using recently available data. This shows that real GDP per worker grew faster than real consumption earnings but labour's share of national income changed little as real product wages grew at a similar rate to labour productivity in the medium term. The period saw modest TFP growth which limited the growth both of real wages and of labour productivity. Economists looking for an historical example of rapid labour-saving technological progress having a seriously adverse impact on labour's share must look elsewhere.
    Keywords: Engels' pause; Factor shares; industrial revolution; labour productivity; real wages
    JEL: N13 O33 O47
    Date: 2020–05
  8. By: Breuer, Christian; Colombier, Carsten
    Abstract: In this present paper, we examine the relationship between public debt and economic growth in a large historical panel dataset of 17 OECD economics over the period from 1870 to 2016. In contrast, the relevant literature focuses on the postWW-II period. Several empirical studies provide evidence in support of the 'conventional view' that public debt is adversely associated with economic growth. We show that the relationship between government debt and per-capita GDP growth is neither statistically significant and robust nor unambiguous regarding the sign. While our baseline regressions support the 'conventional view', particularly in the aftermath of World War II, these results are not robust to alternative specifications. This holds for a linear as well as a non-linear relationship between public debt and economic growth. Our outcome suggests that politicians should exercise great caution in using empirical studies on the debt-growth nexus as a guidance for fiscal policy and that further in-depth analyses are needed.
    Keywords: Government debt,economic growth,historical dataset,panel regressions,robustness analysis,Staatsschulden,Wirtschaftswachstum,historischer Datensatz,Panelregressionen,Sensitivitätsanalyse
    JEL: E62 H63 C23
    Date: 2020
  9. By: Khalid, Usman; Shafiullah, Muhammad
    Abstract: This study investigates bidirectional causality between governance and financial development using panel data of 101 countries from 1984 to 2013. The financial development–governance nexus is explored using econometric methods robust to cross-sectional dependence, and the relationship between different levels of development and openness is analyzed. Long-run equation estimates show clear evidence that financial development positively affects governance, and this positive impact is found to be robust to three different measures of governance. Further analysis shows that improving governance quality has positive effects on financial development, while Granger causality tests demonstrate bidirectional causality between financial development and the governance measures. Last, the impact of financial development on governance is dependent on a country’s level of development and openness. These findings underscore the crucial role of financial development in bringing about good governance reforms and economic growth that, in turn, can further develop the financial sector. As such, a symbiotic and synergistic relationship can persist between good governance, growth, and financial development. The findings provide significant motivation for policymakers to encourage openness and financial sector development to lift the standard of living, especially in emerging economies.
    Keywords: financial development; governance; cross-sectional dependence; economic growth; bidirectional causality; globalization
    JEL: F6 G10 G38 O16 O43
    Date: 2020–05–04
  10. By: Bakari, Sayef; Tiba, Sofien; Mabrouki, Mohamed
    Abstract: In line with the exogenous and endogenous theory coupled with the seminal Schumpeterian contribution, we attempt to investigate the impact of the use of internet and innovation on economic growth in the case of the Tunisian economy. For this purpose, we employ the ARDL bounds testing methodology over the period 1985-2018. In the short-run, our empirical facts outline the absence of a significant effect of innovation on economic growth. Also, our empirical findings reported that the internet stimulates economic growth. However, in the long-run, our empirical findings pointed out the presence of the negative impact of the innovation and the use of internet on economic growth. Moreover, our results show a significant positive impact of the internet and economic growth on innovation in the long-run. Finally, our results show a negative impact of economic growth on the use of the internet. However, the results display a significant positive impact of innovation on the use of the internet. From these perspectives, the Tunisian authorities should take seriously the innovation and the potential of the use of the internet which can help the economy to be modernized, diversified, and robust to create new jobs and to find new markets and new strategic partners, and new opportunities.
    Keywords: Innovation; Use of the Internet; Economic Growth; ARDL Bounds testing.
    JEL: O2 O31 O32 O33 O34 O38 O47 O55
    Date: 2020–03
  11. By: Timothy J. Garrett; Matheus R. Grasselli; Stephen Keen
    Abstract: Climate change has become intertwined with the global economy. Here, we describe the importance of inertia to continued growth in energy consumption. Drawing from thermodynamic arguments, and using 38 years of available statistics between 1980 to 2017, we find a persistent time-independent scaling between the historical time integral $W$ of world inflation-adjusted economic production $Y$, or $W\left(t\right) = \int_0^t Y\left(t'\right)dt'$, and current rates of world primary energy consumption $\mathcal E$, such that $\lambda = \mathcal{E}/W = 5.9\pm0.1$ Gigawatts per trillion 2010 US dollars. This empirical result implies that population expansion is a symptom rather than a cause of the current exponential rise in $\mathcal E$ and carbon dioxide emissions $C$, and that it is past innovation of economic production efficiency $Y/\mathcal{E}$ that has been the primary driver of growth, at predicted rates that agree well with data. Options for stabilizing $C$ are then limited to rapid decarbonization of $\mathcal E$ through sustained implementation of over one Gigawatt of renewable or nuclear power capacity per day. Alternatively, assuming continued reliance on fossil fuels, civilization could shift to a steady-state economy that devotes economic production exclusively to maintenance rather than expansion. If this were instituted immediately, continual energy consumption would still be required, so atmospheric carbon dioxide concentrations would not balance natural sinks until concentrations exceeded 500 ppmv, and double pre-industrial levels if the steady-state was attained by 2030.
    Date: 2020–06

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