nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒07‒20
eight papers chosen by
Marc Klemp
University of Copenhagen

  1. Historical Natural Experiments: Bridging Economics and Economic History By Cantoni, Davide; Yuchtman, Noam
  2. The Cultural Origin of Saving Behavior By Costa Font, Joan; Giuliano, Paola; Ozcan, Berkay
  3. The Origins of the Division of Labor in Pre-modern Times By Emilio Depetris-Chauvin; Ömer Özak
  4. Earthquakes and Economic Growth By Stephanie Lackner
  5. Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis By Matthew E Khan; Kamiar Mohaddes; Ryan N.C. Ng; Hashem Pesaran; Mehdi Raisse
  6. Family Planning and Development: Aggregate Effects of Contraceptive Use By Cavalcanti, Tiago; Kocharkov, Georgi; Santos, Cezar
  7. Italy and the Little Divergence in Wages and Prices: New Data, New Results By Rota, Mauro; Weisdorf, Jacob
  8. Migrants' Remittances and inclusive growth in sub-Saharan Africa By Narcisse Cha'ngom; Georges Tamokwe P.; Edgard Manga

  1. By: Cantoni, Davide; Yuchtman, Noam
    Abstract: The analysis of historical natural experiments has profoundly impacted economics research across fields. In this chapter we trace the development and increasing application of the methodology, both from the perspective of economic historians and from the perspective of economists in other subdisciplines. We argue that the historical natural experiment represents a methodological bridge between economic history and other fields: historians are able to use the cutting edge identification strategies emphasized by applied microeconomists; economists across subfields are able to scour history for useful identifying variation; development and growth economists are able to trace the historical roots of contemporary outcomes, and to identify the ultimate causes of economic growth. Differences in fields suggest differences in scholars' aims of studying historical natural experiments. We propose a taxonomy of three primary motives that reflect priorities in different fields: historians aim to understand causal processes within specific settings. Economists across fields aim to identify "clean" historical events (in whatever context) to test hypotheses of theoretical interest or estimate causal parameters. And, growth and development economists aim to identify past variation that can be causally linked to contemporary outcomes of interest. We summarize important contributions made by research in each category. Finally, we close with a brief discussion of challenges facing each category of work.
    Keywords: causal inference; Historical development; Natural Experiments; Persistence
    JEL: B00 N00 N01 N1 O10
    Date: 2020–02
  2. By: Costa Font, Joan; Giuliano, Paola; Ozcan, Berkay
    Abstract: Traditional economic interpretations have not been successful in explaining differences in saving rates across countries. One hypothesis is that savings respond to cultural specific social norms. A seminal paper in economics (1) however did not find any effect of culture on savings. We revisit this evidence using a novel dataset, which allows us to study the saving behavior of up to three generations of immigrants in the United Kingdom. Against the backdrop of existing evidence, we find that cultural preferences are an important explanation for cross-country differences in saving behavior, and their relevance persists up to three generations.
    Keywords: Culture; Saving
    JEL: D0 Z1
    Date: 2020–02
  3. By: Emilio Depetris-Chauvin (Pontificia Universidad Católica de Chile); Ömer Özak (Southern Methodist University)
    Abstract: This research explores the historical roots of the division of labor in pre-industrial societies. Exploiting a variety of identification strategies and a novel ethnic level dataset combining geocoded ethnographic, linguistic and genetic data, it shows that higher levels of intra-ethnic diversity were conducive to economic specialization in the pre-industrial era. The findings are robust to a host of geographical, institutional, cultural and historical confounders, and suggest that variation in intra-ethnic diversity is a key predictor of the division of labor in pre-industrial times.
    Keywords: Economic Comparative Development, Division of Labor, Economic Specialization, Intra-Ethnic Diversity, Cultural Diversity, Population Diversity, Genetic Diversity, Linguistic Diversity, Serial Founder Effect
    JEL: D74 F10 F14 J24 N10 O10 O11 O12 O40 O43 O44 Z10 Z13
    Date: 2020–07
  4. By: Stephanie Lackner
    Abstract: Natural disasters are known to have devastating immediate impacts, but their long-run effect on economic growth is not well understood. For the natural hazard of earthquakes, this paper provides the first global empirical study on this topic that applies a measure of the exogenous physical hazard responsible for earthquake impacts, earthquake ground shaking. I exploit the random within-country year-to-year variation of shaking to identify the causal effect of earthquakes on economic growth. To construct a panel dataset with country-year observations of earthquake exposure and socioeconomic variables, I combine the universe of relevant earthquake ground shaking data from 1973 to 2015 with country-level World Bank indicators. I find negative long-run growth impacts for an average country comparable with recent findings for climate related natural disasters. A typical earthquake reduces GDP per capita by 1.6% eight years later, with substantial heterogeneity by country categories. In particular, low and middleincome countries experience the greatest long-run economic damages while high-income countries may even experience some positive “building back better†effects. Based on an analysis of alternative spatial aggregation approaches, I find earthquake impacts are driven by local high-intensity events rather than spatially diffuse exposure to lower intensity shaking.
    Date: 2018–12
  5. By: Matthew E Khan (Department of Economics, University of Southern California); Kamiar Mohaddes (Faculty of Economics, University of Cambridge); Ryan N.C. Ng (Faculty of Economics, University of Cambridge); Hashem Pesaran (University of Southern California and Trinity College); Mehdi Raisse (IMF)
    Keywords: Climate change, economic growth, adaptation, counterfactual analysis.
    JEL: C33 O40 O44 O51 Q51 Q54
    Date: 2019–07
  6. By: Cavalcanti, Tiago; Kocharkov, Georgi; Santos, Cezar
    Abstract: What is the role of family planning interventions on fertility, savings, human capital investment, and development? To examine this, endogenous unwanted fertility is embedded in an otherwise standard quantity-quality overlapping generations model of fertility and growth. The model features costly fertility control and families can (partially) insure against a fertility risk by using costly modern contraceptives. In the event of unexpected pregnancies, households can also opt to abort some pregnancies, at a cost. Given the number of children born, parents decide how much education to provide and how much to save out of their income. We fit the model to Kenyan data, implement several family planning policies and decompose their aggregate effects. Our results suggest that with a small government budget (say, up to 0.5 percent of GDP), family planning interventions might be more cost-effective in improving longrun living standards than policies that subsidise basic education.
    Keywords: Abortion; Contraception; education; Income per capita
    JEL: E24 I15 J13 O11
    Date: 2020–01
  7. By: Rota, Mauro; Weisdorf, Jacob
    Abstract: We present new and improved long-run wage indices for skilled and unskilled construction workers in Italy. Our data avoid multiple issues pestering earlier wage indices, including regional shifts and sub-contractor mark-ups, making our new indices the first consistent day-wage sequences for early-modern Italy. Our improved wages, obtained from the construction of the St Peter's Church in Rome, consolidate the traditional view that urban Italy began a prolonged economic downturn during the mid-17th century. The wages also offer sustenance to the idea that epidemics instigated the country's long decline. Comparison with newly downscaled construction wages for London show that Roman workers, despite Italy's downturn, out-earned their early-modern English counterparts. This suggests that high wages alone were not enough to trigger industrialisation.
    Keywords: Construction; Divergence; industrial revolution; living standards; prices; wages
    JEL: I3 J3 J4 J8 N33
    Date: 2020–01
  8. By: Narcisse Cha'ngom (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Georges Tamokwe P. (ESSEC - Université de Douala (Ecole supérieure des sciences économiques et commerciales)); Edgard Manga (Université de Douala [Cameroon])
    Abstract: This study assesses the contribution of remittances to the improvement of inclusive growth in sub-Saharan Africa, taking into account the role of institutions. Based on panel data of 24 countries for the period 1985-2014, results show that remittances positively contribute to the inclusiveness of economic growth in sub-Saharan Africa. Controlling for quality of institutions, it came out that poor institutions rather hamper this contribution in the short run with the risk of neutralizing it in the long run.
    Keywords: remittances,inclusive growth,institutions,Sub-Saharan Africa
    Date: 2020–06–12

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