nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒01‒04
thirteen papers chosen by
Marc Klemp
University of Copenhagen

  1. On the Origins of the Demographic Transition. Rethinking the European Marriage Pattern By Faustine Perrin
  2. Demographic Structure, Knowledge Diffusion, and Endogenous Productivity Growth By Colin Davis; Ken-ichi Hashimoto; Ken Tabata
  3. GDP Effects of Pandemics: A Historical Perspective By Maciej Stefański
  4. Directed technical change and the British Industrial Revolution By David I. Stern; John C. V. Pezzey; Yingying Lu
  5. The increasing influence of siblings in social mobility. A long-term historical view (Barcelona area, 16th-19th centuries) By Pujadas-Mora, Joana-Maria; Brea-Martinez, Gabriel
  6. Endogenous Childlessness and Stages of Development By Thomas TB Baudin; David de la Croix; Paula Eugenia Gobbi
  7. Opening the Black Box of the Danish Dairy Cooperatives: A Productivity Analysis By Sofia Henriques; Eoin McLaughlin; Paul Sharp; Xanthi Tsoukli; Christian Veddel
  8. Do the 'smart kids' catch up? Technological capabilities, globalisation and economic growth By Claudius Graebner; Philipp Heimberger; Jakob Kapeller
  9. Childless Aristocrats. Inheritance and the extensive margin of fertility* By Paula Eugenia Gobbi; Marc Goñi
  10. Redistributive Income Taxation with Directed Technical Change By Jonas Loebbing
  11. Sudden Influxes of Resource Wealth to the Economy By Fabian Mendez Ramos
  12. PUBLIC DEBT AND ECONOMIC GROWTH IN BRAZIL By António Afonso; Sérgio Gadelha; Agatha Silva
  13. Historical Instruments and Contemporary Endogenous Regressors By Gregory P. Casey; Marc P. B. Klemp

  1. By: Faustine Perrin (Lund University)
    Abstract: Why did France experience the demographic transition first? This question remains one of the greatest puzzles of economics, demography, and economic history. The French pattern is hard to reconcile with elucidations of the process as found in other countries. The present analysis goes back to the roots of the process and offers novel ways of explaining why people started to control their fertility in France and how they did so. In this paper, I track the evolution of marriage patterns to a point before the premises of the demographic transition. I identify three distinct phases. Next, I rely on exploratory methods to classify French counties based on their discriminatory features. Five profiles emerge. I discuss these profiles through the lens of the French Revolution, one of the greatest events that ever occurred in French history, which irretrievably altered its society. In particular, the results show that the fertility transition was not as linear, but more complex than previous research had argued. They show the importance of accounting for cultural factors and for individuals’ predispositions to adapt more or less quickly to societal changes. Yet cultural factors are not all. They can help to explain the timing of the transition and the choice of methods used to control fertility, but modernity and gender equality are also needed to describe the mechanisms in play behind the process.
    Keywords: Demographic Transition, European Marriage Pattern, French Revolution, Gender Equality, Women Empowerment
    JEL: J12 J13 J16 N33 O15 O18 Z12
    Date: 2020–12
  2. By: Colin Davis; Ken-ichi Hashimoto; Ken Tabata
    Abstract: This paper considers how increasing longevity and declining birth rates affect market entry and endogenous productivity growth in a two-country model of trade. In each country, the demographic transition to an older population induces a contraction in the labor force through a decline in the working-age population. Firm-level investment in process innovation generates productivity growth, and with imperfect knowledge diffusion the country with the larger labor force has a greater share of firms with higher productivity levels. In this framework, population aging reduces a country’s labor supply, share of industry, and relative productivity. If the country with the smaller labor force experiences population aging, knowledge spillovers improve and the rate of productivity growth rises, as the level of market entry falls. Alternatively, population aging in the country with the larger labor force weakens knowledge spillovers and lowers the rate of productivity growth, but has an ambiguous affect on market entry. We show that the effects of population aging may be reversed by extending retirement age, and consider the welfare implications for demographic transition and retirement age extension arising in our framework through a quantitative analysis based on population data for the United States and Western Europe.
    Date: 2020–12
  3. By: Maciej Stefański
    Abstract: The paper estimates dynamic effects of pandemics on GDP per capita with local projections, controlling for the effects of wars and weather conditions, using a novel dataset that covers 33 countries and stretches back to the 13th century. Pandemics are found to have prolonged and highly statistically significant effects on GDP per capita - a pandemic killing 1% of the population tends to increase GDP per capita by approx. 0.3% after about 20 years. The results are qualitatively robust to various model specifications, geographical division of the sample and an exclusion of extreme events such as the Black Death and the New World epidemics. The effects of pandemics differ from those of wars and weather, which are negative and die out quicker, in line with the neoclassical growth model.
    Keywords: pandemic, GDP, local projection, economic history, war, tree rings
    JEL: I15 N10 N30 N40 N50 O47
    Date: 2020–12
  4. By: David I. Stern; John C. V. Pezzey; Yingying Lu
    Abstract: We build a directed technical change model where one intermediate goods sector uses a fixed quantity of biomass energy (“wood”) and another uses coal at a fixed price, matching stylized facts for the British Industrial Revolution. Unlike previous research, we do not assume the level or growth rate of productivity is inherently higher in the coal-using sector. Analytically, greater initial wood scarcity, initial relative knowledge of coal-using technologies, and/or population growth will boost an industrial revolution, while the converse may prevent one forever. An industrial revolution, with eventual dominance by the coal-using sector, is the model's main dynamic outcome, but not inevitable if inter-good substitutability is high enough. Empirical calibration for 1560-1900 produces historically plausible results for changes in energy-related variables during British industrialization, and through counterfactual simulations confirms that it was the growing relative scarcity of wood caused by population growth that resulted in innovation to develop coal-using machines.
    Keywords: Economic growth, economic history, energy, coal, structural change
    JEL: N13 N73 O33 O41 Q43
    Date: 2020
  5. By: Pujadas-Mora, Joana-Maria; Brea-Martinez, Gabriel
    Abstract: Parental influence over children’s status attainment has historically been argued to be key. However, the cross-sibling influence has been scarcely studied for historical periods and for steam family societies, being the most long-lasting relationship across individuals’ lives once childhood was surpassed. We investigate how intra-generational family relationships determine the social destiny of siblings taking a long-term perspective (16th and the 19th centuries) for Barcelona and its hinterland, using the unique data compiled in the Barcelona Historical Marriage Database. This region was one of the most dynamic economic area in Southern Europe. We found the emergence of the figure of first-married siblings as determinants in the status attainment of other brothers and sisters and a decline in parental influence from the 18th century onwards for all social groups, denying a sibling competing model. This influence worked differently over time depending on sex. First-born sisters with exogamous marriages had a higher influence than first-married brothers on the social mobility of the rest of siblings along the 16th and 17th century. Conversely, from the 18th century onwards, first-married brothers had a higher ascendancy than first-married sisters. Sibship size and the siblings’ marriage order did not contribute to explain these effects. These results can be interpreted in light of an increase in life expectancy of adult population and a change in the occupational structure due to an early industrialization and in affectivity in the18th century.
    Date: 2020–12–16
  6. By: Thomas TB Baudin; David de la Croix; Paula Eugenia Gobbi
    Abstract: Abstract Although developing countries are characterized by high average fertility rates, they are as concerned by childlessness as developed countries. Beyond natural sterility, there are two main types of childlessness: one driven by poverty and another by the high opportunity cost of child-rearing. We measure the importance of the components of childlessness with a structural model of fertility and marriage. Deep parameters are identified using census data from 36 developing countries. As average education increases, poverty-driven childlessness first decreases to a minimum, and then the opportunity-driven part of childlessness increases. We show that neglecting the endogenous response of marriage and childlessness may lead to a poor understanding of the impact that social progress, such as universal primary education, may have on completed fertility. The same holds for family planning, closing the gender pay gap, and the eradication of child mortality.
    Date: 2020–02
  7. By: Sofia Henriques (Lund University); Eoin McLaughlin (University College Cork); Paul Sharp (University of Southern Denmark); Xanthi Tsoukli (University of Southern Denmark); Christian Veddel (University of Southern Denmark)
    Abstract: The rapid spread of the Danish dairy cooperatives from the 1880s until the First World War is often portrayed as a uniform wave which swept the country. We investigate this using exceptionally detailed micro-level panel data taken from the Operational Statistics of Creameries, which were published from 1898 until after the Second World War. Our database comprises 1419 creameries over the period 1898- 1945 and no less than 131 variables. We document the data, and use a simple fixed effects setup to demonstrate considerable heterogeneity in the productivity of the individual creameries both over time and across space. We conclude by suggesting reasons for this, including scale of production, accessibility of fuel, religious institutions, and more.
    Keywords: Creameries, Denmark, productivity
    JEL: N53 N54 Q13
    Date: 2020–12
  8. By: Claudius Graebner (Institute for Socio-Economics, University of Duisburg-Essen, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; ZOE Institute for future-fit Economies, Bonn, Germany); Philipp Heimberger (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; Vienna Institute for International Economic Studies (wiiw), Vienna, Austria); Jakob Kapeller (Institute for Socio-Economics, University of Duisburg-Essen, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)
    Abstract: This paper analyses the impact of technological capabilities on convergence. While looking at the relevance of differences in technological capabilities has a long tradition in economics when it comes to explaining persistent deviations in income, we provide econometric tests on the role of technology in determining convergence outcomes in a growth regression framework. We exploit recent advances in measuring technological capabilities for a global country sample over the period 1985-2014. Our results show that convergence is conditional on technological capabilities. This finding is robust to controlling for economic globalisation, resource dependence, institutional quality and other confounding factors. The initial stock of accumulated technological capabilities is one essential factor that may allow poorer countries to convergence towards higher income levels in rich countries. A successful catching-up process cannot be expected for countries lacking a sufficient stock of previously accumulated technological capabilities.
    Keywords: Economic complexity, technology, convergence, catch-up, globalisation, openness
    Date: 2020–12
  9. By: Paula Eugenia Gobbi; Marc Goñi
    Abstract: Abstract Using genealogical data of British aristocrats, we show that inheritances can affect childlessness. We study settlements, a contract restricting heirs’ powers and settling bequests for yet-to-be-born generations. Settlements reduced childlessness to the “natural” rate, ensuring aristocratic dynasties’ survival. Our estimation exploits that settlements were signed at the heir’s wedding if the family head lived until this date. Whether the heir was born after a girl provides as-good-as-random assignment into settlements. Next, we develop a theory that reproduces our findings, shows that exponential discounting cannot rationalize inheritance systems restricting heirs, and that inheritance systems can emerge endogenously when fertility concerns exist.
    Date: 2020–11
  10. By: Jonas Loebbing
    Abstract: What are the implications of (endogenous) directed technical change for the design of redistributive income taxes? I study this question in a Mirrleesian economy augmented to include endogenous technology development and adoption choices by firms. Under certain conditions, any progressive tax reform induces technical change that compresses the pre-tax wage distribution. The key intuition is that progressive tax reforms tend to increase labor supply of less skilled relative to more skilled workers, which induces firms to develop and use technologies that are more complementary to the less skilled. These directed technical change effects make the optimal tax scheme more progressive, raising marginal tax rates at the right tail of the income distribution and lowering them at the left tail. For reasonable calibrations, the impact of directed technical change on the optimal tax is quantitatively important: optimal marginal tax rates are reduced substantially for incomes below the median and increase monotonically over the bulk of the income distribution instead of being U-shaped (as in most of the previous literature).
    Keywords: optimal taxation, directed technical change, endogenous technical change, wage inequality
    JEL: H21 H23 H24 J31 O33
    Date: 2020
  11. By: Fabian Mendez Ramos
    Keywords: Energy - Energy and Natural Resources Macroeconomics and Economic Growth - Commodities Macroeconomics and Economic Growth - Economic Development Macroeconomics and Economic Growth - Economic Growth Macroeconomics and Economic Growth - Economic Theory & Research
    Date: 2020–04
  12. By: António Afonso; Sérgio Gadelha; Agatha Silva
    Abstract: This paperprovides new insights on the relationship between public debt and economic growth in Brazil. We used Granger causality tests, in multivariate and bivariate analyses using respectively VEC and ARDL methodologies, and monthly data over the period 1998:1-2019:11. We findthat: i) debt-to-GDP and GDP growth rate have a bi-directional Granger causality relationship; ii) debt can improve growth in the short run and becomesharmful in the long run; iii) GDP growth always reduces debt, both in the short and long run; iv) the dynamic between debt and growth in the long run is influenced by the inflation rate, exchange rate and the Emerging Markets Bond Index Plus(Embi+).
    Keywords: Granger causality; Vector Autoregressive;Autoregressive Distributed Lag; government debt; economic growth; Brazil.
    JEL: C32 C22 O40 H63 H69
    Date: 2020–12
  13. By: Gregory P. Casey; Marc P. B. Klemp
    Abstract: We provide a simple framework for interpreting instrumental variable regressions when there is a gap in time between the impact of the instrument and the measurement of the endogenous variable, highlighting a particular violation of the exclusion restriction that can arise in this setting. In the presence of this violation, conventional IV regressions do not consistently estimate a structural parameter of interest. Building on our framework, we develop a simple empirical method to estimate the long-run effect of the endogenous variable. We use our bias correction method to examine the role of institutions in economic development, following Acemoglu et al. (2001). We find long-run coefficients that are smaller than the coefficients from the existing literature, demonstrating the quantitative importance of our framework.
    Keywords: long-run economic development, instrumental variable regression
    JEL: C10 C30 O10 O40
    Date: 2020

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