nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒03‒22
seven papers chosen by
Marc Klemp
University of Copenhagen

  1. Immigrants and the making of America By Sequeira, Sandra; Nunn, Nathan; Qian, Nancy
  2. Endogenous Education and Long-Run Factor Shares By Gene M Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
  3. How Does Automation Affect Economic Growth and Income Distribution in a Two-Class Economy? By Sasaki, Hiroaki; Hagiwara, Takefumi; Pham, Huong; Fukatani, Noriki; Ogawa, Shogo; Okahara, Naoto
  4. Inequality, Openness, and Growth through Creative Destruction By Ulrich Schetter; Adrian Jäggi; Maik T. Schneider
  5. Childcare Support and Economic Growth in an Ultra-Declining Birthrate Society By Miyake, Yusuke
  6. The Economic Impact of Weather and Climate By Richard S.J. Tol
  7. Environmental policy and human capital inequality: A matter of life and death By Karine Constant

  1. By: Sequeira, Sandra; Nunn, Nathan; Qian, Nancy
    Abstract: We study the effects of European immigration to the U.S. during the Age of Mass Migration (1850–1920) on economic prosperity. Exploiting cross-county variation in immigration that arises from the interaction of fluctuations in aggregate immigrant flows and of the gradual expansion of the railway network, we find that counties with more historical immigration have higher income, less poverty, less unemployment, higher rates of urbanization, and greater educational attainment today. The long-run effects seem to capture the persistence of short-run benefits, including greater industrialization, increased agricultural productivity, and more innovation.
    Keywords: Economic development; Historical persistence; Immigration
    JEL: B52 F22 O10 O40
    Date: 2020–01
  2. By: Gene M Grossman (Princeton University); Elhanan Helpman (Harvard University); Ezra Oberfield (Princeton University); Thomas Sampson (London School of Economics)
    Abstract: We study the determinants of factor shares in a neoclassical environment with capital-skill complementarity and endogenous education. When more physical capital raises the marginal product of skills relative to that of raw labor, an increase in a broad measure of embodied human capital raises the capital share in national income for any given rental rate. When education is chosen optimally, a dynamic equilibrium is characterized by an inverse relationship between the level of human capital and both the rental rate on capital and the difference between the interest rate and the growth rate of wages. As a consequence,estimates of the elasticity of substitution that fail to account for levels of human capital will be biased upward. We develop a model with overlapping generations, ongoing increases in educational attainment, and technology-driven neoclassical growth, and show that for a class of production functions with capital-skill complementarity, a balanced growth path exists and is characterized by an inverse relationship between the rates of capital- and labor-augmenting technological progress and the capital share in national income.
    Keywords: neoclassical growth, balanced growth, human capital, education, techno-logical progress, capital-skill complementarity, labor share, capital share
    JEL: E25 I26
    Date: 2020–09
  3. By: Sasaki, Hiroaki; Hagiwara, Takefumi; Pham, Huong; Fukatani, Noriki; Ogawa, Shogo; Okahara, Naoto
    Abstract: This study uses a growth model with automation technology to consider two classes---workers and capitalists---and investigates how advances in automation technology affect economic growth and income distribution. In addition to the two production factors labor and traditional capital, we consider automation capital as the third production factor. We also introduce Pasinetti-type saving functions into the model to investigate how the difference between the capitalists' and workers' saving rates affect economic growth and income distribution. When the capitalists' saving rate is higher than a threshold level, per capita output exhibits endogenous growth irrespective of the workers' savings rate. In this case, the income gap between workers and capitalists widens over time. When the capitalists' saving rate is less than the threshold level, two different long-run states occur depending on the workers' saving rate: the capitalists' own automation capital share approaches a constant, and it approaches zero. In both cases, the per capita output growth is zero and the income gap between the two classes becomes constant over time.
    Keywords: automation technology; endogenous growth; income distribution
    JEL: E25 O11 O33 O41
    Date: 2021–03–07
  4. By: Ulrich Schetter (Center for International Development at Harvard University); Adrian Jäggi; Maik T. Schneider
    Abstract: We examine how inequality and openness interact in shaping the long-run growth prospects of developing countries. To this end, we develop a Schumpeterian growth model with heterogeneous households and non-homothetic preferences for quality. We show that inequality affects growth very differently in an open economy as opposed to a closed economy: If the economy is close to the technological frontier, the positive demand effect of inequality on growth found in closed-economy models may be amplified by international competition. In countries with a larger distance to the technology frontier, however, rich households satisfy their demand for high quality via importing, and the effect of inequality on growth is smaller than in a closed economy and may even be negative. We show that this theoretical prediction holds up in the data, both when considering growth in export quality at the industry level and when considering growth in GDP per capita.
    Keywords: creative destruction, distance to frontier, dual economy, growth, inequality, infant industry protection, non-homothetic preferences, trade openness
    JEL: D30 F43 O15 O30 O40
    Date: 2021–02
  5. By: Miyake, Yusuke
    Abstract: This paper analyzes weather public capital investment oor childcare support maximize growth rate in an ultra-declining birthrate society using a labor augmented model with the public capital. We clarify the global stability of the private capital-public capital ratio to the steady state. In addition, we analyze the effect of increasing expenditure share of a tax revenue on the economic growth. The result of this analysis shows that increased share on the public capital investment brings the higher economic growth. This means that if all tax revenue is allocated to the public capital investment, the growth rate will be maximized.
    Keywords: Public capital investment・ Childcare support・ Income tax・ Economic growth
    JEL: D91 E62 O41
    Date: 2021–03–05
  6. By: Richard S.J. Tol (University of Sussex, Vrije Universiteit, Tinbergen Institute, CESifo, Colorado School of Mines)
    Abstract: I propose a new conceptual framework to disentangle the impacts of weather and climate on economic activity and growth: A stochastic frontier model with climate in the production frontier and weather shocks as a source of inefficiency. I test it on a sample of 160 countries over the period 1950-2014. Temperature and rainfall determine production possibilities in both rich and poor countries; positively in cold countries and negatively in hot ones. Weather anomalies reduce inefficiency in rich countries but increase ineciency in poor and hot countries; and more so in countries with low weather variability. The climate effect is larger that the weather effect.
    Keywords: Climate Change, Weather Shocks, Economic Growth, Stochastic Frontier Analysis
    JEL: D24 O44 O47 Q54
    Date: 2021–03
  7. By: Karine Constant (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel)
    Abstract: This paper analyzes the economic implications of an environmental policy when we account for the life expectancy of heterogeneous agents. In a framework in which everyone su ers from pollution but health status also depends on individual human capital, we find that the economy may be stuck in a trap in which inequality rises steadily, especially when the initial pollution intensity of production is too high. We emphasize that such inequality is in the long run costly for the economy in terms of health and growth. Therefore, we study whether a tax on pollution associated with an investment in pollution abatement can be used to address this situation. We show that a stricter environmental policy may allow the economy to escape from the inequality trap while enhancing the long-term growth rate when the initial inequality in human capital is not too large.
    Keywords: Endogenous Growth,Environmental Policy,Human Capital,Inequality,Longevity
    Date: 2021–02–22

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