nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒05‒31
sixteen papers chosen by
Marc Klemp
University of Copenhagen

  1. The Industrial Revolution and the Great Divergence: Recent Findings from Historical National Accounting By Broadberry, Stephen N
  2. The Economic Impact of the Black Death By Jedwab, Remi; Johnson, Noel; Koyama, Mark
  3. Unreal wages? Real income and economic growth in England, 1260-1850 By Humphries, Jane; Weisdorf, Jacob
  4. The Race between Population and Technology: Real wages in the First Industrial Revolution By Crafts, Nicholas; Mills, Terence C
  5. Economic Growth in Sub-Saharan Africa, 1885-2008 By Broadberry, Stephen N; Gardner, Leigh
  6. Gender and Culture By Giuliano, Paola
  7. Accounting for the Great Divergence: Recent findings from historical national accounting By Stephen Broadberry
  8. Engineering Growth By Maloney, William F; Valencia Caicedo, Felipe
  9. The Long Shadow of the Spanish Civil War By Tur-Prats, Ana; Valencia Caicedo, Felipe
  10. Is the Export-led Growth Hypothesis Valid for India? Another Look at the Evidence By Sanu, Md Sahnewaz
  11. Cash Crops, Print Technologies and the Politicization of Ethnicity in Africa By Pengl, Yannick; Roessler, Philip; Rueda, Valeria
  12. Climate, diseases, and the origins of corruption By Vu, Trung V.
  13. Nepotism vs. Intergenerational Transmission of Human Capital in Academia (1088--1800) By de la Croix, David; Goñi, Marc
  14. Growth with Deadly Spillovers By Pietro F. Peretto; Simone Valente
  15. Names, diversity and innovation By Kremer, Anna
  16. Culture, Institutions and Social Equilibria: A Framework By Daron Acemoglu; James A. Robinson

  1. By: Broadberry, Stephen N
    Abstract: Recent work in historical national accounting is surveyed, focusing on the Industrial Revolution and the Great Divergence. Eighteenth century Britain was the first economy to make the transition to modern economic growth, but this breakthrough built on earlier episodes of per capita income growth with declining population in the fourteenth and seventeenth centuries. Between these two episodes, the economy remained on a plateau rather than shrinking back to Malthusian subsistence as population recovered. The crude idea of a modernising Europe forging ahead of a stagnating Asia needs to be modified to take account of regional variation within both continents. The Great Divergence can be dated to the eighteenth century when the leading European region forged ahead of the leading Chinese region. This can also be seen as the culmination of a dynamic process beginning in the fourteenth century, with a reduction in the frequency and rate of shrinking.
    Date: 2020–08
  2. By: Jedwab, Remi; Johnson, Noel; Koyama, Mark
    Abstract: The Black Death was the largest demographic shock in European history. We review the evidence for the origins, spread, and mortality of the disease. We document that it was a plausibly exogenous shock to the European economy and trace out its aggregate and local impacts in both the short-run and the long-run. The initial effect of the plague was highly disruptive. Wages and per capita income rose. But, in the long-run, this rise was only sustained in some parts of Europe. The other indirect long-run effects of the Black Death are associated with the growth of Europe relative to the rest of the world, especially Asia and the Middle East (the Great Divergence), a shift in the economic geography of Europe towards the Northwest (the Little Divergence), the demise of serfdom in Western Europe, a decline in the authority of religious institutions, and the emergence of stronger states. Finally, avenues for future research are laid out
    Keywords: Black Death; Cities; Demography; institutions; Long-run Growth; Malthusian Theory; Pandemics; Urbanization
    JEL: I14 I15 J11 N00 N13 O0 O43
    Date: 2020–08
  3. By: Humphries, Jane; Weisdorf, Jacob
    Abstract: Estimates of historical workers' annual incomes suffer from the fundamental problem that they are inferred from day wage rates without knowing how many days of work day-labourers undertook per year. We circumvent the problem by building an income series based on the payments made to workers employed by the year rather than by the day. Our data suggest that earlier annual income estimates based on day wages overestimate medieval labour incomes but underestimate labour incomes during the Industrial Revolution. Our revised estimates indicate that modern economic growth began more than two centuries earlier than commonly thought and was driven by an 'Industrious Revolution'. They also suggest that the current global downturn in labour's share is not exceptional but fits within the range of historical fluctuations.
    Keywords: England; industrial revolution; real wages; industrious revolution; labour supply; living standards; malthusian model; modern economic growth
    JEL: J3 J4 J5 J6 J7 J8
    Date: 2019–10–01
  4. By: Crafts, Nicholas; Mills, Terence C
    Abstract: We investigate a structural model of demographic-economic interactions for England during 1570 to 1850. We estimate that the annual rate of population growth consistent with constant real wages was 0.4 per cent before 1760 but 1.5 per cent thereafter. We find that exogenous shocks increased population growth dramatically in the early decades of the Industrial Revolution. Simulations of our model show that if these demographic shocks had occurred before the Industrial revolution the impact on real wages would have been catastrophic and that these shocks were largely responsible for very slow growth of real wages during the Industrial Revolution.
    Keywords: Epidemic disease; industrial revolution; Malthusian checks; nuptiality; population growth; real wages; technological progress
    JEL: N13 N33
    Date: 2020–08
  5. By: Broadberry, Stephen N; Gardner, Leigh
    Abstract: Sub-Saharan Africa (SSA) is often absent from discussions of long-run growth owing to the lack of data on aggregate economic performance before 1950. This paper provides estimates of GDP per capita on an annual basis for eight African economies for the period since 1885. Although the growth experienced in most of SSA since the mid-1990s has had historical precedents, there have also been episodes of negative growth or "shrinking", so that long run progress has been limited. Despite some heterogeneity across countries, this must be seen as a disappointing performance for the region as a whole, given the possibilities of catch-up growth, although African performance was not notably worse than other non-western regions before the 1980s. Avoiding episodes of shrinking needs to be given a higher priority in understanding the transition to sustained economic growth.
    Keywords: Africa; economic growth; GDP per capita; shrinking
    JEL: E01 N37 O10
    Date: 2020–08
  6. By: Giuliano, Paola
    Abstract: This paper reviews the literature on gender and culture. Gender gaps in various outcomes (competitiveness, labor force participation, and performance in mathematics, amongst many others) show remarkable differences across countries and tend to persist over time. The economics literature initially explained these differences by looking at standard economic variables such as the level of development, women's education, the expansion of the service sector, and discrimination. More recent literature has argued that gender differences in a variety of outcomes could reflect underlying cultural values and beliefs. This article reviews the literature on the relevance of culture in the determination of different forms of gender gap. I examine how differences in historical situations could have been relevant in generating gender differences and the conditions under which gender norms tend to be stable or to change over time, emphasizing the role of social learning. Finally, I review the role of different forms of cultural transmission in shaping gender differences, distinguishing between channels of vertical transmission (the role of the family), horizontal transmission (the role of peers), and oblique transmission (the role of teachers or role models).
    Keywords: Culture; Gender; Social norms
    JEL: A13 J16 Z1
    Date: 2020–08
  7. By: Stephen Broadberry
    Abstract: As a result of recent work on historical national accounting, it is now possible to establish more firmly the timing of the Great Divergence of living standards between Europe and Asia in the eighteenth century. There was a European Little Divergence as Britain and the Netherlands overtook Italy and Spain, and an Asian Little Divergence as Japan overtook China and India. The Great Divergence occurred because Japan grew more slowly than Britain and the Netherlands starting from a lower level, and because of a strong negative growth trend in Qing dynasty China. A growth accounting framework is used to assess the contributions of labour, human and physical capital, land and total factor productivity. In addition to these proximate sources, the roles of institutions and geography are examined as the ultimate sources of the divergent growth patterns.
    Keywords: Great Divergence; living standards; measurement; explanation
    JEL: N10 N30 N35 O10 O57
    Date: 2021–03–17
  8. By: Maloney, William F; Valencia Caicedo, Felipe
    Abstract: This paper offers the first systematic historical evidence on the role of a central actor in modern growth theory-the engineer. It collects cross-country and state level data on the labor share of engineers for the Americas, and county level data on engineering and patenting for the U.S. during the Second Industrial Revolution. These are robustly correlated with income today after controlling for literacy, other types of higher order human capital (e.g. lawyers, physicians) and demand side factors, as well as after instrumenting engineering using the 1862 Land Grant Colleges program. A one standard deviation increase in engineers in 1880 accounts for 10% higher US county incomes today, while patenting capacity contributes another 10%. To document the mechanisms through which engineering density works, we show how it supported technology adoption and structural transformation across intermediate time periods, and is strongly correlated with numerous measures of the knowledge economy today.
    Keywords: Development; Engineers; growth; History; Human Capital; Innovation; patents; structural transformation; technology diffusion
    JEL: I23 N10 O11 O30
    Date: 2020–08
  9. By: Tur-Prats, Ana; Valencia Caicedo, Felipe
    Abstract: The Spanish Civil War (1936-1939) was one of the most devastating conflicts of the twentieth century, yet little is known about its long-term legacy. We show that the war had a long-lasting effect on social capital, voting behavior and collective memory. To this end we use geo-located data on historical mass graves, disaggregated modern-day survey data on trust, combined with modern electoral results. For econometric identification, we exploit deviations from the initial military plans of attack, using the historical (1931) highway network. We also employ a geographical Regression Discontinuity Design along the Aragon Front. Our results show a significant, negative and sizable relationship between political violence and generalized trust. We further scrutinize the trust results, finding negative effects of conflict on trust in institutions associated with the Civil War, but no effects when looking at trust on Post 1975 democratic institutions. We also find long-lasting results on voting during the Democratic Period (1977-2016), corresponding to the sided political repression implemented in the Aragon region. In terms of mechanisms-using a specialized survey on the Civil War, street names data and Francoist newsreels about the war-we find lower levels of political engagement and differential patterns of collective memory about this traumatic historical event.
    Keywords: Civil War; Collective Memory; conflict; History; Political Propaganda; Political Repression; Spain; Trust; voting
    JEL: D72 D74 N14 Z10
    Date: 2020–07
  10. By: Sanu, Md Sahnewaz
    Abstract: The previous studies on the export-led growth hypothesis in India have yielded mixed and inconclusive results. This study explores the dynamic relationship between real exports and real economic growth for India in a multivariate framework by including ‘terms of trade’ as an additional variable for the period 1980-2017. Unlike most of the previous studies, this study employs the ARDL bounds testing approach and Toda-Yamamoto version of modified Granger causality test to examine this linkage. The results of the bound tests indicate that there is a stable long-run relationship between the variables when economic growth proxied by GDP growth is the dependent variable. Further, the results of the modified Granger causality test suggest that there is unidirectional causal flow from exports to economic growth and from terms of trade to economic growth without any feedback. The study, therefore, provides further evidence that growth in exports stimulate economic growth in India while there is no evidence of growth-driven export.
    Keywords: Export-led growth; terms of trade; ARDL bounds test, Toda-Yamamoto; causality; GDP; India
    JEL: C32 C51 F13 F14 F43 F63 O19
    Date: 2019–07–03
  11. By: Pengl, Yannick; Roessler, Philip; Rueda, Valeria
    Abstract: What are the origins of the ethnic landscapes in contemporary states? Drawing on a pre-registered research design, we test the impact of dual socioeconomic revolutions that spread across Africa in the 19th and 20th centuries - export agriculture and print technologies. We argue these changes transformed ethnicity via their effects on politicization and boundary-making. Print technologies strengthened imagined communities, leading to more salient yet porous-ethnic identities. Cash crop endowments increased groups' mobilizational potential but with more exclusionary boundaries to control agricultural rents. Using historical data on cash crops and African language publications, we find that groups exposed to these historical forces are more likely to be politically relevant in the post-independence period, and their members report more salient ethnic identities. We observe heterogenous effects on boundary-making as measured by inter-ethnic marriage; relative to cash crops, printing fostered greater openness to assimilate linguistically-related outsiders. Our findings not only illuminate the historical sources of ethnic politicization, but mechanisms shaping boundary formation.
    Keywords: Africa; Agriculture; Colonialism; Ethnicity; Language; Missions
    JEL: N47 N57 O13 O43 Z12 Z13
    Date: 2020–08
  12. By: Vu, Trung V.
    Abstract: It has been commonly observed that tropical countries tend to suffer from intense corruption and underdevelopment. This study provides an explanation for this long-standing disparity across the world based on variation in the intensity of ultraviolet radiation (UV-R). The central hypothesis is that UV-R is positively associated with the (historical) prevalence of eye diseases, which significantly shortens work-life expectancy as a skilled worker. This helps shape the worldwide distribution of corruption by affecting the incumbents’ window of opportunity. Using data for up to 139 countries, I consistently find empirical support for the positive relationship between UV-R and corruption. The main findings withstand accounting for numerous alternative explanations for international differences in corruption levels. Employing individual-level data from the World Values Survey, I document suggestive evidence that exposure to UV-R is linked to surveyed respondents’ tolerance towards corrupt activities. Furthermore, a subnational analysis for China lends credence to the cross-country evidence.
    Keywords: corruption,climate,diseases,ultraviolet radiation,comparative prosperity
    JEL: O11 O43 O57 Q54
    Date: 2021
  13. By: de la Croix, David; Goñi, Marc
    Abstract: We argue that the waning of nepotism in academia bolstered scientific production in pre-industrial Europe. We build a database of families of scholars (1088-1800), measure their scientific output, and develop a general method to disentangle nepotism from inherited human capital -two determinants of occupational persistence. This requires jointly addressing measurement error in human capital proxies and sample selection bias arising from nepotism. Our method exploits multi-generation correlations together with parent-child distributional differences to identify the structural parameters of a first-order Markov process of human capital transmission with nepotism. We find an intergenerational human capital elasticity of 0.59, higher than that suggested by parent-child elasticities, yet lower than multi-generation estimates ignoring nepotism. On average, 16 percent of scholars' sons achieved their position because of nepotism. Nepotism was lower in science than in law and in Protestant than in Catholic institutions, and declined during the Scientific Revolution and the Enlightenment---two periods of buoyant scientific advancement.
    Keywords: human capital transmission; intergenerational mobility; Nepotism; pre-industrial Europe; university scholars; Upper-Tail Human Capital
    JEL: C31 E24 J1
    Date: 2020–08
  14. By: Pietro F. Peretto (Duke University); Simone Valente (University of East Anglia)
    Abstract: Pollution is one of the world's primary causes of premature death, but macroeconomic analysis largely neglects the existence of such negative externality. We build a tractable multi-sector growth model where innovations raise productivity, a polluting primary sector exploits natural resources, emissions increase mortality, and fertility is endogenous. The response of the mortality rate to changes in population size is generally ambiguous and often non-monotonic, and reflects a precise equilibrium relationship that combines emission intensity, dilution e¤ects and labor reallocation e¤ects caused by technology. Deadly spillovers a¤ect welfare through multiple channels - including market-size e¤ects - and create additional steady states, including mortality traps that undermine development in less populated resource-rich countries even for low emission elasticities. Emission taxes yield double dividends in terms of income and population capacity, whereas subsidies to primary production reduce potential population and may trigger population implosion especially if combined with new discoveries of polluting primary resources.
    Keywords: Endogenous Growth, Environmental Externalities, Mortality
    JEL: O12 O44 Q56
    Date: 2021–05–28
  15. By: Kremer, Anna
    Abstract: Diversity of a country is often measured by the amount and spread of nationalities that live there. But also within a country, regions vary in their traditions and culture. Cultural homogeneity within communities is mixed up by (internal) migration, that, like international migration, increases diversity of a place. In a novel approach I therefore look at diversity in German municipality associations measured by different family names and investigate the effect it has on the number of generated patents. I show that cultural diversity and openness of a place affect its economic performance positively in terms of innovation also when referring to intra-country differences.
    Keywords: cultural diversity,innovation,openness,phonebook,patents,local level,Germany,kulturelle Diversität,Innovation,Offenheit,Telefonbuch,Patente,lokal,Deutschland
    JEL: O31 R12 Z10 J61 O1
    Date: 2021
  16. By: Daron Acemoglu; James A. Robinson
    Abstract: This paper proposes a new framework for studying the interplay between culture and institutions. We follow the recent sociology literature and interpret culture as a \repertoire", which allows rich cultural responses to changes in the environment and shifts in political power. Specifically, we start with a culture set, which consists of attributes and the feasible connections between them. Combinations of attributes produce cultural configurations, which provide meaning, interpretation and justification for individual and group actions. Cultural figurations also legitimize and support different institutional arrangements. Culture matters as it shapes the set of feasible cultural figurations and via this channel institutions. Yet, changes in politics and institutions can cause a rewiring of existing attributes, generating very different cultural configurations. Cultural persistence may result from the dynamics of political and economic factors - rather than being a consequence of an unchanging culture. We distinguish cultures by how fluid they are - whereby more fluid cultures allow a richer set of cultural configurations. Fluidity in turn depends on how specific (vs. abstract) and entangled (vs. free-standing) attributes in a culture set are. We illustrate these ideas using examples from African, England, China, the Islamic world, the Indian caste system and the Crow. In all cases, our interpretation highlights that culture becomes more of a constraint when it is less fluid (more hardwired), for example because its attributes are more specific or entangled. We also emphasize that less fluid cultures are not necessarily "bad cultures", and may create a range of benefits, though they may reduce the responsiveness of culture to changing circumstances. In many instances, including in the African, Chinese and English cases, we show that there is a lot of fluidity and very different, almost diametrically-opposed, cultural configurations are feasible, often compete with each other for acceptance and can gain the upper hand depending on political factors.
    JEL: P10 P16 P50
    Date: 2021–05

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