nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒06‒14
fourteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Are genetic traits associated with riots? The political legacy of prehistorically determined genetic diversity By Vu, Trung V.
  2. Religion in Economic History: A Survey By Becker, Sascha O.; Rubin, Jared; Woessmann, Ludger
  3. Bitter Sugar: Slavery and the Black Family By Bertocchi, Graziella; Dimico, Arcangelo
  4. L'Histoire Immobile? A Reappraisal of French Economic Growth using the Demand-Side Approach, 1280-1850. By Nuvolari, Alessandro; Ridolfi, Leonardo
  5. Optimal taxes on capital in the OLG model with uninsurable idiosyncratic income risk By Krueger, Dirk; Ludwig, Alexander; Villalvazo, Sergio
  6. Immigrant Inventors and Diversity in the Age of Mass Migration By Campo, Francesco; Mendola, Mariapia; Morrison, Andrea; Ottaviano, Gianmarco
  7. Population density and economic development By José Pedro Pontes
  8. The asymmetric effect of internet access on economic growth in sub-Saharan Africa: Insight from a dynamic panel threshold regression By Idris A. Abdulqadir; Simplice A. Asongu
  9. Effects of political institutions on the external debt-economic growth nexus in Africa By Yann Nounamo; Simplice A. Asongu; Henri Njangang; Sosson Tadadjeu
  10. Education, Pension and Two-Sided Altruistic in an Endogenous Growth Model By Accolley, Delali; Langot, François
  11. Panel Granger causality between financial development and economic growth By Cândida Ferreira
  12. The Structure and Growth of Ethnic Neighborhoods By Dai, Tianran; Schiff, Nathan
  13. Robots and Unemployment By Noritaka Kudoh; Hiroaki Miyamoto
  14. Harrodians and Kaleckians: a suggested reconciliation and synthesis By Mark Setterfield

  1. By: Vu, Trung V.
    Abstract: This paper establishes that the worldwide distribution of political instability has its deep historical roots in genetic diversity, predetermined over the prehistoric course of the exodus of Homo sapiens from East Africa tens of thousands of years ago. It proposes that the relationship between prehistorically determined genetic diversity and contemporary political instability follows a U-shaped pattern. More specifically, genetic diversity at first reduces the persistence of political instability by increasing the opportunity cost of engaging in riots and revolts. However, genetically fragmented societies tend to suffer from interpersonal mistrust and the under-provision of public goods, which plausibly undermine the establishment of politically stable regimes. Using an ancestry-adjusted index of predicted genetic diversity, this paper consistently finds precise estimates that genetic diversity imparts a U-shaped influence on different measures of political instability and the probability of observing the occurrence of riots and revolts across 141 countries. Furthermore, the contribution of genetic diversity to political instability is at least partially mediated through income/productivity levels, the provision of public goods, income inequality and social trust.
    Keywords: genetic diversity,fractionalization,political instability,riots,conflict
    JEL: E02 F50 N30 O11 Z13
    Date: 2021
  2. By: Becker, Sascha O.; Rubin, Jared; Woessmann, Ludger
    Abstract: This chapter surveys the recent social science literature on religion in economic history, covering both socioeconomic causes and consequences of religion. Following the rapidly growing literature, it focuses on the three main monotheisms-Judaism, Christianity, and Islam-and on the period up to WWII. Works on Judaism address Jewish occupational specialization, human capital, emancipation, and the causes and consequences of Jewish persecution. One set of papers on Christianity studies the role of the Catholic Church in European economic history since the medieval period. Taking advantage of newly digitized data and advanced econometric techniques, the voluminous literature on the Protestant Reformation studies its socioeconomic causes as well as its consequences for human capital, secularization, political change, technology diffusion, and social outcomes. Works on missionaries show that early access to Christian missions still has political, educational, and economic consequences in present-day Africa, Asia, and Latin America. Much of the economics of Islam focuses on the role that Islam and Islamic institutions played in political-economy outcomes and in the "long divergence" between the Middle East and Western Europe. Finally, cross-country analyses seek to understand the broader determinants of religious practice and its various effects across the world. We highlight three general insights that emerge from this literature. First, the monotheistic character of the Abrahamic religions facilitated a close historical interconnection of religion with political power and conflict. Second, human capital often played a leading role in the interconnection between religion and economic history. Third, many socioeconomic factors matter in the historical development of religions.
    Keywords: Christianity; economic history; Education; Finance; Islam; Judaism; persecution; political economy; specialization; Trade
    JEL: I15 I25 J15 N00 Z12
    Date: 2020–06
  3. By: Bertocchi, Graziella; Dimico, Arcangelo
    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 influence of African cultural traditions.
    Keywords: Black family; Culture; migration; Slavery; Sugar
    JEL: J12 J47 N30 O13 Z10
    Date: 2020–06
  4. By: Nuvolari, Alessandro; Ridolfi, Leonardo
    Abstract: We construct a new series of GDP per capita for France for the period 1280-1850 using the demand-side approach. Our estimates point to a long run stability of the French economy with a very gradual acceleration towards modern economic growth. In comparative perspective, our new estimates suggest that England and France were characterized by similar levels of economic performance until the second half of the seventeenth century. It is only after that period that the English economy "forges ahead" in a consistent way.
    Keywords: : GDP; demand-side approach; economic growth; France
    JEL: N13 O47
    Date: 2020–07
  5. By: Krueger, Dirk; Ludwig, Alexander; Villalvazo, Sergio
    Abstract: We characterize the optimal linear tax on capital in an Overlapping Generations model with two period lived households facing uninsurable idiosyncratic labor income risk. The Ramsey government internalizes the general equilibrium effects of private precautionary saving on factor prices and taxes capital unless the weight on future generations in the social welfare function is sufficiently high. For logarithmic utility a complete analytical solution of the Ramsey problem exhibits an optimal aggregate saving rate that is independent of income risk, whereas the optimal time-invariant tax on capital implementing this saving rate is increasing in income risk. The optimal saving rate is constant along the transition and its sign depends on the magnitude of risk and on the Pareto weight of future generations. If the Ramsey tax rate that maximizes steady state utility is positive, then implementing this tax rate permanently induces a Pareto-improving transition even if the initial equilibrium capital stock is below the golden rule.
    Keywords: Idiosyncratic Risk,Taxation of Capital,Overlapping Generations,Precautionary Saving,Pecuniary Externalities
    JEL: H21 H31 E21
    Date: 2021
  6. By: Campo, Francesco; Mendola, Mariapia; Morrison, Andrea; Ottaviano, Gianmarco
    Abstract: A possible unintended but damaging consequence of anti-immigrant rhetoric, and the policies it inspires, is that they may put high-skilled immigrants off more than low-skilled ones at times when countries and businesses intensify their competition for global talent. We investigate this argument following the location choices of thousands of immigrant inventors across US counties during the Age of Mass Migration. To do so we combine a unique USPTO historical patent dataset with Census data and exploit exogenous variation in both immigration flows and diversity induced by former settlements, WWI and the 1920s Immigration Acts. We find that co-ethnic networks play an important role in attracting immigrant inventors. However, we also find that immigrant diversity acts as an additional significant pull factor. This is mainly due to externalities that foster immigrant inventors' innovativeness. These findings are relevant for today's advanced economies that have become major receivers of migrant flows and, in a long-term perspective, have started thinking about immigration in terms of not only level but also composition.
    Keywords: Cultural diversity; Innovation; International Migration
    JEL: F22 J61 O31
    Date: 2020–06
  7. By: José Pedro Pontes
    Abstract: We describe formally the relationship between population density and per capita income along the two growth regimes put forward by KUZNETS (1960), BOSERUP (1965) and TAMURA (2002). We consider a spatial economy where an undifferentiated consumer good is produced by a continuum of competitive agents. Each agent requires one unit of a capital good to produce the final good and the two goods are assumed to be perfect substitutes in production. Under the first growth regime (called “classical” or “Malthusian”), each agent self-produces the capital good by shifting resources that would otherwise produce one unit of the final good. This economy shows marginal decreasing returns of labour. Population growth brings about congestion and the elasticity of output per worker (and income per capita) is negative. A structural change takes place following a sufficient increase in population density and decrease in transport costs. Then, the supply of capital goods is outsourced to a specialized industry, operating in spatial monopolistic competition in line with SALOP (1979). Under this “modern” growth regime, the specialization of the capital goods production is a source of increasing returns in the aggregate economy. The elasticity of per capita income with respect to population density becomes positive just after the structural transition, but this effect may not persist in the long run. If the outsourcing of capital goods is matched by a rising importance in final production of activities which are not land-based, then aggregate increasing returns can be sustained in the long run. Otherwise, the positive sign of elasticity will be transitory and a further increase in population density will revert the economy to a situation where the use of increasing amounts of labour with non-reproducible resources determines mainly a congestion effect.
    Keywords: Economic Development, Population Density, Industrialization, Spatial Competition, Technological Change, Economies of Agglomeration.
    JEL: O12 O33 R11
    Date: 2021–05
  8. By: Idris A. Abdulqadir (Federal University Dutse, Dutse, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This article investigates the asymmetric effect of internet access (index of the internet) on economic growth in 42 sub-Saharan African (SSA) countries over the period 2008-2018. The estimation procedure is obtained following a dynamic panel threshold regression technique via 1000 bootstrap replications and the 400 grids search developed by Hansen (1996, 1999, 2000). The investigation first explores the presence of inflection points in the relationship between internet access and economic growth through the application of Hansen's threshold models. The finding from the nonlinearity threshold model revealed a significant internet threshold-effect of 3.55 percent for growth. The article also examines the linear short-run effect of internet access on economic growth while controlling for the effects of private sector credit, trade openness, government regulation, and tariff regimes. The marginal effect of internet access is evaluated at the minimum, and the maximum levels of government regulation and tariffs regime are positive. On the other hand, the minimum and maximum levels of private sector credit and trade openness are negative via the interaction terms. The article advances the literature by its nonlinear transformation of the relevance of internet access on economic growth by exploring interactive mechanisms of: internet access versus financial resource, internet access versus trade, internet access versus government regulation, and internet access versus the tariff regimes from end-user subscriptions. In policy terms, the statistical significance of the joint impact of government regulations and tariff regimes is relevant in the operation of the telecommunication industry in SSA countries.
    Keywords: Internet access; economic growth; government regulations; trade openness; tariff regimes; sub-Saharan Africa
    Date: 2021–01
  9. By: Yann Nounamo (University of Douala, Douala, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon); Henri Njangang (University of Dschang , Cameroon); Sosson Tadadjeu (University of Dschang , Cameroon)
    Abstract: The main contribution of this study is the determination of an endogenous threshold of institutional quality, beyond which external debt would affect economic growth differently. The focus is on 14 countries of the African Franc zone over the period 1985-2015. Based on the panel Smooth Threshold Regression model, the results reveal that the relationship between external debt and economic growth is based on institutional quality. It is found that the level of indebtedness at which the effect of external debt on economic growth becomes negative is higher in countries with lower levels of corruption and high levels of democracy. This means that poor institutional quality prevents a country from taking full advantage of its credit opportunities. Thus, the more countries become democratic, the more debt helps finance economic growth. These results are robust to sensitivity analysis and Generalized Method of Moments estimation.
    Keywords: external debt, political institutions, economic growth
    Date: 2021–01
  10. By: Accolley, Delali; Langot, François
    Abstract: We have modeled jointly human capital accumulation through formal education and the various pillars of the Canadian retirement income system, using a three-period overlapping generations model with two-sided altruism. We have used this model to investigate the impacts on the real interest rate of the improvement in life expectancy in the presence of endogenous growth, as well as the impacts of raising various tax rates to finance the enhancement of pension plans. We have found that the endogenous accumulation of human capital through education reverts the decline in the real interest rate caused by the improvement in the life expectancy. We have also found that the best way of enhancing the Canada Pension Plan is not to raise the contribution rate, but to increase instead the maximum amount of earnings covered. ABSTRACT IN FRENCH- Nous avons modélisé conjointement l'accumulation du capital humain à travers l''éducation formelle et les divers piliers du système canadien de revenu de retraite, en utilisant un modèle de générations imbriquées sur trois périodes avec altruisme bilatéral. Nous avons utilisé ce modèle pour étudier les impacts de l'amélioration de l’espérance de vie sur le taux d'intérêt réel dans un contexte de croissance endogène, aussi bien que les impacts de l'augmentation de divers taux d'imposition dans le but de financer la bonification des programmes pension. Nous avons trouvé que l’accumulation endogène du capital humain à travers l’éducation renverse la baisse du taux d’intérêt réel causée par l’amélioration de l’espérance de vie. Nous avons aussi trouvé que la meilleure façon de bonifier le Régime de pensions du Canada n’est pas d’augmenter e taux de cotisation, mais plutôt d’augmenter le montant maximal de gains couverts.
    Keywords: demography, education, economic growth, human capital, overlapping generations, pension
    JEL: I25 O31 O41
    Date: 2021–05–13
  11. By: Cândida Ferreira
    Abstract: This paper uses panel Granger causality estimations with the approaches developed by NairReichert and Weinhold (2001), and Bangake and Eggoh (2011) as well as the Dumitrescu and Hurlin (2012) test, with the algorithm developed by Lopez and Weber (2017), to analyse the causality relations between all the nine IMF financial development indices, and the real GDP growth considering a sample of 46 countries spread by all continents over the interval 1990-2017. The results obtained reveal the dynamic character of these causality relations and overall,no significant differences were found when comparing the results obtained for the financial institutions indices with those regarding the financial markets indices. The results confirm the existence of bidirectional causality, although not with the same statistical robustness for all the IMF indices, addressing relevant aspects of the financial development: access, depth and efficiency of the financial institutions and markets.
    Keywords: Panel Granger causality; financial development; IMF financial development indices; financial institutions and markets; economic growth.
    JEL: C33 E02 E44 F43 G20 O43
    Date: 2021–05
  12. By: Dai, Tianran; Schiff, Nathan
    Abstract: We introduce a new statistical definition of an immigrant ethnic neighborhood based on a choice model and using the location distribution of natives as a benchmark. We then examine the characteristics of ethnic neighborhoods in the United States using decadal census tract data from 1970-2010. We find that ethnic neighborhoods are pervasive, often capturing more than 50% of the ethnic population in a city, and differ significantly in housing and demographic characteristics from other locations in the city where a group lives. Most neighborhoods disappear within one or two decades. However, larger neighborhoods persist longer and have a well-defined spatial structure with negative population gradients. Neighborhoods grow primarily through spatial expansion into adjacent locations and lagged measures of the housing stock from previous decades can predict into which specific locations a neighborhood grows. Maps of ethnic neighborhoods: s_deployed/
    Keywords: neighborhoods; ethnic enclave; concentration metrics; housing
    JEL: J15 R23 R30
    Date: 2021–06–01
  13. By: Noritaka Kudoh (Nagoya University); Hiroaki Miyamoto (Tokyo Metropolitan University)
    Abstract: This paper studies the impact of the robotics revolution on the labor market outcomes through the lens of capital-augmenting technological progress. We develop a tractable search-matching model with labor market segmentation and multi-factor production to find the condition under which the new technology harms the labor market in the long run. The robotics revolution hits the labor market for routine-task intensive jobs harder under a more generous unemployment policy. Automation of abstract tasks may cause a disaster for those who are reallocated to routine-task intensive occupations.
    Keywords: robots, capital-augmenting technological progress, search-matching frictions, unemployment, routinization
    JEL: E32 J20 J64
    Date: 2021–05
  14. By: Mark Setterfield (Department of Economics, New School for Social Research)
    Abstract: The Kaleckian and Harrodian approaches to growth frequently arrive at antagonistic positions with respect to key issues in heterodox macrodynamics, including the treatment of the rate of capacity utilization and the very nature of the long-run growth process. Nevertheless, this paper is devoted to exploring the possibilities for reconciling and even synthesizing these traditions. It does so by directly addressing three key areas of dispute: the Keynesian stability condition; Harrodian instability; and the question as to whether long-run growth is best conceived in terms of a stable steady state or `corridor instability'. It is shown that reconciliation and even synthesis is possible - the latter producing a `corridor within a corridor' conception of the growth process in which the economy switches between Kaleckian and Harrodian dynamics depending on the extent to which the rate of capacity utilization departs from its normal rate.
    Keywords: Keynesian stability condition, Harrodian instability, corridor instability, shifting equilibrium, Kaleckian pseudo-instability, normal rate of capacity utilization
    JEL: E11 E12 E22 O41
    Date: 2021–06

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