nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒05‒16
nine papers chosen by
Marc Klemp
University of Copenhagen

  1. State Capacity, National Economic Policies and Local Development: The Russian State in the Southern Urals By Gerda Asmus; Raphaël Franck
  2. Within-Group Heterogeneity in a Multi-Ethnic Society By Artiles, Miriam
  3. On Labor Productivity Growth and the Wage Share with Endogenous Size and Direction of Technical Change By Zamparelli, Luca
  4. How Many Innovations Need to Be Produced in the Process of Endogenous Growth with Fluid Intelligence By Harashima, Taiji
  5. The fertility transition in Sub-Saharan Africa: The role of structural change By Büttner, Nicolas; Grimm, Michael; Günther, Isabel; Harttgen, Kenneth; Klasen, Stephan
  6. Labor Substitutability among Schooling Groups By Mark Bils; Bariş Kaymak; Kai-Jie Wu
  7. Historical Time and the Current State of Post-Keynesian Growth Theory By Ettore Gallo; Mark Setterfield
  8. Politics of Public Education and Pension Reform with Endogenous Fertility By Uchida, Yuki; Ono, Tetsuo
  9. Data Production and the coevolving AI trajectories: An attempted evolutionary model. By Andrea Borsato; Andre Lorentz

  1. By: Gerda Asmus; Raphaël Franck
    Abstract: This study analyzes how state capacity shapes the local impact of national policies by exploiting a quasi-natural experiment in the regional expansion of the state. It uses the local discontinuity created by the boundary of the largest peasant rebellion in 18th century Russia where the state increased security forces and levied taxes more efficiently after the uprising ended. The results show that increased state capacity had limited effects on economic growth until the central government targeted specific development objectives. Namely, when rulers chose to build schools or foster industrialization, their national policies benefited areas which already had strong state capacity.
    Keywords: economic growth, public policies, Russia, state capacity
    JEL: O11 O43 N13 N14
    Date: 2022
  2. By: Artiles, Miriam
    Abstract: Is ethnic diversity good or bad for economic development? Most empirical studies find corrosive effects. In this paper, I show that ethnic diversity need not spell poor development outcomes–a history of within-group heterogeneity can turn ethnic diversity into an advantage for long-run development. I collect new data from a natural experiment regarding Peru's colonial history: the forced resettlement of native populations in the 16th century. This intervention forced together various ethnic groups into new jurisdictions. In those jurisdictions where colonial officials concentrated individuals with a history of within-group heterogeneity, who, prior to colonization, worked in complementary climates of the Andes, ethnic diversity results in systematically lower costs and may even become advantageous. Neither precolonial groups' political complexity nor their degree of economic development explain this result. The transmission of prosocial behavior is one likely channel. I also find evidence consistent with a positive role of economic complementarities between ethnic groups.
    Keywords: Ethnic Diversity, Within-Group Heterogeneity, Long-Run Economic Development
    JEL: J15 N16 O10 O12 Q56 Z10
    Date: 2022–04–16
  3. By: Zamparelli, Luca
    Abstract: This paper combines induced innovation and endogenous growth to investigate both the relation between the wage share and labor productivity growth and the long-run determinants of the wage share. We assume that myopic competitive firms choose the size and direction of technical change to maximize the growth rate of profits. We first prove that the optimal choice of labor productivity growth may be either a positive or a negative function of the wage share, depending on specific restrictions on the innovation technology. Next, by embedding the microeconomic problem into a Classical growth model, we show that a rise in the saving rate may reduce the steady state wage share. Both results conflict with the standard findings of the induced innovation literature, where labor productivity growth is always a positive function of the wage share and where the steady state labor share is independent of the saving rate.
    Keywords: Labor productivity growth, Induced innovation, wage share
    JEL: O30 O40
    Date: 2022–04
  4. By: Harashima, Taiji
    Abstract: In innovation-based endogenous (Schumpeterian) growth theory, the production of innovations is constrained basically by the finite nature of the labor supply. In this paper, I show that innovations are constrained because (1) the amount of fluid intelligence of researchers in an economy is limited and (2) the returns on investments in technologies and in capital are kept equal through arbitrage in markets. With these constraints, equilibrium values of the number of researchers and their average productivity in an economy exist, and the equilibrium value of average productivity determines the amount of innovation production in each period. Distributions of fluid intelligence among researchers are most likely heterogeneous across economies, but if economies are open to each other, an economy with a smaller number of researchers with a high level of fluid intelligence can grow at the same rate as an economy with more of them.
    Keywords: Endogenous growth; Fluid intelligence; Innovation; Production of innovation; Researchers
    JEL: O31 O40
    Date: 2022–04–21
  5. By: Büttner, Nicolas; Grimm, Michael; Günther, Isabel; Harttgen, Kenneth; Klasen, Stephan
    Abstract: Despite relatively sustained economic growth in at least parts of Sub-Saharan Africa over the past twenty years, the fertility transition has not much advanced in most countries in that region. We explore whether the lack of structural change can explain this slow transition. For this end, we analyze the determinants of fertility transitions across the developing world using a novel regional level panel dataset created by matching Demographic and Health Surveys and Household Income Surveys from 60 countries over three decades. Our key hypothesis is that structural change, i.e. a shift of employment from subsistence agriculture to more skill-intensive services, accompanied by an increase in human capital accumulation, is a key driver of the fertility transition. Our results indicate that higher education of women, female employment in non-agricultural formal jobs and industrialization as measured by an increase in nighttime light intensity are indeed important determinants of the fertility transition. We also find suggestive evidence for a complementary role of access to health insurance. Simulations show that if high-fertility countries in Sub-Saharan Africa had experienced the same structural change as the most demographically advanced regions in our sample over the last twenty years, fertility levels would be up to 40% lower.
    Keywords: Demographic transition,Fertility,Structural change,Human capital,Sub-SaharanAfrica
    JEL: D13 J11 J13 J22 O12
    Date: 2022
  6. By: Mark Bils; Bariş Kaymak; Kai-Jie Wu
    Abstract: Knowing the degree of substitutability between schooling groups is essential to understanding the role of human capital in income differences and to assessing the economic impact of such policies as schooling subsidies, immigration systems, or redistributive taxes. We derive a lower bound for the substitutability required for worldwide growth in real GDP from 1960 to 2010 to be consistent with a stable wage premium for schooling despite the rapid growth in schooling, assuming no exogenous worldwide regress in the technology frontier for workers with only primary schooling. That lower bound for the long-run elasticity of substitution is about 4, which is far higher than values commonly used in the literature. Given our bound, we reexamine the importance of human capital in cross-country income differences and the roles of school quality versus the skill bias of technology in greater efficiency gains from schooling in richer countries.
    JEL: E24 J24 O15 O47
    Date: 2022–03
  7. By: Ettore Gallo (Department of Economics, New School for Social Research); Mark Setterfield (Department of Economics, New School for Social Research)
    Abstract: This paper discusses Joan Robinson’s remarks on the importance of historical time in economic analysis. On the one hand, Joan Robinson expressed skepticism with equilibrium analysis as such, arguing that as soon as economists take into account the uncertainty of expectations, history needs to replace equilibrium. On the other, Robinson stressed that, while building economic models, one must be aware that it is historical time rather than logical time that rules reality, warning against the methodological mistake of confusing comparisons of equilibrium positions with a movement between them. We argue that these criticisms point to the possibility of thinking in terms of two different ‘levels’ of historical time – a higher (fundamentalist) level, and a practical (and more analytically tractable) lower level. Using this distinction, we provide a taxonomy of existing strands of post-Keynesian growth theory that are consistent with the concept of low-level historical time. It is shown that despite appearances to the contrary, much post-Keynesian growth theory displays fidelity to Joan Robinson’s concern with the importance of historical time.
    Keywords: Historical time, economic growth, provisional equilibrium, traverse, shifting equilibrium
    JEL: B31 B41 E11 E12 O41
    Date: 2022–04
  8. By: Uchida, Yuki; Ono, Tetsuo
    Abstract: We demonstrate the interaction between short-lived governments’ decisions on education and pension policies and parents’ decisions on fertility in an overlapping generations growth model. Our analysis shows that increased expected life expectancy lowers fertility, decreases the ratio of education expenditure to GDP, and increases the ratio of pension benefits to GDP as well as per capita GDP growth rate. We also consider a reform that reduces pension benefits designed by a long-lived planner and show that the reduction is optimal from a social welfare perspective when the planner gives a large weight to future generations.
    Keywords: Fertility; Public Pension; Public Education; Probabilistic Voting; Overlapping Generations
    JEL: D70 E62 H52 H55
    Date: 2022–04–14
  9. By: Andrea Borsato; Andre Lorentz
    Abstract: This paper contributes to the understanding of the relationship between the nature of data and the Artificial Intelligence (AI) technological trajectories. We develop an agentbased model in which firms are data producers that compete on the markets for data and AI. The model is enriched by a public sector that fuels the purchase of data and trains the scientists that will populate firms as workforce. Through several simulation experiments we analyze the determinants of each market structure, the corresponding relationships with innovation attainments, the pattern followed by labour and data productivity, and the quality of data traded in the economy. More precisely, we question the established view in the literature on industrial organization according to which technological imperatives are enough to experience divergent industrial dynamics on both the markets for data and AI blueprints. Although technical change behooves if any industry pattern is to emerge, the actual unfolding is not the outcome of a specific technological trajectory, but the result of the interplay between technology-related factors and the availability of data-complementary inputs such as labour and AI capital, the market size, preferences and public policies.
    Keywords: Artificial Intelligence, Data Markets, Industrial Dynamics, Agent-based Models.
    JEL: L10 L60 O33 O38
    Date: 2022

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