nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒05‒23
twelve papers chosen by
Marc Klemp
University of Copenhagen

  1. Herding, Warfare, and a Culture of Honor: Global Evidence By Yiming Cao; Benjamin Enke; Armin Falk; Paola Giuliano; Nathan Nunn
  2. Labor Scarcity, Technology Adoption and Innovation: Evidence from the Cholera Pandemics in 19th Century France By Raphaël Franck
  3. A Year Older, A Year Wiser (and Farther from Frontier): Invention Rents and Human Capital Depreciation By Philippe Aghion; Ufuk Akcigit; Ari Hyytinen; Otto Toivanen
  4. Additive Growth By Thomas Philippon
  5. EXPLORING THE CONVERGENCE PUZZLE IN INDIA Combining neoclassical and endogenous models to understand growth experience of Indian states By Anshuman Kamila; Meeta Keswani Mehra
  6. Wealth and income inequality in the long run By Philipp Lieberknecht; Philip Vermeulen
  7. Long-term challenges to Russian economic policy By Simola, Heli
  8. Growth Matters? Revisiting the Enigma of Child Undernutrition in India By Manoj Panda; Abhishek Kumar; William Joe
  9. Russia's growth potential post-COVID-19 By Korhonen, Iikka
  10. Wages, labour market, and living standards in China, 1530-1840 By Liu, Ziang
  11. Migration and invention in the Age of Mass Migration By DIodato, Dario; Morrison, Andrea; Petralia, Sergio
  12. Italian economic growth and the North-South gap: Historical trends and future projections in light of the recent demographic scenarios By Marta De Philippis; Andrea Locatelli; Giulio Papini; Roberto Torrini

  1. By: Yiming Cao; Benjamin Enke; Armin Falk; Paola Giuliano; Nathan Nunn
    Abstract: According to the widely known ‘culture of honor’ hypothesis from social psychology, traditional herding practices have generated a value system conducive to revenge-taking and violence. We test the economic significance of this idea at a global scale using a combination of ethnographic and folklore data, global information on conflicts, and multinational surveys. We find that the descendants of herders have significantly more frequent and severe conflict today, and report being more willing to take revenge in global surveys. We conclude that herding practices generated a functional psychology that plays a role in shaping conflict across the globe.
    Date: 2022
  2. By: Raphaël Franck
    Abstract: To analyze the impact of labor scarcity on technology adoption and innovation, this study uses the differential spread of cholera across France in 1832, 1849 and 1854, before the transmission mode of this disease was understood. The results suggest that a larger share of cholera deaths in the population, which can be causally linked to summer temperature levels, had a positive and significant shortrun effect on technology adoption and innovation in agriculture but a negative and significant short-run impact on technology adoption in industry. These results, which are not driven by migration, urbanization, religiosity or local financial intermediation, can be explained by the positive impact of labor scarcity on human capital formation.
    Keywords: epidemics, labor scarcity, technology adoption
    JEL: I15 N13 O33
    Date: 2022
  3. By: Philippe Aghion; Ufuk Akcigit; Ari Hyytinen; Otto Toivanen
    Abstract: We look at how the arrival of an invention affects wage returns and probability of moving out of employment for white- and blue-collar coworkers of the inventor. First results suggest that older workers are hurt by the arrival of an invention. This negative effect disappears when we control for education and, in particular, for time that since obtaining the last formal degree, i.e., distance to human capital frontier. If anything, this effect is slightly higher for non-STEM than STEM-educated co-workers. This result suggests that retraining programs could be helpful in making the process of creative destruction and economic growth more inclusive.
    JEL: I24 J24 O31
    Date: 2022–03
  4. By: Thomas Philippon
    Abstract: Growth theory is based on the assumption of exponential total factor productivity (TFP) growth. Across countries and time periods I find that TFP growth is actually linear. Unlike the exponential model, the additive growth model provides useful medium-term forecasts of TFP. It also explains the TFP slowdown and the volatility puzzle, and predicts falling real interest rates. For the distant future the model predicts ever increasing increments in standards of living but with growth rates that converge to zero. For the distant past the model suggests that the size of TFP increments has changed in the late 1600’s, the early 1800’s, and around 1930.
    JEL: E22 N1 O11 O3 O4
    Date: 2022–04
  5. By: Anshuman Kamila; Meeta Keswani Mehra (Institute of Economic Growth, Delhi)
    Abstract: The study of economic growth across countries is highly rewarding. Understanding the varied patterns of growth across countries is crucial because disparities in growth rates have, in due course of time, led to gaps in living standards and ‘welfare’. The Economic Survey 2016-17 (2017)conducts an empirical exercise for the ß-convergence for i) countries of the world; ii) provinces of China and iii) states of India. It depicts poorer countries are closing the per capita income gap with richer countries, the poorer Chinese provinces with the richer ones, but in India, the less developed states are not converging to their richer counterparts; instead they are, on average, going further from the richer states. Against the above backdrop, this study is an attempt to scrutinise existing literature on the subject of convergence and infer the gaps in literature pertaining to GSDP per capita growth experience of Indian states. Then, an attempt is made to test for applicability of neoclassical and endogenous growth models. Following this, is an inquiry into whether difference in growth of per capita GSDP across states is on account of difference in inputs in the production process or the difference in efficiency in utilising such inputs in the process of production. We discover that while neo-classical growth model broadly applies to Indian states, only 20% of variation in per capita GSDP across Indian states is explained by dispersion of values of rates of investment, population growth, depreciation and TFP growth - as opposed to nearly 60% dispersion of GDP across world economies being accounted for by such differences. In addition, 8 and 11 states show evidence for AK model and R&D model respectively. Finally, states that were initially ‘rich’ or ‘poor’ have shown similar growth rates for the past two decades, on account of similarity in investment in physical and human capital across these. Therefore, more progressive redistribution of physical and human capital is necessary for convergence in per capita GSDP levels.
    Date: 2021–03
  6. By: Philipp Lieberknecht (Deutsche Bundesbank, Frankfurt, Germany); Philip Vermeulen (Faculty of Business, Economics and Law at AUT University)
    Abstract: This paper analyses the joint long-run evolution of wealth and income inequality. We show that top wealth and income shares were cointegrated over the past century in France and the US. We rationalise this _nding using a two-agent version of the Solow growth model. In this framework, the co-movement of top wealth and income shares is determined by the relative saving rate at the top, i.e. the ratio of the saving rate of rich individuals to the aggregate saving rate. The cointegration _nding suggests that relative saving rates at the top are fairly stable over time, thus explaining the tight co-movement between top wealth and income shares over the past century.
    Keywords: income inequality, wealth inequality, top shares, savings rates, cointegration, error correction
    JEL: D31 E21 E25 N32 N34
    Date: 2022–05
  7. By: Simola, Heli
    Abstract: Russia's economic growth slowed substantially over the past decade. To improve its long-term growth outlook, Russia must deal with structural problems. While the country has not lacked for ambitious development plans, the results of late have been rather thin. We discuss some of the key challenges facing the Russian economy and policy responses. Considering Russia's recent economic policy in light of the economic literature and potential reasons for its successes and failures, we suggest the focus of the country's current economic policy framework is too narrowly drawn to achieve a significant acceleration in long-term growth.
    Keywords: Russia,economic policy,development plans,economic growth
    Date: 2021
  8. By: Manoj Panda; Abhishek Kumar; William Joe (Institute of Economic Growth, Delhi)
    Abstract: Higher economic growth in the post-liberalization phase since the 1990s was expected to translate into rapid all around improvements in well-being of the people. A notable exception in defiance of this association is apparent in the form of a persistently high level of child undernutrition in the face of rapid economic growth in India. We revisit this discordant association in this paper. Our findings are based on the analysis of four waves of the National Family Health Survey (NFHS 1992-93, 1998-99, 2005-06 and 2015-16) data on child undernutrition, demographic and socioeconomic characteristics of households and the per capita state domestic product. Descriptive statistical analysis as well as econometric methods including multilevel logistic models are used to understand the association between child undernutrition and economic growth. Sensitivity analysis is conducted to comprehend the robustness of the association across alternative specifications and adjustments. In particular, effect of growth on child undernutrition are found to be changing in analysis of NFHS third and fourth waves data compared to combined data in all the four waves. We argue that the quantum of growth is important for effect to be felt on child undernutrition. Apart from relying on growth, direct investment in health and nutrition sector is recommended as an important priority for policymaking.
    Keywords: Economic Growth, Child Undernutrition, Anthropometric Failure, Asian Enigma
    Date: 2021–02
  9. By: Korhonen, Iikka
    Abstract: This paper updates my earlier calculations on Russia's long-run growth potential using a standard growth accounting framework in which GDP growth depends on available labor, capital and efficiency in combining them, i.e. total factor productivity. Russia's economy has grown relatively slowly during the past decade, partly because of declining labor force. In my revised framework, growth recovers after the negative COVID-19 shock, but remains subdued as the working-age population continues to dwindle. Productivity growth remains lower than in the early 2000s, while average GDP growth settles at approximately 1.5% p.a.
    Date: 2021
  10. By: Liu, Ziang
    Abstract: Historical wages continue to provide new insights into the long-term development of the economy. In early modern Europe, the standard wage narrative hypothesises a “little divergence” in which England and the Low Countries outperformed other economies between 1500 and 1750. However, our knowledge of Chinese wage history remains considerably limited when it comes to the “great divergence” debate between China and leading economies in Europe. This article contributes to building a wage series in Lower Yangzi China from the sixteenth to the nineteenth centuries. It shows that despite the continued increase of nominal wages over this period, real day wages witnessed a sharp decline between 1620 and 1640, followed by a substantial improvement after1650, until a quick decline between 1740 and 1760. A wage gap between the Lower Yangzi and London may open up in the early eighteenth century, but this implication still awaits further examination considering the measurement limits in the current approach.
    Keywords: wage; living standard; labour market; early modern China; great divergence
    JEL: N30 N15 J21 J31
    Date: 2022–05
  11. By: DIodato, Dario; Morrison, Andrea; Petralia, Sergio
    Abstract: More than 30 million people migrated to the USA between late-ninetieth and early-twentieth century, and thousands became inventors. Drawing on a novel dataset of immigrant inventors in the USA, we assess the city-level impact of immigrants' patenting and their contribution to the technological specialization of the receiving US regions between 1870 and 1940. Our results show that native inventors benefited from the inventive activity of immigrants. In addition, we show that the knowledge transferred by immigrants gave rise to new and previously not exiting technological fields in the US regions where immigrants moved to.
    Keywords: Age of Mass Migration; immigration; innovation; knowledge spill-over; patent; USA
    JEL: F22 O31 R30 J61
    Date: 2022–03–16
  12. By: Marta De Philippis (Bank of Italy); Andrea Locatelli (Bank of Italy); Giulio Papini (Bank of Italy); Roberto Torrini (Bank of Italy)
    Abstract: This paper presents a historical account of economic trends in Italy and its two macro-regions, the Centre and North and the South, since the 1950s, and outlines several growth scenarios based on recent demographic projections and alternative hypotheses on future labour market and productivity paths. We document a progressive slowdown in GDP, particularly in the South, driven by productivity and, more recently, also by employment and capital accumulation dynamics. Going forward, given the reduction in the working age population, without improvements in productivity and labour force participation, the Italian economy – the southern one in particular – is projected to shrink from the second half of the current decade. Despite the unfavourable demographic trends, robust growth rates could still be achieved if productivity grew at the same rate as in other European countries and assuming a catching-up process of between the South and the Centre and North of the country.
    Keywords: regional disparities, demographic trends, economic growth, labour market, total factor productivity
    JEL: J11 R1 O40 O52 N10 E01
    Date: 2022–04

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