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on Economic Growth |
| By: | Gregory Casey; Ryo Horii |
| Abstract: | We construct a 3-factor, directed technical change growth model that exhibits capital-augmenting technical change on the balanced growth path (BGP), circumventing the issues usually caused by the 2-factor Uzawa growth theorem. We calibrate the model to the United States and consider a non-unitary elasticity of substitution between capital and labor. We show that the model converges to the BGP with capital-augmenting technical change from any initial condition. Our results indicate that natural resources and directed technical change play a central role in explaining balanced growth. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1220&r=gro |
| By: | Guillaume Blanc |
| Abstract: | This research shows that secularization accounts for the remarkably early fertility decline in France. The demographic transition, a turning point in history and an essential condition for development, first took hold in France, before the French Revolution and more than a century earlier than in any other country. Why it happened so early is one of the ‘big questions of history’ because it challenges traditional explanations and because of data limitations. Using a novel dataset crowdsourced from publicly available genealogies, I comprehensively document, for the first time, the decline in fertility and its timing with a representative sample of the population. Then, drawing on a wide range of sources and data, I document an important process of secularization in the eighteenth century and find a strong and robust association with the timing of the transition across regions and individuals. Finally, I discuss the persistent impact of the transition on economic growth and explore the drivers of secularization. |
| Keywords: | fertility; development; secularization |
| JEL: | N33 O10 Z12 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:man:sespap:2309&r=gro |
| By: | Li, Defu; Bental, Benjamin |
| Abstract: | Technological progress relates not only to its rate but also to its direction and bias. The rate has been analyzed by the endogenous technical change models and the bias has been analyzed by the directed technical change model, but the determinants of the direction has not been uncovered yet. This paper tries to provide a framework where the equilibrium direction of technical change can be studied to reveal its determinants in steady state. The crucial introductions of the framework are the generalized factor accumulation processes and a generalized production function. The generalizations admit unrestricted factor supply elasticities and marginal transformation rates of production factors into effective factors. These turn out to be the key determinants of the steady-state direction of technological progress, whereby that direction tends towards the factor with the relatively smaller supply elasticity or marginal transformation rate. The neoclassical growth model as a special case cannot admit capital-augmenting technical change in steady state because of the assumptions of capital with infinite supply elasticity and constant marginal transformation rate. Similarly, labor-augmenting technical change cannot be part of a Malthusian steady state owing to labor with infinite supply elasticity. These results provide new insights for understanding the puzzle of Uzawa’s (1961) steady-state theorem and indicates that the size and change of factor supply elasticities may be crucial elements in explaining the Malthusian trap before the industrial revolution, the Kaldor (1961) facts afterwards and the industrial revolution itself. |
| Keywords: | Economic Growth, Direction of Technological Progress, Factor Supply Elasticities, Marginal transformation rates of Factors to Effective Factors, Uzawa Steady-State Theorem, Industrial Revolution, Adjustment Cost |
| JEL: | E13 E25 O33 O41 |
| Date: | 2023–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119211&r=gro |
| By: | Jakub Growiec; Julia Jabłońska; Aleksandra Parteka |
| Abstract: | Output is generated through purposefully initiated physical action. Production needs energy and information, provided by respective factors: hardware (“brawn”), including physical labor and physical capital, and software (“brains”), encompassing human cognitive work and pre-programmed software, in particular artificial intelligence (AI). From first principles, hardware and software are essential and complementary in production, whereas their constituent components are mutually substitutable. This framework generalizes the neoclassical model of production with capital and labor, models with capital-skill complementarity and skill-biased technical change, and unified growth theories embracing also the pre-industrial period. Having laid out the theory, we provide an empirical quantification of hardware and software in the US, 1968-2019. We document a rising share of physical capital in hardware (mechanization) and digital software in software (automation); as a whole software has been growing systematically faster than hardware. Accumulation of digital software was a key contributor to US economic growth. |
| Keywords: | production function, technological progress, complementarity, automation, artificial intelligence |
| JEL: | O30 O40 O41 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:sgh:kaewps:2023091&r=gro |
| By: | Gravina, Antonio Francesco (University of Palermo); Lanzafame, Matteo (Asian Development Bank) |
| Abstract: | This paper provides estimates of the impact of demographic change on labor productivity growth, relying on annual data over 1961-2018 for a panel of 90 advanced and emerging economies. We find that increases in both the young and old population shares have significant negative effects on labor productivity growth, working via various channels—including physical and human capital accumulation. Splitting the analysis for advanced and emerging economies shows that population aging has a greater effect on emerging economies than on advanced economies. Extending the benchmark model to include a proxy for the robotization of production, we find evidence indicating that automation reduces the negative effects of unfavorable demographic change—in particular, population aging—on labor productivity growth. |
| Keywords: | demographic change; labor productivity; robots |
| JEL: | C33 J11 O40 |
| Date: | 2023–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0701&r=gro |
| By: | Fabio Blasutto; David de la Croix |
| Abstract: | Abstract Censorship makes new ideas less available to others, but also reduces the number of people choosing to develop non-compliant ideas. We propose a new method to measure the effect of censorship on knowledge growth, accounting for the agents’ choice between compliant and non-compliant occupations. We apply our method to the Catholic Church’s censorship of books written by members of Italian universities and academies over the period 1400–750. We highlight new facts: once censorship was introduced, censored authors were of better quality than the non-censored authors, but this gap shrank over time and the intensity of censorship decreased over time. We use these facts to identify the deep parameters of a novel endogenous growth model that links censorship to knowledge diffusion and occupational choice. We conclude that the average log publication per scholar in Italy would have been 43% higher if censorship had not been present, while the effect of adverse macroeconomic processes is almost four times smaller. The induced reallocation of talents towards compliant activities explains half the effect of censorship. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/364712&r=gro |
| By: | Victor Gay; Paula Eugenia Gobbi; Marc Goñi |
| Abstract: | We test Le Play’s (1875) hypothesis that the French Revolution contributed to France’s early fertility decline. In 1793, a series of inheritance reforms abolished local inheritance practices, imposing equal partition of assets among all children. We develop a theoretical framework that predicts a decline in fertility following these reforms because of indivisibility constraints in parents’ assets. We test this hypothesis by combining a newly created map of pre-Revolution local inheritance practices together with demographic data from the Henry database and from rowdsourced geneaologies in Geni.com. We provide difference-in-differences and regressiondiscontinuity estimates based on comparing cohorts of fertile age and cohorts too old to be fertile in 1793 between municipalities where the reforms altered and did not alter existing inheritance practices. We find that the 1793 inheritance reforms reduced completed fertility by half to one child, closed the pre-reform fertility gap between different inheritance regions, and sharply accelerated France’s early fertility transition. |
| Keywords: | Demographic transition, Fertility, French Revolution, Inheritance |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/365273&r=gro |
| By: | Thilo N. H. Albers (HU Berlin); Felix Kersting (HU Berlin); Timo Stieglitz (HU Berlin) |
| Abstract: | How does revolutionary technological change impact wealth inequality? We turn to the mother of all technological shocks–the Industrial Revolution–and analyze its role for wealth concentration both empirically and theoretically. Based on a novel dataset on wealth shares at the level of Prussian counties, we provide causal evidence on the positive effect of industrialization on the top percentile's wealth share and the inequality among top fortunes. We show that this relationship between industrialization, wealth concentration, and tail fattening is consistent with both cross-country data on national wealth distributions and with a new individual-level dataset of Prussian millionaires. We disentangle the mechanisms underlying the observed wealth concentration and tail fattening by introducing a dynamic two-sector structure into an overlapping generations model with heterogeneous returns to capital. In particular, we study the role of sector-specific scale dependence, i.e. the positive correlation of rates of return and wealth in industry, and dynastic type dependence in returns, i.e., the gradual one-directional transition of wealth-holders from the low-return traditional to the high-return industrial sector. The simulations suggest that the combination of these two features explains about half of the total increase of the top-1% share, while the other half resulted from the general increase and higher dispersion of returns induced by the emerging industrial sector. |
| Keywords: | rates of return; wealth inequality; industrialization; technology; simulation; |
| JEL: | D31 E21 N13 O14 |
| Date: | 2023–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:462&r=gro |
| By: | IWASAKI, Ichiro; ONO, Shigeki |
| Abstract: | We investigate whether the impacts of financial development and liberalization on economic growth vary across different stages of development, which remains unaddressed in the literature on the finance–growth nexus. In the analysis, a comparative meta-analysis was performed for studies of advanced, developing, and emerging market economies, using 6, 135 estimates extracted from a total of 379 previous works. The results have significant implications for studies of the finance–growth nexus. In particular, the impacts of financial development and liberalization on economic growth do not vary across different stages of development. |
| Keywords: | economic development, finance–growth nexus, meta-synthesis, meta-regression analysis, publication selection bias |
| JEL: | E44 G10 O11 O16 P43 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2023-06&r=gro |
| By: | Derick Almeida (University of Coimbra, Faculty of Economics); Tiago Miguel Guterres Neves Sequeira (University of Coimbra, Centre for Business and Economics and Faculty of Economics) |
| Abstract: | In this paper we study a theoretical link between the effects of increased automation on labor markets, and the fertility decisions of a representative household that is replaced by robots in the production of tasks. We develop a framework in which children provide utility and impose an opportunity cost to the household due to lost labor income. We show that fertility rate changes are the result of an optimal response to wage variations after the economy is hit by a shock that increases the design quality of robots used in production. Using this model, we characterize an initial equilibrium and simulate the effect of a 10% increase in robot productivity on important endogenous variables, including wages, and find that, in the absence of fixed costs to raising children, the fertility rate increases by approximately 3.4%. |
| Keywords: | Automation, Robots, Tasks, Fertility |
| JEL: | I24 J13 J22 J24 J31 O15 O33 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:papers:2023-05&r=gro |