|
on Economic Growth |
| By: | Lukas Rosenberger; W. Walker Hanlon; Carl Hallmann |
| Abstract: | How did Britain sustain faster rates of economic growth than comparable European countries, such as France, during the Industrial Revolution? We argue that Britain possessed an important but underappreciated innovation advantage: British inventors worked in technologies that were more central within the innovation network. We offer a new approach for measuring the innovation network using patent data from Britain and France in the late-18th and early-19th century. We show that the network influenced innovation outcomes and demonstrate that British inventors worked in more central technologies within the innovation network than French inventors. Drawing on recently developed theoretical tools, and using a novel estimation strategy, we quantify the implications for technology growth rates in Britain compared to France. Our results indicate that the shape of the innovation network, and the location of British inventors within it, explains an important share of the more rapid technological change and industrial growth in Britain during the Industrial Revolution. |
| Keywords: | industrial revolution, innovation network, patents, economic growth |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11299 |
| By: | Garibaldi, Pietro (Collegio Carlo Alberto); Turri, Enrico D. (London School of Economics) |
| Abstract: | The neoclassical growth model assumes fixed labor supply and competitive labor markets. Is it harmless to ignore monopsonistic power in the neoclassical growth model? The paper argues that it is not, especially if a growth model needs to be consistent with the long-run dynamics of the labor share. This paper solves a minimalist growth model with monopsonistic power at the firm level and two production technologies with different degrees of efficiency. The paper shows that monopsonistic power by the representative firm implies either a "level" or a "growth" effect in the determination of the labor share. If the two sectors feature unbalanced growth, the economy converges to a an asymptotic balanced growth in which the labor share asymptotically decline, in line with secular evidence on labor share dynamics. The paper shows also that the monopsonistic equilibrium has sizeable "misallocative" effects, since it implies the use of less efficient technologies that are not used by the optimal growth problem. Finally, the paper shows that the negative welfare effect of monopsony is larger when the model accounts for endogenous labor supply as the redistribution from wages to profits induces a reduction in hours worked. The generalized model is also consistent with recent evidence on balanced growth with declining labor supply. |
| Keywords: | monopsony, growth, unbalanced growth, labor share, misallocation |
| JEL: | O40 O41 J23 J30 J42 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17392 |
| By: | Yang, Dongkyu |
| Abstract: | The idea that labor scarcity can induce economic development has long been hypothesized (Hicks, 1932; Habakkuk, 1962), but the evidence remains limited. This paper examines how the Second Great Migration (1940–1970) spurred structural change in the American South between 1970 and 2010. Empirical results using shift-share instruments show that out-migration incentivized capital investment and capital-augmenting technical change, increasing capital per worker and output in both agriculture and manufacturing, at least until 2010. Labor was reallocated from agriculture to non-agriculture. I then develop a dynamic spatial equilibrium model that allows for substitution between factors of production, factor-biased technical change, and factor abundance-based trade to characterize this process. The quantitative analysis indicates that labor-capital substitution played a major role in adjustments to South-to-North migration. |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:nt6kg |
| By: | Vasiliki Fouka; Theo Serlin |
| Abstract: | How does economic modernization affect group identity? Modernization theory emphasizes how labor migration led to the adoption of common identities. Yet economic development may reduce incentives to emigrate, preserving local cultures. We study England and Wales during the Second Industrial Revolution, a period characterized by the development of new industries and declines in transportation and communication costs. Using microdata on individuals’ names and migration decisions, we quantify identity change and its variation across space. We develop and estimate a quantitative spatial model in which migration and cultural identities are inter-dependent. Different components of economic modernization had different effects on identity change. Falling migration costs homogenized peripheral regions. In contrast, industrial development led to heterogeneity, increasing the overall prevalence of the culture of London, while also creating local identity holdouts by reducing out-migration from industrializing peripheries. Modernization promotes both national identities and persistent local identities in peripheral regions that industrialize. |
| JEL: | J6 N0 N33 N63 Z1 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33114 |
| By: | Hoffmann, Bridget; Dueñas, Juliana; Goytia, Alejandra |
| Abstract: | Climate change is projected to increase the frequency and intensity of extremely hot days. We use a panel regression framework at the sub-national (i.e., region) level to identify the effect of extreme heat on economic growth in Latin America accounting for acclimation to the season and to the local climate. Extreme heat has a negative and significant impact on economic growth, and the magnitude of the impact is increasing in the intensity and duration of heat. Our results suggest that the impact of each additional consecutive day of extreme heat is greater than the impact of the prior day. Extreme heat affects economic growth directly in addition to its indirect effect through higher seasonal mean temperatures and extreme heat could account for 34-68% of the total projected reduction in the annual economic growth rate at midcentury due to temperature change. Our results suggest that extreme heat is one potential channel for the documented non-linearity in the impacts of rising mean temperature. |
| Keywords: | extreme heat;heat waves;economic growth |
| JEL: | Q5 Q54 Q51 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13810 |
| By: | Carolina Román (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Henry Willebald (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía) |
| Abstract: | Services currently play a prominent role in Uruguay's productive structure, constituting approximately two-thirds of GDP. This empirical observation has led to various arguments that Uruguay is now primarily a service-based economy. However, this characterization is not recent. By the mid-20th century, the gross value added (VA) from services accounted for over 55% of GDP. Moreover, historical analysis widely recognizes several service activities as key drivers of economic development since the 19th century. Despite this historical recognition, the absence of systematic measures of the VA of services has hindered studies on the evolution of "non-material" activities and their significance for economic growth. This article aims to address this gap by providing VA estimates to cover a comprehensive period from 1870 to 2020. We analyze the long-term evolution of services, particularly how they challenge the traditional three-sector hypothesis. Additionally, we explore the sector's transformations—from services closely tied to material production to those increasingly linked with urbanization and sophisticated consumption patterns. |
| Keywords: | National accounts, Uruguay, Services, Structural change, Economic growth |
| JEL: | E01 E23 N16 N76 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ulr:wpaper:dt-09-24 |
| By: | Brian C. Fujiy |
| Abstract: | I causally estimate local knowledge spillovers in R&D and quantify their importance when implementing R&D policies. Using a new administrative panel on German inventors, I estimate these spillovers by isolating quasi-exogenous variation from the arrival of East German inventors across West Germany after the Reunification of Germany in 1990. Increasing the number of inventors by 1% increases inventor productivity by 0.4%. I build a spatial model of innovation, and show that these spillovers are crucial when reducing migration costs for inventors or implementing R&D subsidies to promote economic activity. |
| Keywords: | inventors, research and development, innovation, agglomeration, spillovers |
| JEL: | F16 J61 O4 O31 R12 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:24-59 |
| By: | Jesús Fernández-Villaverde; Galo Nuño; Jesse Perla |
| Abstract: | We argue that deep learning provides a promising avenue for taming the curse of dimensionality in quantitative economics. We begin by exploring the unique challenges posed by solving dynamic equilibrium models, especially the feedback loop between individual agents' decisions and the aggregate consistency conditions required by equilibrium. Following this, we introduce deep neural networks and demonstrate their application by solving the stochastic neoclassical growth model. Next, we compare deep neural networks with traditional solution methods in quantitative economics. We conclude with a survey of neural network applications in quantitative economics and offer reasons for cautious optimism. |
| JEL: | C61 C63 E27 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33117 |