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on Economic Growth |
| By: | Guillaume Blanc; Romain Wacziarg |
| Abstract: | For most of human history, until the fertility transition, technological progress translated into larger populations, preventing sustained improvements in living standards. We argue that migration offered an escape valve from these Malthusian dynamics after the European discovery and colonization of the Americas. We document a strong relationship between fertility and migration across countries, regions, individuals, and periods, in a variety of datasets and specifications, and with different identification strategies. During the Age of Mass Migration, persistently high fertility across much of Europe created a large reservoir of surplus labor that could find better opportunities in the New World. These migrations, by relieving demographic pressures, accelerated the transition to modern growth. |
| JEL: | F22 J13 N33 O11 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33542 |
| By: | Hatta, Tatsuo; Ikeda, Shinsuke; Hoshina, Hiroki |
| Abstract: | Japan's rapid growth in the 1960s was accompanied by a massive migration from rural to urban areas. However, immediately after 1970, migration declined sharply, and at the same time, the rate of economic growth plummeted.To explain this decline in urban-bound migration, we estimated the urban-bound migration function.The estimation reveals that in the 1970s, the largest factor contributing to the decline in this migration was the relative increase in per capita income in rural areas. The second most important factor was narrowing regional disparities in the job-to- application ratio. In addition, the relative increase in the stock of social capital in the local regions also contributed. However, the population change in the rural areas had negligible effects on urban-bound migration in the 1970s.This paper also demonstrates that the relative increase in per capita income in rural areas is largely due to policy- based regional redistribution, implying that the large-scale redistribution of the fruits of rapid economic growth to rural areas halted urban-bound migration and reduced the growth rate. This suggests that for developing countries experiencing high growth, curbing the political pressure to redistribute to rural areas may be important to sustain the growth. |
| Keywords: | Geographic Labor Mobility, regional migration, growth rate, income redistribution to rural areas |
| JEL: | R11 J61 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:agi:wpaper:02000145 |
| By: | Gunter Merdzan (Ss. Cyril and Methodius University in Skopje, Faculty of Economics – Skopje); Predrag Trpeski (Ss. Cyril and Methodius University in Skopje, Faculty of Economics – Skopje); Daniela Bojadjieva (Ss. Cyril and Methodius University in Skopje, Faculty of Economics – Skopje); Biljana Tashevska (Ss. Cyril and Methodius University in Skopje, Faculty of Economics – Skopje) |
| Abstract: | This paper analyses the role of institutional quality in determining the economic growth in the OECD countries from 1995 to 2021 concerning the institutional economics framework developed by North (1990) and further advanced by Rodrik (2000) and Acemoglu et al. (2005). Institutions are viewed as the formal and informal structures that regulate economic, political, and social activities and are considered the key to influencing economic performance through the minimisation of transaction costs, encouragement of innovation, and human capital development. The theoretical framework assumes that inclusive institutions foster sustained economic growth while extractive institutions stifle development by consolidating power and assets. This paper hypothesises that institutional quality positively influences economic growth in OECD countries. Using panel regression models and Employing the Fraser Institute’s Economic Freedom Index and the Heritage Foundation’s Index of Economic Freedom as measures of institutional quality, it examines how government size, property rights, regulation, and trade freedom affect growth. The findings reveal that institutional quality has a positive but varying impact on economic growth. In particular, small government, low taxes, and good monetary policy are positively related to higher growth rates. However, factors such as property rights and trade freedom have either weak or negative coefficients of correlation with growth. The results suggest that fiscal prudency and sound money supply policies are conducive to growth, but other institutional factors are not as straightforward in their influence on growth. This study is useful for policymakers who wish to improve economic growth through institutional change. |
| Keywords: | Economic growth, Institutions, OECD countries |
| JEL: | O43 O47 P48 |
| Date: | 2024–12–15 |
| URL: | https://d.repec.org/n?u=RePEc:aoh:conpro:2024:i:5:p:191-193 |
| By: | Ramstetter, Eric D. |
| Abstract: | This essay examines how institutions and economic trends have evolved during a period of slow economicgrowth after 2006, focusing on comparisons to 2000-2006, when the economy recovered from the Asianfinancial crisis, and the economic boom during 1990-1996. Private fixed investment declined sharply andremained low after 1996, contributing to relatively low growth. Institutional instability, particularly inpolitical and financial markets, increased investor uncertainty and contributed to low growth. In contrast, important improvements in infrastructure, labor productivity and wages, education, health, and povertyreduction continued to boost growth after 2006. Income distribution among households and regions alsotended to improve, although changes were small. Thailand's large international trade, policies that limit bothimport and domestic competition, and the need to strengthen environmental protection present importantpolicy challenges.The political alignments after the 2023 election offer hope that political parties and other politicalinstitutions can mature, stabilize, and help promote rebounds in private investment and growth, while helpingpromote further gains in education, health, and human capital formation. Literature on development andgrowth emphasizes the key roles of strengthening and stabilizing institutions that foster peace (the lack ofviolence, actual or threatened) and human capital formation (through healthcare, education, etc.) becausepositive externalities are often large in related markets. Fostering continued wage increases driven bycorresponding increases in labor productivity (benefitting both producers and consumers) is anotherimportant challenge for high-income developing economies like Thailand. |
| Keywords: | JEL classfication: O53, O11, O12, O15, O24, O25, O43, O44, Thailand, Institutions, Economic Growth, Physical & Human Capital Formation, Income Distribution, Industrial & International Trade Policies |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:agi:wpaper:02000104 |
| By: | Paul X. McCarthy; Xian Gong; Marieth Coetzer; Marian-Andrei Rizoiu; Margaret L. Kern; John A. Johnson; Richard Holden; Fabian Braesemann |
| Abstract: | This study explores the relationship between personality diversity and national economic performance, introducing the Global Personality Diversity Index ({\Psi}-GPDI) as a novel metric. Leveraging a dataset of 760, 242 individuals across 135 countries, we quantify within-country diversity based on the Big Five personality traits. Our findings reveal that personality diversity accounts for 19.9% of the variance in GDP per capita and provides an additional 2.8% explanatory power beyond institutional quality and immigration, underscoring its unique contribution to economic vitality. Through multi-factor analysis, we demonstrate how personality diversity complements existing economic frameworks, offering actionable insights for policymakers seeking to enhance innovation, productivity, and resilience. This research positions psychological diversity as a critical yet under explored factor in driving economic growth, bridging the fields of psychology and economics. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.19388 |
| By: | Abarca, Alejandro; Ramirez Varas, Surayabi |
| Abstract: | This paper estimates Costa Rica's peace dividend following the end of the civil war and the army's abolition in 1949 with synthetic control. We find that the country's average per capita GDP growth increased from 1.46% to 2.28% between 1950-2010, relative to a counterfactual Costa Rica that did not take this path. Three main mechanisms are offered to explain these results: After the end of the civil war and the proscription of the military, the country decided to invest substantially in infrastructure, education, and health, which drove economic development. Second, the new constitution reduced power concentration by the executive branch and increased its accountability. Third, the military's proscription guaranteed the survival and the long-run success of these political and socio-economic reforms. |
| Keywords: | civil war; economic growth; peace; economic development; Latin America; democratization |
| JEL: | D74 O54 |
| Date: | 2025–02–27 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126870 |
| By: | Boese-Schlosser, Vanessa; Eberhardt, Markus |
| Abstract: | Previous research has established a link between democratic governance and sustainable economic growth. Yet, over the past decade, we have witnessed a global decline of democratic institutions across a wide range of political contexts. How has this erosion of democracy affected countries' economic trajectories over the 1999-2023 period? This paper investigates the economic consequences of democratic breakdowns, focusing on whether - and how - losing democracy comes with an economic cost. Using a heterogeneous difference-in-differences estimator and drawing on the hierarchical structure of the Varieties of Democracy dataset, we examine both high-level democracy definitions and their institutional building blocks. Our analysis proceeds in three steps. First, we estimate the average treatment effect of regime collapse and find robust evidence of an autocratic loss: on average, countries that transition from democracy to autocracy experience a decline in income per capita of around 1.5%, with losses reaching 4-6% two decades after collapse. This effect is driven more strongly by the breakdown of electoral democracy than liberal democracy. Second, we disaggregate democracy into its low-level institutional components to identify the source of this loss. We find that the negative economic effects are primarily driven by the erosion of free and fair elections-while other components, such as freedom of expression or judicial constraints on the executive, play a much smaller role. Third, we explore transmission channels that explain how democratic collapse translates into economic decline. We find suggestive evidence that cuts to investment in social support and public goods - such as education - are among the key mechanisms through which autocratic loss materializes, with some effects emerging more immediately and others likely to deepen over time. Our findings underscore the long-term risks posed by democratic erosion and highlight the central role of electoral integrity in safeguarding economic development. |
| Keywords: | Democracy, Democratic Breakdown, Difference-in-Differences, Heterogeneous Treatment, Interactive Fixed Effects |
| JEL: | O10 P16 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wzbtod:316436 |
| By: | Sheila Jiang; Alessandro Rebucci; Gang Zhang |
| Abstract: | We develop and estimate a new model of endogenous growth in bank efficiency and firm productivity in which banks adopt technology embedded in capital goods produced by entrepreneurs, and agents choose whether to become workers or capital-good-producing entrepreneurs. In this framework, bank efficiency influences firm productivity by affecting agents' occupational choices, while firm productivity affects bank efficiency through the relative price of capital goods. We find that increasing technology adoption in the banking system to the level in the top half of the distribution in the data accelerates the economy's long-term growth from 2% to 2.17%. We also find that empirical evidence based on U.S. bank, metropolitan, and state-level data is consistent with the critical mechanisms of our model. |
| JEL: | G21 O3 O4 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33551 |
| By: | Sanchaita Hazra; Bodhisattwa Prasad Majumder; Tuhin Chakrabarty |
| Abstract: | Current efforts in AI safety prioritize filtering harmful content, preventing manipulation of human behavior, and eliminating existential risks in cybersecurity or biosecurity. While pressing, this narrow focus overlooks critical human-centric considerations that shape the long-term trajectory of a society. In this position paper, we identify the risks of overlooking the impact of AI on the future of work and recommend comprehensive transition support towards the evolution of meaningful labor with human agency. Through the lens of economic theories, we highlight the intertemporal impacts of AI on human livelihood and the structural changes in labor markets that exacerbate income inequality. Additionally, the closed-source approach of major stakeholders in AI development resembles rent-seeking behavior through exploiting resources, breeding mediocrity in creative labor, and monopolizing innovation. To address this, we argue in favor of a robust international copyright anatomy supported by implementing collective licensing that ensures fair compensation mechanisms for using data to train AI models. We strongly recommend a pro-worker framework of global AI governance to enhance shared prosperity and economic justice while reducing technical debt. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.13959 |