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on Economic Growth |
| By: | Wang, Di; Wang, Xilin |
| Abstract: | This paper explores the dynamic effects of labor unions on economic growth and income inequality in a Schumpeterian growth model with heterogeneous households and endogenous market structure. Income inequality arises from an unequal distribution of wealth and heterogeneous labor productivity. In the short run, increasing union bargaining power reduces both growth and inequality when the union is wage-oriented. In the long run, stronger unions continue to lower inequality without affecting the steady-state growth rate. The model identifies the channels through which unions shape inequality: an income-share shift from asset income to labor income, wage compression, and changes in the wealth-wage correlation. Calibrating the model to U.S. data, we find that increasing union bargaining power significantly reduces long-run income inequality. |
| Keywords: | Labor unions; Economic growth; Income inequality; Endogenous market structure |
| JEL: | D30 J50 O30 O40 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125948 |
| By: | Yeonha Jung; Minki Kim; Munseob Lee |
| Abstract: | This study examines the long-term impact of Hyanggyo, state-sponsored educational institutions established during the early Joseon Dynasty in Korea (1392-1592), on human capital accumulation. Although these schools largely ceased functioning as educational centers by the late 16th century, their influence has endured to the present day. Drawing on a newly constructed township-level dataset, we find a robust positive association between historical exposure to Hyanggyo and modern educational attainment. This relationship appears to be driven by enduring local demand for education, supported by three complementary findings. First, regions with greater historical exposure experienced larger gains in Japanese literacy during colonial era school expansions. Second, residents in these areas express stronger pro-education attitudes today. Third, historically exposed regions exhibited lower fertility rates, consistent with a quantity–quality tradeoff in parental investment. Together, our findings highlight the lasting legacy of early educational institutions. |
| Keywords: | Historical institutions, Human capital, Hyanggyo, Joseon, Cultural transmission |
| JEL: | I23 J24 N35 O15 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_707 |
| By: | DiMaria, Charles-Henri |
| Abstract: | Despite the pioneering works of Kuznets and Kaldor in the mid-fifties, it was not until the nineties that economists began to thoroughly investigate whether income inequality is detrimental or conducive to growth. A brief survey of the literature does not yield a definitive conclusion. Some authors argue that inequality is beneficial, as higher-income populations are more likely to save and invest in innovative activities. Conversely, other authors contend that concentrating income in the hands of a few limits the number of potential investors, hinders the development of markets and industries with increasing returns, and may dis-incentivize investment in human capital. Since the mid-nineties, most empirical studies attempting to uncover a link between income inequality and growth have concluded that the relationship is predominantly negative. In this study, we reveal a more complex link, characterized by an inverted-U shape that is mostly negative and only applicable to countries with intermediate income per capita. For poor and rich countries, this link does not exist. We employ a panel threshold model approach, introducing income inequality in linear, quadratic, and cubic forms to allow for potential linear, U-shaped, inverted-U-shaped, and even more complex relationships between inequality and growth. |
| Keywords: | Income inequality, growth regression, panel threshold. |
| JEL: | C23 D63 O47 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126418 |
| By: | Perju, Genoveva-Elena |
| Abstract: | This study examines the long-term economic consequences of institutional discrimination through an analysis of the formal exclusion of the Romanian majority from Transylvania's feudal institutions between 1366-1437. Using path dependence theory as a theoretical framework, we investigate whether this historical exclusion created persistent trajectories of institutional underdevelopment and economic inequality that continue to influence the region's socioeconomic structure today. Our empirical analysis employs county-level data across Romania, comparing Transylvanian counties to other historical regions using regression models that control for contemporary socioeconomic factors. The results indicate that counties in historical Transylvania exhibit significantly lower GDP per capita (€2, 150 less on average) and higher income inequality (3.5 percentage points higher Gini coefficient) compared to other Romanian regions. These findings provide robust empirical evidence supporting the hypothesis that medieval institutional exclusion created path-dependent trajectories that continue to shape economic outcomes seven centuries later. The study contributes to the broader literature on institutional economics, historical determinants of development, and the persistence of inequality, while offering insights into how privilege structures can become embedded in regional economic systems across centuries. |
| Keywords: | · Path dependence · Institutional discrimination · Economic development · Historical persistence · Regional inequality · Transylvania · Feudal institutions · Extractive institutions |
| JEL: | N93 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125924 |
| By: | Pascual Restrepo |
| Abstract: | This chapter explores the long-run implications of Artificial General Intelligence (AGI) for economic growth and labor markets. AGI makes it feasible to perform all economically valuable work using compute. I distinguish between bottleneck and supplementary work—tasks that are essential versus non-essential for unhindered growth. As computational resources expand: (i) the economy automates all bottleneck work, (ii) some supplementary work may be left exclusively to humans, (iii) output becomes linear in compute and labor and its growth is driven by the expansion of compute, (iv) wages converge to the opportunity cost of computational resources required to reproduce human work, and (v) the share of labor income in GDP converges to zero. |
| JEL: | E0 J0 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34423 |
| By: | Zhehao Wang (Osaka School of International Public Policy, Osaka University) |
| Abstract: | In this paper, we explore the impacts of government policies on endogenous fertility and economic growth in a full-fledged framework with private and public spending on both health and education. First, we show that excessive government expenditure on education and insufficient government expenditure on health may lead to zero or even negative economic growth. Second, in our specified model, the income tax rate is shown to have no impact on fertility. Third, we determine the income tax rate and the fraction of revenue used for education expenditure to maximize the balanced growth rate. Furthermore, it is demonstrated that larger public health expenditure on children leads to greater economic growth. Moreover, the welfare-maximizing tax rate and shares of public expenditure allocated to children’s health and education are found to be smaller than the growth-maximizing counterparts. Finally, the welfare-maximizing tax rate exhibits a non-monotonic relationship with social discount factor. |
| Keywords: | human capital, fertility, growth, health, education |
| JEL: | I10 I20 O40 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:osk:wpaper:2514 |
| By: | Pham, Ngoc Sang; Le Van, Cuong; Bosi, Stefano |
| Abstract: | We study an overlapping generations (OLG) exchange economy with an asset that yields dividends. First, we derive general conditions, based on exogenous parameters, that give rise to three distinct scenarios: (1) only bubbleless equilibria exist, (2) a bubbleless equilibrium coexists with a continuum of bubbly equilibria, and (3) all equilibria are bubbly. Under stationary endowments and standard assumptions, we provide a complete characterization of the equilibrium set and the associated asset price dynamics. In this setting, a bubbly equilibrium exists if and only if the interest rate in the economy without the asset is strictly lower than the population growth rate and the sum of per capita dividends is finite. Second, we establish necessary and sufficient conditions for Pareto optimality. Finally, we investigate the relationship between asset price behaviors and the optimality of equilibria. |
| Keywords: | exchange economy, overlapping generations, asset price bubble, fundamental value, low interest rate, Pareto optimal |
| JEL: | C6 D5 D61 E4 G12 |
| Date: | 2025–08–15 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125772 |
| By: | Nicolas Abad (LERN - Laboratoire d'Economie Rouen Normandie - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université); Johanna Etner (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique); Natacha Raffin (CEPS - Centre d'Economie de l'ENS Paris-Saclay - Université Paris-Saclay - ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay); Thomas Seegmuller (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique, AMU - Aix Marseille Université) |
| Abstract: | We use an overlapping generations model with physical and human capital, and two reproductive periods to explore how fertility decisions may differ in response to economic incentives in early and late adulthood. In particular, we analyze the interplay between fertility choices—related to career opportunities—and wages, and investigate the role played by work experience and investment in both types of capital. We show that young adults postpone parenthood above a certain wage threshold and that late fertility increases with work experience. The long run trend is either to converge to a low productivity equilibrium, involving high early fertility, investment in physical capital and relatively low income, or to a high productivity equilibrium, where households postpone parenthood to invest in their human capital and work experience, with higher late fertility and higher levels of income. A convergence to the latter state would explain the postponement of parenthood and the mitigation or slight reversal of fertility decrease in some European countries in recent decades. |
| Keywords: | Fertility, overlapping generations, work experience, postponement |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04577278 |