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on Economic Growth |
| By: | Monisankar Bishnu; Chakshu Jain |
| Abstract: | We develop a theory of the income-fertility relationship across all stages of development. Technological progress shapes fertility through two opposing channels: it raises the return to education, reducing desired family size, and it generates inequality which, depending on the development stage, can raise aggregate fertility. Their interaction produces a non-monotonic historical fertility path - rising in the Malthusian regime, falling during the demographic transition, and rising again at high income. A key implication is that inequality reshapes the composition of fertility across the human-capital distribution, changing the sign of the link between technological progress and long-run growth in a regime-dependent way. We provide empirical evidence consistent with the mechanism using US state-level data. Depending on how technological progress and inequality interact, the economy may achieve sustained growth, an Empty Planet, or Malthusian-like stagnation. |
| Keywords: | fertility, growth, technological change, inequality |
| JEL: | D1 J1 O10 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-46 |
| By: | José Pedro Pontes |
| Abstract: | We undertake a theoretical analysis of the spread of college education and economic growth, leading to three main findings. First, by assuming that schooling is related with a productive activity that is not land-based, we draw the boundary of areas with formal education. We conclude that these areas expand when either population increases in each point or when technical progress primarily a??ects the modern productive sector. Second, we characterise the evolution of schooling in a structurally stable economy and its impact on growth in a manner consistent with the empirical evidence. In particular, we find that the expansion of schooling in a structurally stable spatial economy promotes economic growth, albeit at a diminishing rate. Finally, we provide a plausible explanation the apparent paradox of “education without economic development”, which arises when the positive e??ect of a rapidly growing labour force on the education system is partially o??set by a technological regression in the industrial sector. |
| Keywords: | Education spread, economic growth, population density, education without development, space-time analysis. |
| JEL: | R11 I20 O15 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp04172026 |
| By: | Sebastiano Della Lena; Yasuhiro Sato; Yves Zenou |
| Abstract: | We develop a dynamic model in which individuals allocate time between work and religious activities, and parents invest in their children's human capital and religious belief. The model delivers, in a unified framework, the two empirical regularities documented by Barro and McCleary (2003) and McCleary and Barro (2019): controlling for religious activities, stronger belief raises economic growth because it raises human capital investment; controlling for belief, more time spent on religious activities lowers growth by crowding out labor supply. While the labor-supply margin is individually optimal, the human-capital margin is not: parents do not internalize that greater human-capital investment crowds out future religious transmission through the socialization channel, leading to inefficiently high human capital in equilibrium under strong socialization externality. |
| Keywords: | religion, human capital, cultural transmission, economic growth, cities |
| JEL: | O40 Z12 J24 R11 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26148 |
| By: | Schilirò, Daniele |
| Abstract: | Beginning with the Solow growth model as a baseline, this paper analyzes Paul Romer’s endogenous growth theory and Luigi Pasinetti’s structural economic dynamics framework, emphasizing their innovative contributions to the field. Although these theories differ methodologically and epistemologically, they share a fundamental emphasis on technical progress—defined as technological knowledge—as the primary driver of growth. This study highlights their commonalities, specifically their focus on knowledge, learning, and skills as the factors driving technological progress, though Pasinetti adopts a more evolutionary perspective. Finally, the paper contrasts their specific analytical toolkits: Romer’s reliance on the aggregate production function and the hypothesis of rational expectations versus Pasinetti’s utilization of input-output analysis, vertically integrated sectors, and the "natural system" of production. |
| Keywords: | Solow exogenous growth model; Romer’s endogenous growth; Pasinetti’s structural economic dynamics; technological change; knowledge; learning |
| JEL: | E1 J24 O3 O40 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129256 |
| By: | Choi, Dongkeun (University of California, San Diego); Lee, Munseob (University of California San Diego) |
| Abstract: | The falling relative price of equipment, long viewed as the signature of investment-specific technological change (ISTC), has a countervailing force: rising structures prices. We establish four facts: high-income countries' structures prices rise as equipment prices fall; each investment rate falls with its own price; equipment prices predict income growth more strongly than structures prices; and U.S. structures price rises are broad-based. KLEMS data attribute roughly half the post-1996 rise in construction prices, in the U.S. and abroad, to declining construction TFP. We build a two-capital endogenous growth model with structures in production and R&D. Calibrated to the U.S., structures impose a structural drag of 0.50 percentage points per year, partially offsetting a 1.32 percentage point equipment boost. A nested CES extension finds structures-unskilled substitutability alongside equipment-skilled complementarity. These margins shrink the drag by 20-30% and reveal a novel channel whose omission overstates the 1963-2019 U.S. skill premium rise by 30%. |
| Keywords: | equipment, structures, investment-specific technological change, endogenous growth |
| JEL: | O30 O40 E22 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18671 |
| By: | Lai, Ching-Chong; Lai, Ting-Wei; Yu, Po-yang |
| Abstract: | Existing studies on Schumpeterian growth theory unanimously specify new entrants’ creative destruction behavior in an ad hoc manner. However, this specification fails to reflect the fact that the replacement of incumbents by new entrants is essentially an optimal decision-making process. To overcome this deficiency, this paper develops a Schumpeterian growth model in which creative destruction arises endogenously from the optimal decision-making of entrant R&D firms, rather than being imposed in an ad hoc manner. The model is then used to examine how R&D-related policies—including patent protection and corporate profit taxation—as well as entry sunk costs affect entrants’ creative-destruction behavior, economic growth, and social welfare. Our theoretical analysis shows that a higher corporate profit tax rate or a higher marginal entry cost reduces the mass of potential new entrants, the optimal probability of creative destruction, and the balanced growth rate, whereas stronger patent protection raises these macroeconomic variables. In addition, our numerical welfare analysis finds that the magnitude of the marginal market entry cost plays a crucial role in determining the optimal levels of patent protection and corporate profit taxation. |
| Keywords: | R&D policies, Creative destruction, Economic growth, Social welfare |
| JEL: | L11 O31 O41 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128983 |
| By: | Schilirò, Daniele |
| Abstract: | This paper provides a comprehensive, albeit non-exhaustive, critical reflection on the evolution of political economy, tracing its intellectual lineage from foundational theories to modern growth dynamics. By examining shifting paradigms of wealth production, resource distribution, and power, the study navigates the transition from Mercantilist protectionism and Classical liberalism to the systemic critiques of Marxian economics. It further analyzes the discipline’s formalization during the Neoclassical Revolution and subsequent 20th-century shifts—specifically the Keynesian macroeconomic surge, the neoclassical synthesis, Hayek’s liberal stance, the Monetarist counter-revolution, and the rational expectations frameworks that redefined state-market relations. Beyond these foundational paradigms, the study evaluates critical modern expansions that transformed economics into a mathematically rigorous and structurally nuanced science. Specifically, it reviews the mathematical-axiomatic breakthrough of the Arrow-Debreu general equilibrium model and the strategic frameworks of Game Theory pioneered by von Neumann, Morgenstern, and Nash. Furthermore, the analysis incorporates Coase’s foundational work on transaction costs and organizational boundaries, alongside the revolutionary impacts of asymmetric information models and modern financial portfolio theory. Moving into contemporary discourse, the analysis bridges Solow’s foundational growth models with the endogenous growth theory championed by Romer, emphasizing the pivotal roles of technological change and knowledge. By integrating the Schumpeterian tradition of "creative destruction" with these frameworks, the paper highlights the institutional drivers of modern economic expansion. The study also underscores the innovative contributions of behavioral economics, which integrate psychological insights to explain the factors determining individual economic choices. Utilizing a conceptual-analytic approach, this study synthesizes abstract theory with practical policy to offer a cohesive overview of political economy for scholars and policymakers alike. |
| Keywords: | Political economy; value theory; money; income distribution; game theory; general equilibrium; macroeconomics; monetary theory; innovation; technological change; economic growth; institutions; behavioral economics |
| JEL: | B0 D0 E0 O1 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129334 |
| By: | Xiao Ma; Zi Wang; Xiaodong Zhu |
| Abstract: | We develop a dynamic multi-country trade model with trade-related technology diffusion and endogenous R&D to quantify the impacts of trade policies and trade wars on innovation, technology rivalry, and welfare. We estimate the model using data on trade and patent citations and validate it in the context of U.S. export controls on China. Counterfactual analysis yields three main results. First, U.S. export controls on China reduce technological progress in both countries: China experiences a sharp contraction in knowledge inflows, while the U.S. faces a decline in R&D. Second, trade-driven diffusion and endogenous innovation substantially amplify the technological and welfare gains in the U.S. and losses in other major economies from the 2025 Liberation Day tariffs. Third, U.S. optimal tariffs on China, under varying geopolitical concerns, reflect a trade-off between curbing technology diffusion to China and sustaining U.S. innovation. |
| Keywords: | Trade-related Technology Diffusion; Innovation; Endogenous Growth Model; Trade War; Optimal tariffs |
| JEL: | F12 F13 F14 O31 O33 |
| Date: | 2026–06–11 |
| URL: | https://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-824 |