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on Economic Growth |
| By: | Gobbi, Paula Eugenia; Hannusch, Anne; Rossi, Pauline |
| Abstract: | Much of the observed cross-country variation in fertility aligns with the predictions of classic theories of the fertility transition: countries with higher levels of human capital, higher GDP per capita, or lower mortality rates tend to exhibit lower fertility. However, when examining changes within countries over the past 60 years, larger fertility declines are only weakly associated with greater improvements in human capital, per capita GDP, or survival rates. To understand why, we focus on the role of family institutions, particularly marriage and inheritance customs. We argue that, together with the diffusion of cultural norms, they help explain variations in the timing, speed and magnitude of the fertility decline. We propose a stylized model integrating economic, health, institutional and cultural factors to study how these factors interact to shape fertility transition paths. We find that family institutions can mediate the effect of economic development by constraining fertility responses. |
| Keywords: | Fertility transition; Culture |
| JEL: | J1 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20827 |
| By: | Shoib, Zulekha |
| Abstract: | This study extends the classic Solow–Swan growth model to explore how the reconstruction of capital after major floods shapes Pakistan’s long-term economic growth. The model divides total capital into three key components—traditional, modern, and human capital—to reflect the structural diversity of Pakistan’s economy. Floods are introduced as sudden external shocks that damage these forms of capital differently, disrupting the pace of recovery and future growth. The analysis shows that when post-flood rebuilding focuses mainly on traditional capital, such as housing and basic infrastructure, short-term recovery occurs but long-run growth remains limited due to low technological progress. In contrast, reconstruction that also strengthens modern and human capital—through investment in technology, industry, and education—leads to higher productivity and long-run economic growth. The findings suggest that Pakistan’s recovery from floods is not just about rebuilding what was lost, but about investing smarter in what can sustain future development. The study concludes by emphasizing the importance of balanced and forward-looking reconstruction policies, such as the Twin Capital Reconstruction (TCR) Program, whereby budget allocation towards rebuilding capital in a flood-affected economy should have a fixed proportion diverted towards investments in modern and human capital, alongside traditional capital, so as to ensure long-term growth. |
| Keywords: | Solow–Swan Model; Flood Recovery; Capital; Long-term growth; Pakistan |
| JEL: | C62 C65 E19 Q54 |
| Date: | 2025–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129908 |
| By: | Acemoglu, Daron; Akcigit, Ufuk; Johnson, Simon |
| Abstract: | This chapter presents a tractable framework for the study of technology adoption and diffusion in the context of economic development. Firms in countries behind the world technology frontier can rapidly adopt new techniques from the world frontier. Lower absorptive capacity (because of weak education systems, poor management practices, or barriers to technology adoption), institutional distortions, mismatch between frontier technologies and the needs of firms in the country (i.e., “inappropriate technology†), and credit market frictions slow down technology adoption and cause the economy in question to have a greater distance to the frontier and thus lower income per capita—although the long-run growth rate of the country still remains equal to that of the frontier. This framework is extended to study the choice between innovation and imitation, as well as the role of selection for higher-productivity and higher-absorptive capacity firms during the process of economic development. We illustrate the main comparative statics of our framework with a number of correlations based on cross-country and firm-level data. The tractability of the framework makes it amenable to a range of additional extensions. |
| Keywords: | Technology adoption; Innovation; Institutions; Economic growth; Development; Productivity |
| JEL: | O1 O3 O4 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21032 |
| By: | Bergeaud, Antonin; Nur Gozen, Ruveyda; Van Reenen, John |
| Abstract: | We introduce a methodology to measure cross-country trends in innovation capability- “technological trajectories†and implement this on a new rich dataset covering patents between 1836 and 2016 across multiple countries. Intuitively, trajectories are revealed by a country’s sustained increases in patenting across multiple patent offices. We first describe the data patterns, showing the relative decline of the UK, and the rise first of the US and Germany, and then later of Japan and China. We then econometrically estimate trajectories on (i) the post-1902 period for France, Germany, Japan, the UK and US, and (ii) the post-1960 period for a wider sample of 40 countries. Our trajectories are strongly positively correlated with Total Factor Productivity growth, and also (but less strongly) associated with the growth of labour productivity and capital intensity. We show that future trajectories are predicted by a country’s initial levels of R&D, education and defence spending, classic drivers of innovation in modern growth theory. |
| Keywords: | Patents; Technical progress; Economic history; Innovation |
| JEL: | O31 O33 O34 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21066 |
| By: | Rammohan, Anu; Balla, Shalem; Sharma, Anjali; Goli, Srinivas; Nedumaran, Swamikannu |
| Abstract: | This study examines the dynamic relationship between transitions in cropping pattern and economic growth in India over the period 1966 to 2017, specifically focusing on the relationship between crop production diversity and economic growth. Using the state-level panel data, we present two-way line graphs and estimate Quadratic regression models. This enables us to explore the intricate relationship between GDP per capita and the Shannon Diversity Index. By employing piece-wise regression models, we aim to discern any statistically significant breakpoints or shifts in this relationship. Finally, we estimate Quantile regression and Regression Discontinuity Design (RDD) as robustness checks. Our empirical results show that crop production diversity decreased between 1966 and 1995 and then slightly increased, thereby resembling a 'U-shape relationship'. Using the year 1995 as a breakpoint, the piece-wise regression model shows a split relationship between the Shannon Crop Diversity Index and GDP per capita, with a negative relationship in the first period (1966-1995) and a positive relationship in the second (1996-2017). |
| Keywords: | Agriculture, Crop Diversity, Economic growth, Gross Domestic Product, India |
| JEL: | Q1 Q18 F63 O13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:341615 |
| By: | Costas Arkolakis; Sun Kyoung Lee; Michael Peters |
| Abstract: | Between 1880 and 1920, more than 20 million immigrants settled in the United States. We study how this migration wave affected innovation and growth. Using a newly constructed dataset linking individual census records to historical immigration records and the universe of US patents, we highlight a new channel through which immigrants contributed to growth: they disproportionately settled in urban innovation hubs. To quantify the aggregate and regional effects of this mass migration episode, we develop a new spatial growth model in which skilled workers have a comparative advantage in innovation and sort endogenously across space. We find that international arrivals after 1880 raised US income per capita by 8.2% by 1940. Removing the subsequent immigration restrictions of the 1920s would have raised income per capita by a further 1.7% by 2000. Immigrants' skill composition and their concentration in urban hubs are key drivers of these effects. |
| JEL: | N91 O11 O30 R13 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35392 |
| By: | Lambais, Guilherme; Palma, Nuno |
| Abstract: | We construct the first long-run series of GDP per capita for Brazil, covering the period from 1574 to 1920. We build a new, hand-collected dataset including over 30, 000 observations for prices and wages covering most major regions of Brazil: Bahia, Rio de Janeiro, Pernambuco, São Paulo, and Rio Grande do Sul. Our estimates imply an average per-capita growth rate of approximately zero during the colonial era (1574-1821), 0.69% per year during the imperial era (1822-1888), and 1.02% per year during the Early Republic. The latter estimates lie below the "pro-growth" view of late nineteenth-century Brazil but above the traditional narrative of complete stagnation. |
| JEL: | N16 N32 N36 O47 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21341 |
| By: | Agostinelli, Francesco; Doepke, Matthias; Sorrenti, Giuseppe; Zilibotti, Fabrizio |
| Abstract: | This chapter argues that parenting choices are a central force in the joint evolution of culture and economic outcomes. We present a framework in which parents—motivated by both their children’s future success and their own normative beliefs—choose parenting styles and transmit cultural traits responding to economic incentives. Values such as work ethic, patience, and religiosity are more likely to be instilled when their anticipated returns, economic or otherwise, are high. The interaction between parenting and economic conditions gives rise to endogenous cultural and economic stratification. We extend the model to include residential sorting and social interactions, showing how neighborhood choice reinforces disparities in trust and human capital. Empirical evidence from the World Values Survey supports the model’s key predictions. We conclude by highlighting open questions at the intersection of parenting, culture, and inequality. |
| Keywords: | Inequality; Human capital; Culture; Paternalism |
| JEL: | D10 I24 O10 O4 R20 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20951 |
| By: | Voth, Hans-Joachim |
| Abstract: | Was the Industrial Revolution driven by culture? I review existing theories, confront them with evidence, and suggest directions for future research. |
| Keywords: | Culture; Long-run development |
| JEL: | N13 Z10 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21114 |
| By: | Bernardo Ribeiro (Yale University) |
| Abstract: | This paper proposes a semi-endogenous growth theory that incorporates technology vintages and the endogenous evolution of multiple technological paradigms through innovation. It provides a characterization of both balanced growth equilibrium and transitional dynamics in an environment where new technologies continuously emerge. From a positive perspective, the model rationalizes two distinct empirical patterns. Using two centuries of US patent data, I first document that the age profile of patents has a pronounced hump shape: most contemporary patents build upon technologies that are between 50 and 100 years old. Second, this age profile has remained stable throughout the past century. From a normative standpoint, the theory underscores a misallocation of research effort induced by the tendency among profit-maximizing firms to overinvest in further developing mature technologies. This yields a suboptimally slow development of emerging technologies. According to a calibrated version of the model, correcting such misallocation could generate welfare gains of 7%. |
| Date: | 2026–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2515 |
| By: | Baslandze, Salomé; Vardishvili, Ia |
| Abstract: | Large productivity differences across firms reflect substantial ex-ante heterogeneity at entry, yet the origins of this heterogeneity remain poorly understood. This paper shows that innovating spinouts—firms formed by inventors leaving incumbent innovators—are a key endogenous source of high-growth entrepreneurship and aggregate productivity growth. Using inventor mobility in patent data, we document that spinouts systematically outperform other entrants throughout their life cycle, their performance is strongly linked to parent-firm technological strength, and their formation temporarily depresses parent-firm innovation. We develop a Schumpeterian growth model that endogenizes spinout formation and the fundamental tradeoff between knowledge diffusion, creative destruction, and appropriability. Closely disciplined by rich microlevel data, the model implies that spinouts account for a disproportionate share of high-growth firms and nearly forty percent of aggregate productivity growth, but that inventor departures also impose sizable costs on incumbents, generating a fundamental policy tradeoff. Policy counterfactuals show that relaxing non-compete restrictions raises aggregate growth and welfare and amplifies the effectiveness of entry subsidies. |
| Keywords: | Innovation; entrepreneurship |
| JEL: | O30 O43 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21016 |
| By: | Daron Acemoglu; David Autor; Keelan Beirne; Andrew Scott |
| Abstract: | The secular decline in birth rates across the globe over the past seven decades has slowed population growth, raised average ages, and reshaped labor markets and the macroeconomy. Contrary to the widespread expectation that these trends hamper economic growth, we find lower birth rates are associated with higher growth in GDP per working-age adult across countries and higher wage growth across US commuting zones, with no negative impact on aggregate GDP or earnings. These patterns are not explained by educational upgrading, rising female labor force participation, the declining importance of agriculture, or neoclassical-Solow mechanisms. We argue that they reflect the endogenous, labor-saving response of technology to the scarcity of younger workers. Consistent with this interpretation, countries and regions with lower birth rates exhibit more labor-saving patents and growing high-tech activity. There is also higher TFP growth across countries and industries. Exploiting cross-country variation in WWII military and civilian deaths, we find that declines in younger population, rather than population size per se, drive our results. |
| JEL: | E24 J11 J31 O33 O40 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35401 |
| By: | Bernardo Ribeiro (Einaudi Institute for Economics and Finance) |
| Abstract: | This paper proposes a semi-endogenous growth theory that incorporates technology vintages and the endogenous evolution of multiple technological paradigms through innovation. It provides a characterization of both balanced growth equilibrium and transitional dynamics in an environment where new technologies continuously emerge. From a positive perspective, the model rationalizes two distinct empirical patterns. Using two centuries of US patent data, I first document that the age profile of patents has a pronounced hump shape: most contemporary patents build upon technologies that are between 50 and 100 years old. Second, this age profile has remained stable throughout the past century. From a normative standpoint, the theory underscores a misallocation of research effort induced by the tendency among profit-maximizing firms to overinvest in further developing mature technologies. This yields a suboptimally slow development of emerging technologies. According to a calibrated version of the model, correcting such misallocation could generate welfare gains of 7%. |
| Date: | 2026–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2515r1 |
| By: | Guccione, Andrea; Roldan-Blanco, Pau |
| Abstract: | Firms’ innovation outcomes depend on their ability to attract and retain talented inventors. What market frictions prevent the sorting between firms with high innovation potential and high-productivity inventors? How does this sorting impact aggregate innovation, growth and welfare? We address these questions both empirically and theoretically. Empirically, we show that firms facing strong competition in the product market employ more productive inventors, while less productive inventors tend to be allocated in concentrated industries. Theoretically, we embed a frictional labor market for inventors into an endogenous-growth model of strategic innovation. In line with the data, the model predicts that high-productivity inventors are disproportionately employed in firms that operate in competitive industries. We then use the model to quantify the growth and welfare implications of this inventor sorting. Our results show that matching frictions in the market for inventors impede the allocation of highproductivity inventors to firms with high implementation intensity, and are responsible for a 32% loss in economic growth. Industrial policies that subsidize R&D spending relax these frictions by boosting inventor productivity, helping high-quality inventors reallocate to firms with high implementation incentives. Under optimal subsidies, growth increases as much as 74 basis points, closing most of the gap in missing growth caused by frictions in the market for inventors. |
| Keywords: | Inventors; Innovation; Growth; Misallocation; Search |
| JEL: | L16 J6 O3 O4 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21186 |
| By: | Becker, Sascha O. |
| Abstract: | This chapter explores the intersection of religion and economics on the 250th anniversary of Adam Smith's The Wealth of Nations, first published in 1776. While Smith is often viewed as a secular figure in economics, his work was deeply influenced by the moral philosophy of his time, which was shaped by Christian thought. I discuss how economists think about the religious themes in Smith’s work in the 21st century and review what we know today about the connection between religion and economic outcomes. |
| JEL: | B1 B2 N3 N9 P5 Z12 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21196 |
| By: | Ma, Debin; Rubin, Jared; Weiwen, Yin |
| Abstract: | This paper revisits the old thesis of the contrasting paths of modernization between Japan and China. It develops a new analytical framework regarding the role of knowledge acquisition (propositional vs. prescriptive) and political centralization as the key drivers behind these contrasting paths. Our model and historical data highlight how the introduction of these elements contributed to Meiji Japan’s decisive turn towards the West and Qing China’s lethargic response to Western imperialism. Our analytical framework, developed from a comparative historical narrative and quantitative data, sheds new insights onto the importance of knowledge acquisition for enabling developing countries to reach the world’s economic frontier. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21273 |
| By: | Carsten Colombier (FiFo - Institute for Public Economics, University of Cologne, Germany; Federal Department of Finance (Swiss Ministry of Finance), Bern, Switzerland) |
| Abstract: | This paper contributes to the still unresolved issue of the growth impact of government size by analysing a historical panel data set of 17 developed countries, among them ten EU countries and the former EU member United Kingdom. The data ranges from 1880 to 2016. The unique feature of the long-time dimension allows for conducting a kind of natural experiment. Government size is closely related to economic-policy paradigms. The time span covers different economic policy paradigms, in particular, ‘laissez-faire’ before World War II and Keynesian economic policy after World War II. Before WW II government size is small, after WW II it big. Furthermore, this paper contributes to filling a gap in the literature by testing the non-linear hypothesis (Armey curve). We take particular attention to a key shortcoming of panel-data analysis – parameter or individual heterogeneity. Overall, this analysis suggests a systematic positive, albeit quite small, linear relationship of government size with economic growth. Rather than concentrating on government size, policy makers are advised to care for an efficiently run and high-quality government sector as a prerequisite for a steady growth path. This applies also to the reformed EU Stability and Growth Pact. |
| Keywords: | government size, economic growth, Armey curve, historical data, robustness analysis |
| JEL: | H50 E62 C23 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:men:wpaper:112_2026 |
| By: | Callum J. Jones; David López-Salido; Thomas Philippon |
| Abstract: | Growth theory is based on the assumption of exponential total factor productivity (TFP) growth, or that the conditional expectation of the next TFP increment is proportional to the current level of TFP. In the U.S., we find strong evidence that TFP growth is conditionally additive, not exponential. Even starting from low priors, Bayesian estimation selects the additive model over the exponential one. In addition, professional forecasts and international TFP series are consistent with the additive model but not with the exponential one. |
| JEL: | C10 E17 N0 O11 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35415 |
| By: | Cermeño, Alexandra L.; Salvo, Carla; Weisdorf, Jacob |
| Abstract: | Why are some regions rich and others poor? This study investigates the geographical origins of Italy’s persistent regional income gap. Using municipal population density as both a proxy for historical income and an outcome shaped by geography, we show that first-nature advantages, such as mild climates and fertile soils, favoured higher population density in Northern Italy from the earliest available data. Second-nature forces (agglomeration and market connectivity) then reinforced this initial lead. We find that first- and second-nature geography jointly explain half of today’s municipal variation in income per capita, whereas pre-unification regional histories account for only about one-fifth. |
| Keywords: | Agglomeration economies; Income inequality; Market potential; Natural endowments; Population concentration; Regional development |
| JEL: | O15 O18 N90 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20919 |