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on Economic Growth |
| By: | Tom G\"orges; Magnus {\O}rberg Rove; Paul Sharp; Christian Vedel |
| Abstract: | How do transport infrastructures shape economic transformation and social change? We examine the impact of railway expansion in nineteenth-century Denmark on local population growth, occupational shifts, and the diffusion of ideas. Using a historical panel dataset and a difference-in-differences approach, we document that railway access significantly increased population growth and accelerated structural change. Moreover, railway-connected areas were more likely to establish key institutions linked to civic engagement and the cooperative movement. These findings suggest that improved market access was not only a driver of economic modernization but also a catalyst for institutional and cultural transformation. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.21141 |
| By: | Pascal Stiefenhofer |
| Abstract: | The integration of Artificial General Intelligence (AGI) into economic production represents a transformative shift with profound implications for labor markets, income distribution, and technological growth. This study extends the Constant Elasticity of Substitution (CES) production function to incorporate AGI-driven labor and capital alongside traditional inputs, providing a comprehensive framework for analyzing AGI's economic impact. Four key models emerge from this framework. First, we examine the substitution and complementarity between AGI labor and human labor, identifying conditions under which AGI augments or displaces human workers. Second, we analyze how AGI capital accumulation influences wage structures and income distribution, highlighting potential disruptions to labor-based earnings. Third, we explore long-run equilibrium dynamics, demonstrating how an economy dominated by AGI capital may lead to the collapse of human wages and necessitate redistributive mechanisms. Finally, we assess the impact of AGI on total factor productivity, showing that technological growth depends on whether AGI serves as a complement to or a substitute for human labor. Our findings underscore the urgent need for policy interventions to ensure economic stability and equitable wealth distribution in an AGI-driven economy. Without appropriate regulatory measures, rising inequality and weakened aggregate demand could lead to economic stagnation despite technological advancements. Moreover this research suggests a renegoation of the Social Contract. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.07044 |
| By: | Bharti, Nitin Kumar; Li, Yang |
| Abstract: | We construct a novel dataset of human capital accumulation in China and India from 1900 to 2020 by combining historical records and educational reports to analyze the role of education in economic divergence. Three key findings emerge. First, China pursued a bottom-up strategy, first expanding primary education, followed by secondary and tertiary levels. India, in contrast, adopted a top-down approach, gradually expanding its educational system but prioritizing secondary and higher education before primary. Second, China prioritized quantity over quality, whereas India's expansion attempted to balance quality through teachers' emoluments. Third, China's system features more diversified secondary and tertiary education, with a strong emphasis on vocational education and engineering than India. We highlight the role of educational policies in shaping these trajectories. Our findings on differences in the human capital accumulation in India and China have significant economic implications: education inequality (gini) is not only higher in India but also accounts for a larger share of wage inequality in India (25%), compared with less than 12% in China. Despite a larger share of tertiary-educated graduates, India also struggles with high illiteracy, possibly impeding structural transformation by confining many to the low-productivity agricultural sector. In contrast, China's approach created a larger share of primary, secondary, and vocational graduates combined with more tertiary-educated engineers, generating human capital that is more suitable for the manufacturing sector. India's focus on humanities and accounting in tertiary education fueled service sector growth. Overall, our findings illustrate the importance of human capital composition in shaping long-run economic development. |
| Keywords: | human capital accumulation, education, long run development, inequality, China, India |
| JEL: | D31 E02 E24 H52 I2 N30 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312196 |
| By: | Ruiwu Liu |
| Abstract: | In this working paper, I developed a suite of macroeconomic models that shed light on the intricate relationship between economic development, health, and fertility. These innovative models conceptualize health as an intermediate good, paving the way for new interpretations of dynamic socio-economic phenomena, particularly the non-monotonic effects of health on economic and population growth. The evolving dynamic interactions among economic growth, population, and health during the early stages of human development have been well interpreted in this research. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.00391 |
| By: | Batabyal, Amitrajeet; Beladi, Hamid |
| Abstract: | We analyze a stylized creative region populated by three groups of individuals: the elites who hold political and taxing power, the entrepreneurial creative class that produces a knowledge good, and workers. Political competition between the elites and the creative class results in the elites levying distortionary taxes on the creative class. We provide a rationale for this kind of taxation and then present two results. First, we demonstrate that this kind of distortionary taxation reduces the equilibrium growth rate of the economy of our creative region. Second, we explain why this negative result arises. |
| Keywords: | Creative Class, Distortionary Tax, Elite, Political Competition |
| JEL: | H21 R11 |
| Date: | 2024–11–15 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123673 |
| By: | Zaveri, Esha Dilip; Damania, Richard; Engle, Nathan Lee |
| Abstract: | As climate change intensifies, dry rainfall shocks and droughts are a growing concern. At the same time, scientific evidence suggests that the world has surpassed the safe planetary boundary for green water, which is water stored in biomass and soil that is crucial for maintaining climate resilience. Yet, evidence at the global scale of these combined forces on economic growth is poorly understood. This paper attempts to fill this gap by using data on annual subnational gross domestic product for 82 countries from 1990–2014. Using rainfall shocks as plausibly exogenous variations in a spatially specific panel at the grid level, the analysis finds that the global effects of droughts on economic activity are substantial. Moderate to extreme droughts reduce gross domestic product per capita growth between 0.39 and 0.85 percentage point, on average, depending on the level of development and baseline climatic conditions, with low- and middle-income countries in arid areas sustaining the highest relative losses. In high-income countries, moderate droughts have no impact, and only extreme droughts have adverse effects, reducing growth by about 0.3 percentage point, a little less than half the impact felt in the low- and middle-income country sample for the same intensity of drought. Crucially, the impact of a dry shock of a given magnitude also depends on antecedent green water availability. The results show that increases in soil moisture in previous years can neutralize the harmful impacts from a dry shock, with suggestive evidence that local and upstream forest cover are key channels through which these impacts manifest. These findings have important implications for measuring the economic impact of droughts and can inform adaptation investments. |
| Date: | 2023–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10453 |
| By: | Dietz, Simon; Lanz, Bruno |
| Abstract: | As the climate is changing, the global economy is adapting. This paper describes a novel method of estimating climate adaptation globally. We quantify how much the global economy has adapted to climate change historically, how much it has cost, and how much it has reduced the direct impacts of climate change. The method is based on a structurally estimated model of long-run growth, which identifies how changes in consumption, fertility, innovation, and land use allow the economy to adapt to climate change. Agriculture plays a key role, because it is vulnerable to climate change and food cannot be perfectly substituted. We estimate that adaptation has been highly effective in reducing negative climate impacts on agricultural production. However, the cost of adaptation has been a reallocation of resources out of the rest of the economy, which has in effect slowed down the process of structural change out of agriculture into manufacturing and services. We also use the model to estimate optimal future carbon taxation. Because adaptation is effective but costly, reducing future greenhouse gas emissions would improve welfare substantially. |
| Keywords: | agriculture; climate change; directed technical change; economic growth; energy; population growth; structural change; structural estimation; uncertainty |
| JEL: | C51 O13 Q54 |
| Date: | 2025–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127218 |