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on Economic Growth |
| By: | Quang-Thanh Tran (Development and Policies Research Center (DEPOCEN), Suite 305 - 307, 12 Trang Thi Street, Hoan Kiem, Hanoi) |
| Abstract: | This paper studies how higher education incentives affect fertility decisions and influence long-term economic growth using an R&D-based growth overlapping-generations model with endogenous education/career choice. In this model, higher education plays a dual role – it increases earnings for skilled labor and technological progress but also discourages childbearing. When the fertility of skilled workers is sufficiently low, too many higher education pursuers may lead to a long-run secular stagnation where technology and population remain constant or even a persistent population decline. To avoid these scenarios, regulating access to higher education may be necessary, although it could impose welfare loss on some generations following the policy’s introduction. |
| Keywords: | career choice, endogenous fertility, overlapping generations, higher education |
| JEL: | E13 J11 J13 J14 J22 J24 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:dpc:wpaper:0198 |
| By: | Bruno Delalibera (Universitat de Barcelona); Angélica Brum (Sao Paulo School of Economics - FGV); Luciene Pereiera (Sao Paulo School of Economics - FGV) |
| Abstract: | Over the past three decades, many countries have adopted fiscal rules. This paper studies their impact on economic growth using an overlapping generations model with endogenous growth, where the government imposes both a debt rule and a budget balance rule. The model shows that fiscal rules are not neutral: their design and interaction, through an endogenously adjusting tax rate, directly shape savings, capital accumulation, and longterm growth. The model identifies conditions under which a balanced growth path exists and highlights the possibility of multiple steady states. When fiscal rules are too loose or initial debt is too high, the economy may converge to an unstable path. Tightening fiscal rules improves long-run welfare but can reduce current utility due to higher taxes. Empirically, we estimate a growth equation and address endogeneity using an instrumental variable strategy based on the geographical diffusion of fiscal rules. The results indicate that the adoption of fiscal rules boosts growth in developing and lowincome countries. In Europe, only welldesigned rules are associated with higher growth. Across specifications, debt rules consistently outperform budget balance rules, especially in less developed economies. |
| Keywords: | Fiscal Rules, Fiscal Policy, Economic growth, OLG Model, Instrumental Variables |
| JEL: | O47 E61 E62 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ewp:wpaper:487web |
| By: | Galego Mendes, Arthur; Pennings, Steven Michael |
| Abstract: | This paper presents the Long-Term Growth Model–Human Capital Extension (LTGM-HC), a spreadsheet-based toolkit that projects the human capital of the workforce from 2025 to 2100 for 153 countries. The LTGM-HC simulates pre-tertiary years of schooling, education quality, and health across age cohorts and how they affect current and future workforce productivity. The paper also produces three sets of general results. First, it provides new estimates of the current rate of human capital growth, which differ substantially from those in the Penn World Tables. Global average human capital growth is almost 1 percent and is surprisingly similar across income groups, as greater historical gains in years of schooling in poorer countries are offset by lower initial school quality. Second, it provides new estimates of the pace of future human capital growth. Without future reforms, average human capital growth will slow by around 0.15-0.2 percentage points per decade, hitting zero by 2080 when today’s children begin to retire. In contrast, a scenario with a typical pace of reform almost halves the rate of decline. Finally, it provides new estimates of the contribution of human capital to current and future economic growth. In a typical reform scenario, human capital growth is projected to raise annual GDP per capita growth by around half a percentage point over the next 75 years, leaving GDP per capita 45 percent higher by 2100. However, about two-thirds of these gains reflect reforms that have already been enacted. An extension to include tertiary education raises human capital growth, and its contribution to GDP growth, by around 0.1-0.2 percentage points. |
| Date: | 2025–12–10 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11276 |
| By: | Peter Howitt (Brown University) |
| Abstract: | Peter Howitt delivered his Prize lecture on 8 December 2025 at the Aula Magna, Stockholm University. He was introduced by Kerstin Enflo, member of the Committee for the Prize in Economic Sciences in Memory of Alfred Nobel. |
| Keywords: | technological innovation; economic growth |
| JEL: | O |
| Date: | 2025–12–08 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nobelp:021905 |
| By: | Quang-Thanh Tran (Development and Policies Research Center (DEPOCEN), Suite 305 - 307, 12 Trang Thi Street, Hoan Kiem, Hanoi) |
| Abstract: | This paper examines the long-term consequences of population decline in a quality-ladder endogenous growth framework. The key factor in fertility decisions is child-rearing costs, modeled as a convex function of labor productivity. As technology grows, the costs of raising children (including childbearing, childcare, and educational investments) increase disproportionately. While the economy may experience rapid growth in the early stages of development, it is likely to face sharp contractions in both population and innovation as child-rearing costs outpace the incentives for having children. We show that consistent population decay is almost inevitable. Nevertheless, a pronatalist policy can increase the likelihood of achieving high long-run labor productivity and living standards for future generations, although some short-run welfare deficits are to be expected. |
| Keywords: | quality-ladder growth, overlapping generations, endogenous fertility |
| JEL: | E13 J13 J14 J22 J24 O11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:dpc:wpaper:0199 |
| By: | Claude Diebolt; Joel Huesler |
| Abstract: | In 1685, Louis XIV’s revocation of the Edict of Nantes expelled some 200, 000 Huguenots—one of the most skill-selective forced migrations in early modern Europe. While their contributions to England, Prussia and the Dutch Republic are well documented, the economic losses borne by the French regions they left behind have remained surprisingly unmeasured, despite the Huguenots’ disproportionate role in textiles, luxury crafts, finance and international trade. This paper provides the first economy-wide, micro-quantitative estimate of the long-run cost of this exodus for France. Using a newly assembled parish-level panel of Protestant baptism registers (1570–1700) linked to the industrial censuses of 1839 and 1860, we trace how a seventeenth-century demographic shock shaped regional development nearly two centuries later. We uncover three core results. (1) A one-standard-deviation decline in Huguenot baptisms (≈–20%) led to enduring losses:–5.8% industrial employment, –4.4% establishments and–5.1% wages in 1839, with output deficits still visible in 1860. (2) These effects persisted remarkably: by 1860, industrial production remained 2.8% lower—about 480, 000 francs per arrondissement. (3) The impact hinged on institutional and intellectual complementarities: regions distant from universities, printing presses, commercial hubs or Parliaments suffered the deepest scars. Together, these findings show how the removal of a highly skilled minority durably reshaped France’s economic geography, leaving an imprint that lasted for nearly two centuries. |
| Keywords: | Huguenots; Forced migration; Human capital; Economic persistence; Industrialization; Regional development; Historical shocks; Microhistorical data; Skill-selective migration. |
| JEL: | N33 N34 J61 O15 R11 F22 C23 N93 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ulp:sbbeta:2025-48 |
| By: | Philippe Aghion (Collège de France) |
| Abstract: | Philippe Aghion delivered his Prize lecture on 8 December 2025 at the Aula Magna, Stockholm University. He was introduced by Kerstin Enflo, member of the Committee for the Prize in Economic Sciences in Memory of Alfred Nobel. |
| Keywords: | technological innovation; economic growth |
| JEL: | O |
| Date: | 2025–12–08 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nobelp:021904 |