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on Economic Growth |
| By: | Hammed Oluwaseyi Musibau (Adelaide University); Joaquin Vespignani (University of Tasmania); Maria Belen Yanotti (University of Tasmania) |
| Abstract: | This paper explores the impact of education quality on economic growth in 37 OECD countries. We developed a new dataset that combines mixed-frequency data, including low-frequency data (every three years) from the Programme for International Student Assessment (PISA) and annual data from the World Development Indicators (WDI), covering the period from 2000 to 2018. Our study investigates the relationship between education quality and economic growth. We found that a 1% increase in educational quality contribute to an annual economic growth rate of 2.8%. This result is significantly higher than previous research, which, based on cross-sectional PISA data, reported growth rates ranging from 0.4% to 2.3%. |
| Keywords: | economic growth; education quality; PISA data; Chow–Lin Procedure |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:adl:wpaper:2026-09 |
| By: | Jesús Fernández-Villaverde; Patrick Norrick |
| Abstract: | As of 2026, humanity is likely below replacement fertility. That has never happened before, not in wars or pandemics. But the real surprise is that the fall has been concentrated in low- and middle-income countries and among poorer and less educated women. We fit a single-factor model to 236 countries since 1950: the common component peaked in 1978, and what drives fertility down today are country-specific trends, 219 of them negative and not one leveling off. None of the commonly cited mechanisms can account for this pattern, so we offer a conjecture: modernity itself, which makes a third child expensive and childlessness cheap. Children come in integers, so it takes very little to move a cohort’s fertility rate from 1.8 to 1.3. And nothing in an economy pushes fertility back to 2.1. We close with the main economic consequences, in particular slow growth. |
| Keywords: | fertility decline, demographic transition, population aging, economic growth, labor force, population projections |
| JEL: | J11 J13 O40 E24 O11 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12997 |
| By: | José Pedro Pontes |
| Abstract: | We seek to provide a reasonable explanation for the evidence that, while population density determines regional variation in schooling rates, it typically bears no significant relationship with individual income. To this end, we model a spatial economy composed of a traditional region, inhabited by farmers educated in the family, and a modern region populated by industrial workers trained in schools. In theoretical terms, a proportional increase in demographic density at each location leads to an expansion of the school-educated region, although the overall e??ect also depends on the specific productivity associated with each type of technology. In addition, it reveals a non-monotonic relationship between density and individual income, which first decreases and subsequently increases. The temporal evolution of an economy experiencing a proportional rise in population may also be described by an analogy with the spatial model. |
| Keywords: | Education spread, economic growth, population density, education without development, space-time analysis. |
| JEL: | R11 I20 O15 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp04292026 |
| By: | Callum Jones (Federal Reserve Board); David López-Salido (Banco de España and CEPR); Thomas Philippon (New York University Stern School of Business, CEPR and NBER) |
| Abstract: | Growth theory is based on the assumption of exponential total factor productivity (TFP) growth, in other words, that the conditional expectation of the next TFP increment is proportional to the current level of TFP. In the United States, 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. |
| Keywords: | growth theory, TFP, additive growth |
| JEL: | C10 E17 N0 O11 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2630e |
| By: | Ahmed, Maruf (University of Technology Sydney); Deutscher, Nathan (Australian National University); Siminski, Peter (University of Technology, Sydney) |
| Abstract: | We propose an approach for projecting future absolute intergenerational income mobility. This approach combines the ‘copula and marginals’ approach for examining historical trends, with existing projections of national income and population. A key insight is that half of the required data (the marginal income distribution of parents) are already observable. We apply this approach to 28 OECD countries under two scenarios: (i) projected income growth with no change to inequality, and (ii) income growth combined with extrapolations of inequality trends. We also produce historical absolute mobility estimates, including for 16 countries where none previously existed to our knowledge. The results show significant historical declines in mobility for most countries. The projections suggest potential recovery under sustained economic growth, but rising inequality systematically attenuates these gains. |
| Keywords: | absolute intergenerational mobility, mobility projections |
| JEL: | J62 D31 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18951 |
| By: | Quang-Thanh Tran; Quoc Thai Le |
| Abstract: | Why do some economies manage to escape the middle-income trap while others remain trapped? To answer this question, we develop an overlapping-generations model in which economies can choose between a primitive technology subject to diminishing returns and an advanced technology capable of sustaining long-run growth. Adoption becomes viable only when human capital, capital-use efficiency, and demographic conditions are sufficiently favorable; otherwise, the economy may converge to a middle-income steady state from which escape is nearly impossible. We test these predictions using panel data for 185 economies over 1950–2023. The results show that higher human capital and stronger institutional quality are robustly associated with a greater likelihood of escape, whereas aging becomes an obstacle primarily for economies that grow old before achieving high-income status. Additional evidence based on economic complexity and imports of manufactures and machinery supports the model’s central technology-adoption mechanism which determines whether an economy successfully completes the transition out of middle-income status. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:toh:tupdaa:88 |
| By: | Matthew Collins; Eleonora Guarnieri; Helmut Rainer |
| Abstract: | Why does the quantity-quality tradeoff operate in some societies but not others? We study this question using the staggered introduction of free primary education (FPE) in sub-Saharan Africa, which lowered the cost of investing in children’s human capital. Exploiting within-ethnicity variation, we find that FPE reduces fertility and improves child survival and school enrollment, but only among ethnic groups with gender-egalitarian norms. We provide evidence that FPE strengthens women’s empowerment, predominantly among those gender-egalitarian groups. A simple conceptual framework shows that lower schooling costs create incentives to reduce fertility, while prevailing gender norms determine whether households act on those incentives. |
| Date: | 2026–01–30 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:26/850 |
| By: | Hammed Oluwaseyi Musibau (Adelaide University); Joaquin Vespignani (University of Tasmania); Maria Belen Yanotti (University of Tasmania) |
| Abstract: | We investigate the impact of environmental performance on economic growth and assess the role of governance quality using a global dataset of 206 countries between 1995 and 2022. To address endogeneity concerns, we employ fixed effects estimation and Lewbel’s heteroskedasticity-based two stage least squares estimator, which is well suited for settings where external instruments are unavailable. The findings show that improvements in environmental performance, measured through greenhouse gas emissions per capita and emissions intensity, exert a positive and statistically significant effect on GDP per capita growth. This result is robust across alternative specifications, inequality-based heterogeneity analyses, and regional subsamples. |
| Keywords: | Environmental performance; Governance; Economic growth; Emissions; Global panel |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:adl:wpaper:2026-10 |
| By: | Sriram Balasubramanian; Mr. Paul Cashin |
| Abstract: | This paper examines the origins and evolving use of the concept of Gross National Happiness (GNH) in the Kingdom of Bhutan, and the relationship between measured well-being and macroeconomic indicators across four decades of data. The paper incorporates the 2022 GNH Survey, alongside substantially updated macroeconomic data capturing Bhutan’s experience through the COVID-19 pandemic, and the launch of its ambitious 13th Five-Year Plan (2024–2029). The evidence continues to show that Bhutan’s rapid increase in national income remains only weakly associated with improvements in measured happiness—a pattern that is suggestive of the Easterlin Paradox. The updated GNH index indicates continued progress in well-being alongside sustained economic growth. Drawing on the literature linking cultural norms to economic development, we argue that Bhutan’s cultural endowment is on balance an asset for its growth prospects. GNH exemplifies how a culture-neutral well-being measure becomes more effective for policymaking when assimilated to relevant local cultural norms and values. |
| Keywords: | Gross National Happiness; GDP; Bhutan; Easterlin Paradox; well-being; development economics; cultural norms |
| Date: | 2026–09–18 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/192 |
| By: | Henderson, Lou; Humphries, Jane |
| Abstract: | Breastfeeding is vital and valuable labour, contributing to the physical and cognitive health of children throughout their lives, yet it is rarely compensated in formal labour markets. Its economic importance may therefore go unrecognised. We impute upper and lower bounds for the value of unpaid breastfeeding over five centuries in England to better understand its economic role over the course of economic development. We also contribute a novel estimate of changes in breastfeeding duration over this period from historical and bioarchaeological sources using interval regression. At minimum, unpaid breastfeeding consistently exceeded 0.1% of GDP, reaching a possible peak of 6.58% in the sixteenth century while the wider economy stagnated. This quantity exceeds expenditures on school and apprenticeship, making breastfeeding possibly the largest source of human capital investment in early modern England. Yet the relative value of unpaid breastfeeding gradually declined as the wider economy grew. Indeed, for much of English history the income elasticity of breastfeeding appears to have been negative, only becoming positive at some point in the nineteenth century. Because breastfeeding was strongly negatively correlated with infant mortality, this challenges longstanding assumptions about the relationship between income and mortality. In sum, breastfeeding was not a biologically determined constant but a dynamic, if neglected, part of economic life. |
| Keywords: | breastfeeding;unpaid care;human capital;national accounts;demography |
| JEL: | N0 R14 J01 |
| Date: | 2026–09–21 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140884 |
| By: | Jakub Growiec; Klaus Prettner; Maciej Szkr\'obka |
| Abstract: | After the arrival of transformative artificial intelligence (TAI), broad-based automation is expected to decrease the labor share and increase income and wealth inequality. Although economic growth is likely to accelerate, most of its gains may accrue to a narrow group of individuals and firms. Hence, if unmitigated by redistributive policy, income and wealth inequality may rise to levels unseen in the industrial economy. Using a unifying theoretical framework, we survey the redistributive policies proposed for the era of TAI, such as universal basic income (UBI), universal basic capital (UBC), state-issued compute and robot permits, and taxes on capital, compute, robots, tokens, land, energy, consumption, and wealth. We argue that policies that are able to broadly distribute rents from capital including compute and robots - such as UBC or UBI financed through capital taxes - are most likely to achieve lasting reductions in inequality in a world with human-aligned transformative AI. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.14750 |
| By: | Raouf Boucekkine (Aix Marseille Univ, CNRS, AMSE, Marseille, France); Natalia Hritonenko (Department of Mathematics, Prairie View A&M University); Yuri Yatsenko (Houston Baptist University); Ullrika Sahlin (Lund University) |
| Abstract: | We study optimal growth in a Ramsey economy with irreversible pollution, where the natural absorption capacity is non-monotonic and non-concave à la Forster. In the absence of pollution control, the capital dynamics decouple from pollution, and we characterize a simple threshold on the maximal absorption capacity above which the optimal path is sustainable and below which an optimal regime of irreversible pollution sets in. We then introduce an optimal abatement pollution control to assess whether irreversible pollution ceases to be optimal. We derive a four-dimensional dynamical system for capital, consumption, pollution and the (shadow) cost of pollution, coupled with an algebraic rule for optimal abatement, which is eventually reduced to dimension three, with abatement linearly entering the pollution dynamics. Our main result is that optimal abatement shifts the irreversibility threshold but does not eliminate it. More importantly, we show that embedding the Forster's pollution dynamics into a Ramsey growth model generates a novel hybrid ecological irreversibility condition that is invisible in pollutiononly frameworks. Coupling ecosystem curvature with the social discount rate, it is structurally robust and preeminent over all feasibility conditions amenable to policy intervention, and defines the boundary between a world where sustainability is achievable and one where it is not. |
| Keywords: | Optimal growth; Optimal pollution control; Optimal irreversible regimes; Ecological sustainability; Irreversible pollution |
| JEL: | O44 Q50 Q52 Q57 |
| Date: | 2026–09–22 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2627 |
| By: | Vladimir Asriyan; Alberto Martin; Guillermo Ordoñez; Victoria Vanasco |
| Abstract: | We study a dynamic economy in which heterogeneous entrepreneurs invest in either generic or innovative technologies, the latter relying on intangible, firm-specific assets whose payoffs are realized through learning or experimentation (e.g., know-how, R&D). A key friction is that, to finance investment, entrepreneurs can pledge assets but not cash flows. We show that innovative technologies can relax financing constraints by increasing the value of continuation relative to default, thereby enabling borrowing against future cash flows. Technology choice is non-monotonic in productivity: low-productivity entrepreneurs innovate-to-experiment and delay investment, intermediate types adopt generic technologies, and high-productivity entrepreneurs innovate-to-scale and relax financial constraints. In equilibrium, financial frictions distort both the allocation of capital and the choice of technology, leading to insufficient experimentation. The model helps us understand how innovation is adopted across firms and economies and has novel policy implications. |
| Keywords: | borrowing capacity, experimentation, financial frictions, innovation, intangible capital, misallocation, technology choice |
| JEL: | D24 E22 G32 O31 O40 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1597 |
| By: | Matthew Curtis; Paula E. Gobbi; Marc Goñi; Joanne Haddad |
| Abstract: | Centuries before the demographic transition, the European Marriage Pattern (EMP) limited fertility in Western Europe through high celibacy, late marriage, and nuclear households. Whether the EMP reflected female empowerment or instead financial hardship remains debated. This paper shows that local inheritance institutions determined where economic opportunity strengthened the EMP and where the EMP reflected poverty. We construct a new atlas of 2, 486 rural and urban inheritance customs in France and Belgium and combine it with genealogical data on 75, 000 women born between 1500 and 1750. We show that the EMP manifested alongside earning opportunities where inheritance included women and younger siblings, but that the EMP reflected economic distress where inheritance was inegalitarian; that effects differed between urban and rural areas; and that they persisted over centuries. We develop and estimate a structural model in which inheritance rules affect marriage decisions through female empowerment and financial constraints. The estimates imply that roughly 65 percent of celibacy reflected choice rather than constraint, suggesting that the EMP was heterogeneous but primarily a positive force for female empowerment. |
| Keywords: | European marriage pattern, celibacy, customs, inheritance |
| JEL: | D10 J10 K11 N33 O10 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12995 |
| By: | Guarnieri, Eleonora (University of Bristol, CEPR, CESifo); Tur-Prats, Ana (University of California, Merced) |
| Abstract: | Why do some cultures go extinct while others prevail? We show that a society’s risk of cultural extinction, proxied by language loss, is shaped by its ancestral gender norms and by how these differ from those of competing cultures. Using the Ethnologue and the Male Dominance Index for a global sample of languages, we first show that languages from more gender-equal societies are likelier to go extinct. In our framework, male-dominant societies are more expansionist through two channels, military capacity sustained by surplus extraction and demographic pressure from women's specialization in domestic and reproductive labor, and therefore expand at the expense of gender-egalitarian groups. We test this in two settings. Under European colonization, we find that Indigenous groups more gender-equal than their colonizers are more vulnerable to extinction, which is best explained by asymmetries in male dominance rather than dominance more broadly. Exploiting local variation in neighbors' gender structure across Africa, we show that languages from more gender-egalitarian societies are less likely to survive in cells located close to male-dominant neighbors, with military capacity and population pressure predicting language expansion. |
| Keywords: | cultural diversity, language extinction, gender norms, inter-group contact |
| JEL: | Z10 O10 F54 J16 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18947 |