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on Economic Growth |
| By: | Do, Quy-Toan; Levchenko, Andrei; Raddatz, Claudio |
| Abstract: | This paper analyzes theoretically and empirically the impact of comparative advantage in international trade on fertility. It builds a model in which industries differ in the extent to which they use female relative to male labor and countries are characterized by Ricardian comparative advantage in either female labor or male labor intensive goods. The main prediction of the model is that countries with comparative advantage in female labor intensive goods are characterized by lower fertility. This is because female wages and therefore the opportunity cost of children are higher in those countries. The paper demonstrates empirically that countries with comparative advantage in industries employing primarily women exhibit lower fertility. The analysis uses a geography-based instrument for trade patterns to isolate the causal effect of comparative advantage on fertility. |
| Keywords: | Economic Theory&Research,Labor Policies,Population Policies,Labor Markets,Trade Policy |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6930&r=gro |
| By: | Oeindrila Dube; Suresh Naidu |
| Abstract: | Does foreign military assistance strengthen or further weaken fragile states facing internal conflict? Aid may strengthen the state by bolstering its repressive capacity vis-à-vis armed non-state actors, or weaken it if resources are diverted to these very groups. We examine how U.S. military aid affects political violence in Colombia. We exploit the allocation of U.S. military aid to Colombian military bases, and compare how aid affects municipalities with and without bases. We use an instrument based on worldwide increases in U.S. military aid (excluding Latin America). We find that U.S. military assistance leads to differential increases in attacks by paramilitaries, but has no effect on guerrilla attacks. Aid also results in more paramilitary (but not guerrilla) homicides during election years, particularly in politically competitive municipalities. The findings suggest that foreign military assistance may strengthen armed non-state actors, undermining domestic political institutions. |
| JEL: | H56 O54 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20213&r=gro |
| By: | Kopsidis, Michael; Bromley, Daniel W. |
| Abstract: | Our purpose here is to challenge the big-bang approach to economic history in which some alleged institutional imposition - a deus machine - is claimed to launch a series of new economic behaviors. This so-called prime mover is then carried forward by the inexorable forces of path dependency to change the course of history. The specific creation story under investigation here is the French Revolution and the subsequent Napoleonic conquest of parts of Germany. We show that recent efforts to re-write German economic history using this theoretical model cannot be supported by the abundant and concerted empirical evidence. -- |
| Keywords: | institutional change,French Revolution,Germany,Prussian reforms,agricultural development,industrialization |
| JEL: | N43 N53 N63 O43 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iamodp:149&r=gro |
| By: | Ferreira, Francisco H. G. (World Bank); Lakner, Christoph (World Bank); Lugo, Maria Ana (World Bank); Özler, Berk (University of Otago) |
| Abstract: | Income differences arise from many sources. While some kinds of inequality, caused by effort differences, might be associated with faster economic growth, other kinds, arising from unequal opportunities for investment, might be detrimental to economic progress. We construct two new metadata sets, consisting of 118 household surveys and 134 Demographic and Health Surveys, to revisit the question of whether inequality is associated with economic growth and, in particular, to examine whether inequality of opportunity – driven by circumstances at birth – has a negative effect on subsequent growth. Results are suggestive but not robust: while overall income inequality is generally negatively associated with growth in the household survey sample, we find no evidence that this is due to the component we attribute to unequal opportunities. In the DHS sample, both overall wealth inequality and inequality of opportunity have a negative effect on growth in some of our preferred specifications, but the results are not robust to relatively minor changes. On balance, although our results are suggestive of a negative association between inequality and growth, the data at our disposal does not permit robust conclusions as to whether inequality of opportunity is bad for growth. |
| Keywords: | inequality, inequality of opportunity, economic growth |
| JEL: | D31 D63 O40 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8243&r=gro |
| By: | Aoki, Masahiko (Asian Development Bank Institute) |
| Abstract: | Economists often identify a reduction in the share of agricultural employment as a quantitative indication of the economic growth of nations. But this process did not occur in earnest in the People’s Republic of China until the 1980s and to some extent in Japan until well into the mid-20th century. Were extractive political regimes, commonly regarded as the primary drivers of economic performance, solely responsible for the lateness of these developments? This paper deals with this question from a strategic perspective by examining the interactions between the polity and the economy in both countries. It begins by characterizing the complementary nature of the peasant-based economy and the agrarian-tax state in premodern China and Japan. It then describes how endogenous strategic forces evolved from among the intermediate organizations in each country to challenge the incumbent dynastic ruler in response to the commercialization of the peasant-based economy on one hand and the fiscal and military weakening of the agrarian-tax state on the other. The paper then introduces a three-person game model between a ruler and two challenging organizations, and derives conditions for multiple equilbria and their comparative static. The analytical results help to identify the endogenous strategic forces that led the Meiji Restoration and the Xinhai Revolution to move from a premodern state of play to nation-state building and modern economic regimes in each country. |
| Keywords: | endogenous institutional change; institutional complementarity; Chinese economy; Meiji Restoration; tax state; peasant-based economy; three person politico-economic game |
| JEL: | B52 C72 N40 N45 O10 P51 |
| Date: | 2014–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0486&r=gro |
| By: | Pauline Grosjean (School of Economics, Australian School of Business, the University of New South Wales); Rose Khattar (School of Economics, Australian School of Business, the University of New South Wales) |
| Abstract: | We document the implications of missing women in the short and long run. We exploit a natural historical experiment, which sent large numbers of male convicts and far fewer female convicts to Australia in the 18th and 19th century. In areas with higher gender imbalance, women historically married more, worked less, and were less likely to occupy high-rank occupations. Today, people living in those areas have more conservative attitudes towards women working and women are still less likely to have high-ranking occupations. We document the role of vertical cultural transmission and of homogamy in the marriage market in sustaining cultural persistence. Conservative gender norms may have been beneficial historically, but are no longer necessarily so. Historical gender imbalance is associated with an aggregate income loss estimated at $800 per year, per person. Our results are robust to a wide array of geographic, historical and present-day controls, including migration and state fixed effects, and to instrumenting the overall sex ratio by the sex ratio among convicts. |
| Keywords: | Culture, gender roles, sex ratio, natural experiment, Australia |
| JEL: | I31 N37 J16 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2014-29&r=gro |
| By: | Forson, Joseph Ato; Janrattanagul, Jakkaphong; Carsamer, Emmanuel Carsamer |
| Abstract: | There are widespread debates as to whether cultural values have a bearing on economic growth. Scholarly articles have actually had conflicting results with proponents arguing there is whiles opponents have thought otherwise. The aim of this paper is to verify the assertions made by these two schools of thought from the perspective of culture as a rationality component using an input-output growth model. We basically employed an approach that sought to define and aggregate cultural values under rationality indices: instrumental, affective, value and traditional rationality from 29 countries with data from world value survey (1981-2009). We systematically had them tested in an endogenous growth model alongside traditional economic variables. We conclude that when these cultural variables are combined with the so-called economic variables, there is an improvement in the model explanation than before. In addition, two of these cultural indices indicated a statistically positive effect on economic growth (instrumental and affective rationality). However, traditional rationality index was also robust but with a negative coefficient. Value rationality showed a somewhat weaker link to economic growth and was statistically insignificant. The policy implications of these findings are also discussed. |
| Keywords: | Economic growth, Rationality, Cultural traits |
| JEL: | O1 O11 O5 |
| Date: | 2013–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56825&r=gro |
| By: | John Fernald |
| Abstract: | U.S. labor and total-factor productivity growth slowed prior to the Great Recession. The timing rules out explanations that focus on disruptions during or since the recession, and industry and state data rule out “bubble economy” stories related to housing or finance. The slowdown is located in industries that produce information technology (IT) or that use IT intensively, consistent with a return to normal productivity growth after nearly a decade of exceptional IT-fueled gains. A calibrated growth model suggests trend productivity growth has returned close to its 1973-1995 pace. Slower underlying productivity growth implies less economic slack than recently estimated by the Congressional Budget Office. As of 2013, about ¾ of the shortfall of actual output from (overly optimistic) pre-recession trends reflects a reduction in the level of potential. |
| JEL: | E23 E32 O41 O47 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20248&r=gro |
| By: | Dercon Stefan |
| Abstract: | The developing world is experiencing substantial environmental change, and climate change is likely to accelerate these processes in the coming decades. Due to their initial poverty and their relatively high dependence on environmental capital for their livelihoods, the poor are likely to suffer most due to their low resources for mitigation and investment in adaptation. Economic growth is essential for any large-scale poverty reduction. Green growth, a growth process that is sensitive to environmental and climate change concerns, can be particularly helpful in this respect. We focus on the possible trade-offs between the greening of growth and poverty reduction, and we highlight the sectoral and spatial processes behind effective poverty reduction. High labor intensity, declining shares of agriculture in GDP and employment, migration, and urbanization are essential features of poverty-reducing growth. We contrast some common and stylized green-sensitive growth ideas related to agriculture, trade, technology, infrastructure, and urban development with the requirements of poverty-sensitive growth. We find that these ideas may cause a slowdown in the effectiveness of growth to reduce poverty. The main lesson is that trade-offs are bound to exist; they increase the social costs of green growth and should be explicitly addressed. If they are not addressed, green growth may not be good for the poor, and the poor should not be asked to pay the price for sustaining growth while greening the planet. |
| Keywords: | Environmental Economics&Policies,Rural Poverty Reduction,Achieving Shared Growth,Climate Change Economics,Economic Theory&Research |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6936&r=gro |
| By: | Verme, Paolo |
| Abstract: | The Middle East and North Africa region is known for having low female labor market participation rates as compared with its level of economic development. A possible explanation is that these countries find themselves at the turning point of the U-shape hypothesis when countries transition from declining to rising female participation rates. This paper tests the U-shape hypothesis in countries in the Middle East and North Africa. It finds that the region has outperformed other world regions in terms of the main drivers of the U-shape hypothesis, including gross domestic product per capita, economic transformation away from the agricultural sector, female education, and fertility rates. These facts are consistent with nonparametric evidence that shows countries in the region are distributed over a U-shaped curve. However, parametric tests of the hypothesis point in a different direction. The region shows an inverted U-shape overall and great heterogeneity across countries and age cohorts that defies any law on the relation between gross domestic product and female participation rate. The explanation behind these findings may be economic and cultural. Jobless growth and the lack of growth in employment sectors such as manufacturing and services, which proved critical for female employment in other countries, weaken labor demand and strengthen the role of institutions that may discourage female participation, such as marriage, legislation, and gender norms. |
| Keywords: | Population Policies,Regional Economic Development,Economic Theory&Research,Labor Policies,Labor Markets |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6927&r=gro |
| By: | Mario J. Crucini; Gregor W. Smith |
| Abstract: | We study the role of distance and time in statistically explaining price dispersion for 14 commodities from 1732 to 1860. The prices are reported for US cities and Swedish market towns, so we can compare international and intranational dispersion. Distance and commodity-specific fixed effects explain a large share—roughly 60%—of the variability in a panel of more than 230,000 relative prices over these 128 years. There was a negative "ocean effect": international dispersion was less than would be predicted using distance, narrowing the effective ocean by more than 3000 km. The absolute effect of distance declined over time beginning in the 18th century. This process of convergence was broad- based, across commodities and locations (both national and international). But there was a major interruption in convergence in the late 18th and early 19th centuries, at the time of the Napoleonic Wars, stopping the process by two or three decades on average. |
| JEL: | N70 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20247&r=gro |
| By: | Lester, Rodney |
| Abstract: | While the real sector and governments (along with a few micro economists) have long recognized the core economic role that the insurance function plays, the mainstream economics profession has largely treated it as invisible background. This literature review of the relevant research, most of which has been carried out in the past few decades, demonstrates that the insurance sector contributes at a basic level to inclusive economic growth and the effectiveness of the credit function. It also shows that the latter impact may be particularly fundamental in assisting the poor to avoid poverty traps and to progress economically. However, the research and the theoretical models underpinning it also highlight certain constraints to the efficient utilization of the insurance function. The literature dealing with innovations designed to overcome these constraints is reviewed and successful initiatives and remaining challenges are identified. |
| Keywords: | Climate Change Economics,Debt Markets,Insurance&Risk Mitigation,Insurance Law,Banks&Banking Reform |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6943&r=gro |
| By: | Fatih Karanfil; Yuanjing Li |
| Abstract: | In this paper, we examine the long-- and short--run dynamics between |
| Keywords: | Electricity consumption; economic growth; electricity dependence; urbanization. |
| JEL: | C23 O57 Q43 |
| Date: | 2014–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-337&r=gro |