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on Economic Growth |
| By: | Fulford, Scott L. (Boston College); Petkov, Ivan (Boston College); Schiantarelli, Fabio (Boston College) |
| Abstract: | The United States provides a unique laboratory for understanding how the cultural, institutional, and human capital endowments of immigrant groups shape economic outcomes. In this paper, we use census micro-sample information to reconstruct the country-of-ancestry distribution for US counties from 1850 to 2010. We also develop a county-level measure of GDP per capita over the same period. Using this novel panel data set, we investigate whether changes in the ancestry composition of a county matter for local economic development and the channels through which the cultural, institutional, and educational legacy of the country of origin affects economic outcomes in the US. Our results show that the evolution of the country-of-origin composition of a county matters. Moreover, the culture, institutions, and human capital that the immigrant groups brought with them and pass on to their children are positively associated with local development in the US. Among these factors, measures of culture that capture attitudes towards cooperation play the most important and robust role. Finally, our results suggest that while fractionalization of ancestry groups is positively related with county GDP, fractionalization in attributes such as trust, is negatively related to local economic performance. |
| Keywords: | immigration, ethnicity, ancestry, economic development, culture, institutions, human capital |
| JEL: | J15 N31 N32 O10 Z10 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9060&r=gro |
| By: | Jeanet Bentzen; Jacob Gerner Hariri; James A. Robinson |
| Abstract: | We document that rules for leadership succession in ethnic societies that antedate the modern state predict contemporary political regimes; leadership selection by election in indigenous societies is associated with contemporary representative democracy. The basic association, however, is conditioned on the relative strength of the indigenous groups within a country; stronger groups seem to have been able to shape national regime trajectories, weaker groups do not. This finding extends and qualifies a substantive qualitative literature, which has found in local democratic institutions of medieval Europe a positive impulse towards the development of representative democracy. It shows that contemporary regimes are shaped not only by colonial history and European influence; indigenous history also matters. For practitioners, our findings suggest that external reformers' capacity for regime-building should not be exaggerated. |
| JEL: | D72 N4 P16 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21193&r=gro |
| By: | de Pleijt, Alexandra M. (Utrecht University) |
| Abstract: | Did human capital contribute to economic growth in England? In this paper the stock of total years of schooling present in the population between 1300 and 1900 is quantified. The stock incorporates extensive source material on literacy rates, the number of primary and secondary schools and enrolment figures. The trends in the data suggest that, whilst human capital facilitated pre-industrial economic development, it had no role to play during the Industrial Revolution itself: there was a strong decline in educational attainment between ca. 1750 and 1830. A time series analysis has been carried out that confirms this conclusion. |
| Keywords: | Human capital ; Industrial Revolution ; economic growth ; England JEL classification: N10 ; N30 ; O47 ; O57 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:229&r=gro |
| By: | Bassino, Jean-Pascal (IAO, ENS de Lyon); Broadberry, Stephen (London School of Economics); Fukao, Kyoji (Hitotsubashi University); Gupta, Bishnupriya (University of Warwick); Takashima, Masanori (Hitotsubashi University) |
| Abstract: | Japanese GDP per capita grew at an annual rate of 0.04 per cent between 725 and 1874, but the growth was episodic, with the increase in per capita income concentrated in three periods, 1150-1280, 1450-1600 and after 1730, interspersed with periods of stable per capita income. There is a similarity here with the growth pattern of Britain. The first countries to achieve modern economic growth at opposite ends of Eurasia thus shared the experience of an early end to growth reversals. However, Japan started at a lower level than Britain and grew more slowly until the Meiji Restoration. |
| Keywords: | Japan ; Great Divergence ; GDP per capita ; growth reversals ; Britain JEL classification: N10 ; N30 ; N35 ; O10 ; O57 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:230&r=gro |
| By: | Broadberry, Stephen (London School of Economics); Fukao, Kyoji (Hitotsubashi University); Zammit, Nick (University of Warwick) |
| Abstract: | Although Japanese economic growth after the Meiji Restoration is often characterised as a gradual process of trend acceleration, comparison with the United States suggests that catching-up only really started after 1950, due to the unusually dynamic performance of the US economy before 1950. A comparison with the United Kingdom, still the world productivity leader in 1868, reveals an earlier period of Japanese catching up between the 1890s and the 1920s, with a pause between the 1920s and the 1940s. Furthermore, this earlier process of catching up was driven by the dynamic productivity performance of Japanese manufacturing, which is also obscured by a comparison with the United States. Japan overtook the UK as a major exporter of manufactured goods not simply by catching-up in labour productivity terms, but by holding the growth of real wages below the growth of labour productivity so as to enjoy a unit labour cost advantage. Accounting for levels differences in labour productivity between Japan and the United Kingdom reveals an important role for capital in the catching-up process, casting doubt on the characterisation of Japan as following a distinctive Asian path of labour intensive industrialisation. |
| Keywords: | Labour productivity ; sectoral disaggregation ; international comparison JEL classification: N10 ; N30 ; O47 ; O57 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:231&r=gro |
| By: | Dimitrios Varvarigos |
| Abstract: | I study the effects of tax evasion on economic growth by focusing on the cultural aspects of tax compliance and their effect on the extensive margin of tax evasion. A cultural norm that determines the contemptibility of tax dodging practices links the past incidence of tax evasion with the tax payers’ current incentives to conceal sources of income. This dynamic complementarity may lead to multiple equilibria in the evolution of tax evasion. Due to the latter’s effect on capital accumulation, this multiplicity may lead economies in divergent development paths, as long as they differ in the initial magnitude of tax evasion. This happens even though economies may be, on the outset, identical in terms of capital stock and structural characteristics, including those that govern tax enforcement. |
| Keywords: | Tax evasion; Economic Growth; Cultural Norms |
| JEL: | H26 O41 Z1 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:15/10&r=gro |
| By: | Michael Carter; John Morrow |
| Abstract: | Commentators on the ‘East Asian Miracle’ of inclusive rural growth have often pointed toward shared growth policies. But why were these policies not chosen elsewhere? This paper shows that economies with a stronger middle class may sustain higher productivity through public good provision. We model voters who invest in either subsistence or technologies in which public goods complement private capital. Investment and technology choices vary with wealth and the level of public goods enforced by political lobbies. We show that increased productive possibilities, such as those of an emerging middle class, can further power reforms when money matters in politics. |
| Date: | 2015–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:764&r=gro |
| By: | Francisco J. Beltran Tapia (University of Cambridge); Julio Martinez-Galarrage (Universitat de Valencia) |
| Abstract: | Apart from measuring inequality and poverty at the provincial level in Spain between 1860 and 1930, this paper empirically assesses the relationship between economic growth and both inequality and destitution. The results, on the one hand, confirm the presence of a KuznetsÕ curve. However, although growing incomes did not directly contribute to reducing inequality, at least during the early stages of modern economic growth, other processes associated with economic growth significantly improved the situation of the bottom part of the population. On the other hand, growing incomes and lower inequality levels are shown to have been pro-poor. |
| Keywords: | Inequality, economics growth, economic history, Spain, Kuznets curve |
| JEL: | O10 N13 N14 I30 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0078&r=gro |
| By: | Stefan Leknes (Department of Economics, Norwegian University of Science and Technology) |
| Abstract: | I attempt to find the causal effect of endogenous population size on quality of life. Quantity and quality of consumer amenities would increase with urban scale if not offset by congestion effects. To deal with endogeneity, I utilize a quasi-experimental design where I exploit the exogenous spatial distribution of mineral resources with Norwegian historical mines from the 12th till the 19th century. The findings suggest persistence in population patterns from early industrialization, and a positive urban scale effect on quality of life that pass multiple tests of confounding factors. |
| Date: | 2014–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:nst:samfok:15814&r=gro |
| By: | Sedgley, Norman; Elmslie, Bruce |
| Abstract: | Most growth theorists agree that understanding the economics of innovation and technological change is central to understanding why some countries are richer and/or grow faster than other countries. The driving force behind recent developments in endogenous innovation models of growth is a desire to eliminate population scale effects. In the semi endogenous growth model growth becomes proportional to the exogenous population growth rate but invariant to policy. This paper makes population growth endogenous by modeling fertility along the lines of Barro and Becker (Fertility Choice in a Model of Economic Growth, 1989) and models an array of government policies to demonstrate how some policies can impact levels and growth rates in a scale free endogenous growth model. In the model government policies are categorized according to whether they have level effects only, level and growth effects, or no impact on levels and/or growth. |
| Keywords: | policy effects on growth,endogenous population,public finance |
| JEL: | H2 H0 O3 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201535&r=gro |
| By: | Richard H. Steckel (Department of Economics, Ohio State University); Garrett T. Senney (Department of Economics, Ohio State University) |
| Abstract: | Many studies by social scientists view heart disease as the outcome of current or recent conditions such as poverty, smoking and obesity. An alternative approach gaining recognition is developmental origins of health and disease, which we apply to understand high death rates of whites in the South from cardiovascular disease (CVD). In this interpretation CVD vulnerability follows from unbalanced physical development created by poor conditions in utero that underbuilds major organs such as the kidneys and the cardiovascular system relative to those needed to process lush nutrition later in life. The South underwent an economic transformation from generations of poverty to rapid economic growth in the post-WWII era, exposing many children born in the 1950s through the 1980s to unbalanced physical development. Here we use state-level data for whites on income growth, smoking, obesity and education to explain variation in CVD death rates in 2010-2011. Our proxy for unbalanced physical growth, the ratio of average household income in 1980 to that in 1950, has a large systematic influence on CVD mortality, an impact that increases dramatically with age. The income ratio combined with smoking, obesity, and education explains two thirds of the variance in CVD mortality across states. Metaphorically, persistent intergenerational poverty loads the gun and rapid income growth pulls the trigger. |
| Keywords: | Developmental Origins, Mortality, American South |
| JEL: | I13 J15 N32 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:osu:osuewp:15-01&r=gro |
| By: | Gründler, Klaus; Krieger, Tommy |
| Abstract: | Evidence from a novel measure of democracy (SVMDI) based on Support Vector Machines highlights a robust positive relationship between democracy and economic growth. We argue that the ambiguity in recent studies can be traced back to the neglect of the information in the equation in levels and the lack of sufficient sensitivity of traditional democracy indicators. We further analyze the transmission channels through which democracy exerts its influence on growth, concluding that democratic countries have better educated populations, higher investment shares, lower fertility rates, but not necessarily higher levels of redistribution. The latter explains why we find only little indication of a nonlinear effect of democracy on growth. |
| Keywords: | Democracy,Economic Growth,Support Vector Machines |
| JEL: | O11 O47 P16 H11 C43 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wuewwb:131&r=gro |
| By: | Emilio Ocampo |
| Abstract: | Argentina’s economic and institutional decline has long posed a conundrum to economists and social scientists. In particular, it challenges theories that seek to explain cross-country growth differences over time. Those theories that claim that institutions have a first-order effect on growth cannot explain the persistent economic decadence of a country that in 1930 was among the most institutionally advanced in Latin America. Theories that claim that that education and growth precede inclusive institutions face a similar problem, since Argentina was one of the most educationally advanced countries in Latin America. The same can be said of theories that claim that social capital is the determinant factor that explains long-term growth. This paper emphasizes the key role played by recurrent cycles of populism in pushing the country into secular decadence and posits that, in Argentina, rising commodity prices have driven the cycles of populism. |
| Keywords: | Populism, commodity cycles, Argentina, inequality, institutions, social capital, economic growth, economic decline. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cem:doctra:562&r=gro |
| By: | Ryoji Ohdoi (Department of Social Engineering, Tokyo Institute of Technology); Koichi Futagami (Graduate School of Economics, Osaka University); Takeo Hori (College of Economics, Aoyama Gakuin University) |
| Abstract: | In this paper, we propose a neoclassical growth model with non-unitary discount- ing, where an individual discounts her future utilities from consumption and leisure differently. Because this non-unitary discounting induces the individual's preference reversals, we regard one individual as being composed of different selves. Then we derive the closed-form solution of the recursive competitive equilibrium in which her different selves behave in a time-consistent way in all periods. With regard to welfare analysis, we obtain the following three main results. First, the selves in any period strictly prefer the planning allocation to the laissez-faire allocation if they are given the same value of a state variable in both situations. Second, the selves in the long run can prefer the latter to the former allocation if we focus on the overall equilibrium paths in both situations. Third, a time-consistent tax policy designed by a benevolent government replicates the planning allocation. |
| Keywords: | Non-unitary discounting; Time-inconsistency; Intrapersonal game; Markov- perfect equilibrium; Time-consistent tax policy |
| JEL: | E21 H21 O41 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1514&r=gro |
| By: | Girardi, Daniele; Mura, Antonio |
| Abstract: | Using a new dataset of construction investment in world countries for the period 2000- 2011, this article provides novel evidence of a bell-shaped relationship between the share of construction in GDP and economic development. The relative level of construction activity tends to increase in developing countries, to peak during industrialization and to decrease at a slowing pace in industrialized countries, approaching stabilization in mature economies. The curve fits better if economic development is measured by alternative indicators instead of per-capita GDP, namely life expectancy and an Economic Development Index (EDI) which takes into account per capita income, life expectancy, maternal mortality ratio and the share of agriculture in employment. On average, the peak in construction activity is reached at a per capita income level of almost 5,000 Euro (PPP, 2011 prices), or when life expectancy in the country has reached around 67 years. At its peak, construction accounts for about 14% of a country's GDP. The curve is robust to the inclusion of control variables. Population density, demographic growth and credit expansion don't explain cross-country variation in the share of construction in output, while there is weak evidence that a less concentrated income distribution is positively related to the size of the construction sector. |
| Keywords: | Construction, Development, Investment, Bon's Curve |
| JEL: | L74 N60 O10 |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64554&r=gro |
| By: | Mallick, Debdulal |
| Abstract: | This paper revisits the empirical relationship between business-cycle volatility and long-run growth. The key contribution lies in controlling for fluctuations in the trend growth that also accounts for enormous heterogeneity among countries in their long-run growth trajectories; otherwise, the estimating equation would be misspecified. We find that there is no effect of BC volatility on growth once estimation duly accounts for these fluctuations. Otherwise, there would be a significant effect of BC volatility on growth that also varies across time period and country income groups. We instead find a negative effect of persistence in volatility on growth. The results have implications in light of recent global financial crises, and also for cross-country regressions. |
| Keywords: | Growth, Business cycles, Volatility, Volatility persistence |
| JEL: | E32 F44 O11 O4 O40 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64502&r=gro |
| By: | T.D. Stanley; Chris Doucouliagos; Piers Steel |
| Abstract: | In this paper, we apply meta-regression analysis to 58 studies that explore the impact of ICT on economic growth. We find evidence of econometric specification bias and publication selection bias in favor of positive growth effects. After correcting these biases, we show that ICT has contributed positively to economic growth, on average. We find that both developed and developing countries benefit equally from landline and cell technologies, with cell’s contribution to growth being double that of landline. However, developed countries gain significantly more from computing than do developing countries. In contrast, the Internet has had little effect on growth. |
| Keywords: | ICT, economic growth, meta-regression analysis |
| JEL: | O3 O4 |
| Date: | 2015–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:dkn:econwp:eco_2015_9&r=gro |
| By: | Obregon, Carlos |
| Abstract: | Piketty argues that there are long-run fundamental laws in capitalism that will necessarily concentrate the income in favor of the privileged 1 or 10% of the population. Piketty's two fundamental laws are really theoretical propositions that presume relative rigidity in the rate of return of capital and in the net savings rate. We show that such propositions are incompatible with seventy-five years of studies estimating the value of the elasticity of substitution between capital and labor, and with the theoretical models of savings optimizing behavior. We argue that Piketty's laws are wrong and that they contradict the essence of market dynamics. Economic agents optimize and neither the rate of return of capital nor the net savings rate can remain relatively stable as Piketty supposes. Using empirical estimates of the long-run elasticity of substitution between capital and labor, and analyzing the relationship between the net savings rate and the real growth rate of the economy, we show that Piketty's forecast for the second half of the twenty-first century is inadequate. We propose alternative forecasts. |
| Keywords: | Piketty, Capitalism, Rate of return of capital, Savings rate, Economy growth, Elasticity between capital an labor |
| JEL: | D30 D31 D33 E20 E21 E25 F01 O47 O57 |
| Date: | 2015–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64593&r=gro |