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on Economic Growth |
| By: | William F. Maloney; Felipe Valencia Caicedo |
| Abstract: | This paper offers the first systematic historical evidence on the role of a central actor in modern growth theory - the engineer. It collects cross-country and state level data on the labor share of engineers for the Americas, and county level data on engineering and patenting for the US during the Second Industrial Revolution. These are robustly correlated with income today after controlling for literacy, other types of higher order human capital (e.g. lawyers, physicians), demand side factors, and after instrumenting engineering using the Land Grant Colleges program. A one standard deviation increase in engineers in 1880 accounts for a 16% increase in US county income today, and patenting capacity contributes another 10%. We further show engineering density supported technological adoption and structural transformation across intermediate time periods. Our estimates help explain why countries with similar levels of income in 1900, but tenfold differences in engineers diverged in their growth trajectories over the next century. The results are supported by historical case studies from the US and Latin America. |
| Keywords: | innovative capacity, human capital, engineers, technology diffusion, patents, growth, structural transformation, development, history |
| JEL: | O11 O30 N10 I23 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6339&r=gro |
| By: | Raphaël Franck; Stelios Michalopoulos |
| Abstract: | During the French Revolution, more than 100,000 individuals, predominantly supporters of the Old Regime, fled France. As a result, some areas experienced a significant change in the composition of the local elites whereas in others the pre-revolutionary social structure remained virtually intact. In this study, we trace the consequences of the émigrés' flight on economic performance at the local level. We instrument emigration intensity with local temperature shocks during an inflection point of the Revolution, the summer of 1792, marked by the abolition of the constitutional monarchy and bouts of local violence. Our findings suggest that émigrés have a non monotonic effect on comparative development. During the 19th century, there is a significant negative impact on income per capita, which becomes positive from the second half of the 20th century onward. This pattern can be partially attributed to the reduction in the share of the landed elites in high-emigration regions. We show that the resulting fragmentation of agricultural holdings reduced labor productivity, depressing overall income levels in the short run; however, it facilitated the rise in human capital investments, eventually leading to a reversal in the pattern of regional comparative development. |
| JEL: | N10 O10 O15 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23936&r=gro |
| By: | Ahmed S. Rahman (United States Naval Academy) |
| Abstract: | We develop a growth model with over-lapping generations that endogenizes skill acquisition and two forms of technical change, one that automates existing production processes, and one that invents new production processes. The former kind of technological change obso- letes certain middle-range skills; the latter has the potential to increase such skills. This work suggests that 1) early industrialization generates greater automation; 2) employment polarization caused by automation also fosters education polarization, potentially affecting future growth; 3) the economy naturally transitions from automation to innovation; and 4) such a transition today will lessen wage inequality but may not bring back mid-skilled jobs as it had historically. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:usn:usnawp:61&r=gro |
| By: | Buggle, Johannes; Durante, Ruben |
| Abstract: | This research examines the historical relationship between economic risk and the evolution of social cooperation. We hypothesize that norms of generalized trust developed in pre-industrial times as a result of experiences of cooperation triggered by the need of subsistence farmers to cope with climatic risk. These norms persisted over time, even after climate had become largely unimportant for economic activity. We test this hypothesis for Europe combining high-resolution climate data for the period 1500-2000 with survey data at the sub-national level. We find that regions with higher inter-annual variability in precipitation and temperature display higher levels of trust. This effect is driven by variability in the growing season months, and by historical rather than recent variability. Regarding possible mechanisms, we find that regions with more variable climate were more closely connected to the Medieval trade network, indicating a higher propensity to engage in inter-community exchange. These regions were also more likely to adopt inclusive political institutions earlier on, and are characterized by a higher quality of local governments still today. Our findings suggest that, by favoring the emergence of mutually-reinforcing norms and institutions, exposure to environmental risk had a long-lasting impact on human cooperation. |
| Keywords: | Climate; Cooperation; Persistence; Political Institutions; Risk; Trust |
| JEL: | N53 O11 O13 Q54 Z10 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12380&r=gro |
| By: | José García-Montalvo; Marta Reynal-Querol |
| Abstract: | The relationship between ethnic heterogeneity and economic growth is complex. Empirical research working with cross-country data finds a negative, or statistically in- significant, relationship. However, research at the city level usually finds a positive relationship between diversity and wages/productivity. Generally, the trade-off be- tween the economic benefits of diversity and the costs of heterogeneity implies that the relationship between diversity and growth depends on the size of the area used as the unit of observation. In this paper we perform a systematic analysis of the effect of the size of geographical units on the relationship between ethnic diversity and growth. We find a positive relationship for small geographical areas and no effect for large areas and countries. There are potentially different mechanisms that can explain this result depending on the structure of the economy and its level of development. In the case of Africa, we argue that a possible explanation of the positive relationship between diversity and growth is the increase in trade at the boundaries between ethnic groups due to ethnic specialization. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:992&r=gro |
| By: | Rodríguez-Pose, Andrés; von Berlepsch, Viola |
| Abstract: | Does population diversity matter for economic development in the long-run? Does the impact of diversity differ over time? This paper traces the short-, medium-, and long-term economic impact of population diversity resulting from the big migration waves of the late 19th and early 20th centuries to the United States (US). Using census data from 1880, 1900, and 1910, the settlement pattern of migrants across the counties of the 48 US continental states is tracked in order to construct measures of population fractionalisation and polarisation at county level. Factors which may have influenced both the individual settlement decision at the time of migration as well as county-level economic development in recent years are controlled for. The results of the analysis show that high levels of population fractionalisation have a strong and positive influence on economic development in the short-, medium-, and long-run. High levels of polarisation, by contrast, undermine development. Despite a stronger effect on income levels in the first 30 years, these relationships are found to be extremely long-lasting: counties with a more heterogeneous population composition over 130 years ago are significantly richer today, whereas counties that were strongly polarised at the time of the migration waves have endured persistent negative economic effects. |
| Keywords: | Counties; diversity; economic development; Fractionalisation; Polarisation; USA |
| JEL: | J15 J61 O43 R11 R23 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12347&r=gro |
| By: | Hodler, Roland; Valsecchi, Michele; Vesperoni, Alberto |
| Abstract: | The effects of ethnic geography, i.e., the distribution of ethnic groups across space, on economic, political and social outcomes are not well understood. We develop a novel index of ethnic segregation that takes both ethnic and spatial distances between individuals into account. Importantly, we can decompose this index into indices of spatial dispersion, generalized ethnic fractionalization, and the alignment of spatial and ethnic distances. We use maps of traditional ethnic homelands, historical population density data, and language trees to compute these four indices for more than 150 countries. We apply these indices to study the relation between historical ethnic geography and current economic, political and social outcomes. Among other things, we document that countries with higher historical alignment, i.e., countries where ethnically diverse individuals lived far apart, have higher-quality government, higher incomes and higher levels of trust. |
| Keywords: | economic development; ethnic diversity; ethnic geography; fractionalization; quality of government; Segregation; trust. |
| JEL: | C43 D63 O10 Z13 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12378&r=gro |
| By: | Federico, Giovanni; Nuvolari, Alessandro; Vasta, Michelangelo |
| Abstract: | The origins of the Italian North-South divide have always been controversial. We fill this gap by estimating a new data-set of real wages (Allen 2001) from the Unification (1861) to WWI. Italy was very poor throughout the period, with a modest improvement since the late 19th century. This improvement started in the North-West industrializing regions, while real wages in other macro-areas remained stagnant. The gap North-West/South widened until the end of the period. Focusing on the drivers of the different regional trends, we find that human capital formation exerted strong positive effect on the growth of real wages. |
| Keywords: | 19th century; Italy; real wages; regional divide |
| JEL: | N01 N13 N33 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12358&r=gro |
| By: | Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson |
| Abstract: | We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation a la Ben Porath (1967) and capital-skill complementarity a la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early post-war period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the US labor share. |
| Keywords: | neoclassical growth, balanced growth, technological progress, capital-skill complementarity, labor share, capital share |
| JEL: | O40 E25 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1504&r=gro |