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on Economic Growth |
| By: | Matthew Delventhal (Claremont McKenna College); Jesús Fernández-Villaverde (University of Pennsylvania); Nezih Guner (CEMFI) |
| Abstract: | The demographic transition—the move from a high fertility/high mortality regime into a low fertility/low mortality regime—is one of the most fundamental transformations that countries undertake. To study demographic transitions across time and space, we compile a data set of birth and death rates for 186 countries spanning more than 250 years. We document that (i) a demographic transition has been completed or is ongoing in nearly every country; (ii) the speed of transition has increased over time; and (iii) having more neighbors that have started the transition is associated with a higher probability of a country beginning its own transition. To account for these observations, we build a quantitative model in which parents choose child quantity and educational quality. Countries differ in geographic location, and improved production and medical technologies diffuse outward from Great Britain, the technological leader. Our framework replicates well the timing and increasing speed of transitions. It also produces a strong correlation between the speeds of fertility transition and increases in schooling similar to the one in the data. |
| Keywords: | skill-biased technological change, diffusion |
| JEL: | J13 N30 O11 O33 O40 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2022-031&r= |
| By: | Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Maryna Tverdostup (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Europe will be challenged by demographic changes over the next few decades, even under favourable assumptions about fertility and migration, but the economic effects are not yet fully understood. This paper studies the effects of population ageing on economic growth, capital deepening and robotisation in 27 European Union (EU) labour markets. First, we econometrically assess the effects of ageing and potential labour market shortages on growth. Second, we test the hypothesis of whether ageing leads to faster adoption of new technologies. We distinguish between various capital asset types, including non-ICT and ICT capital, tangible and intangible capital and the adoption of robots. The analysis is based on Eurostat, the European Labour Force Survey (EU-LFS) and International Federation of Robotics (IFR) data. Results indicate that ageing and demographic changes might contribute to secular stagnation, which decelerates the adoption of new technologies. |
| Keywords: | aging, growth, capital accumulation, new technologies, secular stagnation |
| JEL: | J11 O33 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:222&r= |
| By: | Shijun Gu; Chengcheng Jia |
| Abstract: | How does wealth inequality affect economic growth? Byoungchan Lee answers this question by developing a heterogeneous-agent model and augmenting it with endogenous firm innovation. The novel channel is that rising wealth concentration reduces aggregate demand, which gives firms a disincentive to spend on R&D and therefore leads to slower productivity growth. In this discussion, we first explain the difference in calibration strategy between Lee’s approach and the common approach in the literature, and then discuss its quantitative implications for the effect of rising inequality on aggregate consumption. |
| Keywords: | heterogeneous-agent model; wealth inequality; aggregate consumption; Diversity |
| JEL: | D31 D52 E21 |
| Date: | 2022–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwq:94912&r= |
| By: | Pantelis Kammas (Athens University of Economics and Business, Patission 76, Athens 10434, Greece); Vassilis Sarantides (Athens University of Economics and Business, Patission 76, Athens 10434, Greece) |
| Abstract: | What explains the emergence of cooperation among individuals and what determines the range of situations in which humans cooperate? In this study, we build on the pathogen stress hypothesis to explore the role of infectious diseases on the radius of trust (i.e., on whether trust was restricted towards a narrow circle of familiar others or, in contrast, involved a much wider circle of strangers) in different societies through the years. Our analysis develops and employs both contemporary and historical measures of radius of trust and takes place along four layers, namely at: (i) cross-country level, (ii) cross-country individual level, (iii) pre-industrial ethic group level, and (iv) using data on second-generation migrants. Empirical findings across all layers of analysis clearly indicate that historical pathogen prevalence is robustly and negatively associated with the radius of trust that the reference point of in-groups is restricted to the closest circle of familiar others. In other words, lethal disease environments seem to increase the distance between out-group and in-group trust, decreasing consequently the radius of people who are deemed trustworthy. |
| Keywords: | pathogens; radius of trust; persistence |
| JEL: | N00 Z10 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2022016&r= |
| By: | Silva Lopes, Artur |
| Abstract: | Relying on low frequency econometric methods, a new simple method to assess international income convergence is introduced. It implements the long-run forecasting definition and discards short and medium-term information contents of the data as these may produce misleading evidence. Robustness to non-stationarities is achieved using first differences of logged per capita incomes. Application to a selected sample of 67 different countries, including only one low-income country, provides scant support to the hypothesis. Even for a 120-year horizon, almost 4/5 or 80% of the population of the (positively biased selected) sample is forecast to still live in countries significantly lagging behind the leader. |
| Keywords: | income convergence; low frequency; interval forecasting; growth empirics |
| JEL: | C22 C53 N10 O47 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114488&r= |
| By: | Jedwab,Remi Camille,Romer,Paul M,Islam,Asif Mohammed,Samaniego,Roberto |
| Abstract: | In this paper, the authors: (i) study wage-experience profiles and obtain measures of returns to potential work experience using data from about 24 million individuals in 1,084 household surveys and census samples across 145 countries; (ii) show that returns to work experience are strongly correlated with economic development—workers in developed countries appear to accumulate twice more human capital at work than workers in developing countries; (iii) use a simple accounting framework to find that the contribution of work experience to human capital accumulation and economic development might be as important as the contribution of education itself; and (iv) employ panel regressions to investigate how changes in the returns over time correlate with several factors such as economic recessions, transitions, and human capital stocks. |
| Keywords: | Educational Sciences,Economics of Education,Law and Justice Institutions,Labor Markets |
| Date: | 2021–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9786&r= |
| By: | Ziesemer, Thomas (RS: GSBE MORSE, Macro, International & Labour Economics, Mt Economic Research Inst on Innov/Techn) |
| Abstract: | We link the BOPC growth model to the goods market, foreign debt dynamics and Okun's law. A new condition for getting the Thirlwall effect of world GDP growth on domestic growth is that investment and exports should react less than savings and imports, all as a share of GDP, to an increase in the domestic growth rate. If this condition holds, the Thirlwall effect is present for stable and unstable debt/GDP dynamics and for positive or negative reactions of the current account to domestic growth. Okun's law translates the effect on the domestic GDP growth rate to a change of the unemployment rate. In unstable models, the change of world GDP growth may turn around the debt/GDP dynamics. Estimations support the specification of the theoretical model and lead to simulations of the Thirlwall effect and interest rate shocks on output growth. In the presence of banks consortia, unstable debt dynamics are the empirically relevant case for Brazil. A crisis can be less likely according to a simple model of profit maximizing bank consortia through a jump into a steady state for the debt/GDP ratio; unstable, increasing debt/GDP processes cannot be ruled out and may lead to crises unless the empirics of the stability conditions gets more favourable and leads the country-bank model into a stable steady state. |
| JEL: | F43 O11 O41 |
| Date: | 2022–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2022029&r= |
| By: | Xavier Jaravel; Danial Lashkari |
| Abstract: | How should we measure long-run changes in consumer welfare? This paper proposes a nonparametric approach that is valid under arbitrary preferences that depend on observable consumer characteristics, e.g. when expenditure shares vary with income. Our approach only requires data on the consumption baskets of a cross section of consumers facing a common set of prices. Using nominal expenditures under a constant set of prices as our money-metric for real consumption (welfare), we derive a consistent measure of its growth in terms of a correction to the conventional measures based on price index formulas. Our correction ac-counts for the cross-sectional dependence of the measured price indices on consumer income and other characteristics. We use nonparametric methods to approximate these corrections and provide bounds on the resulting approximation errors. Applying the approach to the measurement of growth in US real consumption per capita, we find a sizable correction to the standard measures of growth in the post-war era, a period of fast growth combined with substantial inflation gaps across income groups. |
| Keywords: | consumer welfare, expenditure, US |
| Date: | 2022–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1859&r= |