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This paper examines the evolution of unemployment in a task-based model that allows for two types of technical change. One is automation, which turns labor tasks into mechanized ones. The second is addition of new labor tasks, which increases specialization, as in the expanding variety literature. The paper shows that in equilibrium the unemployment caused by automation converges to zero over time. [ABSTRACT FROM AUTHOR]

Since the appearance of the seminal paper of Frankel and Romer (Am Econ Rev 89(3): 379–399, 1999), 'Does trade cause growth?', the impact of aggregate trade openness on income has been controversial. This research shows that the type of product that is traded has first-order effects, while overall trade intensity has second-order effects on per capita income because of (i) the hierarchical structure of learning-by-doing in products with different levels of sophistication of the production processes; and (ii) the fertility and education effects of trade specialization following the quantity–quality tradeoff framework of Galor and Mountford (Am Econ Rev 96(2): 299–303, 2006). Using data on trade disaggregated by the level of technological sophistication of the production process for 223 countries over the period 1962–2019, we find that (1) the effects of foreign trade on income differ widely across technology categories; (2) high-tech trade has permanent growth effects; and (3) a significant fraction of the impact of trade on income is mediated through education and fertility. [ABSTRACT FROM AUTHOR]

This paper studies to what extent religion has been used to legitimize political power throughout the world and how this matters for current institutions. Historically, some rulers have used religion to legitimize their power, while others relied on more democratic means. This tendency, termed divine legitimization, incentivized rulers to embed religion into institutions. We illustrate within a simple framework that the use of religion to legitimize power and the consequent institutionalization of religion may help explain why religion and religious institutions have persisted despite modernization. To test empirically, we combine data on pre-modern religious beliefs across 1265 ethnographic societies, various geographic data, and current data on the prevalence of religious laws in 176 countries. We provide evidence in support of divine legitimization and the resulting institutionalization of religion. For identification, we exploit exogenous variation in the incentives to employ religion for power purposes. We further document that countries that relied on divine legitimization are more autocratic today and their populace more religious. These results contribute to our understanding of the persistence of religious as well as autocratic institutions. [ABSTRACT FROM AUTHOR]

This paper presents a model of innovations and endogenous economic growth with two main assumptions: first, the cost of searching for innovations differs across innovations, and second, innovations take time to find. The paper shows that given these two assumptions together, competition leads to patent races and to duplication of innovative activity. The paper then shows that duplication significantly reduces the effect of scale on growth. It also shows that competitive R&D creates too much research on easy innovations, and too little research on the difficult ones. Finally, the paper shows that risk sharing might increase duplication and reduce growth. [ABSTRACT FROM AUTHOR]

This paper explores the link between infrastructures built by autocratic regimes and political values in the wake of the transition to democracy and in the long run. In Fascist Italy (1922–43), Mussolini founded 147 "New Towns" (Città di Fondazione). Exploring municipality-level data before and after their construction, I document (1) that the New Towns enhanced local electoral support for the Fascist Party and (2) that the effect persisted through democratization, enhancing local support for Italy's neo-fascist party, which endured until recent times. Placebo estimates of New Towns planned but not built and spatial regression discontinuity design both support a causal interpretation of this pattern. Survey respondents near the New Towns currently exhibit preferences for a stronger leader in politics, for nationalism, and for the fascists as such. The effect is greater for individuals who lived under the Fascist Regime and is transmitted across generations inside the family. The findings suggest that authoritarian leaders may exploit public investment programs to induce a favorable view of their ideology, which persists across institutional transitions and over the long term. [ABSTRACT FROM AUTHOR]

The literature on aid and growth has not found a convincing instrumental variable to identify the causal effects of aid. This paper exploits an instrumental variable based on the fact that, since 1987, eligibility for aid from the International Development Association (IDA) has been based partly on whether or not a country is below a certain threshold of per capita income. The paper finds evidence that other donors tend to reinforce rather than compensate for reductions in IDA aid following threshold crossings. Overall, aid as a share of gross national income (GNI) drops about 59 % on average after countries cross the threshold. Focusing on the 35 countries that have crossed the income threshold from below between 1987 and 2010, a positive, statistically significant, and economically sizable effect of aid on growth is found. A 1 percentage point increase in the aid to GNI ratio from the sample mean raises annual real per capita growth in gross domestic product by approximately 0.35 percentage points. [ABSTRACT FROM AUTHOR]

In this paper we argue that a potentially important mechanism by which modernization leads to democratization is a rise in de facto power as more of the population becomes educated. Analyzing a model in which the polity dictates the pace of modernization through its choice of public education expenditures, we first show that (i) an autocrat must eventually fund public education as long as the masses begin with some de facto power even though it lowers the income of the group he represents, and (ii) an autocrat never relinquishes power unless de facto power increases as the economy modernizes. We then present evidence that increases in education and de facto power have very often preceded the transitions of autocratic regimes to democratic ones. [ABSTRACT FROM AUTHOR]

I document in this paper a puzzle thathas not received previous attention in the literature. In 1980–98,median per capita income growth in developing countries was 0.0percent, as compared to 2.5 percent in 1960–79. Yet I documentin this paper that variables that are standard in growth regressions—policieslike financial depth and real overvaluation, and initial conditionslike health, education, fertility, and infrastructure generallyimproved from 1960–79 to 1980–98. Developing countrygrowth should have increased instead of decreased according tothe standard growth regression determinants of growth. The stagnationseems to represent a disappointing outcome to the movement towardsthe ``Washington Consensus'' by developing countries. I speculatethat worldwide factors like the increase in world interest rates,the increased debt burden of developing countries, the growthslowdown in the industrial world, and skill-biased technicalchange may have contributed to the developing countries' stagnation,although I am not able to establish decisive evidence for thesehypotheses. I also document that many growth regressions aremis-specified in a way similar to the Jones (1995) critique thata stationary variable (growth) is being regressed on non-stationaryvariables like policies and initial conditions. It may be thatthe 1960–1979 period was the unusual period for LDC growth,and the 1980–98 stagnation of poor countries representsa return to the historical pattern of divergence between richand poor countries. [ABSTRACT FROM AUTHOR]

This paper empirically investigates the impact of willingness to take risks on entrepreneurship. We use a quarter century of data on second-generation Americans from Current Population Surveys in conjunction with a measure of willingness to take risks based on the Global Preference Survey. The level of risk taking in the country of origin is found to have a positive and significant impact on the likelihood of being an entrepreneur. A one-standard deviation increase in risk taking increases the probability of being an entrepreneur by 18%. We find that risk taking is also robust to other preference and cultural factors such as trust, patience, and individualism, as well as several deep-root determinants of development. [ABSTRACT FROM AUTHOR]

How does population aging affect economic growth and factor shares in times of increasingly automatable production processes? The present paper addresses this question in a new macroeconomic model of automation where competitive firms perform tasks to produce output. Tasks require labor and machines as inputs. New machines embody superior technological knowledge and substitute for labor in the performance of tasks. Automation is labor-augmenting in the reduced-form aggregate production function. If wages increase then the incentive to automate becomes stronger. Moreover, the labor share declines even though the aggregate production function is Cobb–Douglas. Population aging due to a higher longevity reduces automation in the short and promotes it in the long run. It boosts the growth rate of absolute and per-capita GDP in the short and the long run, lifts the labor share in the short and reduces it in the long run. Population aging due to a decline in fertility increases automation, reduces the growth rate of GDP, and lowers the labor share in the short and the long run. In the short run, it may or may not increase the growth rate of per-capita GDP, in the long run it unequivocally accelerates per-capita GDP growth. [ABSTRACT FROM AUTHOR]

This paper establishes a robust relationship between idea flows across countries, as captured by book translations, and two measures of population relatedness. I argue that linguistic distance imposes a cost on idea flows, whereas genetic distance captures an incentive to communicate when dissimilar countries have more to learn from each other. Consistent with this hypothesis, I find that linguistic distance is negatively associated with book translations, whereas genetic distance is positively associated with book translations after conditioning on linguistic and geographic distance. In particular, the benchmark estimate indicates that a one standard deviation increase in linguistic distance reduces book translations by 12%, while a one standard deviation increase in genetic distance increases book translations by 10%. [ABSTRACT FROM AUTHOR]

This paper shows that different labor market policies can lead to differences in technology across sectors in a model of labor saving technologies. Labor market regulations reduce the skill premium and as a result, if technologies are labor saving, countries with more stringent labor regulation, which bind more for low skilled workers, become less technologically advanced in their high skill sectors, but more technologically advanced in their low skill sectors. We then present data on capital-output ratios, on estimated productivity levels and on patent creation, which tend to support the predictions of our model. [ABSTRACT FROM AUTHOR]

In this paper we examine the impact of natural resource wealth by focusing on historical coal-mining across European regions. As an exogenous source of variation in coal extraction activities, we rely on the presence of coal-deposits located on the earth's surface, which historically facilitated the discovery and extraction of coal. Our results show that former coal-mining regions are substantially poorer, with (at least) 10% smaller per-capita GDP than comparable regions in the same country that did not mine coal. We provide evidence that much of this lag is explained by lower levels of human capital accumulation and that this human-capital effect is concentrated in men. Finally, we provide suggestive evidence that the persistently lower levels of human capital in coal mining regions that we document result from the crystallization of negative attitudes towards education and lower future orientations in these regions. [ABSTRACT FROM AUTHOR]

This paper provides an empirical investigation of the hypothesis that population shocks such as the repeated outbreaks of the plague affected the timing of the demographic transition. The empirical analysis uses disaggregate data from Germany and exploits geographic variation in the exposure to medieval plague shocks. The findings document that areas with greater exposure to plague outbreaks exhibited an earlier onset of the demographic transition. The results are consistent with the predictions of the unified growth literature and provide novel insights into the largely unexplored empirical determinants of the timing of the transition from stagnation to growth. [ABSTRACT FROM AUTHOR]

This paper contributes to the understanding of the long-run consequences of Roman rule on economic development. In ancient times, the area of contemporary Germany was divided into a Roman and a non-Roman part. The study uses this division to test whether the formerly Roman part of Germany are more developed than the non-Roman part. This is done using the Limes Germanicus wall as geographical discontinuity in a regression discontinuity design framework. The results indicate that economic development-as measured by luminosity-is indeed significantly and robustly larger in the formerly Roman part of Germany. The study identifies the persistence of the Roman road network until the present as an important factor causing this developmental advantage of the formerly Roman part of Germany both by fostering city growth and by allowing for a denser road network. [ABSTRACT FROM AUTHOR]

This paper provides an empirical test of the child quantity-quality (QQ) trade-off predicted by unified growth theory. Using individual census returns from the 1911 Irish census, we examine whether children who attended school were from smaller families-as predicted by a standard QQ model. To measure causal effects, we use a selection of models robust to endogeneity concerns which we validate for this application using an Empirical Monte Carlo analysis. Our results show that a child remaining in school between the ages of 14 and 16 caused up to a 27 % reduction in fertility. Our results are robust to alternative estimation techniques with different modeling assumptions, sample selection, and alternative definitions of fertility. These findings highlight the importance of the demographic transition as a mechanism which underpinned the expansion in human capital witnessed in Western economies during the twentieth century. [ABSTRACT FROM AUTHOR]

e liberal trade policies good for growth? Sceptics often point to the late nineteenth century as a period when protectionist policies promoted economic development. This apparent blueprint for the benefits of protectionism paradoxically comes from a period that is often described as the first era of globalization. In this paper we reassess the empirical evidence about the relationship between tariffs and growth between 1870 and 1914. Our key findings challenge the idea that in the nineteenth century countries that raised tariffs thereby increased their own growth rate. Using new and improved data and employing a whole portfolio of econometric tests we do not find evidence that increased protectionism raised the rate of individual countries' growth. While some positive cross-sectional correlation exists between tariffs and growth, this may reflect unobserved country traits rather than a causal relation. There is equally little evidence that other external factors, such as real exchange rates and terms of trade changes, were key drivers of economic performance. A paradox of this first era of globalization is not that free trade was bad for growth; it is that international economic policies seem to have mattered little to countries' growth trajectories. [ABSTRACT FROM AUTHOR]

What are the effects of blocking patents on R&D and consumption? This paper develops a quality-ladder growth model with overlapping intellectual property rights and capital accumulation to quantitatively evaluate the effects of blocking patents. The analysis focuses on two policy variables (a) patent breadth that determines the amount of profits created by an invention and (b) the profit-sharing rule that determines the distribution of profits between current and former inventors along the quality ladder. The model is calibrated to aggregate data of the US economy. Under parameter values that match key features of the US economy and show equilibrium R&D underinvestment, I find that optimizing the profit-sharing rule of blocking patents would lead to a significant increase in R&D, consumption and welfare. Also, the paper derives and quantifies a dynamic distortionary effect of patent policy on capital accumulation. [ABSTRACT FROM AUTHOR]

This paper examines whether collaboration within groups in pre-industrial agriculture favored the emergence of collectivist rather than individualist cultures. I document that societies whose ancestors jointly practiced irrigation agriculture historically have stronger collectivist norms today. This finding holds across countries, sub-national districts within countries, and migrants, and is robust to instrumenting the historical adoption of irrigation by its geographic suitability. In addition, I find evidence for a culturally-embodied effect of irrigation agriculture on economic behavior. Descendants of irrigation societies innovate less today, and are more likely to work in routine-intensive occupations, even when they live outside their ancestral homelands. Together, my results suggest that historical differences in the need to act collectively have contributed to the global divergence of culture and technology. [ABSTRACT FROM AUTHOR]