Early and Late Demographic Transitions: the Role of Urbanization

This paper uses new estimates of the dates on which different countries have experienced their demographic transition to address two empirical questions. First, I study the importance of different socioeconomic variables on the timing of these transitions. Second, I distinguish between countries that have experienced early and late demographic transitions and compare their relative income around the transition date. My results indicate that the size of a country’s urban population plays a crucial role in triggering its demographic transition. In particular, after controlling for income and total population, more urbanized countries tend to experience an earlier demographic transition. Moreover, countries that experience an early demographic transition (before 1950) are much richer than latecomers, suggesting that urbanization plays a more important role than income in the latter. One interpretation of these results is that a country’s level of income and rate of urbanization are substitutable factors that trigger the country’s demographic transition. Finally, if one accepts the premise that urban agglomerations enhance both technological progress and the demand for human capital, the results provide indirect support for theories that highlight these factors as triggers of the demographic transition or the escape from Malthusian traps.urbanization, demographic transition, rural-urban migration, Malthusian traps

The Diffusion of Internet: A Cross-Country Analysis

This paper analyzes the process of Internet diffusion across the world using a panel of 199 countries during the time interval 1990-2004. We group countries in two categories, low and high income countries, and show that the Internet diffusion process is well characterized by an S-shape curve for both groups. Low income countries display a steeper diffusion curve and equivalent to a right shift of the high income countries diffusion curve. The estimated diffusion curves provide evidence of a “catching up” process, although a very slow one. We next explore the determinants of Internet diffusion at the country level and across the same income groups. Our most novel finding is that network effects seem to be crucial—the number of Internet users in a country at a given year is positively associated with the number of users in the previous year. We also find that the degree of competition in the provision of Internet contributes positively to its diffusion and we also identify significant positive language externalities.Technological diffusion; Internet; S-shape curve; Network externalities; Digital divide

How Endogenous Is Money? Evidence from a New Microeconomic Estimate

This paper uses microeconomic data on firms’ money demand and investment in physical capital for the period 1983-2006 to estimate the extent to which variation in the U.S. money supply is an endogenous response to variation in firms’ demand for liquidity. We estimate a simple model in which each firm’s desired money balances in any period depend on that firm’s current transactions, current investment, and its planned future investment, as well as aggregate variables such as interest rates and common policy forecasts. Calculations based on our estimates suggest that only a very small fraction of the variability in the aggregate stock of money represents an endogenous response to autonomous changes in firms’ investment plans.Money demand, money supply, endogenous money, monetary neutrality

Democracy, Diversification, and Growth Reversals

There is much evidence that less democratic countries experience more high-frequency growth volatility. In this paper we report a similar finding about volatility in the medium term: we find evidence that reversals of trend-growth are sharper and more frequent in non-democracies. Motivated by this evidence, we construct a model in which non-democracies have high barriers of entry for new firms. This leads to less sectoral diversification and so, in an uncertain environment, to larger growth swings in less democratic countries. We present empirical evidence that confirms the positive relation between democracy and industrial diversification.medium term growth, growth volatility, democracy, diversification

Macroeconomic costs of gender gaps in a model with household production and entrepreneurship

This paper examines the quantitative effects of gender gaps in entrepreneurship and workforce participation in an occupational choice model with a household sector. Gender gaps in entrepreneurship affect negatively both income and aggregate productivity, since they reduce the entrepreneurs’ average talent and female labor force participation. We estimate the gender gaps for 37 European countries and we find that gender gaps cause an average market output loss of 11.5% when they are considered constant across talent levels. The loss in total output, which also includes household production, varies between 6.4% and 8.7%, depending on the household productivity parameter

Financial development and city growth: evidence from Northeastern American cities, 1790-1870

We find a positive and strong correlation between financial development and subsequent city growth in the Northeastern United States between 1790 and 1870. The correlation is robust to controls for geographical characteristics of the city, the percentatge of population working in different sectors, and its initial population. Our estimates suggest that the presence of a bank at a given location increases its subsequent growth by one to two percentage points per year. Because urban growth was correlated with econòmic development in the nineteenth-century US, we believe our results provide further suport for the finance-growth nexus

Size-Dependent Gender Gaps in Entrepreneurship: The Case of Chile

This paper documents differences in firm size depending on whether their manager is a man or a woman and studies the aggregate implications of these gender gaps in Chile. We document that in 2007 less than a quarter of firms are managed by women and that this gap takes its largest value for managers with tertiary education or more. In terms of their number of workers, female-run firms are on average about three times smaller than those run by men. Moreover, the ratio of men to women managers is always above one, but it is much higher for large and medium firms than for small or micro ones. These differences remain significant after controlling for several manager and firm characteristics. We then use an extended version of the theoretical framework developed in Cuberes and Teignier (2016) to incorporate these facts and obtain quantitative predictions about their effects on aggregate productivity and income in Chile. We find that the observed gender gaps in entrepreneurship in Chile generate a fall in aggregate productivity and aggregate income of 7.5%

Financial Development and City Growth: Evidence from Northeastern American Cities, 1790-1870

In this paper we argue that in 19th century U.S, households and firms that were located in cities with banks enjoyed a higher level of both consumption and production amenities than those who were located in cities without banks. We use data on banks location and city population growth in the Northeastern United States in 1830-1870 and document a positive and strong correlation between financial development and subsequent population growth. The correlation is robust to controls for geographical characteristics of the city, the percentage of population working in different sectors, and its initial population. Propensity score matching estimators that compare similar cities in terms of observables also yield a positive association between finance and urban growth. Our estimates suggest that the presence of a bank at a given location in the late 1830s is associated with increases its population growth in the 1840s by one to one and a half percentage points per year. Because urban growth was correlated with economic development in the nineteenth-century U.S, we believe our results provide further support for the finance-growth nexus.

The effect of the Spanish Reconquest on Iberian cities

This paper studies the effect of the Spanish Reconquest, a military campaign that aimed to expel the Muslims from the Iberian Peninsula, on the population of its most important cities. The almost four centuries of Reconquest offer a “quasi-natural” experiment to study the persistence of population shocks at the city level. Analyzing city growth before and after the onset of the Reconquest, we find that it had a significant negative effect on the population of the main Iberian cities. However, when we control for time effects, we conclude that in most cities this effect was transitory. In order to quantify the duration of the shock driven by the Reconquest we then estimate its average effect on the urban share of these cities considering the time dimension of the entire panel of cities simultaneously and adding city-specific time trends. Our estimates suggest that these cities regained their pre-Reconquest shares on average in less than 100 years. These results are robust to controlling for a large set of country and city-specific socioeconòmic indicators and spatial effects. Our findings suggest that the locational fundamentals that determined the relative size of Iberian cities before the Reconquest were more important determinants of the fate of these cities than the direct negative impact that the Reconquest had on their population