Structural change and the Kaldor facts in a growth model with relative price effects and non-Gorman preferences

Growth of per-capita income is associated with (i) significant shifts in the sectoral economic structure, (ii) systematic changes in relative prices and (iii) the Kaldor facts. Moreover, (iv) cross-sectional data shows systematic expenditure structure difference between rich and poor households. Ngai and Pissarides (2006) and Acemoglu and Guerrieri (2008) are consistent with observation (i)-(iii) but abstract form non-homotheticities of preferences. However, they cannot replicate the structural change between the U.S. goods and service sector quantitatively. This paper presents a growth model, which reconciles both forces of structural change - relative price and income effects - with balanced growth on the aggregate. The theory is simple and parsimonious and contains an analytical solution. The model can replicate shape and magnitude of the nonbalanced sectoral facts as well as the balanced nature of growth on the aggregate. In a structural estimation, the model’s functional form is exploited to obtain estimates for the relative importance of income and price effects as determinants of the structural change.Structural change, relative price effect, non-Gorman preferences, Kaldor facts.

Protestantism and Education: Reading (the Bible) and other Skills

During industrialization, Protestants were more literate than Catholics. This paper investigates whether this fact may be led back to the intrinsic motivation of Protestants to read the bible and whether other education motives were involved as well. We employ a historical data set from Switzerland which allows us to differentiate between different cognitive skills: reading, numeracy, essay writing and Swiss history. We develop an estimation strategy to examine whether the impact of religious denomination was particularly large with respect to reading capabilities. We find support for this hypothesis. However, Protestants’ education motives went beyond reading the bible.cognitive skills, education, reading capability, religious denomination, protestant reformation

Qualifying Religion: The Role of Plural Identities for Educational Production

This paper examines the role of religious denomination for human capital formation. We employ a unique data set which covers, inter alia, information on numerous measures of school inputs in 169 Swiss districts for the years 1871/72, 1881/82 and 1894/95, marks from pedagogical examinations of conscripts (1875-1903), and results from political referenda to capture conservative or progressive values in addition to the cultural characteristics language and religion. Catholic districts show on average significantly lower educational performance than Protestant districts. However, accounting for other sociocultural characteristics qualifies the role of religion for educational production. The evidence suggests that Catholicism is harmful only in a conservative milieu. We also exploit information on absenteeism of pupils from school to separate provision of schooling from use of schooling.culture, educational production, plural identity, religious denomination, school inputs

A Theory of Structural Change That Can Fit the Data

We study structural change in historical consumption expenditure of theUnited States, the United Kingdom, Canada, and Australia over morethan a century. We characterize the most general class of preferencesin a time-additive setting that admits aggregation of the saving deci-sion and allows to identify preference parameters from aggregate data.We parametrize and estimate such intertemporally aggregable (IA) pref-erences and discuss their properties in a dynamic general equilibriumframework with sustained growth. Our preference class is considerablymore flexible than the Gorman form or PIGL, giving rise to a good fit ofthe non-monotonic pattern of structural change

Missing growth from creative destruction

Statistical agencies typically impute inflation for disappearing products based on surviving products, which may result in overstated inflation and understated growth. Using U.S. Census data, we apply two ways of assessing the magnitude of “missing growth” for private nonfarm businesses from 1983– 2013. The first approach exploits information on the market share of surviving plants. The second approach applies indirect inference to firm-level data. We find: (i) missing growth from imputation is substantial — at least 0.6 percentage points per year; and (ii) most of the missing growth is due to creative destruction (as opposed to new varieties

Structural change and the Kaldor facts in a growth model with relative price effects and non-Gorman preferences

Growth of per-capita income is associated with (i) significant shifts in the sectoral economic structure, (ii) systematic changes in relative prices and (iii) the Kaldor facts. Moreover, (iv) cross-sectional data shows systematic expenditure structure difference between rich and poor households. Ngai and Pissarides (2006) and Acemoglu and Guerrieri (2008) are consistent with observation (i)-(iii) but abstract form non-homotheticities of preferences. However, they cannot replicate the structural change between the U.S. goods and service sector quantitatively. This paper presents a growth model, which reconciles both forces of structural change - relative price and income effects - with balanced growth on the aggregate. The theory is simple and parsimonious and contains an analytical solution. The model can replicate shape and magnitude of the nonbalanced sectoral facts as well as the balanced nature of growth on the aggregate. In a structural estimation, the model’s functional form is exploited to obtain estimates for the relative importance of income and price effects as determinants of the structural change