Technological Progress and Economic Transformation

Growth theory can go a long way toward accounting for phenomena linked with U.S. economic development. Some examples are: (i) the secular decline in fertility between 1800 and 1980, (ii) the decline in agricultural employment and the rise in skill since 1800, (iii) the demise of child labor starting around 1900, (iv) the increase in female labor-force participation from 1900 to 1980, (v) the baby boom from 1936 to 1972. Growth theory models are presented to address all of these facts. The analysis emphasizes the role of technological progress as a catalyst for economic transformation.

Technological Progress and Economic Transformation

Growth theory goes a long way toward explaining phenomena in labor economics linked with U.S. economic development. Some examples are: (a) the secular decline in fertility between 1800 and 1980, (b) the decline in agricultural employment and the rise in skill since 1800, (c) the demise of child labor starting around 1900, (d) the increase in female labor-force participation from 1900 to 1980. Growth theory models are presented to address all of these facts, plus the temporary rise in fertility that occurred during the baby boom. The analysis emphasizes the role of technological progress as a catalyst for economic transformation. A separate set of lecture notes on the paper is available at: https://urresearch.rochester.edu/handle/1802/6714Child Labor, Economic Growth, Educational Attainment, Female Labor-Force Participation, Fertility, Technological Progress.

Engines of Liberation - Additional Notes

These short notes supplement the discussion in Greenwood, Seshadri and Yorukoglu (2004) on time-use studies and female labor-force participation.

Children and Household Wealth

This paper examines the effects of children on consumption and wealth. To anchor intuition, we develop implications using a simple permanent income model with no uncertainty and complete markets. But this framework does not come close to matching the distribution of existing wealth. We therefore examine the effects of children using a rich, augmented life-cycle model, and using a life-cycle model with endogenous fertility. We find that children have a large effect on household’s net worth and consequently are an important factor in understanding the wealth distribution. The effects of children are much larger than the effects of asset tests associated with cash and near-cash transfers, given earnings realizations and the social security system experienced by households in the original HRS cohort. We also show that fertility and credit constraints interact in ways that significantly affect wealth accumulation.

The U.S. demographic transition

Between 1800 and 1940, the United States went through a dramatic demographic transition. In 1800, the average woman had seven children, and 94 percent of the population lived in rural areas. By 1940, the average woman birthed just two kids, and only 43 percent of the populace lived in the country. The question is: What accounted for this shift in the demographic landscape? The answer given here is that technological progress in agriculture and manufacturing explains these facts.

The US Demographic Transition

Between 1800 and 1940 the U.S. went through a dramatic demographic transition. In 1800 the average woman had 7 children, and 94 percent of the population lived in rural areas. By 1940 the average woman birthed just 2 kids, and only 43 percent of populace lived in the country. The question is: What accounted for this shift in the demographic landscape? The answer given here is that technological progress in agriculture and manufacturing explains these facts.fertility, technological progress, agriculture, manufacturing

WP 2018-381

This project explores the causes behind the recent decline in the Labor Force Participation (LFP) rate. The analysis examines the evolution of the LFP rate for different demographic groups to gauge the effect of demographic changes. An integral part of the project is an investigation of the flows of workers into and out of the labor force to determine whether the LFP rate has been declining because more workers are leaving or because fewer workers are entering the labor market. The project also studies the evolution of wages and finds that the decline in the LFP rate is often accompanied by a declining real wage, which is indicative of the relative importance of demand versus supply factors.Social Security Administration, RRC08098401-10, UM18-Q5. The collection of data used in this study was partly supported by the National Institutes of Health under grant number R01 HD069609 and R01 AG040213, and the National Science Foundation under award numbers SES 1157698 and 1623684.https://deepblue.lib.umich.edu/bitstream/2027.42/145483/1/wp381.pdfDescription of wp381.pdf : Working pape

WP 2019-403

This paper quantifies the effects of the totalization agreements that coordinate the United States Social Security program with the comparable programs of other countries. For each treated country that has signed an agreement with the U.S., we construct a synthetic control country by properly weighting other countries that have not signed a totalization agreement with the U.S. to make sure that the resulting synthetic control mimics the behavior of the treated country before the totalization agreement entered into force. Using the synthetic country to approximate what would happen to the treated country after the agreement, we find, on average, that totalization agreements reduce U.S. exports significantly and increase U.S. imports and U.S. foreign direct investment in the fifth year after the agreement. Moreover, we find the effects are quite heterogeneous across countries/agreements, with some agreements increasing U.S. exports and others decreasing U.S. imports, both of which are the opposite of the average effects. In future work, we will investigate why the effects vary across countries by relating the estimates in this paper to the bilateral trade patterns between the U.S. and the treated countries, as well as the number and composition of beneficiaries of the totalization agreements.U.S. Social Security Administration Award RDR18000002, UM19-Q2https://deepblue.lib.umich.edu/bitstream/2027.42/152444/1/wp403.pdfDescription of wp403.pdf : Working pape

The Influence of Public Policy on Health, Wealth and Mortality

In this project we extend an augmented lifecycle model, incorporating a Grossman-style model of health capital, to enhance understanding of factors influencing consumption, wealth and health. We develop three primary results when using the model to explore the effects of stylized versions of Medicare and Social Security on wealth and longevity. First, our model calibration implies consumption and health are complements. As health depreciates with age, households will get less utility from consumption than would be in the case of a lifecycle model that does not endogenize health. Second, it appears that forward-looking households, when confronted by a substantially reduced safety net, will respond by reducing consumption and by reducing their health investment and therefore longevity. Third, there is a potentially important difference between short- and long- run responses to policy.

East Asia vs. Latin America: TFP and Human Capital Policies

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