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Industry and the Family: Two Engines of Growth

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  • Connolly, Michelle
  • Peretto, Pietro F

Abstract

We generalize the class of endogenous growth models in which the scale of the economy has level rather than growth effects, and study the implications of different demographic and technological factors when both fertility choice and research effort are endogenous. The model incorporates two dimensions of technological progress: vertical (quality of goods) and horizontal (variety of goods). Both dimensions contribute to productivity growth but are driven by different processes and hence respond differently to changes in fundamentals. Specifically, while unbounded vertical progress is feasible, the scale of the economy limits the variety of goods. Incorporating a linearity in reproduction generates steady-state population growth and variety expansion. We thus have two engines of growth generating dynamics that we compare with observed changes in demographics, market structure, and patterns of growth. Numerical solutions yield the important insight that, while endogenous, fertility responds very little to industrial policies. Demographic shocks, in contrast, have substantial effects on growth. Copyright 2003 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Economic Growth.

Volume (Year): 8 (2003)
Issue (Month): 1 (March)
Pages: 115-48

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Handle: RePEc:kap:jecgro:v:8:y:2003:i:1:p:115-48

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Web page: http://www.springerlink.com/link.asp?id=102931

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References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  2. Dalgaard, Carl-Johan & Kreiner, Claus Thustrup, 2001. " Is Declining Productivity Inevitable?," Journal of Economic Growth, Springer, vol. 6(3), pages 187-203, September.
  3. Charles I. Jones, 1999. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," NBER Working Papers 7375, National Bureau of Economic Research, Inc.
  4. Fürnkranz-Prskawetz, Alexia & Kögel, Tomas, 2000. "Agricultural Productivity Growth and Escape from the Malthusian Trap," CEPR Discussion Papers 2485, C.E.P.R. Discussion Papers.
  5. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  6. Kelly, Morgan, 2001. " Linkages, Thresholds, and Development," Journal of Economic Growth, Springer, vol. 6(1), pages 39-53, March.
  7. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
  8. Peretto, Pietro F, 1998. " Technological Change and Population Growth," Journal of Economic Growth, Springer, vol. 3(4), pages 283-311, December.
  9. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
  10. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  11. Peretto, Pietro F, 1998. " Technological Change, Market Rivalry, and the Evolution of the Capitalist Engine of Growth," Journal of Economic Growth, Springer, vol. 3(1), pages 53-80, March.
  12. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
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Citations

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Cited by:
  1. Strulik, Holger & Prettner, Klaus & Prskawetz, Alexia, 2012. "The past and future of knowledge-based growth," Center for European, Governance and Economic Development Research Discussion Papers 140, University of Goettingen, Department of Economics.
  2. GROWIEC, Jakub, 2006. "Fertility choice and semi-endogenous growth: where Becker meets Jones," CORE Discussion Papers 2006023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Chu, Angus C. & Cozzi, Guido, 2011. "Cultural preference on fertility and the long-run growth effects of intellectual property rights," MPRA Paper 29059, University Library of Munich, Germany.
  4. Strulik, Holger & Prettner, Klaus & Prskawetz, Alexia, 2011. "R&D-based growth in the post-modern era," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 04/2011, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
  5. Growiec, Jakub, 2010. "Knife-edge conditions in the modeling of long-run growth regularities," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1143-1154, December.
  6. Pietro Peretto & Simone Valente, 2011. "Growth on a Finite Planet: Resources, Technology and Population in the Long Run," Working Papers 11-12, Duke University, Department of Economics.
  7. Katsuhiko Hori & Katsunori Yamada, 2011. "Education, Innovation, and Long-Run Growth," KIER Working Papers 798, Kyoto University, Institute of Economic Research.
  8. Jakub Growiec, 2007. "Beyond the Linearity Critique: The Knife-edge Assumption of Steady-state Growth," Economic Theory, Springer, vol. 31(3), pages 489-499, June.
  9. Strulik, Holger & Prettner, Klaus & Prskawetz, Alexia, 2012. "The past and future of knowledge-based growth," Center for European, Governance and Economic Development Research Discussion Papers 140, University of Goettingen, Department of Economics.
  10. repec:ebl:ecbull:v:15:y:2007:i:8:p:1-7 is not listed on IDEAS
  11. Frederic Tournemaine & Pongsak Luangaram, 2012. "R&D, human capital, fertility, and growth," Journal of Population Economics, Springer, vol. 25(3), pages 923-953, July.
  12. Frederic Tournemaine, 2007. "Can population promote income per-capita growth? A balanced perspective," Economics Bulletin, AccessEcon, vol. 15(8), pages 1-7.
  13. Pietro Peretto & Michelle Connolly, 2007. "The Manhattan Metaphor," Journal of Economic Growth, Springer, vol. 12(4), pages 329-350, December.

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