Rent-Seeking, Capital Accumulation, and Macroeconomic Growth

T HE application of capital theory to decisions on individual improvement, and in particular improvement of earning capacity, has provided a framework for the understanding of many aspects of observed behavior regarding education, health, occupational choice, mobility, etc., as rational investment of present resources for the purpose of enjoying future returns. The formulation by Friedman and Kuznets (1945) and the significant development of the theory by Becker (1962, 1964) and Mincer (1958, 1962) provided a novel view of the life cycle of earnings by linking it to the time profile of investment in human capital: People make most of their investments in themselves when they are young, and to a large extent by foregoing current earnings. Observed earnings are therefore relatively low at early years, and they rise as investment declines and as returns on past investments are realized. The main reason why investment is undertaken mostly by the young is that they have a longer period over which they can re-

To critically evaluate the recent literature on macroeconomic repercussions of the HIV pandemic and the response to it. The review focuses on the impacts of HIV through both its health consequences and its impact on the accumulation of human capital. So far, most studies have found a moderate impact of the HIV epidemic on macroeconomic growth. However, recent studies tend to emphasize the fact that HIV undermines human capital and implies a long-term detriment for economic development. Availability of data from Demographic and Health Surveys offers opportunities for better understanding the relationship between the HIV epidemic and economic growth through pathways linking its microeconomic and macroeconomic impacts. The macroeconomic impact of HIV observed so far appears moderate. Our analysis of recent literature, however, points out three important issues that may have been previously underestimated. First, the most important effects may occur in the longer run, through changes in the accumulation of human capital. Second, aggregate impact often masks an unequal impact among different economic groups. Third, the empirical evidence on which current macroeconomic models are based remains weak, in particular in the way it takes into account responses to HIV at the households' level. Microsimulation models and the recently increasing availability of robust datasets at households' level offer promising opportunities to address these issues.

Modeling economic growth factors in Egypt: A quantile regression approach

This study investigates the impact of grandparental childcare on long-term economic growth by developing a two-sector growth model featuring two-sided altruism, human capital accumulation, and intergenerational labour-childcare trade-offs, and by utilizing macroeconomic moments from 2000 to 2019 extracted from Chinese national statistics and household survey data and the equilibrium-based inverse calibration approach. The theoretical results find that grandparental childcare can significantly promote economic growth when younger parents are more productive than older grandparents. First, it replaces less productive old-age labour with more productive younger labour in both production and education, thereby enhancing overall labour productivity. Second, grandparental childcare increases investment returns on children’s education within dynastic families, boosting human and physical capital accumulation. The quantitative results find that grandparental childcare can raise the annual growth rate by about 1.26 percentage points. The findings carry policy implications for elderly labour utilization, childcare, and economic growth.

This paper analyzes the effects of wage decline by exogenous economic shock and individuals’ utility changes on fertility rate and human capital accumulation using an overlapping-generations model, which is mainly based on Groezen, Leers and Mejidam (2003) and Cardak (2004). Although Groezen, Leers and Mejidam (2003) consider childcare cost and child allowances in a model of a small open economy, they ignore educational expenditures and do not analyze human capital accumulation. Although Cardak (2004) considers human capital accumulation and assumes it is determined by governmental or parental expenditures on education and by parent’s human capital endowments, he ignores childcare cost and child allowances, and assumes population size is constant in each period. This study considers human capital accumulation in a model of a closed economy with endogenous fertility. We then consider the effects of declining wage rate on fertility rate, human capital accumulation, and economic growth when an individual’s preferences for his consumption change. This paper is motivated by declining birthrate by the cost burden of educational expenses and wage decline by the coronavirus (Covid-19) pandemic in Japan. We find that increased preference for consumption of individuals decreases the number of children (reduce fertility rate), constricts human capital accumulation, and surely impairs economic growth when wage rate declines by exogenous economic shock.

This paper analyzes the effects of working from home on fertility rate and human capital accumulation using an overlapping-generations model, which is mainly based on Groezen, Leers and Mejidam (2003) and Cardak (2004). Although Groezen, Leers and Mejidam (2003) consider childcare cost and child allowances in a model of a small open economy, they ignore educational expenditures and do not analyze human capital accumulation. Although Cardak (2004) considers human capital accumulation and assumes it is determined by governmental or parental expenditures on education and by parent’s human capital endowments, he ignores childcare cost and child allowances, and assumes population size is constant in each period. This study considers human capital accumulation in a model introduced childcare time with endogenous fertility by following Murata (2022). We then consider the effects of working from home on fertility rate and human capital accumulation. This paper is motivated by enforced working from home during the coronavirus (Covid-19) pandemic. We find that if the government increases childcare subsidies, working from home promotes human capital accumulation and economic growth.

This paper develops a growth theory that captures the replacement of physical capital accumulation by human capital accumulation as a prime engine of growth along the process of development. It argues that the positive impact of inequality on the growth process was reversed in this process. In early stages of the Industrial Revolution, when physical capital accumulation was the prime source of growth, inequality stimulated development by channelling resources towards individuals with a higher propensity to save. As human capital emerged as a growth engine, equality alleviated adverse effects of credit constraints on human capital accumulation, stimulating the growth process. This research develops a growth theory that captures the endogenous replacement of physical capital accumulation by human capital accumulation as a prime engine of economic growth in the transition from the Industrial Revolution to modern growth. The proposed theory offers a unified account for the effect of income inequality on the growth process during this transition. It argues that the replacement of physical capital accumulation by human capital accumulation as a prime engine of economic growth changed the qualitative impact of inequality on the process of development. In the early stages of the Industrial Revolution, when physical capital accumulation was the prime source of economic growth, inequality enhanced the process of development by channelling resources towards individuals whose marginal propensity to save is higher. In the later stages of the transition to modern growth, as human capital emerged as a prime engine of economic growth, equality alleviated the adverse effect of credit constraints on human capital accumulation and stimulated the growth process. The proposed theory unifies two fundamental approaches regarding the effect of income distribution on the process of development: the Classical approach and the Credit Market Imperfection approach. 1 The Classical approach was originated by Smith (1776) and was further interpreted and developed by Keynes (1920), Lewis (1954), Kaldor (1957), and Bourguignon (1981). According to this approach, saving rates are an increasing function of wealth and inequality therefore channels resources towards individuals whose marginal propensity to save 1. The socio-political economy approach provides an alternative mechanism: equality diminishes the tendency for socio-political instability, or distortionary redistribution, and hence it stimulates investment and economic growth. See the comprehensive survey of Benabou (1996b).

Population aging, economic growth, and the social transmission of human capital: An analysis with an overlapping generations model

Economic growth is an increase in the productive capacity of an economy. The productive capacity can be increased by an increase in factors of production, such as capital, labor, or the level of technology. Economic growth can also be defined briefly as an increase in the level of output that an economy can produce. From a supply-side view, the main sources of economic growth are expected to be from capital (both physical and human), accumulation and technological progress. The literature on economic growth examines whether the sources of economic growth stem mostly from technological progress, physical capital accumulation, or human capital accumulation. Besides, it is a fundamental debate about a simple question: Why does rapid growth occur in some countries when some others cannot achieve such a performance? Important literature analyzing the high and sustained economic growth of countries already exists. The main concern is to disentangle the contributions of capital accumulation and technological progress from this growth process. In light of this main concern, sources of growth should also be investigated for the countries in the Middle East and North Africa (MENA). Our study explores the sources of economic growth for the MENA countries and contributes to the debate over whether they stem from technological progress, physical capital accumulation, or human capital accumulation, and deliberates on the identifying assumption used in growth accounting theories.

I analyze how changes in life expectancy affect retirement age, education time, and growth rates of economies. I set up a continuous time, overlapping generations model of endogenous growth with externalities in human capital production. I find that increases in life expectancy give rise to first, higher retirement ages and second, higher education spans. A threshold level for life expectancy exists such that per capita growth rates follow an inverted U pattern.

Our purpose is to examine the effect of monetary expansion on capital accumulation and economic growth in an overlapping generations model with the growth engine of human capital accumulation. It is shown that, under the money-in-the-utility-function approach, money growth stimulates human capital accumulation of individuals, through asset demand shifts from money to capital and arbitrage movements from physical to human capital. So it also boosts balanced-equilibrium growth of the economy. Thus, the positive growth effect of monetary expansion is immune to changes from physical to human capital as the growth engine.

This paper proposes an economic growth model with population growth and physical and human capital accumulation. The physical capital accumulation is built on the Solow growth model (Solow in Q J Econ 70:65–94, 1956). The education and human capital accumulation is influenced by the Uzawa–Lucas model (Uzawa in Int Econ Rev 6:18–31, 1965; Lucas in J Monet Econ 22:3–42, 1988). The population dynamics are influenced by the Haavelmo population model (Haavelmo in a study in the theory of economic evolution. Haavelmo, Amsterdam, 1954) and the Barro–Becker fertility choice model (Barro and Becker in Econometrica 57:481–501, 1989). We synthesize these dynamic forces in a compact framework, applying an alternative utility function proposed by Zhang (Econ Lett 42:105–110, 1993). The model describes a dynamic interdependence between population change, wealth accumulation, human capital accumulation, and division of labor. We simulate the model to demonstrate the existence of equilibrium points and to plot the motion of the dynamic system. We also examine the effects of changes in the propensity to have children, the mortality rate parameter, the propensity to receive education, the human capital utilization efficiency, and the mortality rate elasticity of human capital upon dynamic paths of the system.

Internal and external migration can have a profound impact on rural asset accumulation in most Third World countries. In many African, Asian, and Latin American countries the bulk of the labor force still lives in the countryside. In these countries the large difference between expected rural and urban or foreign incomes, coupled with the risk-reducing functions of migration, causes workers to migrate, either to urban centers or abroad. The remittances—defined as the money or goods sent home by migrant workers—can have a large effect on the accumulation of assets in these rural areas. For example, an inflow of external remittances to rural households at the upper end of the income distribution could increase land accumulation by the rich. In general terms the effect of remittances on asset accumulation in a rural Third World economy depends on answers to three questions: (a) Who migrates? (b) How much net income do migrants remit? and (c) What are the marginal effects of these remittances on household consumption and investment? Because of data limitations, in this article I propose to examine only the first and the third questions; other researchers have addressed the second issue. In the past surprisingly little attention has been focused on the question of the marginal effects of remittances on household consumption and investment in the rural Third World. This inattention has been due to three considerable methodological problems. The first is fungibility; because remittances are like any other form of cash income, it is difficult to associate this income source with any particular changes in household expenditure behavior. The second problem relates to the multiple-round effects of remittances on the local economy. For example, an inflow of remittances into a rural area may lead to a surge in expenditures in housing, which may, in turn, create new income and employment opportunities for the poor and unskilled. Unfortunately, however, few studies have

Previous articleNext article No AccessDisease and Development: A Reply to Bloom, Canning, and FinkDaron Acemoglu and Simon JohnsonDaron AcemogluMassachusetts Institute of Technology Search for more articles by this author and Simon JohnsonMassachusetts Institute of Technology Search for more articles by this author PDFPDF PLUSFull TextSupplemental Material Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Journal of Political Economy Volume 122, Number 6December 2014 Article DOIhttps://doi.org/10.1086/677190 Views: 799Total views on this site Citations: 25Citations are reported from Crossref © 2014 by The University of Chicago. All rights reserved.PDF download Crossref reports the following articles citing this article:Leah Bevis, Kichan Kim, David Guerena Soil zinc deficiency and child stunting: Evidence from Nepal, Journal of Health Economics 53 (Oct 2022): 102691.https://doi.org/10.1016/j.jhealeco.2022.102691Koichi Futagami, Miho Sunaga Risk aversion and longevity in an overlapping generations model, Journal of Macroeconomics 72 (Jun 2022): 103415.https://doi.org/10.1016/j.jmacro.2022.103415Rainer Kotschy Health improvements impact income inequality, The Journal of the Economics of Ageing 22 (Jun 2022): 100385.https://doi.org/10.1016/j.jeoa.2022.100385Masagus M. Ridhwan, Peter Nijkamp, Affandi Ismail, Luthfi M.Irsyad The effect of health on economic growth: a meta-regression analysis, Empirical Economics 122 (Apr 2022).https://doi.org/10.1007/s00181-022-02226-4Lei He, Zhengqi Wang The interaction effects of rising life expectancy and the public pension burden on aggregate savings and economic growth, Portuguese Economic Journal 115 (Mar 2022).https://doi.org/10.1007/s10258-022-00208-zMehmet Top, Songul Cinaroglu Cluster analysis of health systems in Europe according to life expectancy at birth, The International Journal of Health Planning and Management 36, no.66 (Jul 2021): 2162–2181.https://doi.org/10.1002/hpm.3283Maria Kuecken, Josselin Thuilliez, Marie-Anne Valfort Disease and Human Capital Accumulation: Evidence from the Roll Back Malaria Partnership in Africa, The Economic Journal 131, no.637637 (Dec 2020): 2171–2202.https://doi.org/10.1093/ej/ueaa134Alistair Dieppe, Atsushi Kawamoto, Yoki Okawa, Cedric Okou, Jonathan Temple What Explains Productivity Growth, (Jun 2021): 39–96.https://doi.org/10.1596/978-1-4648-1608-6_ch2Rainer Kotschy Health dynamics shape life-cycle incomes, Journal of Health Economics 75 (Jan 2021): 102398.https://doi.org/10.1016/j.jhealeco.2020.102398David E. Bloom, Simiao Chen, Michael Kuhn, Mark E. McGovern, Les Oxley, Klaus Prettner The economic burden of chronic diseases: Estimates and projections for China, Japan, and South Korea, The Journal of the Economics of Ageing 17 (Oct 2020): 100163.https://doi.org/10.1016/j.jeoa.2018.09.002Daron Acemoglu, Leopoldo Fergusson, Simon Johnson Population and Conflict, The Review of Economic Studies 87, no.44 (Aug 2019): 1565–1604.https://doi.org/10.1093/restud/rdz042Anna Tompsett The Lazarus drug: the impact of antiretroviral therapy on economic growth, Journal of Development Economics 143 (Mar 2020): 102409.https://doi.org/10.1016/j.jdeveco.2019.102409Sydney Chikalipah, Daniel Makina Economic growth and human development: Evidence from Zambia, Sustainable Development 27, no.66 (Apr 2019): 1023–1033.https://doi.org/10.1002/sd.1953Keiya Minamimura, Daishin Yasui From physical to human capital accumulation: Effects of mortality changes, Review of Economic Dynamics 34 (Oct 2019): 103–120.https://doi.org/10.1016/j.red.2019.03.005Dierk Herzer, Korbinian Nagel The impact of adult and non-adult mortality on development: Two centuries evidence from a panel of industrial countries, Journal of Policy Modeling 41, no.22 (Mar 2019): 352–371.https://doi.org/10.1016/j.jpolmod.2019.02.008Sydney Chikalipah, Godwin Okafor Dynamic Linkage Between Economic Growth and Human Development: Time Series Evidence from Nigeria, Journal of International Development 31, no.11 (Sep 2018): 22–38.https://doi.org/10.1002/jid.3390Agnieszka Gehringer, Klaus Prettner , Macroeconomic Dynamics 23, no.44 ( 2019): 1471.https://doi.org/10.1017/S1365100517000293Xiaobing Zhao, Mason Gerety, Nicolai V. Kuminoff Revisiting the temperature-economic growth relationship using global subnational data, Journal of Environmental Management 223 (Oct 2018): 537–544.https://doi.org/10.1016/j.jenvman.2018.06.022Daniel Gallardo-Albarrán Health and economic development since 1900, Economics & Human Biology 31 (Sep 2018): 228–237.https://doi.org/10.1016/j.ehb.2018.08.009Casper Worm Hansen, Holger Strulik Life expectancy and education: evidence from the cardiovascular revolution, Journal of Economic Growth 22, no.44 (Sep 2017): 421–450.https://doi.org/10.1007/s10887-017-9147-xJudith Kabajulizi, Marcus R Keogh-Brown, Richard D Smith The welfare implications of public healthcare financing: a macro–micro simulation analysis of Uganda, Health Policy and Planning 32, no.1010 (Oct 2017): 1437–1448.https://doi.org/10.1093/heapol/czx125Daron Acemoglu, Leopoldo Fergusson, Simon Johnson Population and Civil War, SSRN Electronic Journal (Jan 2017).https://doi.org/10.2139/ssrn.2947307Thomas J. Hyclak, Christopher L. Skeels, Larry W. Taylor The cardiovascular revolution and economic performance in the OECD countries, Journal of Macroeconomics 50 (Dec 2016): 114–125.https://doi.org/10.1016/j.jmacro.2016.09.005Marcello Basili, Filippo Belloc HOW TO MEASURE THE ECONOMIC IMPACT OF VECTOR-BORNE DISEASES AT COUNTRY LEVEL, Journal of Economic Surveys 29, no.55 (Jul 2014): 896–916.https://doi.org/10.1111/joes.12075Casper Worm Hansen, Lars Lønstrup The Rise in Life Expectancy and Economic Growth in the 20th Century, The Economic Journal 125, no.584584 (May 2015): 838–852.https://doi.org/10.1111/ecoj.12261

Political economy of taxation, debt ceilings, and growth