On the Transition to Modern Growth

RePEc Short ID: pra33
ORCID iD: 0000-0001-6991-4677

Ravikumar, B.; Vandenbroucke, Guillaume

doi:10.20955/wp.2023.026

Working Paper

On the Transition to Modern Growth

Abstract: We study a simple model where a single good can be produced using a diminishing-returns technology (Malthus) and a constant-returns technology (Solow). The economy's output exhibits three stages: (i) stagnation; (ii) transition with increasing growth; (iii) constant growth in the long run. We map the Malthus technology to agriculture and show that the share of employment in agriculture is sufficient to determine both the onset of economic transition and the dynamics of output during the transition. Using 20th century data on agricultural share of employment, we project backward and estimate the onset of transition for the U.S., Western Europe, and India. We then show that the model's implications are consistent with the observed output dynamics.

Keywords: economic transition; agricultural employment; Malthus; Solow;

JEL Classification: O10; O13; O40;

https://doi.org/10.20955/wp.2023.026