Antonio Ciccone

Trade and Productivity

We estimate the effect of international trade on average labour productivity across countries. Our empirical approach relies on a summary measure of trade that, we argue, is preferable to the one conventionally used on both theoretical and empirical grounds. In contrast to the marginally significant and non-robust effects of trade on productivity found previously, our estimates are highly significant and robust even when we include institutional quality and geographic factors in the empirical analysis. We also examine the channels through which trade and institutional quality affect average labour productivity. Our finding is that trade works through labour efficiency, while institutional quality works through physical and human capital accumulation. We conclude with an exploratory analysis of the role of trade policies for average labour productivity.

Rain and the Democratic Window of Opportunity

According to the economic approach to political transitions, negative transitory economic shocks can give rise to a window of opportunity for democratic change. We examine this hypothesis using yearly rainfall variation over the 1980-2004 period in 41 Sub-Saharan African countries. We find that a 25% drop in rainfall increases the probability of a transition to democracy during the following two years by around 3 percentage points. A 5% fall in income due to low rainfall raises the probability of democratization by around 7 percentage points. We also find that rainfall does not affect transitions from democracy to autocracy.

Human Capital, the Structure of Production, and Growth

We document that countries with higher initial education levels experienced faster value-added and employment growth in schooling-intensive industries in the 1980s and 1990s. This effect is robust to controls for other determinants of international specialization and becomes stronger when we focus on economies open to international trade. Our finding is consistent with schooling fostering the adoption of new technologies if such technologies are skilled-labor augmenting, as was the case in the 1980s and the 1990s. In line with international specialization theory, we also find that countries where education levels increased rapidly experienced stronger shifts in production toward schooling-intensive industries.

International Commodity Prices, Growth and the Outbreak of Civil War in Sub-Saharan Africa

Para entender mejor los efectos de las condiciones economicas sobre las guerras civiles, examinamos si las guerras civiles en Africa Subsahariana han sido mas probables despues de caidas en los precios internacionales de los principales bienes de exportacion. Nuestras estimaciones indican un efecto robusto de las caidas de precios internacionales sobre el comienzo de las guerras civiles.

Start-Up Costs and Pecuniary Externalities as Barriers to Economic Development

One critical aspect of economic development is that productivity growth and a rising standard of living are realized through more roundabout methods of production and increasing specialization of intermediate inputs and producer services. We use an extended version of the Judd-Grossman-Helpman model of dynamic monopolistic competition to show that an economy that inherits a small range of specialized inputs can be trapped into a lower stage of development. The limited availability of specialized inputs forces the final goods producers to use a labor intensive technology, which in turns implies a small inducement to introduce new intermediate products. The start-up costs, which make the intermediate goods producers subject to dynamic increasing returns, and pecuniary externalities that result from the factor substitution in the final goods sector, play essential roles in the model.

Long-Run Substitutability between More and Less Educated Workers: Evidence from U.S. States 1950-1990

We estimate the aggregate long-run elasticity of substitution between more and less educated workers (the slope of the demand curve for more relative to less educated workers) at the US state level. Our data come from the (five)1950-1990 decennial censuses. Our empirical approach allows for state and time fixed effects and relies on time and state dependent child labor and compulsory school attendance laws as instruments for (endogenous) changes in the relative supply of more educated workers. We find the aggregate long-run elasticity of substitution between more and less educated workers to be around 1.5.

Oil Price Shocks, Income, and Democracy

We examine the effect of oil price fluctuations on democratic institutions over the 1960–2007 period. We also exploit the very persistent response of income to oil price fluctuations to study the effect of persistent (oil-price-driven) income shocks on democracy. Our results indicate that countries with greater net oil exports over GDP see improvements in democratic institutions following upturns in international oil prices. We estimate that a 1 percentage point increase in per capita GDP growth due to a positive oil price shock increases the Polity democracy score by around 0.2 percentage points on impact and by around 2 percentage points in the long run. The effect on the probability of a democratic transition is around 0.4 percentage points.

Input Chains and Industrialization

A key aspect of industrialization is the adoption of increasing-returns-to-scale, industrial, technologies. Two other, well-documented aspects are that industrial technologies are adopted throughout intermediate-input chains and that they use intermediate inputs intensively relative to the technologies they replace. These features of industrial technologies combined imply that countries with access to similar technologies may have very different levels of industrialization and income, even if the degree of increasing returns to scale at the firm level is relatively small. Furthermore, a small improvement in the productivity of industrial technologies can trigger full-scale industrialization and a large increase in income.

Growth, Democracy, and Civil War

Are civil wars partly caused by low economic growth? And do democratic institutions attenuate the impact of low growth on the likelihood of civil war? Our approach to answering these questions exploits that international commodity prices have a significant effect on income growth in Sub-Saharan African countries. We show that lower income growth makes civil war more likely in non-democracies. This effect is significantly weaker in democracies. So much so, that we do not find a link between growth and civil war in countries with democratic institutions. Our results therefore point to an interaction between economic and institutional causes of civil war.

Human Capital and Externalities in Cities

We combine growth theory with US Census data on individual schooling and wages to estimate the aggregate return to human capital and human capital externalities in cities. Our estimates imply that a one year increase in average schooling in cities increases their aggregate labour productivity by 8 to 11%. We find no evidence for aggregate human capital externalities in cities however, although we use three different approaches. Our main theoretical contribution is to show how human capital externalities can be identified (non-parametrically) even if workers with different levels of human capital are imperfect substitutes in production.