Our work sheds light on the joint role of human capital and geography during the early stages of ... more Our work sheds light on the joint role of human capital and geography during the early stages of the transition from stagnation to growth in early twentieth century Greece. We uncover a robust association between geography and literacy. We also show that geography is correlated with land inequality and thus establish that land distribution is a channel through which geography influences literacy. Finally, the impact of geography on human capital formation weakens with industrialization. Our work contributes to the literature on geography and human capital in the transition from stagnation to growth since Greece was at the early stages of the industrial era during the study period.
The objective of this paper is to empirically examine the relation between growth and human capit... more The objective of this paper is to empirically examine the relation between growth and human capital for the Greek regions (NUTS III), for the period 1981-2003. We use the enrolment rates at lower and upper secondary education and the respective student/teacher ratios. Moreover, taking a broader view of human capital, we include two health care indicators (the number of medical doctors and hospital beds). We find that student enrolment rates at both levels of secondary education have a positive impact on growth, while a higher student-teacher ratio inhibits growth. Also, the number of medical doctors seems to boost growth. Besides, there are important human capital externalities across neighbouring regions. We define two regional groups (high and low income) and there is strong evidence of heterogeneity in rates of return to human capital. The above results are more robust for high income regions. Overall, this study incorporates the differences in rates of return to education between regional clubs. We believe that our findings have important policy implications and Greek authorities should take them into account in designing growth promoting policies at the national and regional level.
This study examines the role of proximity in regional growth using a multi-dimensional framework,... more This study examines the role of proximity in regional growth using a multi-dimensional framework, for seven EU countries during 1990-2005. We incorporate geographical as well as economic and technological effects in two seminal growth models in order to test for the existence and magnitude of interregional externalities. Our findings show that spillovers are important for European regional growth, regardless of the measure of proximity; thus regions surrounded by dynamic entities are likely to growth faster than otherwise. Moreover, our results underline the need for coordinated EU policies aiming at higher physical and human capital accumulation, taking into account regional synergies.
This paper estimates production functions for the 48 contiguous U.S. states over the 1970–2000 pe... more This paper estimates production functions for the 48 contiguous U.S. states over the 1970–2000 period employing recently developed panel estimators that tackle simultaneously parameter heterogeneity, cross-sectional dependence and non-stationarity. The findings suggest that labor, private capital and, when controlling for cross-sectional dependence, average schooling years exert a positive and significant effect on state income. In contrast, the income effect of public capital stock is negative. The state-specific coefficients indicate that this effect likely stems from the negative elasticity of income with respect to public capital in the states located primarily in the Snow Belt region.
In this paper we use country panel data to explore the effect of innovation on top income inequal... more In this paper we use country panel data to explore the effect of innovation on top income inequality. We construct a novel dataset of patents by combining patents from USPTO and EPO to test the effect of innovation on income inequality. We demonstrate that innovation has a strong positive correlation with top income shares. Also, we find weak evidence that innovation has a negative effect on overall income inequality. We support our findings by using instrumental variables to tackle endogeneity. In addition our IV analysis shows that the effect of innovation on top income shares remains significant for 3 years. Finally, we show that innovation has a less strong effect on top income inequality when we include defensive patents in the analysis.
This study investigates the determinants of gender-specific life expectancy across US states over... more This study investigates the determinants of gender-specific life expectancy across US states over the period 1995-2007. We employ a production function specification where life expectancy depends on health expenditure, income, education and lifestyle variables, allowing for spatial effects. Empirical results suggest that education attainment and health expenditure are the main factors behind improving longevity, whereas smoking bears a strong negative influence. For robustness purposes, we also use health spending as well as education criteria, apart from geographical ones to model interstate spillovers. In the former case, states with similar health expenditure are 'neighbors' and affect positively the life expectancy process. If education is applied instead of health spending together with geographic proximity, the spatial correlation is insignificant, i.e. education 'neighbors' do not affect life expectancy. Our findings do not imply significant gender differences regarding health production. The results suggest that health care policy will have to focus on wider economic and social considerations, like education and lifestyle changes, except medical care provision in order to exploit the full potential for life expectancy improvements of the US population.
This paper surveys the literature that examines the effect of education on economic growth. Speci... more This paper surveys the literature that examines the effect of education on economic growth. Specifically, we apply meta-regression analysis to 56 studies with 979 estimates and show that there is substantial publication selection bias towards a positive impact of education on growth. Once we account for this, we find evidence of a genuine effect of education on economic growth. The variation in reported estimates can be attributed to differences in the measurement of education and study characteristics, most importantly model specification, estimation methodology, type of data and the research outlet where studies were published, e.g. academic journals vs. working papers.
European Journal of Political Economy, Mar 1, 2023
This paper advances the hypothesis that individuals in more ethnically fragmented societies, part... more This paper advances the hypothesis that individuals in more ethnically fragmented societies, participate less in social groups. More precisely, the empirical analysis places the spotlight on trade unions and investigates whether ethnic diversity affects the decision of workers to participate in them. The analysis takes place along two layers:(a) crosscountry and (b) individual level. First, building on a set of innovative instruments derived from the parasite-stress theory of values and sociality, our crosscountry analysis seeks to exploit exogenous sources of variations in ethnic diversity and to establish a convincing relationship between ethnic diversity and trade union density across countries. In turn, by following an epidemiological approach, our analysis attempts investigate variations on the behavior of individuals whose social values potentially differ, but they all live in a common economic and institutional setting. To this end, we employ individual level data from the European Social Survey (ESS) and we investigate whether migrants that cοme from more ethnically fragmented societies participate less in trade unions in their European countries of residence. Consistent with the prediction of the theory, both layers of the empirical analysis provide evidence of a negative and highly significant relationship between ethnic diversity and the decision of the workers to participate in trade unions.
We investigate the relationship between economic growth and top income inequality under the influ... more We investigate the relationship between economic growth and top income inequality under the influence of human and physical capital accumulation, using an annual panel of U.S. state-level data. Our analysis is based upon the "unified" framework offered by Galor and Moav (2004) while the empirics account for cross-section dependence, parameter heterogeneity, and endogeneity, in nonstationary series. We conclude that changes in inequality do not influence growth, neither in the short run nor in the long run in the United States as a whole in the 1929-2013 period. Our findings are robust to the inclusion of overall income inequality measures. These findings provide support for the theoretical prediction of the unified theory of inequality and growth, according to which the growth effect of inequality becomes insignificant in the latest stages of economic development that the United States experiences during our period of investigation. Therefore, future policies aiming at moderating the concentration at the upper end of income distribution are not likely to have adverse growth consequences in developed countries such as the United States. (JEL I21, O47, C23) * The opinions expressed are those of the authors only and should not be considered as representative of the European Commission's official position. The authors thank especially the Editors and three anonymous referees for their very constructive remarks and suggestions. The paper has also benefited greatly from comments received by conference par
ABSTRACT This paper analyzes the co-evolution of two major determinants of social welfare, namely... more ABSTRACT This paper analyzes the co-evolution of two major determinants of social welfare, namely, income and carbon emissions. In particular, by using a distribution dynamics approach based on Markov chains, we investigate the shape and behavior of the joint distribution of per-capita income and carbon dioxide emissions. We arrive at several interesting conclusions, especially in the context of international negotiations on climate change. First, evidence does not support theoretical models predicting the existence of a poverty-environment trap. Specifically, in the long-run two main groups of countries will emerge: poor versus polluting countries. Second, the typical development path leads initially to high emission levels and, subsequently, to high income. Third, the convergence process towards the stationary distribution is very slow. Finally, for carbon emissions, whenever it is observed, the environmental Kuznets curve seems to be only a transitory phenomenon.
Review of Urban & Regional Development Studies, Mar 1, 2008
The purpose of this paper is to test regional convergence and investigate interregional dispariti... more The purpose of this paper is to test regional convergence and investigate interregional disparities in terms of per capita income in Greece. The novelty of our study lies in the use of a disaggregated dataset for an extended time period (1971-2003) at two regional levels (NUTS II & NUTS III). Our results indicate that there is β convergence between prefectures, but not among regions, while no evidence of σ convergence was found at both regional levels. Also, the GDP geographic concentration and population density have a negative impact on growth, which outweighs the positive growth effect of population geographic concentration and GDP spatial inequality. Thus, policies aiming at the decentralization of economic activity in Greece would enhance growth and regional equality simultaneously. Finally, we do not find economic dualism across geographic areas; however rich prefectures seem to converge faster than poor ones.
This paper advances the hypothesis that workers participate less in trade unions in more ethnical... more This paper advances the hypothesis that workers participate less in trade unions in more ethnically fragmented societies. This hypothesis dates back at least to Marx and Engels who first suggested that increased ethnic and racial antipathies among workers undermine class consciousness and weaken the unity of the working class in the United States. Building on a set of innovative instruments derived from biogeography and more precisely the parasite-stress theory of values and sociality (Fincher and Thornhill, 2008), our analysis seeks to exploit exogenous sources of variations in ethnic diversity and establish a convincing relationship between ethnic diversity and trade union density across countries. In turn, our analysis investigates the above mentioned relationship by using the European Social Survey (ESS) dataset and in particular a sample of migrants of different ancestry residing in ESS countries. Consistent with the prediction of the theory, both layers of the empirical analysis provide evidence of a strong, negative and highly significant relationship between ethnic diversity and the decision of the workers to participate in trade unions. Obtained empirical findings remain highly robust across a number of alternative empirical specifications and estimation techniques.
This paper estimates production functions for Greek regions over 1981-2003, using a novel human c... more This paper estimates production functions for Greek regions over 1981-2003, using a novel human capital dataset. We construct rich human capital series, where data for employees are decomposed according to their education level. Our empirics include recent non-stationary panel techniques, allowing for cross-section dependence and parameter heterogeneity in production technology, along with fixed effects and dynamic panel estimators. We show that ignoring cross-section dependence and parameter heterogeneity has a serious distorting impact on the estimated results, both qualitatively and quantitatively. Our evidence shows that tertiary education has a strong positive association with labor productivity growth, while secondary education exhibits a negative relationship. Primary education, public capital and net agglomeration do not display any relation with growth. Overall, findings suggest that policy makers should account for spillovers alongside technology heterogeneity and direct their efforts towards the expansion of tertiary education in poor regions in order to promote convergence.
This paper focuses on the implications of Decentralized Education (DE) and Centralized Public Edu... more This paper focuses on the implications of Decentralized Education (DE) and Centralized Public Education (CPE) for growth and welfare in an overlapping generations model. Individuals choose learning time, consumption and human capital. Under DE, there is no government intervention, while in CPE, human capital is augmented by public education expenditures …nanced by a distortionary income tax, where the latter is chosen by a benevolent …scal authority. CPE is welfare superior to DE for moderate/strong preferences over human capital bequests and medium/high elacticities of human capital with respect to average public education spending, average and parental human capital. So, even if we abstract from equity considerations, education policy may be supported on welfare grounds.
In this paper we explore the effect of innovation on income inequality using annual country panel... more In this paper we explore the effect of innovation on income inequality using annual country panel data for 29 countries. We demonstrate that innovation activities reduce personal income inequality by matching patents from the European Patent Office with their inventors. Our findings are supported by instrumental variable estimations to tackle endogeneity. The results are also robust with respect to various inequality measures, alternative quality indexes of innovation, truncation bias, the use of patent applications together with granted patents and different ways to split or allocate patents.
This paper studies the general equilibrium implications of two types of education policy in an ov... more This paper studies the general equilibrium implications of two types of education policy in an overlapping generations growth model with second-best policy. We examine vouchers, which augment inherited private education spending, and public investment on economy-wide human capital, that provides economy-wide externalities to individual human capital accumulation. The government determines jointly the allocation of tax revenues among the two types of education policy and tax policy, subject to the competitive decentralized equilibrium. Using plausible parameter values it is shown that it is socially optimal to spend heavily on economy-wide human capital accumulation and finance government spending by a modest proportional tax on initial human capital and a low tax on inherited private education expenditures.
This paper decomposes public spending and tax revenue into various subcategories and estimates th... more This paper decomposes public spending and tax revenue into various subcategories and estimates the impact of each of them on economic growth. The results provide some support for theoretical models of endogenous growth. Specifically, the main findings are: a) government spending on education, health and fuel-energy display a hump-shaped relationship with per capita growth; b) public expenditures on housingcommunity amenities, social security-social assistance and transport-communication are characterized by a U-shaped relation with growth; c) the effect of public spending on education and social expenditures on growth is stronger the poorer a country is, while the opposite is true for expenditures on health; d) there is a non-linear impact of distortionary taxation on growth, but the form on non-linearity is sensitive to changes in estimation method, since sometimes we find a hump-shaped and sometimes a U-shaped relationship; e) budget surplus has a positive effect on growth. These results are derived by estimating both single growth equations and systems of equations, which endogenize social spending.
Our work sheds light on the joint role of human capital and geography during the early stages of ... more Our work sheds light on the joint role of human capital and geography during the early stages of the transition from stagnation to growth in early twentieth century Greece. We uncover a robust association between geography and literacy. We also show that geography is correlated with land inequality and thus establish that land distribution is a channel through which geography influences literacy. Finally, the impact of geography on human capital formation weakens with industrialization. Our work contributes to the literature on geography and human capital in the transition from stagnation to growth since Greece was at the early stages of the industrial era during the study period.
The objective of this paper is to empirically examine the relation between growth and human capit... more The objective of this paper is to empirically examine the relation between growth and human capital for the Greek regions (NUTS III), for the period 1981-2003. We use the enrolment rates at lower and upper secondary education and the respective student/teacher ratios. Moreover, taking a broader view of human capital, we include two health care indicators (the number of medical doctors and hospital beds). We find that student enrolment rates at both levels of secondary education have a positive impact on growth, while a higher student-teacher ratio inhibits growth. Also, the number of medical doctors seems to boost growth. Besides, there are important human capital externalities across neighbouring regions. We define two regional groups (high and low income) and there is strong evidence of heterogeneity in rates of return to human capital. The above results are more robust for high income regions. Overall, this study incorporates the differences in rates of return to education between regional clubs. We believe that our findings have important policy implications and Greek authorities should take them into account in designing growth promoting policies at the national and regional level.
This study examines the role of proximity in regional growth using a multi-dimensional framework,... more This study examines the role of proximity in regional growth using a multi-dimensional framework, for seven EU countries during 1990-2005. We incorporate geographical as well as economic and technological effects in two seminal growth models in order to test for the existence and magnitude of interregional externalities. Our findings show that spillovers are important for European regional growth, regardless of the measure of proximity; thus regions surrounded by dynamic entities are likely to growth faster than otherwise. Moreover, our results underline the need for coordinated EU policies aiming at higher physical and human capital accumulation, taking into account regional synergies.
This paper estimates production functions for the 48 contiguous U.S. states over the 1970–2000 pe... more This paper estimates production functions for the 48 contiguous U.S. states over the 1970–2000 period employing recently developed panel estimators that tackle simultaneously parameter heterogeneity, cross-sectional dependence and non-stationarity. The findings suggest that labor, private capital and, when controlling for cross-sectional dependence, average schooling years exert a positive and significant effect on state income. In contrast, the income effect of public capital stock is negative. The state-specific coefficients indicate that this effect likely stems from the negative elasticity of income with respect to public capital in the states located primarily in the Snow Belt region.
In this paper we use country panel data to explore the effect of innovation on top income inequal... more In this paper we use country panel data to explore the effect of innovation on top income inequality. We construct a novel dataset of patents by combining patents from USPTO and EPO to test the effect of innovation on income inequality. We demonstrate that innovation has a strong positive correlation with top income shares. Also, we find weak evidence that innovation has a negative effect on overall income inequality. We support our findings by using instrumental variables to tackle endogeneity. In addition our IV analysis shows that the effect of innovation on top income shares remains significant for 3 years. Finally, we show that innovation has a less strong effect on top income inequality when we include defensive patents in the analysis.
This study investigates the determinants of gender-specific life expectancy across US states over... more This study investigates the determinants of gender-specific life expectancy across US states over the period 1995-2007. We employ a production function specification where life expectancy depends on health expenditure, income, education and lifestyle variables, allowing for spatial effects. Empirical results suggest that education attainment and health expenditure are the main factors behind improving longevity, whereas smoking bears a strong negative influence. For robustness purposes, we also use health spending as well as education criteria, apart from geographical ones to model interstate spillovers. In the former case, states with similar health expenditure are 'neighbors' and affect positively the life expectancy process. If education is applied instead of health spending together with geographic proximity, the spatial correlation is insignificant, i.e. education 'neighbors' do not affect life expectancy. Our findings do not imply significant gender differences regarding health production. The results suggest that health care policy will have to focus on wider economic and social considerations, like education and lifestyle changes, except medical care provision in order to exploit the full potential for life expectancy improvements of the US population.
This paper surveys the literature that examines the effect of education on economic growth. Speci... more This paper surveys the literature that examines the effect of education on economic growth. Specifically, we apply meta-regression analysis to 56 studies with 979 estimates and show that there is substantial publication selection bias towards a positive impact of education on growth. Once we account for this, we find evidence of a genuine effect of education on economic growth. The variation in reported estimates can be attributed to differences in the measurement of education and study characteristics, most importantly model specification, estimation methodology, type of data and the research outlet where studies were published, e.g. academic journals vs. working papers.
European Journal of Political Economy, Mar 1, 2023
This paper advances the hypothesis that individuals in more ethnically fragmented societies, part... more This paper advances the hypothesis that individuals in more ethnically fragmented societies, participate less in social groups. More precisely, the empirical analysis places the spotlight on trade unions and investigates whether ethnic diversity affects the decision of workers to participate in them. The analysis takes place along two layers:(a) crosscountry and (b) individual level. First, building on a set of innovative instruments derived from the parasite-stress theory of values and sociality, our crosscountry analysis seeks to exploit exogenous sources of variations in ethnic diversity and to establish a convincing relationship between ethnic diversity and trade union density across countries. In turn, by following an epidemiological approach, our analysis attempts investigate variations on the behavior of individuals whose social values potentially differ, but they all live in a common economic and institutional setting. To this end, we employ individual level data from the European Social Survey (ESS) and we investigate whether migrants that cοme from more ethnically fragmented societies participate less in trade unions in their European countries of residence. Consistent with the prediction of the theory, both layers of the empirical analysis provide evidence of a negative and highly significant relationship between ethnic diversity and the decision of the workers to participate in trade unions.
We investigate the relationship between economic growth and top income inequality under the influ... more We investigate the relationship between economic growth and top income inequality under the influence of human and physical capital accumulation, using an annual panel of U.S. state-level data. Our analysis is based upon the "unified" framework offered by Galor and Moav (2004) while the empirics account for cross-section dependence, parameter heterogeneity, and endogeneity, in nonstationary series. We conclude that changes in inequality do not influence growth, neither in the short run nor in the long run in the United States as a whole in the 1929-2013 period. Our findings are robust to the inclusion of overall income inequality measures. These findings provide support for the theoretical prediction of the unified theory of inequality and growth, according to which the growth effect of inequality becomes insignificant in the latest stages of economic development that the United States experiences during our period of investigation. Therefore, future policies aiming at moderating the concentration at the upper end of income distribution are not likely to have adverse growth consequences in developed countries such as the United States. (JEL I21, O47, C23) * The opinions expressed are those of the authors only and should not be considered as representative of the European Commission's official position. The authors thank especially the Editors and three anonymous referees for their very constructive remarks and suggestions. The paper has also benefited greatly from comments received by conference par
ABSTRACT This paper analyzes the co-evolution of two major determinants of social welfare, namely... more ABSTRACT This paper analyzes the co-evolution of two major determinants of social welfare, namely, income and carbon emissions. In particular, by using a distribution dynamics approach based on Markov chains, we investigate the shape and behavior of the joint distribution of per-capita income and carbon dioxide emissions. We arrive at several interesting conclusions, especially in the context of international negotiations on climate change. First, evidence does not support theoretical models predicting the existence of a poverty-environment trap. Specifically, in the long-run two main groups of countries will emerge: poor versus polluting countries. Second, the typical development path leads initially to high emission levels and, subsequently, to high income. Third, the convergence process towards the stationary distribution is very slow. Finally, for carbon emissions, whenever it is observed, the environmental Kuznets curve seems to be only a transitory phenomenon.
Review of Urban & Regional Development Studies, Mar 1, 2008
The purpose of this paper is to test regional convergence and investigate interregional dispariti... more The purpose of this paper is to test regional convergence and investigate interregional disparities in terms of per capita income in Greece. The novelty of our study lies in the use of a disaggregated dataset for an extended time period (1971-2003) at two regional levels (NUTS II & NUTS III). Our results indicate that there is β convergence between prefectures, but not among regions, while no evidence of σ convergence was found at both regional levels. Also, the GDP geographic concentration and population density have a negative impact on growth, which outweighs the positive growth effect of population geographic concentration and GDP spatial inequality. Thus, policies aiming at the decentralization of economic activity in Greece would enhance growth and regional equality simultaneously. Finally, we do not find economic dualism across geographic areas; however rich prefectures seem to converge faster than poor ones.
This paper advances the hypothesis that workers participate less in trade unions in more ethnical... more This paper advances the hypothesis that workers participate less in trade unions in more ethnically fragmented societies. This hypothesis dates back at least to Marx and Engels who first suggested that increased ethnic and racial antipathies among workers undermine class consciousness and weaken the unity of the working class in the United States. Building on a set of innovative instruments derived from biogeography and more precisely the parasite-stress theory of values and sociality (Fincher and Thornhill, 2008), our analysis seeks to exploit exogenous sources of variations in ethnic diversity and establish a convincing relationship between ethnic diversity and trade union density across countries. In turn, our analysis investigates the above mentioned relationship by using the European Social Survey (ESS) dataset and in particular a sample of migrants of different ancestry residing in ESS countries. Consistent with the prediction of the theory, both layers of the empirical analysis provide evidence of a strong, negative and highly significant relationship between ethnic diversity and the decision of the workers to participate in trade unions. Obtained empirical findings remain highly robust across a number of alternative empirical specifications and estimation techniques.
This paper estimates production functions for Greek regions over 1981-2003, using a novel human c... more This paper estimates production functions for Greek regions over 1981-2003, using a novel human capital dataset. We construct rich human capital series, where data for employees are decomposed according to their education level. Our empirics include recent non-stationary panel techniques, allowing for cross-section dependence and parameter heterogeneity in production technology, along with fixed effects and dynamic panel estimators. We show that ignoring cross-section dependence and parameter heterogeneity has a serious distorting impact on the estimated results, both qualitatively and quantitatively. Our evidence shows that tertiary education has a strong positive association with labor productivity growth, while secondary education exhibits a negative relationship. Primary education, public capital and net agglomeration do not display any relation with growth. Overall, findings suggest that policy makers should account for spillovers alongside technology heterogeneity and direct their efforts towards the expansion of tertiary education in poor regions in order to promote convergence.
This paper focuses on the implications of Decentralized Education (DE) and Centralized Public Edu... more This paper focuses on the implications of Decentralized Education (DE) and Centralized Public Education (CPE) for growth and welfare in an overlapping generations model. Individuals choose learning time, consumption and human capital. Under DE, there is no government intervention, while in CPE, human capital is augmented by public education expenditures …nanced by a distortionary income tax, where the latter is chosen by a benevolent …scal authority. CPE is welfare superior to DE for moderate/strong preferences over human capital bequests and medium/high elacticities of human capital with respect to average public education spending, average and parental human capital. So, even if we abstract from equity considerations, education policy may be supported on welfare grounds.
In this paper we explore the effect of innovation on income inequality using annual country panel... more In this paper we explore the effect of innovation on income inequality using annual country panel data for 29 countries. We demonstrate that innovation activities reduce personal income inequality by matching patents from the European Patent Office with their inventors. Our findings are supported by instrumental variable estimations to tackle endogeneity. The results are also robust with respect to various inequality measures, alternative quality indexes of innovation, truncation bias, the use of patent applications together with granted patents and different ways to split or allocate patents.
This paper studies the general equilibrium implications of two types of education policy in an ov... more This paper studies the general equilibrium implications of two types of education policy in an overlapping generations growth model with second-best policy. We examine vouchers, which augment inherited private education spending, and public investment on economy-wide human capital, that provides economy-wide externalities to individual human capital accumulation. The government determines jointly the allocation of tax revenues among the two types of education policy and tax policy, subject to the competitive decentralized equilibrium. Using plausible parameter values it is shown that it is socially optimal to spend heavily on economy-wide human capital accumulation and finance government spending by a modest proportional tax on initial human capital and a low tax on inherited private education expenditures.
This paper decomposes public spending and tax revenue into various subcategories and estimates th... more This paper decomposes public spending and tax revenue into various subcategories and estimates the impact of each of them on economic growth. The results provide some support for theoretical models of endogenous growth. Specifically, the main findings are: a) government spending on education, health and fuel-energy display a hump-shaped relationship with per capita growth; b) public expenditures on housingcommunity amenities, social security-social assistance and transport-communication are characterized by a U-shaped relation with growth; c) the effect of public spending on education and social expenditures on growth is stronger the poorer a country is, while the opposite is true for expenditures on health; d) there is a non-linear impact of distortionary taxation on growth, but the form on non-linearity is sensitive to changes in estimation method, since sometimes we find a hump-shaped and sometimes a U-shaped relationship; e) budget surplus has a positive effect on growth. These results are derived by estimating both single growth equations and systems of equations, which endogenize social spending.
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