AGHION Philippe

"The solution to inequality, environmental degradation, and other deficits of capitalism is better capitalism. The Power of Creative Destruction draws on cutting-edge research to argue that what we need today is not revolution but reform: pro-competitive policies that enable innovation while compensating for the disruption it causes".

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What is the optimal form of firm organization during "bad times"? The greater turbulence following macro shocks may benefit decentralized firms because the value of local information increases (the "localist" view). On the other hand, the need to make tough decisions may favor centralized firms (the "centralist" view). Using two large micro datasets on decentralization in firms in ten OECD countries (WMS) and US establishments (MOPS administrative data), we find that firms that delegated more power from the central headquarters to local plant managers prior to the Great Recession outperformed their centralized counterparts in sectors that were hardest hit by the subsequent crisis (as measured by export growth and product durability). Results based on measures of turbulence based on product churn and stock market volatility provide further support to the localist view. This conclusion is robust to alternative explanations such as managerial fears of bankruptcy and changing coordination costs. Although decentralization will be suboptimal in many environments, it does appear to be beneficial for the average firm during bad times.

Creative destruction is the process by which new innovations constantly make existing technologies and activities obsolete. It is the process by which newly created jobs constantly replace existing ones. This book invites the reader to rethink the history and puzzles of growth through the prism of creative destruction and to challenge many of the conventional wisdom. Why technological revolutions and automation create more jobs than they destroy. Why competition and industrial policy are not mutually exclusive. Why taxes are not the only way to make growth fairer. Why growth is not correctly measured. Why secular stagnation is not inevitable. Why industrialization is not an indispensable step in the development process. Why the carbon tax is not the only lever for greener growth. Why, with appropriate public policies, creative destruction does not harm health and happiness. Why innovation needs the market, the state, but also the active intervention of civil society. The Power of Creative Destruction is both an exploration of the roots of economic prosperity and a guide to thinking about the future of capitalism. [Editor's summary].

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What are the effects of automation in the labor and product markets? A host of factors may be at play. Automating the production process may displace certain workers, raising the possibility of technological unemployment, but these displacement effects could be offset by a productivity effect. Automation may induce productivity gains, increase market demand and the scale of production, and in turn increase labor demand. Depending on the extent to which productivity gains are passed through to consumers by producers, consumers could benefit from lower prices or producers could retain higher profits. Finally, because of business-stealing effects from firms that automate and displace their competitors, the industry-level employment and the price and profit effects of automation may differ from their firm-level or plant-level impacts. [First paragraph].

"In this book, the winners of the Best Young Economist Award share their perceptions, understandings, analyses, and proposals for what the future of the world could or should be. They answer the fundamental questions that economists and key leaders are asking today. Are the inequalities that have been growing since the end of the last century still tolerable? Does the welfare state still have a future? Is globalization really the cause of all the ills? Is Europe still a relevant economic space? Is economics finally opening up to other disciplines? In this book, each author expresses his or her background, his or her vision of society, and the actions he or she proposes to take in order to deal with the disruptions the world is facing. Created in 2000 by the Cercle des économistes and the newspaper Le Monde, the Best Young Economist Prize is awarded each year to an economist under the age of 40, selected for the recognition of his or her expertise and active participation in the public and economic debate.

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Creative destruction is the process by which new innovations constantly make existing technologies and activities obsolete. It is the process by which newly created jobs constantly replace existing ones. This book invites the reader to rethink the history and puzzles of growth through the prism of creative destruction and to challenge many of the conventional wisdom. Why technological revolutions and automation create more jobs than they destroy. Why competition and industrial policy are not mutually exclusive. Why taxes are not the only way to make growth fairer. Why growth is not correctly measured. Why secular stagnation is not inevitable. Why industrialization is not an indispensable step in the development process. Why the carbon tax is not the only lever for greener growth. Why, with appropriate public policies, creative destruction does not harm health and happiness. Why innovation needs the market, the state, but also the active intervention of civil society. The Power of Creative Destruction is both an exploration of the roots of economic prosperity and a guide to thinking about the future of capitalism.

We use comprehensive micro data in the French manufacturing sector between 1994 and 2015 to document the effects of automation technologies on employment, wages, prices and profits. Causal effects are estimated with event studies and a shift-share IV design leveraging pre-determined supply linkages and productivity shocks across foreign suppliers of industrial equipment. At all levels of analysis —plant, firm, and industry —the estimated impact of automation on employment is positive, even for unskilled industrial workers. We also find that automation leads to higher profits, lower consumer prices, and higher sales. The estimated elasticity of employment to automation is 0.28, compared with elasticities of 0.78 for profits, -0.05 for prices, and 0.37 for sales. Consistent with the importance of business-stealing across countries, the industry-level employment response to automation is positive and significant only in industries that face international competition. These estimates can be accounted for in a simple monopolistic competition model: firms that automate more increase their profits but pass through some of the productivity gains to consumers, inducing higher scale and higher employment. The results indicate that automation can increase labor demand and can generate productivity gains that are broadly shared across workers, consumers and firm owners. In a globalized world, attempts to curb domestic automation in order to protect domestic employment may be self-defeating due to foreign competition.

Creative destruction is the process by which new innovations constantly make existing technologies and activities obsolete. It is the process by which newly created jobs constantly replace existing ones. This book invites the reader to rethink the history and puzzles of growth through the prism of creative destruction and to challenge many of the conventional wisdom. Why technological revolutions and automation create more jobs than they destroy. Why competition and industrial policy are not mutually exclusive. Why taxes are not the only way to make growth fairer. Why growth is not correctly measured. Why secular stagnation is not inevitable. Why industrialization is not an indispensable step in the development process. Why the carbon tax is not the only lever for greener growth. Why, with appropriate public policies, creative destruction does not harm health and happiness. Why innovation needs the market, the state, but also the active intervention of civil society. The Power of Creative Destruction is both an exploration of the roots of economic prosperity and a guide to thinking about the future of capitalism.

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For exiting products, statistical agencies often impute inflation from surviving products. This understates growth if creatively-destroyed products improve more than surviving ones. If so, then the market share of surviving products should systematically shrink. Using entering and exiting establishments to proxy for creative destruction, we estimate missing growth in US Census data on non-farm businesses from 1983 to 2013. We find missing growth (i) equaled about one-half a percentage point per year. (ii) arose mostly from hotels and restaurants rather than manufacturing. and (iii) did not accelerate much after 2005, and therefore does not explain the sharp slowdown in growth since then.

hifting our fossil-fuelled civilisation to clean modes of production and consumption requires deep transformations in our energy and economic systems. Innovation in physical technologies and social behaviours is key to this transformation. But innovation has not been at the heart of economic models of climate change. This chapter reviews the state of the art on the economics of innovation, applying recent insights to climate change. The core insight is that technological innovation is a path-dependent process in which history and expectations matter greatly in determining eventual outcomes. This insight has six important implications for climate policy design. First, efficient climate policy requires direct research subsidies for inducing and/or diffusing clean innovations, combined with carbon pricing (whether by taxes or trading). Second, both public and private sector involvement is required. Third, path dependence and system inertia imply that delaying policies that redirect innovation towards clean technologies significantly increases costs in the future. Fourth, more developed countries should act as leaders in clean technology and should subsidise access to such technologies for less developed countries. Fifth, if a transition from coal to clean energy is to be made via intermediates (for example, gas), the use of gas (without carbon capture) should be agreed to be on a time-limited basis. Finally, investment in coal should not be encouraged, as its continued use is only safe if we assume the cost-effectiveness of carbon capture and storage (CCS) technologies. While much greater efforts should be taken to reduce the costs of CCS, the speed that these technologies can be developed and deployed is uncertain.

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We identify two counteracting effects of credit access on productivity growth: on the one hand, better access to credit makes it easier for entrepreneurs to innovate. on the other hand, better credit access allows less efficient incumbent firms to remain longer on the market, thereby discouraging entry of new and potentially more efficient innovators. We first develop a simple model of firm dynamics and innovation‐based growth with credit constraints, where the above two counteracting effects generate an inverted‐U relationship between credit access and productivity growth. Then we test our theory on a comprehensive French manufacturing firm‐level dataset. We first show evidence of an inverted‐U relationship between credit constraints and productivity growth when we aggregate our data at the sectoral level. We then move to firm‐level analysis, and show that incumbent firms with easier access to credit experience higher productivity growth, but that they also experience lower exit rates, particularly the least productive firms among them. To support these findings, we exploit the 2012 Eurosystem's Additional Credit Claims programme as a quasi‐experiment that generated an exogenous extra supply of credits for a subset of incumbent firms.

In this paper we use cross-state panel data to show a positive and significant correlation between various measures of innovativeness and top income inequality in the United States over the past decades. Two distinct instrumentation strategies suggest that this correlation (partly) reflects a causality from innovativeness to top income inequality, and the effect is significant: for example, when measured by the number of patent per capita, innovativeness accounts on average across US states for around 17% of the total increase in the top 1% income share between 1975 and 2010. Yet, innovation does not appear to increase other measures of inequality which do not focus on top incomes. Next, we show that the positive effects of innovation on the top 1% income share are dampened in states with higher lobbying intensity. Finally, from cross-section regressions performed at the commuting zone (CZ) level, we find that: (i) innovativeness is positively correlated with upward social mobility. (ii) the positive correlation between innovativeness and social mobility, is driven mainly by entrant innovators and less so by incumbent innovators, and it is dampened in states with higher lobbying intensity. Overall, our findings vindicate the Schumpeterian view whereby the rise in top income shares is partly related to innovation-led growth, where innovation itself fosters social mobility at the top through creative destruction.

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In this survey paper, we argue that the effects of artificial intelligence (AI) and automation on growth and employment depend to a large extent on institutions and policies. We develop a two‑fold analysis. In a first section, we survey the most recent literature to show that AI can spur growth by replacing labor by capital, both in the production of goods and services and in the production of ideas. Yet, we argue that AI may inhibit growth if combined with inappropriate competition policy. In a second section, we discuss the effect of robotization on employment in France over the 1994‑2014 period. Based on our empirical analysis on French data, we first show that robotization reduces aggregate employment at the employment zone level, and second that non‑educated workers are more negatively affected by robotization than educated workers. This finding suggests that inappropriate labor market and education policies reduce the positive impact that AI and automation could have on employment.

This doctoral thesis focuses on the challenges faced by rare disease patients. It is structured in three parts, each of which is dedicated to the issues of an actor at the heart of the diagnostic and therapeutic Odyssey of rare disease patients. The first part of the thesis focuses on the patient and his social network. Chapter 1 considers the sources of delay in access to diagnosis, and explores in particular the effect of social capital on the delay in obtaining a diagnosis. Chapter 2 discusses the negative externalities on maternal health of a diagnosis of a chronic disease in children. The second part of the thesis is dedicated to the pharmaceutical industry and focuses on R&D investment decisions targeting rare diseases. Chapter 3 assesses the causal effect of the Orphan Drug Policy on research effort, and Chapter 4 considers the inequalities in the allocation of R&D investments between rare diseases. Part 3 is dedicated to public policy makers and discusses the issues of evaluating the benefits of therapeutic innovation and defining the conditions of access to this innovation. Chapter 5 assesses the causal effect of therapeutic innovation on the longevity of rare disease patients. Chapter 6 is a critical discussion of the use of tools.

In this paper, we argue that the effects of artificial intelligence (AI) and automation on growth and employment depend largely on institutions and policies. Our analysis is articulated in two parts. In the first part, we show that AI can stimulate growth by replacing labor with capital, both in the production of goods and services and in the production of ideas. However, we argue that AI can inhibit growth if combined with inappropriate competitive policy. In a second part, we discuss the effect of robotization on employment in France over the period 1994-2014. Based on our empirical analysis on French data, we show first that robotization reduces aggregate employment at the employment area level, and second that workers with low levels of education are more penalized by robotization than workers with high levels of education. This finding suggests that inappropriate labor market and education policies reduce the positive impact that AI and automation could have on employment.

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In this paper we merge individual income data, firm-level data, patenting data, and IQ data in Finland over the period 1988–2012 to analyze the returns to invention for inventors and their coworkers or stakeholders within the same firm. We find that: (i) inventors collect only 8 percent of the total private return from invention. (ii) entrepreneurs get over 44 percent of the total gains. (iii) bluecollar workers get about 26 percent of the gains and the rest goes to white-collar workers. Moreover, entrepreneurs start with significant negative returns prior to the patent application, but their returns subsequently become highly positive.

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For at least 5000 years, people have created, modified and used financial instruments, markets and intermediaries. Whether it was the use of money and debt to facilitate specialization and investment in Babylonia in 3000 BC (Van de Mieroop, 2005), the creation of market-traded securities in ancient Rome to mobilize capital for immense minig projets (Rostovotzeff, 1957. Malmendier, 2005).

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The 2008 crisis revived doubts about growth and resuscitated the debate on secular stagnation initiated by Hansen in 1938. Particularly in a post-crisis context of zero or very low growth, Schumpeterian theory may seem to be outdated. Nevertheless, in this article, we show that it remains a valid conceptual framework. We begin by recalling the main highlights of Schumpeter's model of growth. We then argue that this conceptual framework remains relevant to many aspects of growth, notably secular stagnation, structural reforms and the debate on inequality. We show that because of creative destruction, the growth in productivity induced by innovation is underestimated. In addition, we explain why the Schumpeterian framework calls for a complementarity between structural reforms and macroeconomic policy. Finally, we show the positive impact of innovation and creative destruction on social mobility.

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We identify two counteracting effects of credit access on productivity growth: on the one hand, better access to credit makes it easier for entrepreneurs to innovate. on the other hand, better credit access allows less efficient incumbent firms to remain longer on the market, thereby discouraging entry of new and potentially more efficient innovators. We first develop a simple model of firm dynamics and innovation‐based growth with credit constraints, where the above two counteracting effects generate an inverted‐U relationship between credit access and productivity growth. Then we test our theory on a comprehensive French manufacturing firm‐level dataset. We first show evidence of an inverted‐U relationship between credit constraints and productivity growth when we aggregate our data at the sectoral level. We then move to firm‐level analysis, and show that incumbent firms with easier access to credit experience higher productivity growth, but that they also experience lower exit rates, particularly the least productive firms among them. To support these findings, we exploit the 2012 Eurosystem's Additional Credit Claims programme as a quasi‐experiment that generated an exogenous extra supply of credits for a subset of incumbent firms.

What makes countries engage in reforms of mass education? Motivated by historical evidence on the relation between military threats and expansions of primary education, we assemble a panel dataset from the last 150 years in European countries and from the postwar period in a large set of countries. We uncover three stylized facts: (i) investments in education are associated with military threats, (ii) democratic institutions are negatively correlated with education investments, and (iii) education investments respond more strongly to military threats in democracies. These patterns continue to hold when we exploit rivalries in a country’s neighborhood as an alternative source of variation. We develop a theoretical model that rationalizes the three empirical findings. The model has an additional prediction about investments in physical infrastructures, which finds support in the data.

We design two laboratory experiments to analyze the causal effects of competition on step-by-step innovation. Innovations result from costly R&D investments and move technology up one step. Competition is inversely measured by the ex post rents for firms that operate at the same technological level, that is, for neck-and-neck firms. First, we find that increased competition leads to a significant increase in R&D investments by neck-and-neck firms. Second, increased competition decreases R&D investments by firms that are lagging behind, in particular if the time horizon is short. Third, we find that increased competition affects industry composition by reducing the fraction of sectors where firms are neck-and-neck. All these results are consistent with the predictions of step-by-step innovation models.

Statistical agencies typically impute inflation for disappearing products based on surviving products, which may result in overstated inflation and understated growth. Philippe Aghion, Antonin Bergeaud, Timo Boppart & Simon Bunel use the theory and methodology developed by Aghion et al. (2017) to quantify in the case of France how much of productivity growth is missed by statistical offices because of this. Using the census of plants in France, they find that from 2004 to 2015, about 0.5 percentage point of real output growth per year is not taken into account, which is about the same as what was found in the U.S. While this result suggests that missing growth from creative destruction could structurally be the same in different countries, the authors show that they in fact hide different underlying establishment and firm's lifecycle dynamics in the two countries.

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The 2008 crisis has revived doubts about growth and resurrected the debate on secular stagnation, initiated by Hansen in 1938. Particularly in a post-crisis context of zero or very low growth, Schumpeterian theory may seem outdated. However, in this article, we show that it remains a valid framework of thought. We begin by recalling the main highlights of the Schumpeterian model of growth. We then argue that this framework is still relevant for several aspects of growth. In particular, we focus on secular stagnation, structural reforms and the inequality debate. We show that, because of creative destruction, innovation-induced productivity growth is underestimated. Furthermore, we explain why the Schumpeterian framework argues for a complementarity between structural reforms and macroeconomic policy. Finally, we show the positive impact of innovation and creative destruction on social mobility.

The 2008 crisis has revived doubts about growth and resurrected the debate on secular stagnation, initiated by Hansen in 1938. Particularly in a post-crisis context of zero or very low growth, Schumpeterian theory may seem outdated. However, in this article, we show that it remains a valid framework of thought. We begin by recalling the main highlights of the Schumpeterian model of growth. We then argue that this framework is still relevant for several aspects of growth. In particular, we focus on secular stagnation, structural reforms and the inequality debate. We show that, because of creative destruction, innovation-induced productivity growth is underestimated. Furthermore, we explain why the Schumpeterian framework argues for a complementarity between structural reforms and macroeconomic policy. Finally, we show the positive impact of innovation and creative destruction on social mobility.

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In this paper we conduct a laboratory experiment to test the extent to which Moore and Repullo’s subgame perfect implementation mechanism induces truth-telling, both in a setting with perfect information and in a setting where buyers and sellers face a small amount of uncertainty regarding the good’s value. We find that Moore–Repullo mechanisms fail to implement truth-telling in a substantial number of cases even under perfect information about the valuation of the good. Our data further suggests that a substantial proportion of these lies are made by subjects who hold pessimistic beliefs about the rationality of their trading partners. Although the mechanism should—in theory—provide incentives for truth-telling, many buyers in fact believe that they can increase their expected monetary payoff by lying. The deviations from truth-telling become significantly more frequent and more persistent when agents face small amounts of uncertainty regarding the good’s value. Our results thus suggest that both beliefs about irrational play and small amounts of uncertainty about valuations may constitute important reasons for the absence of Moore–Repullo mechanisms in practice.

This thesis studies different aspects of firm dynamics, both theoretically and empirically. All chapters make extensive use of different microeconomic databases to test the theoretical predictions. The first chapter focuses on the innovation premium, i.e. the response of the wages of employees of a firm that increases its R&D intensity and thus becomes closer to the technological frontier. The evaluation of this response is done using a database on the wage of 1% of the UK-based workers. The second chapter looks at the response of firms' innovation and productivity to an export demand shock, considering French firms with at least one patent, and using both tax and customs databases. Finally, the third chapter studies the role of adjustment costs of production factors, and in particular of corporate real estate, on the employment dynamics of firms following a productivity shock. This chapter uses a large sample of French single-establishment firms. All three chapters study different dimensions of the response of firms to a demand or productivity shock, whether it is a response in terms of employment, wages, innovation or size.

The purpose of this paper is to show that draw from both, Schumpeterian growth theory and Schumpeter's own thinking in order to thinl about growth policy design and the role of the state. This reflection offers an economic policy roadmap and gives rise to concrete proposals in terms of an adequate mix of demand and supply-side options according to the relative distance to frontier of economies.

The back cover states: "Intended for first-year undergraduate students, this book provides an introduction to the economic analysis of individual and collective choices, both at the microeconomic and macroeconomic levels. This second, updated and enriched edition offers a very contemporary introduction to economics, both in method and content. From the point of view of method, the book starts with simulations and problems, then structures and generalizes the reasoning and finally applies the analysis to other situations. We also question the new elements necessary to continue the analysis in different or more complex situations. In terms of content, supply and demand, the basis of any introduction to economics, are placed in a broader context of analysis of individual and collective decisions, of sharing the benefits of exchange and of the overall search for efficiency and equity. This approach makes it possible to integrate recent research findings or current applications of economic theory into the main body of the book: decision theory, asymmetric information, the role of capital and insurance markets, international debt and rational expectations, among others. Solved exercises inserted in the text allow the reader to check his understanding of the subject, as it is presented.

The purpose of this paper is to show that both Schumpeterian growth theory and Schumpeter’s own thinking can be helpful in order to think about growth policy design and the role of the state. This reflection offers an economic policy roadmap and gives rise to concrete proposals in terms of an adequate mix of demand and supply-side options depending on the country’s distance to the world technology frontier.

We build an endogenous growth model to analyze the relationships between taxation, corruption, and economic growth. Entrepreneurs lie at the center of the model and face disincentive effects from taxation but acquire positive benefits from public infrastructure. Political corruption governs the efficiency with which tax revenues are translated into infrastructure. The model predicts an inverted-U relationship between taxation and growth, with corruption reducing the optimal taxation level. We find evidence consistent with these predictions and the entrepreneurial channel using data from the Longitudinal Business Database of the US Census Bureau. The marginal effect of taxation for growth for a state at the 10th or 25th percentile of corruption is significantly positive. on the other hand, the marginal effects of taxation for growth for a state at the 90th percentile of corruption are much lower across the board. We make progress towards causality through Granger-style tests and by considering periphery counties where effective tax policy is largely driven by bordering states. Finally, we calibrate our model and find that the calibrated taxation rate of 37% is fairly close to the model׳s estimated welfare maximizing taxation rate of 42%. Reducing corruption provides the largest potential impact for welfare gain through its impact on the uses of tax revenues.

In this paper we analyze the relationship between turnover-driven growth and subjective well-being. Our model of innovation-led growth and unemployment predicts that: (i) the effect of creative destruction on expected individual welfare should be unambiguously positive if we control for unemployment, less so if we do not. (ii) job creation has a positive and job destruction has a negative impact on well-being. (iii) job destruction has a less negative impact in areas with more generous unemployment insurance policies. and (iv) job creation has a more positive effect on individuals that are more forward-looking. The empirical analysis using cross-sectional MSA (metropolitan statistical area) -level and individual-level data provide empirical support to these predictions.

Can a country grow faster by saving more? The paper addresses this question both theoretically and empirically. In the theoretical model, growth results from innovations that allow local sectors to catch up with frontier technology. In poor countries, catching up requires the cooperation of a foreign investor who is familiar with the frontier technology and a domestic entrepreneur who is familiar with local conditions. In such a country, domestic savings matters for innovation, and therefore growth, because it enables the local entrepreneur to put equity into this cooperative venture, which mitigates an agency problem that would otherwise deter the foreign investor from participating. In rich countries, domestic entrepreneurs are already familiar with frontier technology and therefore do not need to attract foreign investment to innovate, so domestic savings does not matter for growth. A cross-country regression shows that lagged savings is positively associated with productivity growth in poor countries but not in rich countries.

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This lecture is the story of an intellectual journey, that of elaborating a new—Schumpeterian—theory of economic growth. A theory where (i) growth is generated by innovative entrepreneurs. (ii) entrepreneurial investments respond to incentives that are themselves shaped by economic policies and institutions. (iii) new innovations replace old technologies: in other words, growth involves creative destruction and therefore involves a permanent conflict between incumbents and new entrants. First, we motivate and then lay out the Schumpeterian paradigm and point to a set of empirical predictions which distinguish this paradigm from other growth models. Second, we raise four debates on which the Schumpeterian approach sheds new light: the middle income trap, secular stagnation, the recent rise in top income inequality, and firm dynamics. Third and last, we show how the paradigm can be used to think (or rethink) about growth policy design. (This article is based on the author’s presentation at the Global Award for Entrepreneurship Research ceremony in Stockholm, Sweden, May 10, 2016.

This paper argues that openness, by lowering costs to access existing research, can enhance both early and late stage innovation through greater exploration of novel research directions. We examine a natural experiment in openness: late-1990s NIH agreements that reduced academics' access costs regarding certain genetically engineered mice. Implementing difference-in-differences estimators, we find that increased openness encourages entry by new researchers and exploration of more diverse research paths, and does not reduce the creation of new genetically engineered mice. Our findings highlight a neglected cost of strong intellectual property restrictions: lower levels of exploration leading to reduced diversity of research output.

The back cover states: "In this inaugural lesson, Philippe Aghion recounts the experience of developing a new theory - Schumpeterian - of economic growth: a theory of growth through innovation and creative destruction, which constantly brings modeling into dialogue with empirical analysis, and which places the firm at the heart of the development process. This lesson addresses some of the enigmas of growth: the role of competition and industrial policy . the "Argentine paradox" and the traps of underdevelopment . the relationship between innovation, inequality and social mobility . and the apparent secular stagnation of developed economies."

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Why are some countries rich and others poor? Is it due to culture, climate, geography? Or is it the result of the ignorance of political leaders? Acemoglu and Robinson show with numerous examples that these answers do not hold water. History and economic analysis suggest a different explanation: it is the presence or absence of certain political and economic institutions that ensure or impede progress toward prosperity. From "extractive" institutions - protecting the interests of a powerful elite at the expense of the common good - to "inclusive" institutions - which set limits on the influence of the powerful, eliminate discrimination and promote innovation - the path is strewn with obstacles. Acemoglu and Robinson analyze them in detail, drawing on an impressive array of examples from the history of the Roman Empire, Mayan city-states, medieval Venice, the Soviet Union, Latin America, Africa, and the West. They thus develop a new synthesis of political economy of undeniable relevance to the major political and economic challenges of today.

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"To stop the spiral of decline, we need a new growth model. A model of growth through innovation where new companies and activities are constantly competing and replacing existing ones. An "inclusive" growth model that leaves no one by the wayside and includes future generations. A growth model that is resolutely progressive because it tackles social inequalities at their root by reactivating the mechanism of social mobility. But how to change the economic model when there is no consensus on the diagnosis, the solutions or the tools? How can we reform by breaking with conventional wisdom? This book shows why and how we need to change our way of thinking in order to change our economic model and ensure sustainable prosperity for our fellow citizens" [4th cover].

The back cover states: "To stop the spiral of decline, we need a new growth model. A model of growth through innovation where new businesses and activities are constantly competing and replacing existing ones. A model of inclusive growth that leaves no one behind and that includes future generations, by rebalancing our public finances and encouraging green innovation. A growth model that is resolutely progressive because it tackles social inequalities at their root, by reactivating the mechanism of social mobility. But how to change the economic model when there is no consensus on the diagnosis, the solutions or the tools? How can we reform by breaking with conventional wisdom? This book shows why and how we need to change our way of thinking in order to change our economic model and ensure sustainable prosperity for our fellow citizens. "P.A. G.C. A major book, which combines an in-depth analysis of successful countries with innovative proposals adapted to today's France".

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French growth is insufficient to emerge from a situation of massive unemployment that began in the 1970s. At the same time, in comparison with other European countries, France is characterized by high income inequalities among all citizens and by lower social mobility. It seems to us thatămore inclusive policies[1] could at the same time raise growth, reduce income inequalities and foster social mobility.

"To stop the spiral of decline, we need a new growth model. A model of growth through innovation where new companies and activities are constantly competing and replacing existing ones. An "inclusive" growth model that leaves no one by the wayside and includes future generations by rebalancing our public finances and encouraging green innovation. A growth model that is resolutely progressive because it tackles social inequalities at their root by reactivating the mechanics of social mobility. But how to change the economic model when there is no consensus on the diagnosis, the solutions or the tools? How can we reform by breaking with conventional wisdom? This book shows why and how we need to change our way of thinking in order to change our economic model and ensure sustainable prosperity for our fellow citizens. P. A., G. C., É. C. A major book, which combines in-depth analysis of successful countries with innovative proposals adapted to today's France.

"To stop the spiral of decline, we need a new growth model. A model of growth through innovation where new companies and activities are constantly competing and replacing existing ones. An "inclusive" growth model that leaves no one by the wayside and includes future generations by rebalancing our public finances and encouraging green innovation. A growth model that is resolutely progressive because it tackles social inequalities at their root by reactivating the mechanics of social mobility. But how to change the economic model when there is no consensus on the diagnosis, the solutions or the tools? How can we reform by breaking with conventional wisdom? This book shows why and how we need to change our way of thinking in order to change our economic model and ensure sustainable prosperity for our fellow citizens. P. A., G. C., É. C. A major book, which combines in-depth analysis of successful countries and innovative proposals adapted to today's France. (Editor's summary).

What are the effects of cyclical fiscal policy on industry growth? We show that industries with a relatively heavier reliance on external finance or lower asset tangibility tend to grow faster (in terms of both value added and of labor productivity growth) in countries that implement fiscal policies that are more countercyclical. We reach this conclusion using Rajan and Zingales׳s (1998) difference-in-difference methodology on a panel data sample of manufacturing industries across 15 OECD countries over the period 1980–2005.

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This thesis studies the effects of tuition fees on students in higher education. In the first part, we conduct a theoretical analysis of the motivations for tuition fees. Chapter 1 provides a critical and multidisciplinary review of the literature and identifies three motivations for introducing or increasing tuition fees (the redistributive effect, the incentive effect and the contributory effect) whose validity we question. Chapter 2 examines the theoretical conditions that make the introduction of tuition fees desirable, even though there are social classes with distinct behaviors. We show, using recent developments in behavioral economics, that the implementation of progressive fees, while it may be a fair solution from a purely theoretical point of view, raises other problems. The second part of this thesis focuses on national experiences with fee implementation. Chapter 3 highlights the contrasting nature of the results presented in the literature before drawing up a typology of institutional contexts. Two regimes appear to be coherent even if their foundations are radically different (the "liberal" and the "social democratic" regimes), while the "conservative" French regime appears to be difficult to sustain. The following three chapters offer the first study of the effects of introducing tuition fees in the French university context. We begin by looking at two aspects of efficiency related to the introduction of tuition fees: (i) a selection effect and (ii) an effort incentive effect. In chapter 4, we show that the introduction of tuition fees at Dauphine reinforces the segregation and inequality effects. In chapter 5, we extend this approach by showing, contrary to the results developed in the theoretical literature, that tuition fees do not increase the level of success and therefore the incentives to effort of students at Dauphine. Finally, in chapter 6, we discuss the possible generalization of the previous results by first analyzing the particular nature of the public at Paris 9 Dauphine University within the French university landscape. The theoretical limits to the introduction of tuition fees (Part I), confirmed empirically (Part II), lead us, in the last part of this thesis, to return to the typology constructed in Chapter 3 by discussing how the "social democratic" institutional regime could contribute to meeting the objectives of equity, efficiency and financing needs of universities in the French case. To do so, we introduce the foundations of what we call "pay-as-you-go" education and define the conditions for its equity, efficiency and capacity to finance higher education.

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This chapter looks at the determinants of productivity growth, based on the following two questions. First, how can we enhance productivity growth in advanced versus emerging market economies? Second, is there something to learn from observing the big technological waves and their diffusion patterns across different countries? We first present a simple framework to think about the sources of productivity growth. We then look at the sources of productivity growth in advanced countries, and we then turn our attention to the sources of productivity growth in emerging market economies. We finally analyze the technological waves and draw a few lessons from comparing the differences in their diffusion patterns across countries.

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The thesis consists of five articles, three of which are on the external control mechanisms of firms and two on the application of game theory to the study of competition between firms. Chapter 1 studies the financial engineering problem of allocating voting rights among the securities issued by a firm. It is shown that it may be optimal for a firm to issue non-voting securities in the perspective of a takeover bid. Chapter 2 applies the modern theory of delegation, supervision and authority to the external control of a firm. In particular, it is shown that a compromise must be found between supervision by a large shareholder and initiative left to the executive managers of the firm. Chapter 3 studies an optimal financial contract problem in a dynamic setting. It is shown that when the parties (lender and borrower) cannot agree not to renegotiate the current contract, the lender derives zero profit from the relationship. Chapter 4, consisting of two essays, extends the barrier to entry models to the case of dynamic competition between asymmetric firms. It is shown that the entry of a less efficient competitor is likely to be temporary while that of a more efficient competitor is permanent.