The history augmented Solow model

- We combine UGT and the Solow model, empirically.
- Identifying assumptions plausible; estimates nicely in line with theoretical priors.
- Robustness is check against “deep determinants” (institutions, culture, geo).
- Take-off drops out when human capital (thus productivity) is controlled, as expected.
- Simple combination of UGT and Solow motivates a large fraction of global inequality.

Unified growth theory predicts that the timing of the fertility transition is a key determinant of contemporary comparative development, as it marks the onset of the take-off to sustained growth. Neoclassical growth theory presupposes a take-off, and explains comparative development by variations in (subsequent) investment rates. The present analysis integrates these two perspectives empirically, and shows that they together constitute a powerful predictive tool vis-a-vis contemporary income differences.