Advancing
Did the Millennium Development Goals Change Trends in Child Mortality?
Declan French
Health Economics, forthcoming
Abstract:
There has been little assessment of the role the Millennium Development Goals (MDGs) have had in progressing international development. There has been a 41% reduction in the under-five mortality rate worldwide from 1990 to 2011 and an acceleration in the rate of reduction since 2000. This paper explores why this has occurred, and results for all developing countries indicate that it is not due to more healthcare or public health interventions but is driven by a coincidental burst of economic growth. Although the MDGs are considered to have played an important part in securing progress against poverty, hunger and disease, there is very little evidence to back this viewpoint up. A thorough analysis of the successes and failures of the MDGs is therefore necessary before embarking on a new round of global goals.
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The Economic Legacy of Warfare: Evidence from Urban Europe
Mark Dincecco & Massimiliano Gaetano Onorato
University of Michigan Working Paper, July 2015
Abstract:
We show new evidence that the economic legacy of historical warfare persists to the present. Warfare was a key feature of European history. We argue that cities were safe harbors from war threats. War-related urbanization, in turn, had positive consequences for long-run development. We geocode the locations of more than 600 conflicts fought in Europe between 1300 and 1799. To measure urban economic activity, we gather satellite image data on light intensity at night for more than 500 cities between 2000 and 2010. We find a positive, significant, and robust relationship between historical conflict exposure and urban economic activity today. We find that human capital formation and local political representation are two channels through which the consequences of historical warfare are transmitted through time. Our results highlight the military origins of Europe's prosperous urban belt.
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The longevity of famous people from Hammurabi to Einstein
David de la Croix & Omar Licandro
Journal of Economic Growth, September 2015, Pages 263-303
Abstract:
We build a new sample of 300,000 famous people born between Hammurabi’s epoch and Einstein’s cohort, including their vital dates, occupations, and locations from the Index Bio-bibliographicus Notorum Hominum. We discuss and control for selection and composition biases. We show using this long-running consistent database that there was no trend in mortality during most of human history, confirming the existence of a Malthusian epoch; we date the beginning of the steady improvements in longevity to the cohort born in 1640–1649, clearly preceding the Industrial Revolution, lending credence to the hypothesis that human capital may have played a significant role in the take-off to modern growth; we find that this timing of improvements in longevity concerns most countries in Europe and most skilled occupations.
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The Contribution of Female Health to Economic Development
David Bloom, Michael Kuhn & Klaus Prettner
NBER Working Paper, July 2015
Abstract:
We analyze the economic consequences for less developed countries of investing in female health. In so doing we introduce a novel micro-founded dynamic general equilibrium framework in which parents trade off the number of children against investments in their education and in which we allow for health-related gender differences in productivity. We show that better female health speeds up the demographic transition and thereby the take-off toward sustained economic growth. By contrast, male health improvements delay the transition and the take-off because ceteris paribus they raise fertility. According to our results, investing in female health is therefore an important lever for development policies. However, and without having to assume anti-female bias, we also show that households prefer male health improvements over female health improvements because they imply a larger static utility gain. This highlights the existence of a dynamic trade-off between the short-run interests of households and long-run development goals. Our numerical analysis shows that even small changes in female health can have a strong impact on the transition process to a higher income level in the long run. Our results are robust with regard to a number of extensions, most notably endogenous investment in health care.
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The Output Cost of Gender Discrimination: A Model-Based Macroeconomics Estimate
Tiago Cavalcanti & Jose Tavares
Economic Journal, forthcoming
Abstract:
We use a growth model in which saving, fertility and labour market participation are endogenous, to quantify the cost that barriers to female labour force participation impose in terms of an economy's output. The model is calibrated to mimic the U.S. economy's behavior in the long-run. We find that a 50 percent increase in the gender wage gap leads to a 35 percent decrease in income per capita in steady-state. Using independent estimates of the female to male earnings ratio for a wide cross-section of countries, we construct an economy with parameters similar to those calibrated for the U.S. economy, except for the degree of gender barriers. Higher discrimination decreases steady-state output per capita for two distinct reasons: a direct effect due to the decrease in female labour market participation, and an indirect effect working through an increase in fertility. For several countries, a large fraction of the difference between the country's output and U.S. output can be ascribed to differences in gender discrimination. In addition, we find that close to half of the overall decrease in output per capita is due to the effect of gender discrimination in fertility.
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Capital Markets in China and Britain, 18th and 19th Century: Evidence from Grain Prices
Wolfgang Keller, Carol Shiue & Xin Wang
NBER Working Paper, July 2015
Abstract:
Capital markets allow surplus income to be invested into productivity-enhancing projects. Despite their prominence in general accounts of growth little is known on their role in the emergence of modern economic growth. In this paper we ask whether capital market performance might explain why Britain surged ahead of China in the 18th century. We employ an asset-pricing model together with information on regional grain prices to derive interest rates, and then compare capital market development in large parts of Britain and China. We first calibrate the method and show that it can replicate key features of the United States’ early 19th century capital market, where more systematic data from bank interest rates is available. Using this approach we estimate interest rates for Britain that are at least 20% lower than those for China, for the years 1770 - 1860. Moreover, the regional integration of British capital markets, measured in terms of bilateral interest rate correlations, was far greater than it was in China. The Yangzi Delta correlations come close to the British average at distances below 200 kilometers, but at larger distances interest rate correlations in Britain are twice those of the Delta, and three or more times as high as elsewhere in China. We also find that Britain’s advantage over China in terms of market integration existed already in the late 18th century. Backcasting on the 19th century trends suggests capital market divergence started by the year 1690. Overall, our results provide support for the hypothesis that divergence in capital market development occurred before income divergence, and may therefore be an important factor in explaining the Great Divergence.
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The internet as a general-purpose technology: Firm-level evidence from around the world
George Clarke, Christine Zhenwei Qiang & Lixin Colin Xu
Economics Letters, October 2015, Pages 24–27
Abstract:
This paper uses firm-level data to assess whether telecom services are general-purpose technologies. We find that only internet services are so: firm growth and productivity are substantially higher when internet access is greater and when firms use the internet more intensively; and it benefits firms of both high- and low-tech industries, firms of all sizes, and firms with and without exporting. Small firms benefit more from internet than large firms do. In contrast, fixed-line and cellular services are not robustly related to firm performance.
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What Is the Aggregate Economic Rate of Return to Foreign Aid?
Channing Arndt, Sam Jones & Finn Tarp
World Bank Economic Review, forthcoming
Abstract:
In recent years, academic studies have been converging towards the view that foreign aid promotes aggregate economic growth. We employ a simulation approach to: (i) validate the coherence of empirical aid-growth studies published since 2008; and (ii) calculate plausible ranges for the rate of return to aid. Our results highlight the long run nature of aid-financed investments and the importance of channels other than accumulation of physical capital. We find the return to aid lies in ranges commonly accepted for public investments and there is little to justify the view that aid has had a significant pernicious effect on productivity.
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Axel Dreher, Anna Minasyan & Peter Nunnenkamp
European Economic Review, forthcoming
Abstract:
Political misalignment and greater ideological distance between donor and recipient governments may render foreign aid less effective by adding to transaction costs and eroding trust. We test this hypothesis empirically by considering the political ideology of both governments along the left-right spectrum in augmented models on the economic growth effects of aid. Following the estimation approach of Clemens et al. (2012), we find that aid tends to be less effective when political ideology differs between the donor and the recipient.
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The Robustness of the Win-Win Effect
Feng Bai, Eric Luis Uhlmann & Jennifer Berdahl
Journal of Experimental Social Psychology, forthcoming
Abstract:
We demonstrate that positive relationships between measures of national gender equality and Olympic medal wins are robust across a variety of appropriate statistical approaches to analyzing cross-national data. First demonstrated by Berdahl, Uhlmann, and Bai (2015), who controlled for GDP, population, latitude, and income inequality, we show that relationships between gender equality and medal wins remain positive when controlling for GDP per capita, consistently log-transforming positively skewed variables, and fully analyzing all four gender gap subindexes. The Win-Win effect is most robust for gender equality in education and earnings. Controlling for arbitrarily-defined world regions (“Anglo-Saxon countries” vs. “Africa”) is inappropriate, as such groupings are based on folk stereotypes, not objective scientific criteria, and risks masking meaningful differences between countries. There is, however, often more than one right way to analyze a dataset; we discuss how this can be addressed by crowdsourcing the analysis of complex datasets prior to publication.
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Carl Henrik Knutsen
Kyklos, August 2015, Pages 357–384
Abstract:
This paper argues that democracy enhances technological change, the most important determinant of long-term economic growth. It first presents an argument on how and why dictators restrict civil liberties and diffusion of information to survive in office, even if this reduces their personal consumption. The argument predicts that autocracies have slower technological change than democracies, which in turn impairs GDP per capita growth rates. These and other implications from the argument are tested empirically, and so are implications from alternative explanations on the association between democracy and technological change. Drawing on an extensive global dataset, with some time series going back to the early 19th century, the paper reports robust evidence that democracy increases not only technology-induced growth but also net economic growth rates. Notably, the results hold when accounting for the endogeneity of democracy, country-fixed effects, and sample-selection bias.
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The Non-Democratic Origins of Income Taxation
Isabela Mares & Didac Queralt
Comparative Political Studies, forthcoming
Abstract:
This article examines the adoption of income taxes in Western economies since the 19th century. We identify two empirical regularities that challenge predictions of existing models of taxation and redistribution: While countries with low levels of electoral enfranchisement and high levels of landholding inequality adopt the income tax first, countries with more extensive electoral rules lag behind in adopting these new forms of taxation. We propose an explanation of income tax adoption that accounts for these empirical regularities. We discuss the most important economic consideration of politicians linked to owners of different factors, namely, the shift of the tax burden between sectors, and examine how preexisting electoral rules affect these political calculations. The article provides both a cross-national test of this argument and a microhistorical test that examines the economic and political determinants of support for the adoption of the income tax in 1842 in Britain.
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Your development or mine? Effects of donor-recipient cultural differences on the aid-growth nexus
Anna Minasyan
Journal of Comparative Economics, forthcoming
Abstract:
Development aid from the West may lead to adverse growth effects in the global South due to the neglected cultural differences between development aid (paradigm) providers and recipients. I test this hypothesis empirically by augmenting an aid-growth model with proxy variables for cultural differences between donors and recipients. First, I use donor-recipient genetic distance, i.e., blood types, to capture the traditional way of cultural transmission. Second, I use western education of recipient country leaders to capture resource-based transmission of culture. Results of the OLS panel estimation in first differences show that a one unit increase in donor-recipient genetic distance reduces the main effect of aid on growth by 0.2 percentage points when aid is increased by one percentage point. In turn, a one percentage point increase in aid yields on average a 0.3 percentage point increase in growth after a decade for countries with western educated leaders.
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The Poor Get Poorer: Tracking Relative Poverty in India Using a Durables-Based Mixture Model
Sudeshna Maitra
Journal of Development Economics, forthcoming
Abstract:
I propose the use of a durables-based mixture model to identify the consumption class structure of a population. The mixture model decomposes the marginal distribution of durables ownership across all households, into three conditional distributions (one each for lower, middle and upper classes), along with their weights in the population distribution, endogenously determining class membership. This approach provides a potentially deeper understanding of the dynamics of classes, in particular the lower class, than can be obtained using poverty lines or PCA alone. It avoids many well-known problems with expenditure data, ameliorates the impact of changing survey designs, and enables an analysis of the behaviour and membership of classes over time. I use the mixture approach to show that the urban lower class in India became smaller but poorer during the 1990s.
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Andreas Wimmer
Comparative Political Studies, forthcoming
Abstract:
Existing research has shown that highly diverse countries tend to provide less public goods. This article argues, by contrast, that the relationship is spurious: both contemporary ethnic heterogeneity and low public goods provision represent legacies of a weakly developed state capacity inherited from the past. Classical theories of state formation are then tested to show that favorable topography and climate, high population densities, as well as a history of warfare are conducive to state formation. Using an instrumental variable approach, I show that previous ethnic diversity is not consistently an impediment to the formation of indigenous states and thus to contemporary public goods provision. Empirically, this article uses three different measurements of public goods provision and data on pre-colonial levels of state formation in Asia and Africa to test these various hypotheses.
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Wedding trousseaus and cloth consumption in Catalonia around 1300
Lluís To Figueras
Economic History Review, forthcoming
Abstract:
Between 1230 and 1315 a large amount of Flemish and northern French cloth reached the market of Vic, a medium-sized Catalan town to the north of Barcelona. Descriptions of cloth from a sample of over 1,000 wedding trousseaus reveal that common people were quite familiar with a wide selection of fabrics from manufacturing centres such as Bruges, Saint-Omer, Arras, and Châlons, and by the end of the thirteenth century Saint-Denis, Paris, Ypres, and Narbonne. Northern cloth had travelled over 1,000 kilometres before it reached the market stalls of Vic, reflecting the efficiency of commercial networks in bringing commodities across Europe at a reasonable transportation cost. Marriage contracts from this period specify the identity of the most frequent purchasers of these fabrics, and the identity of the women that would wear them, tailored as capes or tunics. Northern cloth was purchased by all social groups, not just the wealthy elite: even peasant households used such fabrics for their daughters' dresses. All in all, wedding trousseaus provide exceptional evidence of how commercialized both the urban and rural populations had become by the end of the thirteenth century in a society eager to buy imported commodities.
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The Wages of Women in England, 1260–1850
Jane Humphries & Jacob Weisdorf
Journal of Economic History, June 2015, Pages 405-447
Abstract:
This paper presents two wage-series for unskilled English women workers 1260–1850, one based on daily wages and one on the daily remuneration implied in annual contracts. The series are compared with each other and with evidence for men, informing several debates. Our findings suggest first that women servants did not share the post-Black Death “golden age” and so offer little support for a “girl-powered” economic breakthrough; and second that during the industrial revolution, women who were unable to work long hours lost ground relative to men and to women who could work full-time and fell increasingly adrift from any “High Wage Economy.”
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Economic Dynamics in the Malthusian Era: Evidence from the 1609 Spanish Expulsion of the Moriscos
Eric Chaney & Richard Hornbeck
Economic Journal, forthcoming
Abstract:
We investigate economic dynamics in the Malthusian era using the 1609 expulsion of Moriscos from Spain. Sharp population declines in former-Morisco districts were accompanied by decreased output and increased per capita output. While these short-run results are consistent with standard Malthusian predictions, Malthusian convergence was delayed through 1786 in former-Morisco districts. Archival sources and historical accounts suggest extractive institutions and cultural differences may have contributed to delayed convergence in population and output per capita. This historic episode provides an unusually rich setting to examine Malthusian dynamics, highlighting the potential for sustained differences in per capita output in the Malthusian era.
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Bribery and investment: Firm-level evidence from Africa and Latin America
Addis Gedefaw Birhanu, Alfonso Gambardella & Giovanni Valentini
Strategic Management Journal, forthcoming
Abstract:
Using a unique database that measures firm-level bribery in Africa and Latin America, we corroborate extant results in the literature that paying bribes deters firm investments in fixed assets. Our contribution is to explore four mechanisms. By adopting a reverse causality approach (Gelman and Imbens, 2013), we find evidence consistent with one of them: short-term oriented firms prefer to bribe rather than invest in fixed assets, while the opposite is true for firms with a long-term orientation. We rule out that bribe payments drain financial resources for investment, that firms that invest do not bribe because fixed assets make them less flexible and more vulnerable to future bribes, and that less efficient firms bribe rather than invest.
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Philip Keefer & Stuti Khemani
World Bank Economic Review, forthcoming
Abstract:
We use a “natural experiment” in media markets in Benin to examine the impact of community radio on government responsiveness to citizens. Contrary to prior research on the impact of mass media, in this experiment government agents do not provide greater benefits to citizens whose exposure to community radio increased their demand for those benefits. Households with greater access to community radio were more likely to pay for government-provided bed nets to combat malaria than to receive them for free. Mass media changed the private behavior of citizens — they invested more of their own resources in the public health good of bed nets — but not citizens’ ability to extract greater benefits from government. While the welfare consequences of these results are ambiguous, the pattern of radio's effects that we uncover has implications for policy strategies to use mass media for development objectives.
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Aart Kraay & Peter Murrell
Review of Economics and Statistics, forthcoming
Abstract:
Corruption estimates rely largely on self-reports of affected individuals and officials. Yet, survey respondents are often reticent to tell the truth about sensitive subjects, leading to downward biases in survey-based corruption estimates. This paper develops a method to estimate the prevalence of reticent behavior and reticence-adjusted rates of corruption using survey responses to sensitive questions. A statistical model captures how respondents answer a combination of conventional and random-response questions, allowing identification of the effect of reticence. GMM and maximum-likelihood estimates are obtained for ten countries. Adjusting for reticence dramatically alters the perceptions of the extent of corruption.