Bootstrapped
Why Does Aid Not Target the Poorest?
Ryan Briggs
International Studies Quarterly, forthcoming
Abstract:
Foreign-aid projects typically have local effects, so they need to be placed close to the poor if they are to reduce poverty. I show that, conditional on local population levels, World Bank (WB) project aid targets richer parts of countries. This relationship holds over time and across world regions. I test five donor-side explanations for pro-rich targeting using a pre-registered conjoint experiment on WB Task Team Leaders (TTLs). TTLs perceive aid-receiving governments as most interested in targeting aid politically and controlling implementation. They also believe that aid works better in poorer or more remote areas, but that implementation in these areas is uniquely difficult. These results speak to debates in distributive politics, international bargaining over aid, and principal-agent issues in international organizations. The results also suggest that tweaks to WB incentive structures to make ease of project implementation less important may encourage aid to flow to poorer parts of countries.
High-skilled services and development in China
Lei Fang & Berthold Herrendorf
Journal of Development Economics, June 2021
Abstract:
We document that the employment share of high-skill-intensive services is much lower in China than in countries with similar GDP per capita. We build a model of structural change with goods and low- and high-skill-intensive services to account for this observation. We find that large distortions limit the size of high-skill-intensive services in China. If they were removed, both high-skill-intensive services and GDP per capita would increase considerably. We document a strong presence of state-owned enterprises in high-skill-intensive services and suggest that this leads to important distortions.
The Changing Relationship between Bodyweight and Longevity in High- and Low-Income Countries
Joanna Aleksandra Kopinska et al.
NBER Working Paper, May 2021
Abstract:
Standard measures of bodyweight (overweight and obese, for example) fail to reflect technological progress over time - and in particular, recent progress disproportionately promoting longevity at higher bodyweights (and differences in access to it). This paper builds on the pioneering work of HansWaaler (Waaler, 1984) and Robert Fogel (Fogel, 1994) to empirically estimate how technological progress, and differential access to it, have fundamentally transformed the relationship between body mass index (BMI) and longevity in high-, middle-, and low-income countries. Importantly, we show that the combined effect of technological progress and access to it across countries is so profound that the share of national populations above mortality-minimizing bodyweight is not clearly greater in countries with higher overweight and obesity rates (as traditionally defined) -- and in fact, relative to current standards, a larger share of low-income countries' populations can be unhealthily heavy.
The New Era of Unconditional Convergence
Dev Patel, Justin Sandefur & Arvind Subramanian
Harvard Working Paper, April 2021
Abstract:
The central fact that has motivated the empirics of economic growth -- namely unconditional divergence -- is no longer true and has not been so for decades. Across a range of data sources, poorer countries have in fact been catching up with richer ones, albeit slowly, since the mid-1990s. This new era of convergence does not stem primarily from growth moderation in the rich world but rather from accelerating growth in the developing world, which has simultaneously become remarkably less volatile and more persistent. Debates about a "middle-income trap" also appear anachronistic: middle-income countries have exhibited higher growth rates than all others since the mid-1980s.
Corporate governance and industrialization
Maurizio Iacopetta & Pietro Peretto
European Economic Review, June 2021
Abstract:
Corporate governance distortions delay or even halt a country's transformation into a modern innovation economy. We investigate the mechanism through a growth model that allows for agency issues within firms. Governance distortions raise the cost of investment and depress the incentives to set up new firms. Modest differences in governance account for large gaps in income: A 32 percent investment cost differential can explain the secular decline of Latin America income relative to that of the USA, and implies an industrialization delay of a third of a century. We obtain similar results for a large number of countries and macro-regions.
China's Anticorruption Campaign and Entrepreneurship
Dongmin Kong & Ni Qin
Journal of Law and Economics, February 2021, Pages 153-180
Abstract:
This paper investigates the causal effect of corruption on entrepreneurship. We use staggered anticorruption investigations in China as exogenous shocks to conduct difference-in-differences estimation and find that the country's anticorruption campaign has a sizeable positive effect on entrepreneurship, especially in urban areas, areas with high levels of trust, and areas with short verdict processes after investigation. We discuss four plausible mechanisms for the positive effect of the anticorruption campaign: reduced rent seeking, improved government quality, technology spillover from innovation, and the easing of financial constraints for non-state-owned enterprises. Our results are robust to a battery of tests based on different specifications and alternative measures. Overall, this study provides a timely evaluation of the importance of anticorruption efforts in a typical emerging market.
Political fragmentation, rural-to-urban migration and urban growth patterns in western Eurasia, 800-1800
Gary Cox & Valentin Figueroa
European Review of Economic History, May 2021, Pages 203-222
Abstract:
Prominent scholars argue that Europe's political fragmentation improved the security of property rights, thereby promoting growth. We explore a complementary mechanism: urban fragmentation -- the proliferation of self-governing cities -- helped emancipate labor, and freer labor promoted both faster and more correlated town growth. To test these hypotheses, we first show that polities with more self-governing cities offered more protection to runaway serfs against lordly recapture. We then show that more fragmented areas exhibited both faster and more correlated urban growth. While both the property rights and labor freedom mechanisms predict faster growth, only the latter predicts more highly correlated growth.
The Legal Origins of Financial Development: Evidence from the Shanghai Concessions
Ross Levine et al.
NBER Working Paper, May 2021
Abstract:
We assemble new data on the British and French concessions in Shanghai between 1845 and 1936 to assess the legal origins view of financial development. During this period, two regime changes altered the degree to which the British common and French civil law traditions held jurisdiction over the respective concessions: the 1869 formation of the Mixed Courts strengthened Western legal jurisdiction, while the 1926 rendition agreement returned those courts to Chinese control. By examining the changing application of different legal traditions to adjacent neighborhoods within the same city, we address identification challenges associated with cross-country studies. Consistent with the legal origins view, the financial development advantage in the British concession widened after the formation of the Courts and shrank after their rendition.
Animals and the prehistoric origins of economic development
Ideen Riahi
European Review of Economic History, May 2021, Pages 247-279
Abstract:
This paper revisits the macro-level relationship between human genetic variation (genetic distance and diversity) and economic development. If other continents were biogeographically more similar to Eurasia, their populations' capacities to ward off the adverse effects of European colonization would have been much higher and, thus, their economies considerably more prosperous today. At the continental scale, genetic differences between people do not matter for comparative development.
Deadly Discrimination: Implications of "Missing Girls" for Workplace Safety
Zhibo Tan, Shang-Jin Wei & Xiaobo Zhang
NBER Working Paper, May 2021
Abstract:
We examine an indirect but potentially deadly consequence of the "missing girls" phenomenon. A shortage of brides causes many parents with sons of marriageable age to work harder and seek higher-paying but potentially dangerous jobs. In response, employers invest less in workplace safety, which in turn increases work-related mortality. Drawing from a broad range of data sets and taking advantage of large regional and temporal variations in sex ratios in China, we demonstrate that in areas with a more severe shortage of young women, the parents with unmarried sons suffer a significantly higher incidence of accidental injuries and workplace deaths.
Property Right Acquisition and Path Dependence: Nineteenth-Century Land Policy and Modern Economic Outcomes
Douglas Allen & Bryan Leonard
Economic Journal, forthcoming
Abstract:
This paper compares lands settled between 1862-1940 under the Homestead Act to lands that sold for cash during the same time. We combine recently digitized individual land patents with modern satellite data and find a negative effect of homesteading on modern land use that cannot be explained by land quality, title characteristics, or unobserved differences in settlers. We test the hypothesis that early homestead settlement put homesteaders "in the way" of future development, creating a path dependence in land use decisions for homesteads, despite the fact that their legal rights were identical to purchased lands.
Religious Festivals and Economic Development: Evidence from Catholic Saint Day Festivals in Mexico
Eduardo Montero & Dean Yang
NBER Working Paper, May 2021
Abstract:
Societies worldwide spend substantial resources celebrating religious festivals. How do festivals influence economic and social outcomes? We study Catholic patron saint day festivals in Mexico, exploiting two features of the setting: (i) municipal festival dates vary across the calendar and were determined in the early history of towns after Spanish conquest, and (ii) there is considerable variation in the intra-annual timing of agricultural seasons. We compare municipalities with "agriculturally-coinciding" festivals (those that coincide with peak planting or harvest months) to other municipalities, examining differences in long-run economic development and social outcomes. Agriculturally-coinciding festivals have negative effects on household income and other development outcomes. They also lead to lower agricultural productivity and higher share of the labor force in agriculture, consistent with agriculturally-coinciding festivals inhibiting the structural transformation of the economy. Agriculturally-coinciding festivals also lead to higher religiosity and social capital, potentially explaining why such festivals persist in spite of their negative growth consequences.
The Private Impact of Public Data: Landsat Satellite Maps Increased Gold Discoveries and Encouraged Entry
Abhishek Nagaraj
Management Science, forthcoming
Abstract:
How does public data shape the relative performance of incumbents and entrants in the private sector? Using a simple theoretical framework, I argue that public data reduces investment uncertainty, facilitates the discovery of new market opportunities, and increases the relative market share of new entrants relative to incumbents. I shed light on these predictions by estimating the impact of public data from Landsat, a U.S. National Aeronautics and Space Administration satellite mapping program, on the discovery rates of new deposits by incumbents (seniors) and entrants (juniors) in the gold exploration industry. I exploit idiosyncratic timing variation and cloud cover in Landsat coverage across regions to identify the causal effect of public data on the patterns of gold discovery. I find that Landsat data nearly doubled the rate of significant gold discoveries after a region was mapped and increased the market share of new entrants from about 10% to 25%. Public data seem to play an important, yet relatively underexplored, role in driving performance differences across firms.