Developing Modernity
China’s one-child policy amplifies intergenerational inequality via enlarged differential fertility
Yewen Yu, Yi Fan & Junjian Yi
Proceedings of the National Academy of Sciences, 2 June 2026
Abstract:
Using the staggered rollout of China’s one-child policy (OCP) across provinces and birth cohorts as a quasi-natural experiment, we demonstrate that differential fertility between richer and poorer households exacerbates intergenerational income inequality. Rural/poorer families, who are less constrained by the OCP than their urban/richer counterparts, tend to have more children but invest less in each child’s human capital. This reduction in mobility is primarily driven by the rising economic status of children born to urban/wealthier families. Our estimates suggest that the OCP accounts for approximately 25% of the observed decline in intergenerational income mobility in China and thus highlight a demographic channel through which economic inequality persists across generations.
The Sisyphean Pursuit of Evidence for Poverty Traps
Dean Karlan, Amol Singh Raswan & Christopher Udry
NBER Working Paper, May 2026
Abstract:
Much of development economics, both micro and macro, posits theories and explores the empirics of poverty traps. A common theory centers around asset-threshold poverty traps in which marginal returns to capital increase sharply over a certain threshold and financial markets are incomplete. This combination leads households above this threshold to prosper while those below continuously fall back, trapped in poverty. Yet in economics, as best as we can tell, far more papers assume such thresholds than empirically demonstrate them. In a key recent exception, Balboni et al. (2022) (hereinafter “BBBGH”) argues that data from Bangladesh identifies clear evidence of such a threshold at slightly above the cost of a cow for recent recipients of a big push transfer program. We apply this analysis to data from seven other similar programs in low-income countries and find no evidence of an asset-threshold poverty trap. We then return to BBBGH and argue that their data do not support the identification of a poverty trap, with the point of disagreement being a log-transformation challenge and a potential geographic confound. In long-term representative rural panel data from Bangladesh and Ghana we find no evidence of divergence away from any particular threshold. While the threshold theory is undoubtedly true for some households, we argue that the pursuit of clear evidence of an asset-threshold poverty trap for a broad population is likely an aspirational goal rendered unachievable by the intersection of a multitude of possible mechanisms as well as heterogeneous agents.
Hunting for Hollanders: The community responsibility system, trade sanctions, and public debt in the late-medieval Low Countries
Jaco Zuijderduijn
Economic History Review, forthcoming
Abstract:
To persuade creditors to lend, cities in the Low Countries relied on a community responsibility system that made all citizens personally liable for public debt. This exposed itinerant citizens to significant risks: their merchandise could be confiscated by creditors, and they could even be imprisoned for debt. Although it is usually difficult to assess how such sanctions were enforced in practice, this study examines a unique account of a group of creditors actively pursuing repayment. Their principal debt collector was a monk of the Carthusian order who travelled tirelessly throughout the Lower Rhine region in search of inhabitants of the county of Holland. This monk-turned-bounty-hunter primarily targeted merchants and their goods but also sought to seize financial instruments and real estate owned by Hollanders. Whilst existing literature emphasizes reputation-based mechanisms to explain polities’ access to credit, this evidence suggests that sanction-based mechanisms were equally important: reprisals proved effective in recovering debts. Considering that the community responsibility system exposed merchants to sanctions, its survival into the early modern period is quite striking. I argue that the creation of public debt secured political and economic privileges that cities valued more highly than the safety of their merchants.
Where do Billionaires Come From?
Yosef Bonaparte
University of Colorado Working Paper, December 2025
Abstract:
Billionaires have surged worldwide, yet the country‑level determinants of their incidence and scale remain underexplored. We analyze how democracy relates to the global concentration of extreme wealth over 2021–2024 using a panel of 153 countries. We conduct analyses at both the extensive margin (the presence of any billionaires) and the intensive margin (the count of billionaires). A one‑unit increase in democracy raises the probability of hosting at least one billionaire by about 5.7 percentage points and is associated with roughly 6.2 additional billionaires, conditional on entry. Mechanism tests indicate that Regulatory Quality and Rule of Law largely mediate these effects, consistent with democracy operating as a “gateway” that secures credible property rights and legal certainty for large‑scale capital retention. Once these channels are included, the direct effect of democracy weakens, suggesting that consolidated democracies shape the geography of extreme wealth primarily through institutional quality rather than democracy per se.
The stalled quiet revolution: Population control, skewed sex ratios, and the widening gender gap in labor force participation
Zihao Chen, Yawen Ding & Xu Tian
Journal of Development Economics, June 2026
Abstract:
China’s declining female labor force participation (LFP) stands in stark contrast to the global “quiet revolution” of rising women’s economic engagement. This paper offers a novel explanation for this unique trend through the long-term unintended effects of population control policies, which have distorted sex ratios in both marriage and labor markets. Using a cohort difference-in-differences strategy, we find that the introduction of China’s One-Child Policy (OCP) significantly reduced women’s LFP by 12 percentage points relative to their male counterparts. The widening gender gap in LFP is primarily driven by male-biased sex ratios resulting from the OCP. Specifically, women exposed to the more skewed sex ratio exhibit higher marriage and fertility rates, improved husband quality, greater intra-household bargaining power, extended leisure time, and fewer ambition-related psychological traits. The crowding-out effect of labor market distortions on the gender gap in LFP plays a secondary role. These insights explain the continuing decline in female labor supply and the enlarging gender gap in LFP in China.
Asset Mobility and Property Rights
Amy Pond
International Organization, Spring 2026, Pages 359-381
Abstract:
How does asset mobility affect the provision of property rights? Existing research anticipates that firm owners with mobile assets are effective at pressuring the government for property rights. In this research note, I examine not just the influence of firm owners but also their preferences. I develop a formal model to show that owners of mobile assets, who may move their assets out of the government’s reach, have less to gain from property rights enforcement than owners with less mobile assets. Moreover, once one considers heterogeneous firms competing with one another, firms with more mobile assets may gain a competitive advantage from policies that are disproportionately costly for their competitors (like violations of property rights). I evaluate the model propositions drawing on empirical analyses of survey data from business executives in Latin America and cross-national, time-series data on firm profits. The findings from Latin America show that business executives with less mobile assets report greater need for property rights improvements. Cross-nationally, property rights increase the profits of firms, but the effects are confined to firms with substantial immobile assets. These findings are consistent with the smaller benefits of property rights among firms with more mobile assets. The research note unites the literatures on heterogeneous firms and the development of property rights to challenge the conventional wisdom about how asset mobility affects property rights.
Did the Cold War produce development clusters in Africa?
Paul Castañeda Dower et al.
Journal of Development Economics, June 2026
Abstract:
We examine the lasting impact of Cold War alignment on African development. To overcome the empirical challenge of ambiguous and interdependent international alliances during the Cold War, we introduce a non-cooperative game of social interactions. Using pre-determined, country-level characteristics to construct payoffs, we identify a unique two-bloc equilibrium partition of the continent. We then assign bloc alignments based on how the partition predicts UN voting patterns. Our empirical results indicate no income differences today between the Western and the Eastern blocs. However, their development paths reflect Cold War ideologies: Western-aligned African countries have greater inequality, financial development, and democracy, but lesser infrastructure, compared to Eastern-aligned ones.
Adam Smith and the Role of the Towns in Feudal Europe
Mark Koyama
George Mason University Working Paper, April 2026
Abstract:
Adam Smith's account of medieval towns in Book III of The Wealth of Nations remains one of the most influential analyses of how commerce transformed feudal Europe. This paper formalizes Smith's argument as a game between kings, lords, and towns. The king-town alliance emphasized by Adam Smith emerges when towns are wealthy enough to offer fiscal and military support but lords remain a serious threat. However, when kings become excessively predatory, towns may ally with lords (as in the Magna Carta crisis); when towns are too weak to offer substantial support, kings ally with lords instead (as in Eastern Europe). A dynamic extension shows that the king-town equilibrium is self-undermining: commercial growth erodes lordly military power through Smith's "diamond buckles" mechanism, eventually enabling royal absolutism. In contrast, the king-lords equilibrium is self-reinforcing, suppressing urban development and preserving feudal institutions. The framework highlights how small differences in initial urban development could generate dramatically different long-run trajectories and illuminates both the brilliance and the limitations of Smith's conjectural history.
Is the Mafia responsible for technological backwardness in Sicily? An analysis from unification of the Italian Kingdom in 1861 to 1913
Fabio Paolo Di Vita, Giuseppe Di Vita & Livio Ferrante
European Journal of Law and Economics, June 2026, Pages 209-230
Abstract:
This paper examines the potential impact of the Mafia on technological progress in Sicily. In particular, we investigate whether the presence of this criminal organisation can explain the technological backwardness observed in Sicily and among Sicilian municipalities from the unification of the Italian Kingdom in 1861 until 1913. We exploit the historical shock caused by the dissolution of the socialist Peasant Fasci organization in 1894 and find that the strengthening of the Mafia is closely associated with a reduction in both the intensity and duration of newly registered patents.
Academic freedom and creativity: An empirical investigation
Di Sima
Journal of Development Economics, June 2026
Abstract:
This study examines the impact of academic freedom reform on university graduates’ creativity using a large, multi-decade, cross-country sample. We construct a novel creativity index based on occupational task data and analyze how reforms in an individual’s home country affect their creativity after immigrating to the United States. Exploiting variation in reform timing across countries, we find that academic freedom reform significantly enhances graduates’ labor market creativity. Results are robust to multiple DID estimators, alternative specifications, placebo tests, and IV methods, as well as approaches addressing potential biases. Effects are particularly pronounced for developing countries, environments with decentralized governance, and low corruption. Reforms appear to boost creativity by encouraging higher educational attainment, facilitating entry into high-tech and research-oriented fields, and promoting managerial and professional roles. Our findings underscore the economic value of academic freedom and its potential as a policy instrument for nurturing student creativity.