Developing the World
How Poverty Fell
Vincent Armentano, Paul Niehaus & Tom Vogl
NBER Working Paper, April 2026
Abstract:
The share of the global population living in extreme poverty fell dramatically from an estimated 36% in 1990 to 9% in 2015. We describe how this decline happened: the extent to which changes within as opposed to between cohorts contributed to poverty declines, and the key changes in the lives of households as they transitioned out of (and into) poverty. We do so using cross-sectional and panel sources that are representative or near-representative of five countries that collectively accounted for 75% of global poverty decline between 1990 and 2015. The data show that overlapping birth cohorts experienced the decline of poverty together over time, such that poverty decline can be viewed as a primarily within-cohort phenomenon. Within cohorts, the data reveal substantial churn, casting the challenge of escaping poverty as a "slippery slope" more than a long-term trap. The data also illustrate a diversity of pathways out of poverty: sectoral transitions, migration, and changing occupational choices and female labor force participation can all account for some part of poverty reduction, but in all but a handful of cases, a majority of households exiting poverty did so without experiencing these changes.
Technological Unemployment in Victorian Britain: Young Workers and the Collapse of Entry
Hillary Vipond
London School of Economics Working Paper, November 2025
Abstract:
We do not know whether technological unemployment swept across England in the wake of the British Industrial Revolution. In this paper, I propose an approach to quantify jobs lost to, and created by, creative destruction in the 19th century. Using over 170 million individual records from the full-count British census (1851-1911), I generate sub-industry "task" level occupational data. I apply this to the English bootmaking industry as it mechanized. The new data reveal sharp structural changes: 152,000 artisanal jobs disappeared as skills became obsolete, while 144,000 new jobs emerged. However, incumbent bootmakers were rarely displaced. Instead, the decline was driven by young men no longer entering the artisanal trade. These findings challenge assumptions about displacement, showing how slow adoption and persistent demand can shield existing workers, while opportunities vanish for new entrants.
Aid Cuts Increase Demand for Government Services and Taxation: Evidence from Halting USAID Funding
Ryan Jablonski, Brigitte Seim & Alex Yeandle
London School of Economics Working Paper, March 2026
Abstract:
Fiscal theories of state development emphasize a complementarity between government revenue, taxation, and citizen demands for public services. We assess the relevance of this logic for understanding the political and redistributive consequences of massive cuts to foreign aid budgets following the shuttering of USAID in 2025. We conduct over 4,500 in-person surveys, survey experiments, and interviews with citizens and public health officials before and after the termination of USAID operations in Malawi, one of the world's most aid-dependent countries. Focusing especially on health aid, we document three emerging trends. First, since the closing of USAID, citizens and public officials have observed substantial declines in health service quality, reduced medicine availability, and rising corruption, especially in more aid-dependent communities. Second, politicians and local service providers are often blamed for declining relations with donors and corresponding cuts to services. Third, we document high, but heterogeneous, demand for the government to fund canceled health services through taxation, particularly when respondents are experimentally assigned more information about aid cuts. Consistent with theory, we conclude that this aid shock is changing expectations of the state by increasing inequality and shifting demand for progressive and redistributive social policy, especially among the poorest.
Benefitting from brutality? Profits of north-western Europe's slave trade at the eve of the industrial revolution
Klas Rönnbäck et al.
Economic History Review, forthcoming
Abstract:
One of the most contentious issues in the study of the Atlantic slave trade is the profitability of the trade. In this paper, we contribute by pooling all available data on transatlantic slave ship voyage accounts into a joint dataset. This dataset includes data from a period of 100 years (1730-1830) and from five nations (Denmark, France, Great Britain, the Netherlands, and Spain). It permits calculation of the trade's profitability (total net returns over net outlays). Using weight calibration sampling methods, we compute a representative profit rate between 1750 and 1795 for France, Great Britain, and the Netherlands. Our results suggest that the average profitability (net returns over net outlay) was not remarkably high (around 11-14 per cent for multi-year ventures), with a very high variance. Some observations allow the computation of internal rates of return, which we then apply to the rest of the dataset. This shows that profits were low compared with alternative investment opportunities.
Capitalism and Femicide: An Empirical Inquiry
Christian Bjørnskov& Martin Rode
Kyklos, forthcoming
Abstract:
This study investigates the claim that capitalism (or neoliberal reforms) is associated with higher rates of femicide, which is often identified as an outcome of the capitalist exploitation of women in parts of the feminist literature. Employing a panel of 163 countries observed between 1990 and 2023, we find no significantly positive relationship between the Economic Freedom of the World index and different measures that approximate the concept of femicide. If anything, we partially find a significantly negative effect, particularly when not conditioning on income, which likely constitutes an important long-run transmission channel of the impact of pro-market institutions for reducing deadly violence against women. Even for countries with a large textile exporting sector -- an industry that is heavily associated with the economic exploitation of women -- more economic freedom is not significantly related to comparatively higher rates of femicide.
The economic impact of pandemics and wars in pre-modern Western Europe: A supply-side perspective
Michael Donadelli & Antonio Paradiso
Journal of Evolutionary Economics, February 2026
Abstract:
This paper undertakes a comprehensive analysis of the supply-side economic repercussions of pandemics and conflicts in pre-modern Western Europe (UK, France, Spain). We integrate theoretical simulations of a Malthusian growth model with empirical analyses of historical data (1250-1900) to disentangle long-term supply-side effects. The growth model reveals how shocks propagate through labor, technology, and capital, generating testable predictions about temporary versus permanent output changes. Empirically, we estimate potential output (i.e., the supply-side proxy) using Hodrick-Prescott filters and the Unobserved Components Model, then apply local projections to quantify dynamic responses to pandemic and war shocks. Results from our integrated framework show that pandemics exert heterogeneous effects on long-term potential output. In the UK, technological adaptations fostered by pandemics boosted potential output in the long run. In France, output fell in the short term, recovered in the medium term, and ultimately converged to zero. In Spain, institutional constraints hindered adaptive responses, producing only adverse outcomes. War shocks had generally weaker supply-side effects, and when present, their impact was merely temporary. Overall, our analysis demonstrates that cross-country institutional characteristics were decisive in shaping divergent recovery paths.
Can Personal Freedom Drive Economic Complexity?
Vítor Castro
Kyklos, forthcoming
Abstract:
Research on economic complexity has identified various factors that enable countries to achieve higher levels of productive sophistication. However, the role of personal freedom as a distinct driver has been overlooked. This paper argues that by providing the necessary environment for individuals to explore new ideas, be creative and challenge the status quo, personal freedom is essential to the development of unique and complex products. This hypothesis is tested using a panel of 139 countries over the 1998-2022 period and employing panel corrected standard error and system-GMM estimators to account for cross-sectional dependence, serial correlation, and potential endogeneity. Our empirical analysis provides robust evidence that personal freedom is a significant booster of economic complexity. This evidence is more prominent in developing and emerging countries and is largely driven by core civil liberties, rule of law, and property rights. The results emphasize that fostering an environment of personal liberty is a fundamental determinant of long-run economic sophistication and development.
Institutional dynamics produce resource curse traps
Nusrat Molla, Simon Levin & Elke Weber
Proceedings of the National Academy of Sciences, 28 April 2026
Abstract:
Communities reliant on extractive industries face a paradox: Despite the promise of economic growth from lucrative, well-paying industries, they often experience poor socioeconomic outcomes. While the so-called "resource curse" has been debated and studied extensively in a variety of disciplines, understanding when and why the resource curse occurs, and whether it is possible to escape it, remains a challenge. This study examines these questions through a dynamical systems model that incorporates theories from the literature about how extractive industries interact with institutions and the communities in which they are based. The model reveals that both the resource curse and a more diversified economy are possible, depending on the initial level of human and social capital. It also reveals how various factors, such as declining commodity prices, can trigger an abrupt and irreversible transition from the diversified equilibrium to the resource curse. A generalized version of the model further reveals that the feedback between extractive industries and institutional strength are critical in determining the occurrence of this type of transition. The results illustrate the difficulty of escaping the resource curse, identify potential leverage points or change, and highlight the critical role of institutional dynamics in producing and perpetuating extractive dynamics in these regions.
The Success of the Embedded State in England
Leander Heldring et al.
NBER Working Paper, April 2026
Abstract:
Many states exhibit high degrees of capacity without the fiscal resources necessary to fund a modern bureaucracy. We argue that they achieve this by exploiting features of the social structure of the societies they govern to motivate individuals to engage in bureaucratic and governance tasks without pay. We develop and illustrate the concept of the "Embedded State" using a unique survey of British urban government from 1835. Since British local authorities had few resources, only two-thirds of positions were paid. We first show that unpaid positions were significantly more productive than paid ones. We then show that unpaid positions conveyed prestige and were 'stepping stone' positions, provided different on-the-job incentives, and were taken up by the socio-economic elite. We also show that the successful Embedded State featured patronage and corruption and could not fully motivate unpaid bureaucrats to implement onerous tasks.
China's demographic dividend has moved from age-based labor supply to skill-based productivity
Hengyu Gu et al.
Proceedings of the National Academy of Sciences, 14 April 2026
Abstract:
Accelerated global population aging challenges conventional economic growth paths. Yet, the mechanisms underlying the transition from the age-based demographic dividend, derived from a favorable age support ratio (ASR), to a skill-based dividend, driven by human capital accumulation, remain insufficiently understood. Using population census data for 336 Chinese cities from 2000 to 2020, we develop a task-based skill ratio (TSR) index to quantify the skill composition of local labor markets, capturing the relative intensity of high- and low-skill tasks within city-level employment structures. We identify a divergence trend where the ASR peaked around 2010 and has since declined, while the TSR has continued to rise and diffuse geographically. We further examine a synergistic effect between ASR and TSR on economic growth and project the compensatory TSR required under alternative demographic scenarios to 2100. It shows that both ASR and TSR positively affect the per capita GDP of a city, but the latter plays a dominant role. A higher ASR amplifies the economic returns to TSR, with the old-age support ratio (OSR) as the binding constraint. Projections indicate that delayed retirement can partly alleviate the effects of the ASR decline, but cannot reverse the long-term trend. Continued improvement in the TSR is therefore necessary to offset this structural demographic shift. Economic growth relies less on favorable age structures and increasingly depends on the skill composition of the workforce, making skill upgrading central to sustained prosperity.
(Under)mining Preindustrial Europe: Ecology, Society, and Cultural Change, 1180-1550
Guy Geltner
Journal of Interdisciplinary History, Winter 2026, Pages 223-249
Abstract:
Europe's first mining boom began in the twelfth century amid favorable climatic, political, and demographic conditions. Despite its seemingly simple technologies and modest energy regimes, manual mining triggered a cascade of processes, altering ecologies and landscapes; stimulating migration; creating privileged occupational communities; prompting debates on the costs and benefits of ore extraction; and generating insights about humans' place in nature more broadly. Yet the entangled biogeochemical, social, and cultural legacies of manual mining remain largely obscure for both conceptual and methodological reasons. Combining approaches from history, archaeology, and the paleosciences offers a fresh perspective. Evidence from several European mining districts -- written sources, physical remains, and analyses at the micro-, landscape- and regional levels -- attest communities' complex experiences of and approaches to the outcomes of non-mechanized mining. Interdisciplinary historical accounts recast a "preindustrial" industry as having long-term and often adverse consequences and recover earlier societies' ambivalence toward mining. An interdisciplinary approach to earlier mining history responds to calls for recontextualizing the Anthropocene from a chronological standpoint within Europe, augmenting its more common critiques from beyond that region and in the aftermath of industrialization.
From Social Proximity to Policy Preferences: Contact with Drug Market Participants and Citizens' Attitudes Toward Drug Policy
Daniel Zizumbo-Colunga & Pamela Ruiz Flores López
Public Opinion Quarterly, Spring 2026, Pages 176-201
Abstract:
The negative externalities of the global "war on drugs" -- including violence, militarization, mass incarceration, and human rights violations -- have sparked an intense debate over drug prohibition and legalization. Public opinion, particularly in regions most affected by drug-related violence, plays a pivotal role in shaping policy decisions, as it can either reinforce the status quo or push policymakers toward reform. In this context, it remains unclear whether citizens' proximity to drug market participants gives them a clearer understanding of the threats of drug trafficking and abuse, swaying them toward prohibitionist positions, or -- as we argue -- promotes perspective-taking and fosters greater support for legalization. Using previously underanalyzed data from 18 countries and three waves of the Latinobarómetro, we examine the effect of contact on citizens' drug policy preferences in Latin America, one of the regions most affected by drug violence. To derive generalized inferences, we use pooled models with fixed effects. To address measurement and simultaneity concerns, we employ year-specific and lagged hierarchical linear models. Across all specifications, contact is consistently associated with greater support for drug legalization. Our findings challenge the notion that personal contact with drug market participants fosters prohibitive attitudes and alleviate fears that legalizing drugs -- and thus increasing consumer and non-consumer contact -- could trigger significant public backlash. This study contributes to intergroup contact theory by extending its application to the understudied domain of drug policy and offering new insights into how social and environmental factors shape public opinion.