Into Modernity
Global Universal Basic Skills: Current Deficits and Implications for World Development
Sarah Gust, Eric Hanushek & Ludger Woessmann
NBER Working Paper, October 2022
Abstract:
How far is the world away from ensuring that every child obtains the basic skills needed to be internationally competitive? And what would accomplishing this mean for world development? Based on the micro data of international and regional achievement tests, we map achievement onto a common (PISA) scale. We then estimate the share of children not achieving basic skills for 159 countries that cover 98.1% of world population and 99.4% of world GDP. We find that at least two-thirds of the world's youth do not reach basic skill levels, ranging from 24% in North America to 89% in South Asia and 94% in Sub-Saharan Africa. Our economic analysis suggests that the present value of lost world economic output due to missing the goal of global universal basic skills amounts to over $700 trillion over the remaining century, or 11% of discounted GDP.
Culture and the Historical Fertility Transition
Brian Beach & Walker Hanlon
Review of Economic Studies, forthcoming
Abstract:
The historical transition to a low fertility regime was central for long-run growth, but what caused it? Existing economic explanations largely focus on the economic incentives to limit fertility. This paper presents new evidence highlighting the importance of cultural forces as a complementary driver of the fertility transition. We leverage a sharp change in fertility in Britain in 1877 and document large synchronized declines in fertility among culturally-British households residing outside of Britain, in Canada, the U.S. and South Africa, relative to their non-British neighbors. We propose a plausible catalyst for the change: the famous Bradlaugh-Besant trial of 1877.
Disruptive innovation in the economic organization of China and the West
Hilton Root
Journal of Institutional Economics, forthcoming
Abstract:
We explore how macro and micro networks influence the diffusion of technological innovation and cultural/social behavior. Across the historical regimes in China and Europe, dynastic lordship's macro networks afforded different advantages in technological innovation. A network particular to Europe, the Roman Church, extended deep into local parishes with ethical norms prescribing fairness to strangers, and these cultural foundations helped guilds, trade associations, merchant courts, and universities operate cooperatively far beyond kinship. In contrast, Chinese emperors relied on ancient Confucian moral codes and system-spanning Confucian-educated officialdom; but fiscal limitations compelled officials to defer to local lineage orders, resulting in an enduring cultural pattern of guanxi and a polity whose institutional problem-solving capacity falter beyond the local level. Yet the civil service system has enabled China to outperform similar lineage-dependent regimes. Probing network topologies, we find that system-spanning networks can facilitate technological diffusion, but local networks influence cultural and behavioral change.
The Fall of Constantinople and the Rise of the West
Andreas Link
University of Erlangen-Nuremberg Working Paper, July 2022
Abstract:
During the Renaissance numerous discoveries and inventions significantly bolstered European development. This paper examines the role played by Greek migrants in this process. While the vast majority of works by ancient Greek scholars such as Galen, Hippocrates, and Euclid were unknown in Western Europe during the middle ages, such knowledge had been preserved in the Byzantine Empire. The revival of ancient Greek knowledge within Western Europe coincided with the conquest of Constantinople by the Ottomans in 1453 and the subsequent surge in Greek migration to Western Europe. Using a newly constructed dataset on Greek migrants in Europe, I show that a Greek presence around the year 1500 is positively associated with city growth in the sixteenth century. This finding is corroborated by a difference-in-differences analysis as well as an instrumental variable approach that exploits distance to Constantinople as a source of exogenous variation in Greek presence in European cities. In terms of mechanisms, I find that a Greek presence is associated with larger numbers of published book editions in astronomy, mathematics, and medicine - fields in which ancient Greek and Byzantine scholars were especially advanced - as well as larger levels of upper-tail human capital. Finally, the results show that destination places for Greek migration became centers of innovation. Together, these results emphasize the importance of Greeks in the dissemination and application of scientific knowledge in early modern Europe and suggest that a Greek presence was one of the major growth drivers during the early modern period.
Does democracy cause gender equality?
Thomas Barnebeck Andersen
Journal of Institutional Economics, forthcoming
Abstract:
Does democracy cause gender equality? To address this question, I use the unexpected Second Vatican Council (1962-65) as part of a shock-based identification strategy. The Second Vatican Council brought forward in time transitions to democracy that would have happened anyway and triggered transitions to democracy that would not otherwise have occurred. I use this plausibly exogenous variation in democracy to offer a causal estimate. According to my baseline specification, one standard deviation increase in democracy leads to three-fifths of a standard deviation increase in gender equality. I also peruse qualitative evidence to sketch a causal mechanism.
Democracy and the quality of economic institutions: Theory and evidence
Tommy Krieger
Public Choice, September 2022, Pages 357-376
Abstract:
We present a simple model, illustrating how democracy may improve the quality of the economic institutions. The model further suggests that institutional quality varies more across autocracies than across democracy and that the positive effect of democracies on economic institutional quality increases in people's human capital. Using a panel data set that covers 150 countries and the period from 1920 to 2019, and different measures of economic institutional quality, we show results from fixed effect and instrumental variable regressions that are in line with the predictions of our model.
Democracy favors access to credit of firms
Francis Osei-Tutu & Laurent Weill
European Journal of Political Economy, forthcoming
Abstract:
Access to credit is one of the main obstacles for the growth of firms. We test the hypothesis that democracy exerts an impact on access to credit. We perform regressions at the firm-level on a large dataset of 46,000 firms in 108 countries. We find evidence of a negative relationship between democracy and credit constraints for firms. We further establish that democracy contributes to reduce borrower discouragement and leads to more bank loan approval decisions. Our key finding is therefore that democracy favors firms' access to credit. Our work contributes to the debate on the impact of democracy on economic development by considering one firm-level channel of transmission.
Legal Heritage and Urban Slums
Per Fredriksson et al.
Journal of Regional Science, forthcoming
Abstract:
This paper studies the effect of legal origins (common law vs. civil law) on contemporary slum formation in developing countries. First, we provide a cross-country correlation analysis. Second, a regression discontinuity analysis using household data from Cameroon. The results suggest that a common law heritage is associated with a lower probability of slum conditions. The legal philosophies transplanted through colonization appear to be associated with the pattern of contemporary urban housing stocks in developing countries.
Does the Conquest Explain Quebec's Historical Poverty? The Economic Consequences of 1760
Vincent Geloso
George Mason University Working Paper, August 2022
Abstract:
The British Conquest of Quebec in 1760 was a key moment in Canadian history as it marked the beginning of a tense coexistence between French and English Canadians. Many argue that the Conquest had strong economic consequences in the form of the relative poverty of the French settlers. The mechanisms proposed are manifold, but they all rely on a key feature: a retreat from the market by French farmers. Using 171 years of wheat price data for Quebec City and Montreal, I test whether there are any signs of this retreat from the market and instead find the opposite: over time, markets grew more integrated across regions. In fact, there are more signs of disintegration during the era of French rule. Additionally, over time, regional prices became better predicted by current prices elsewhere than by the lagged prices in the same region. By the 1830s, markets in Quebec were as well integrated as those in economies such as the United States, France, Britain and Germany. The evidence in this paper is consistent with recent empirical findings about Quebec's economic history, and so I argue that the case for the Conquest's initiation of the relative poverty of Quebec (also dubbed "economic inferiority" in the historiography) is non-existent. This does not exclude long-run consequences of the Conquest, but the correct answer must lie elsewhere than in conventional explanations.
Rebel Governance and Development: The Persistent Effects of Guerrillas in El Salvador
Antonella Bandiera et al.
NBER Working Paper, September 2022
Abstract:
How does rebel governance affect long-term development? We investigate the economic, social, and political consequences of temporary territorial control by guerrillas during the Salvadoran Civil War. During this period, these guerrillas displaced state authorities and promoted the creation of self-governing institutions that embodied local values and openly distrusted the state and elites. Using a spatial regression discontinuity design, we show that areas once under guerrilla control have experienced worse economic outcomes over the last 20 years compared with adjacent areas then controlled by the formal state. Our results suggest that community institutions in guerrilla-controlled areas led to enduring land fragmentation and disengagement with the government. We argue that when non-state actors develop alternative governance institutions, they can lead to negative development effects through lasting norms of distrust of out-groups.
The Power of Hydroelectric Dams: Historical Evidence from the United States over the 20th Century
Edson Severnini
Economic Journal, forthcoming
Abstract:
This paper evaluates large-scale hydroelectric dams built in the United States during the twentieth century. Combining panel event-study designs and synthetic control methods, two results stand out: First, dams constructed pre-1950 spurred short-run local growth, in large part thanks to a "cheap-local-power advantage," and resulted in remarkable long-run growth, more than doubling local population density after 50 years. Second, dams constructed post-1950 had only modest effects on growth. The first result indicates agglomerative impacts on local economic activity. The second result suggests the cheap-local-power advantage created by hydropower attenuated after 1950, probably because of such innovations as high-tension transmission lines.
Fertility and the Education of African Parents and Children
Tom Vogl
NBER Working Paper, September 2022
Abstract:
Sub-Saharan Africa exhibits higher fertility and lower education than other world regions. Economic and demographic theory posit that these phenomena are linked, with slow fertility decline connected to slow education growth among both adults and children. Using microdata from 33 African countries, this paper documents the co-evolution of adult education, fertility, and child education in female birth cohorts surrounding the onset of the region's fertility transition. Fertility change displays a robust negative relationship with the educational outcomes of adult women but a more nuanced relationship with the educational outcomes of children. As fertility declines, children's grade attainment rises, but their school enrollment does not. The divergence is partly explained by a split in how women's education relates to fertility and child education. Rising women's education predicts declining fertility and rising children's grade attainment, but it is less systematically linked to enrollment change.