Local Prospects
Tax Aversion and the Social Contract in Africa
James Robinson
NBER Working Paper, April 2022
Abstract:
Despite the low levels of taxation and public good provision in Africa, I provide evidence that a large proportion of Africans prefer lower taxation and fewer public goods. This cannot be explained by standard arguments about problems of accountability, governance or state capacity. Instead I argue that it reflects deeply seated ideas about the nature of the state and its potential threats to the autonomy of society. I show the historic social contracts in Africa rarely featured taxation and kept the state to limited jurisdictions. These social contracts have in many ways reproduced themselves and influence the way Africa is governed today.
Missing Men: Second World War Casualties and Structural Change
Christoph Eder
Economica, April 2022, Pages 437-460
Abstract:
A large literature has documented the persistent effects of historic events. This paper studies the effects of a historical demographic shock, documenting persistent effects that are historically contingent. I exploit military Second World War (WWII) casualties in Austrian municipalities as a natural experiment for a negative population shock, and study the economic consequences until today. In the short run, WWII casualties lead to structural transformation: labour is reallocated from agriculture towards manufacturing. This effect persists for decades. But instead of more economic development in the long run, WWII casualties led to a lower concentration of jobs and lower wages today. A more detailed analysis shows that in high-casualty municipalities, employment increased predominantly in low-skill industries within manufacturing, and these municipalities missed out on the transition to the service sector around the turn of the century.
Strengthening State Capacity: Postal Reform and Innovation during the Gilded Age
Abhay Aneja & Guo Xu
NBER Working Paper, March 2022
Abstract:
We use newly digitized records from the U.S. Post Office to study how strengthening state capacity affects public service delivery and innovation in over 2,800 cities between 1875-1905. Exploiting the gradual expansion of a major civil service reform, cities with a reformed postal office experience fewer errors in delivery, lower unit costs and an increase in mail handled per worker. This improvement goes with greater information flow, as measured by increased volumes of mail and newspapers. We observe more joint patenting involving inventors and businesses from different cities, suggesting that a more effective postal service contributed to innovation and growth during the Gilded Age.
New Estimates of Over 500 Years of Historic GDP and Population Data
Christopher Fariss et al.
Journal of Conflict Resolution, April 2022, Pages 553-591
Abstract:
Gross domestic product (GDP), GDP per capita, and population are central to the study of politics and economics broadly, and conflict processes in particular. Despite the prominence of these variables in empirical research, existing data lack historical coverage and are assumed to be measured without error. We develop a latent variable modeling framework that expands data coverage (1500 AD-2018 AD) and, by making use of multiple indicators for each variable, provides a principled framework to estimate uncertainty for values for all country-year variables relative to one another. Expanded temporal coverage of estimates provides new insights about the relationship between development and democracy, conflict, repression, and health. We also demonstrate how to incorporate uncertainty in observational models. Results show that the relationship between repression and development is weaker than models that do not incorporate uncertainty suggest. Future extensions of the latent variable model can address other forms of systematic measurement error with new data, new measurement theory, or both.
A new estimate of Chinese male occupational structure during 1734-1898 by sector, sub-sector pattern, and region
Cheng Yang
Economic History Review, forthcoming
Abstract:
Based on the Xingke Tiben, this paper assesses the long-run economic development of China, by constructing a new estimate of male occupational structure during 1734-1898 by sector, sub-sector pattern, and region. After assessing the source's biases, using this new empirical basis, this paper demonstrates that the national male occupational structure was nearly identical in 1761-70, 1821-30, and 1881-90, suggesting a long-lasting structural stasis of the national economy, allowing for fluctuations between benchmark dates. Within agriculture, substantial regional differences in labour organisation are revealed. Three distinct models are found: the Northern Regions model features a high usage of wage labour, the Yangtze Valley model presents a high level of tenancy development, and the Southern Regions model displays the highest share of landowners. All three models saw increasing use of wage labour in 1761-1890 and shrinking landownership in 1821-90. At the regional level, the long-run estimate for Lower Yangtze suggests that the region as a whole stagnated throughout the entire period, but the overall structural stasis hides dynamic, contrasting long-run economic change between the region's core and peripheral areas. Comparative analysis with England further suggests that the timing of the Great Divergence between China and England took place before 1734, even in the context of the regional difference.
A Bit of Salt, A Trace of Life: Gender Norms and the Impact of a Salt Iodization Program on Human Capital Formation of School Aged Children
Zichen Deng & Maarten Lindeboom
Journal of Health Economics, forthcoming
Abstract:
This paper evaluates the effect of a national salt iodization program on the cognition of school-aged children in China. We focus on the role of gender preferences. Linking pre-eradication iodine deficiency rates with household survey data, we find a strong positive impact of prenatal exposure to the program on cognition and schooling for girls. For boys, we find no effect. Child preferences play an important role in parental investment decisions and impact program effects. We find that parents invest more in girls with a high initial endowment. For boys, this is different. Parents invest in boys, irrespective of their initial endowment. The nationally implemented program may therefore primarily benefit low endowment girls. We then exploit village-level variation in gender attitudes and find that gender attitudes are related to parental investment behavior and that the program's impact is stronger for girls born to parents with strong preferences for boys.
Awe Culture and Corporate Social Responsibility: Evidence from Abortion Rates in China
Chao Yan et al.
Western Kentucky University Working Paper, January 2022
Abstract:
By proxying "awe culture" (i.e., reverence for life and ethical behavior) with regional induced abortion rates, we examine the impact of awe culture on corporate social responsibility (CSR) in a sample of Chinese firms. We find that firms located in areas with higher induced abortion rates spend less funds on CSR activities and obtain lower CSR scores. The findings remain intact after an array of robustness tests. Further analysis shows that the effect of awe culture on CSR is more pronounced in areas with weaker law enforcement and where the local government emphasizes economic growth targets. However, the effect becomes insignificant when firms are well-represented by top executives with overseas experience, foreign directors, and a high proportion of female board members. The significance of the effect also diminishes for non-state-owned firms, and firms with higher institutional ownership and higher cash holdings. Moreover, awe culture attenuates the positive impact of CSR on firm value. Overall, we document that awe culture, as an informal institution, shapes CSR behaviors.
Does Aid for Malaria Increase with Exposure to Malaria Risk? Evidence from Mining Sites in the D.R.Congo
Samuel Lordemus
Oxford Bulletin of Economics and Statistics, forthcoming
Abstract:
I examine the ability of donors to target the highest exposure to malaria risk when the health information structure is fragmented. I exploit local variations in the risk of malaria transmission induced by mining activities in the Democratic Republic of Congo as well as financial and epidemiological data from health facilities to estimate how local aid is matching the local malaria burden. Using fine-grained data on mines and health infrastructure in a regression discontinuity design, I find no evidence that local populations exposed to the highest risk of malaria transmission receive a proportionately higher share of aid compared to neighbouring areas with reduced exposure to malaria risk.
Social Skills Improve Business Performance: Evidence from a Randomized Control Trial with Entrepreneurs in Togo
Stefan Dimitriadis & Rembrand Koning
Management Science, forthcoming
Abstract:
Recent field experiments demonstrate that advice, mentorship, and feedback from randomly assigned peers improve entrepreneurial performance. These results raise a natural question: what is preventing entrepreneurs and managers from forming these peer connections themselves? We argue that entrepreneurs may be under-networked because they lack the necessary social skills-the ability to communicate effectively and interact collaboratively with new acquaintances-that allow them to match efficiently with knowledgeable peers. We use a field experiment in the context of a business training program in Togo to test if a short social skills training module increases the number and complementarity of peers that participants choose to learn from. We find that social skills training led entrepreneurs to match with 50% more peers and that more of those matches were based on complementary managerial skill. Finally, the training also increased entrepreneurs' monthly profits by approximately 20%. Further analyses point to improvements in networking and advice as the drivers of performance improvements. Our findings suggest that social skills help entrepreneurs build relationships that create value for both themselves and their peers.
Investing in the Next Generation: The Long-Run Impacts of a Liquidity Shock
Patrick Agte et al.
NBER Working Paper, March 2022
Abstract:
How do poor entrepreneurs trade off investments in business enterprises versus children's human capital, and how do these choices influence intergenerational socio-economic mobility? To examine this, we exploit experimental variation in household income resulting from a one-time relaxation of household liquidity constraints (Field et al., 2013), and track schooling and business outcomes over the subsequent 11 years. On average, treatment households, who were made wealthier through the experiment, increase human capital investment such that their children are 35% more likely to attend college. However, schooling gains only accrue to children with literate parents, among whom college attendance nearly doubles. In contrast, treatment effects on investment among the illiterate accrue only on the business margin and are accompanied by adverse educational outcomes for children. As a result, treatment lowers relative educational mobility. In a forecasting exercise, we find that earnings gains for literate households are four times larger than the earnings gains for illiterate households, raising earnings inequality. Our findings highlight how parental investment choices can contribute to a growth in intergenerational earnings inequality despite reductions in urban poverty.
Bridging the Gap: Evidence from the Return Migration of African Scientists
Caroline Viola Fry
Organization Science, forthcoming
Abstract:
Although prior research has highlighted the benefits that accrue to brokers in innovation networks, much less attention is devoted to understanding who benefits from associating with a broker. This study focuses on the impact of associating with a specific kind of broker - a core/periphery bridge - that is, one that spans central and peripheral actors. I argue that actors associated with a core/periphery bridge benefit more when they have no central connection, or are outsiders in the network, due to their greater need for sponsorship from the broker. I explore this idea in the context of the return migration of American-trained scientists to African institutions, who span the core and the periphery of the global scientific network. I evaluate the impact of their return on the publication outcomes of nonmigrant scientists based in African institutions and find that following the arrival of a returnee in their institution, the nonmigrants who are not already connected to scientists in top global institutions have a greater publication output through improved access to central knowledge and connections. The findings contribute to a better understanding of how brokers can influence innovation systems more broadly.