Findings

Lowly Places

Kevin Lewis

January 04, 2023

Wellbeing Rankings
David Blanchflower & Alex Bryson
NBER Working Paper, December 2022

Abstract:

Combining data on around four million respondents from the Gallup World Poll and the US Daily Tracker Poll we rank 164 countries, the 50 states of the United States and the District of Colombia on eight wellbeing measures. These are four positive affect measures -- life satisfaction, enjoyment, smiling and being well-rested -- and four negative affect variables -- pain, sadness, anger and worry. Pooling the data for 2008-2017 we find country and state rankings differ markedly depending on whether they are ranked using positive or negative affect measures. The United States ranks lower on negative than positive affect, that is, its country wellbeing ranking looks worse using negative affect than it does when using positive affect. Combining rankings on all eight measures into a summary ranking index for 215 geographical locations we find that nine of the top ten and 16 of the top 20 ranked are US states. Only one US state ranks outside the top 100 -- West Virginia (101). Iraq ranks lowest -- just below South Sudan. Country-level rankings on the summary wellbeing index differ sharply from those reported in the World Happiness Index and are more comparable to those obtained with the Human Development Index.


Industrial Gold Mining and Female Empowerment
Anja Benshaul-Tolonen
Economic Development and Cultural Change, forthcoming 

Abstract:

Does industrial development affect female empowerment? This paper explores the causal effects of a continent-wide expansion of a modern industry on female empowerment. Identification relies on plausibly exogenous spatial-temporal variation in gold mining in Africa. The establishment of industrial-scale mines induces female empowerment -- justification of domestic violence decreases by 19%, women have better access to healthcare (23%), and are 31% more likely to work in services -- alongside rapid economic growth. The changes are not limited to subgroups, and are present across women of all ages and migration status. There are no clear changes in attitudes held by men -- who are on average less likely to endorse violence -- leading to a smaller gender gap in justification of violence. Despite fears that a positive shock to a male dominated sector would reduce women’s bargaining power in the household, no such change is observed. Results survive several robustness checks relating to trends and treatment distances, and are supported by results on community development, including night light and health care access.


Local economic growth and infant mortality
Andreas Kammerlander & Günther Schulze
Journal of Health Economics, January 2023 

Abstract:

We estimate the effect of local economic growth on infant mortality. We use geo-referenced data for non-migrating mothers from 46 developing countries and a total of 128 DHS survey rounds and combine it with nighttime luminosity data at a granular level. Using mother fixed effects we show that an increase in local economic activity significantly reduces the probability that the same mother loses a child before its first birthday.


Life expectancy and human capital: New empirical evidence
Trung Vu
Health Economics, February 2023, Pages 395-412 

Abstract:

This paper re-examines a well-established hypothesis postulating that life expectancy augments incentives for human capital accumulation, leading to global income differences. A major distinguishing feature of the current study is to estimate heterogeneous panel data models under a common factor framework, which explicitly accounts for parameter heterogeneity, unobserved common factors (UCFs), and variables' non-stationarity. In sharp contrast to most previous studies, I find that the impact of health improvements on human capital accumulation turns out to be imprecisely estimated at conventionally accepted levels of statistical significance. I demonstrate that conventional estimates of the educational returns to rising longevity are derived from estimating misspecified models at least partially due to parameter heterogeneity and the presence of UCFs.


Ongoing trends of human intelligence
Gerhard Meisenberg & Richard Lynn
Intelligence, January-February 2023 

Abstract:

The aim of the study is to estimate the most recent trends of intelligence world-wide. We find that the most recent studies report mainly positive Flynn effects in economically less developed countries, but trivial and frequently negative Flynn effects in the economically most advanced countries. This is confirmed by an analysis of 48 countries in the 2000–2018 PISA tests, showing that high pre-existing IQ and school achievement are the best predictors of declining test scores. IQ gaps between countries are still large (e.g., 19 IQ points in PISA between East Asia and South Asia) but are diminishing world-wide. We predict that these trends, observed in adolescents today, will reduce cognitive gaps between the working-age populations of countries and world regions during coming decades. As is predicted by the well-established relationship between intelligence and economic growth, there is already evidence that the ongoing cognitive convergence is paralleled by global economic convergence. These developments raise questions as to how long this cognitive and economic convergence will continue, whether it will eliminate cognitive and economic gaps between countries entirely, and whether a condition with high levels of cognitive ability and economic prosperity is sustainable long-term.


Did Caselaw Foster England's Economic Development During the Industrial Revolution? Data and Evidence
Peter Murrell & Peter Grajzl
University of Maryland Working Paper, November 2022 

Abstract:

We generate and analyze data pertinent to the role of caselaw in England's economic development during the Industrial Revolution. Applying topic modeling to a corpus of 67,455 reports on English court cases, we construct annual time series of caselaw developments between 1765 and 1865. We then add a real per-capita GDP series to our caselaw series and estimate a structural VAR. Caselaw shocks account for more of the variability in per-capita GDP than do shocks directly to per-capita GDP. The response of per-capita GDP to caselaw innovations critically depends on the legal domain. Developments in caselaw on intellectual property, organizations, debt and finance, and inheritance exerted positive effects while developments in property and ecclesiastical caselaw reduced per-capita GDP. Our analysis uncovers a 'bleak law era' when the legal system misallocated attention between development-promoting and development-hindering areas of law.


Picking Winners? Government Subsidies and Firm Productivity in China
Lee Branstetter, Guangwei Li & Mengjia Ren
NBER Working Paper, December 2022 

Abstract:

Are Chinese industrial policies making the targeted Chinese firms more productive? Alternatively, are efforts to promote productivity undercut by efforts to maintain or expand employment in less productive enterprises? In this paper, we attempt to shed light on these questions through the analysis of previously underutilized microdata on direct government subsidies provided to China’s publicly traded firms. We categorize subsidies into different types. We then estimate total-factor productivity (TFP) for Chinese listed firms and investigate the relationship between these estimates of TFP and the allocation of government subsidies. We find little evidence that the Chinese government consistently “picks winners”. Firms’ ex-ante productivity is negatively correlated with subsidies received by firms, and subsidies appear to have a negative impact on firms’ ex-post productivity growth throughout our data window, 2007 to 2018. Neither subsidies given out under the name of R&D and innovation promotion nor industrial and equipment upgrading positively affect firms’ productivity growth. On the other hand, we find a positive impact of subsidy on current year employment, both for the aggregated and employment-related subsidies. These findings suggest that China’s increasingly prescriptive industrial policies may have generated limited effects in promoting productivity.


Financial Consequences of the Belt and Road Initiative
Mehmet Canayaz
Pennsylvania State University Working Paper, November 2022 

Abstract:

As the largest-ever infrastructure project, China’s Belt and Road Initiative (BRI) is expected to reshape the global economy for the coming decades. This paper provides the first analysis of BRI's effects on financial markets and real economic activity in Europe. It exploits the opening of a subway tunnel under Istanbul's Bosporus Strait that geographically positions nearby countries on BRI's railway corridor. Governments of countries that gain access to BRI respond by sharply increasing sovereign debt issuance and devoting resources to collective consumption spending rather than much-needed infrastructure investments. In these countries, outlooks for inflation, financial stability, and economic uncertainty worsen, and sovereign yields surge. Businesses issue less debt, lower capital investments, and observe reductions in their valuations. Additional findings on foreign aid, international trade, and BRI program membership highlight China's growing footprint in corridor economies.


Industrial Clusters in the Long Run: Evidence from Million-Rouble Plants in China
Stephan Heblich et al.
NBER Working Paper, December 2022 

Abstract:

We identify negative spillovers exerted by large, successful manufacturing plants on other local production facilities in China. A short-lived alliance between the U.S.S.R. and China led to the construction of 150 "Million-Rouble plants" in the 1950s. Our identification strategy exploits the ephemeral geopolitical context and the relative position of allied and enemy airbases to isolate exogenous variation in plant location decisions. We find a boom-and-bust pattern in hosting counties: treated counties are twice as productive as control counties in 1982, but 30% less productive in 2010. The average other establishment in treated counties is unproductive, does not innovate, and charges high markups. We find that (over)specialization limits technological spillovers. This prevents the emergence of new industrial clusters and leads to a flight of entrepreneurs.


The Employment Effects of Mobile Internet in Developing Countries
Gaurav Chiplunkar & Pinelopi Koujianou Goldberg
NBER Working Paper, December 2022

Abstract:

We examine the employment effects of 3G mobile internet expansion in developing countries. We find that 3G significantly increases the labor force participation rate of women and the employment rates of both men and women. Our results suggest that 3G affects the type of jobs and there is a distinct gender dimension to these effects. Men transition away from unpaid agricultural work into operating small agricultural enterprises, while women take more unpaid jobs, especially in agriculture, and operate more small businesses in all sectors. Both men and women are more likely to work in wage jobs in the service sector.


Predatory Rulers, Credible Commitment, and Tax Compliance in the Ottoman Balkans
Yusuf Magiya
Journal of Historical Political Economy, Summer 2022, Pages 263-297 

Abstract:

This paper explores how the wealthy's tax evasion behavior is shaped by the level of rule of law, and its consequences for fiscal capacity building. In contexts with lower respect for the rule of law and weaker property rights, the possibility of rulers' predatory behavior inclines wealth holders to shelter their wealth, decreasing tax compliance. Such wealth sheltering is especially common during wartime when rulers confiscate assets to fund the war. With wealth sheltering, it is unlikely that the rulers will invest in fiscal capacity building since there will be no sufficient assets to make such an investment optimal. Under stronger rule of law and property rights, the constraints on the rulers' predatory behavior provides higher security for wealth holders and makes them less likely to shelter wealth, bringing higher tax compliance. This compliance makes it more likely that rulers can increase fiscal revenues during war and therefore will be more likely to invest in fiscal capacity. Empirically, the paper uses an original dataset of Ottoman waqfs in modern-day Greece and Bulgaria between 1600 and 1912 in addition to annual Ottoman fiscal revenue data. Results indicate that wars increase wealth sheltering under weaker rule of law, while they do not under stronger rule of law. Furthermore, while wars do not increase fiscal revenues under weaker rule of law, they increase fiscal revenues under stronger rule of law. In other words, war does not make the state under weak rule of law, but does make the state under strong rule of law and security of property. The paper, thus, outlines a dilemma for the rulers: In order to be able to increase fiscal revenues and strengthen the state in the long term, they need to tie their own hands and forgo their predatory ability that can provide them revenues in the short term.


Selective mortality and fertility and long run health effects of prenatal wartime exposure
Reyn van Ewijk & Maarten Lindeboom
Economics & Human Biology, December 2022 

Abstract:

Many previous studies have shown that prenatal exposure to adverse historical circumstances negatively affects long-run health. Most women who are pregnant during wars experience clearly adverse circumstances that are however not as harsh as the typically studied extreme episodes such as famines, combat and wide-scale destruction. We show that prenatal exposure to World War II (WWII) in five Western European countries did not lead to a population-wide poorer health among the elderly. We even find indications of a better than expected health. This is likely due to selective fertility and mortality. We attempt to quantify these selection effects and show that when taking them into account, the initially positively estimated health effects on almost all outcomes are substantially attenuated. Selective mortality and fertility likely occur in similar directions for many historical episodes of adversity. Our results therefore suggest that a part of the previous research on such exposures likely under estimated the true sizes of the long-run effects.


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