Making the Economy
Markets under Mao: Measuring Underground Activity in the Early PRC
Adam Frost & Zeren Li
China Quarterly, forthcoming
Abstract:
In this article we develop and analyse novel datasets to retrace the persistence and scale of underground market activity in Maoist China. We show that, contrary to received wisdom, Chinese citizens continued to engage in market-based transactions long after “socialist transformation” was ostensibly complete, and that this activity constituted a substantial proportion of local economic output throughout the Maoist era. This helps to explain, in part, why, when markets were officially reopened in China, private economic activity took off. We arrive at these findings through the development and analysis of novel datasets based on unconventional historical sources -- namely, a collection of 2,690 cases of “speculation and profiteering” that were recovered from flea markets in eastern China. We show how these grassroots sources can be systematically analysed and used, in lieu of official statistical aggregates, to develop new insights into the macro workings of the Maoist economy.
Assimilation and economic development: The case of federal Indian policy
Melinda Miller
Public Choice, forthcoming
Abstract:
Throughout the nineteenth century, federal Indian policy oscillated between two extreme positions: assimilation versus isolation. While scholars have often been interested in the impact of past federal policy on current levels of economic development among American Indian tribes, none have explicitly examined the influence of federal assimilation policy on long-run economic development. In this paper, I take advantage of tribal-level variation in the application of federal policies to estimate the effect of assimilation on long-run economic performance. To quantify the impact of such policies, I introduce a novel measure of cultural assimilation: the prevalence of traditional indigenous names relative to common American first names. To calculate the distribution of name types, I have gathered the names and locations for all American Indians enumerated in the 1900 United States census. After classifying each name, I calculated the reservation-specific share of non-indigenous names. I estimate the relationship between cultural assimilation in 1900 and per capita income from 1970 through 2020. I find that historical levels of assimilation are consistently associated with higher levels of per capita income in all census years. The results are robust to the inclusion of a variety of cultural and institutional controls and regional fixed effects.
Long-run intergenerational health benefits of women empowerment: Evidence from suffrage movements in the US
Hamid Noghanibehambari & Farzaneh Noghani
Health Economics, forthcoming
Abstract:
An ongoing body of research documents that women empowerment is associated with improved outcomes for children. However, little is known about the long-run effects on health outcomes. This paper adds to this literature and studies the association between maternal exposure to suffrage reforms and children's old-age longevity. We utilize changes in suffrage laws across US states and over time as a source of incentivizing maternal investment in children's health and education. Using the universe of death records in the US over the years 1979–2020 and implementing a difference-in-difference econometric framework, we find that cohorts exposed to suffrage throughout their childhood live 0.6 years longer than unexposed cohorts. Furthermore, we show that these effects are not driven by preexisting trends in longevity, endogenous migration, selective fertility, and changes in the demographic composition of the sample. Additional analysis reveals that improvements in education and income are candidate mechanisms. Moreover, we find substantial improvements in early-adulthood socioeconomic standing, height, and height-for-age outcomes due to childhood exposure to suffrage movements. A series of state-level analyses suggest reductions in infant and child mortality following suffrage law change. We also find evidence that counties in states that passed the law experienced new openings of County Health Departments and increases in physicians per capita.
Assortative Mating on Only-Child Status and Accumulation of Economic Advantages in Contemporary China
Fangqi Wen
Ohio State University Working Paper, August 2023
Abstract:
This study examines a new type of assortative mating and its economic consequences. Previous research has suggested that people tend to marry someone similar to themselves, which potentially affects macro-level inequalities. In contemporary China, differential fertility, reinforced by the implementation of the One-Child Policy (1979-2015), has resulted in a situation that only children on average come from higher status families than individuals with siblings. As the only-child status signals more parental support and better inheritance prospects in the Chinese marriage market, I hypothesize that (1) net of other factors, only children have incentives to marry each other; (2) this kind of marital sorting further contributes to the economic advantages of only-child couples (both partners only children) over non-only-child couples. By adopting data from the China Family Panel Studies, I demonstrate that growing up as an only child has a positively significant effect on marrying another only child. In addition, by exploiting the plausibly exogenous shock of China's One-Child Policy, I show that only-child couples generally earn higher income, receive more monetary transfer, and own more expensive homes than other married couples. These findings reveal that the One-Child Policy unintentionally maintained or even enlarged disparities between advantaged and disadvantaged social groups.
Destruction from Above: Long-Term Legacies of the Tokyo Air Raids
Masataka Harada, Gaku Ito & Daniel Smith
Journal of Politics, forthcoming
Abstract:
Does war enhance or impede the long-term community-level development of social capital? While wartime mobilization and collective-action efforts might strengthen social ties, extreme destruction can potentially erase these effects. We use historical aerial photographs taken after the indiscriminate firebombing of Tokyo during World War II to measure conditionally independent micro-variation in neighborhood-level damages, and investigate the relationship between the amount of damages sustained and the present-day strength of neighborhood associations, a key indicator of geographically rooted social capital. Even after decades of population recovery, economic growth, and transformations of the urban space, the most heavily damaged neighborhoods continue to have less-organized neighborhood associations, and also exhibit lower socioeconomic well-being in terms of education, occupation, and residential stability. These findings are consistent with the idea that the social capital of survivors is a crucial ingredient for postwar recovery: when fewer survivors remain, communities can potentially be set on a path of persistent disadvantage.
Numeracy selectivity of Spanish migrants in colonial America (sixteenth–eighteenth centuries)
María del Carmen Pérez-Artés
Economic History Review, forthcoming
Abstract:
Since the arrival of Christopher Columbus in the so-called New World in 1492, hundreds of thousands of Spaniards settled in Central and South America. This paper assesses the skill selectivity of Spanish migrants who went to Hispanic America during the sixteenth to eighteenth centuries for the first time. The age-heaping method is employed to estimate numeracy levels as a proxy for human capital. With a database of 33 929 individual observations, the findings show that Spaniards who left the country to settle in the Spanish territories were positively self-selected. Additionally, differences are observed in the human capital of those who chose to settle in Mexico, who had a higher level of numeracy, than those who chose Peru. These differences might be due to the viceroyalty structure and educational institutions that encouraged the emigration of people with greater human capital to Mexico. Finally, when the level of numeracy of Spaniards in Hispanic America is compared with the numeracy of the total population, emigrants still had higher levels of human capital.
Culture, sovereignty, and the rule of law: Lessons from Indian country
Terry Anderson & Dominic Parker
Public Choice, forthcoming
Abstract:
The rule of law is a process whereby the citizens -- society -- are in a race with the state -- government -- to thread the needle between anarchy and despotism, or to live in “the narrow corridor,” as Acemoglu and Robinson (2019, Penguin Books) call it. In the narrow corridor, private and collective institutions balance the coercive power of the state necessary to prevent citizens from taking from one another with private control of resources and exchange that create gains from trade. We argue that pre-contact Native Americans, as residual claimants of rents created by rules of law embedded in cultural practices that achieved this balance, were able to build healthy economies based on clear property rights and exchange. During the early period of European contact, American Indians and Europeans continued to abide by rules of law that encouraged trading rather than raiding. By the nineteenth century, however, rules imposed by the federal government declared Indians to be “wards” of the state and replaced productive trading rules of law with predatory rent-seeking rules. Settler governments justified rent seeking on the grounds that tribal customs and cultures were lawless and inefficient, but a deeper understanding suggests that those more local institutions represented a rule of law that balanced collective action and private action in ways that encouraged investment and exchange. Ironically, federal laws have suppressed Indian liberties, caused abject poverty, and left jurisdictional gaps in the rule of law that have enabled disorder. We conclude that the path back to the narrow corridor requires granting American Indians the sovereignty that will make tribes residual claimants of rents created by productive rules of law of their own making.
State Capacity as an Organizational Problem. Evidence from the Growth of the U.S. State Over 100 Years
Nicola Mastrorocco & Edoardo Teso
NBER Working Paper, August 2023
Abstract:
We study how the organization of the state evolves over the process of development of a nation, using a new dataset on the internal organization of the U.S. federal bureaucracy over 1817-1905. First, we show a series of facts, describing how the size of the state, its presence across the territory, and its key organizational features evolved over the nineteenth century. Second, exploiting the staggered expansion of the railroad and telegraph networks across space, we show that the ability of politicians to monitor state agents throughout the territory is an important driver of these facts: locations with lower transportation and communication costs with Washington DC have more state presence, are delegated more decision power, and have lower employee turnover. The results suggest that high monitoring costs are associated with small, personalistic state organizations based on networks of trust; technological shocks lowering monitoring costs facilitate the emergence of modern bureaucratic states.
How do policymakers update their beliefs?
Eva Vivalt & Aidan Coville
Journal of Development Economics, October 2023
Abstract:
We present results from experiments run in collaboration with the World Bank and Inter-American Development Bank on how policymakers, policy practitioners, and researchers update their beliefs in response to results from academic studies. Initially, policymakers both believe development programs will have more positive results and are more certain about it than policy practitioners and researchers, despite reporting less familiarity with the programs. When participants are presented with the results of impact evaluations, we find evidence they update more on good news and are relatively insensitive to confidence intervals. We do not observe significant differences in biases between groups, and these biases cannot fully explain differences in beliefs.
Ethnolinguistic diversity, quality of local public institutions, and firm-level innovation
Chiara Natalie Focacci, Mitja Kovac & Rok Spruk
International Review of Law and Economics, September 2023
Abstract:
Institutional quality is crucial for innovation and economic growth. In this article, we exploit historical linguistic differences across Slovenian municipalities between the Italian, German, and Slovenian-speaking population prior to World War 1, as a plausible exogenous source of variation in firm-level innovation to estimate the effect of institutional quality on innovation. Employing a set of limited dependent variable and instrumental variable models, we show that greater historical exposure to multilingualism is associated with markedly better quality of government and provision of public goods, more impartial local government administration, and lower prevalence of corruption, which in turn predicts systematically more vibrant economic activity, greater economic complexity, and higher rates of firm-level innovation at the local level. The estimated effects are robust to a variety of specification checks and do not appear to be sensitive to the choice of ethnic and linguistic diversity measures.