Modern Economics
The Long-Lasting Effects of Experiencing Communism on Attitudes toward Financial Markets
Christine Laudenbach, Ulrike Malmendier & Alexandra Niessen-Ruenzi
Journal of Finance, April 2026, Pages 1103-1145
Abstract:
We show that exposure to anti-capitalist ideology can exert a lasting influence on attitudes toward capital markets and stock market participation. Using novel survey, bank, and broker data, we document that, decades after Germany's reunification, East Germans invest significantly less in stocks and hold more negative views on capital markets. Effects vary by personal experience under communism. Results are strongest for individuals who remember life in the German Democratic Republic positively, for example, those living in a “showcase city.” Results reverse for those with negative experiences like environmental pollution or lack of Western TV entertainment.
Time for Growth
Lars Boerner & Battista Severgnini
American Economic Journal: Macroeconomics, April 2026, Pages 523-560
Abstract:
This paper investigates the adoption, diffusion, and long-run impact of the public mechanical clock, one of the most important high-technology machines in history, on European economic growth and development. We avoid endogeneity by considering the relationship between the adoption of such clocks and an instrumental variable based on the appearance of repeated solar eclipses. Solar eclipses triggered a medieval cultural movement in which people sought to understand the motion of stars and clocks, which resulted in astronomic instruments and symbols of prestige. We find a significant increase in population, especially between 1500 and 1700, in early adopter cities.
English’s Significance: Exam Performance by Subject and Future Income in China
Ruixue Jia et al.
Journal of Development Economics, April 2026
Abstract:
Each year, millions of college applicants worldwide take standardized tests, with research consistently linking test performance to various life outcomes, notably career success. This study investigates the predictive power of subject test scores in China’s National College Entrance Exam (NCEE) on future income outcomes, analyzing administrative data for around 190,000 individuals born between 1980 and 1985. While Chinese, Math, and English all positively correlate with future income, English emerges as the most influential predictor. This influence remains consistent across different career stages, underscoring the enduring significance of English proficiency. Our results demonstrate the value of English skills over the past few decades in China, the largest developing country that was rapidly integrated into the global economy, and have implications for education policies beyond China.
The Law Is the Last to Know: Evidence That De Facto Progress Drives De Jure Women's Rights
Joshua Ammons & Daniel D'Amico
Kyklos, forthcoming
Abstract:
This paper examines how improvements in women's formal legal rights shape economic and social outcomes across countries. Using the Gender Disparity Index from the Economic Freedom of the World dataset, we analyze cases where countries experienced substantial increases in women's legal rights sustained for at least 5 years. Contrary to expectations, our findings show that such policy changes did not yield better economic and social outcomes. To explain these results, we demonstrate that the average annual gains in de facto property rights for women were greatest before these changes were codified into law. Formal legal advances follow, rather than drive, informal changes in women's social participation and economic roles. This study emphasizes the informal dependency of institutional change and its implications for economic development and social welfare.
From Capabilities to Peace: Can Mobile Money Reduce Conflicts in Developing Countries?
Alfred Michel Nandnaba
Economics & Politics, forthcoming
Abstract:
While armed conflict remains a major impediment to economic and political stability in developing countries, the potential role of digital financial inclusion, particularly mobile money, in mitigating violent conflict remains largely unexplored. This article examines the impact of mobile money adoption on armed conflict across 103 developing countries from 2000 to 2020, using the Entropy Balancing method to address selection bias. The findings show that mobile money significantly reduces violent conflicts, with an average decrease of 282 conflict-related deaths. These results remain robust across various sensitivity checks, including alternative model specifications, instrumental variable techniques to account for the reverse causality, and analyses of dynamic and spillover effects. The study also highlights important heterogeneity in the impact depending on the type of mobile money service, the country's level of development, the duration of the conflict, financial sector development, and geographic region. Moreover, it identifies key economic channels, including income, unemployment, inequality, and consumption volatility, through which mobile money contributes to the reduction of violent conflict. These findings underscore the strategic importance of digital financial services for promoting peace and fostering economic development in low- and middle- income countries.
Land Concentration and Long-Run Development in the Frontier United States
Cory Smith
American Economic Journal: Applied Economics, April 2026, Pages 1-33
Abstract:
I study the long-run economic effects of land concentration on the American frontier. Using quasi-random variation in initial land allocations from a checkerboard formula, I analyze a large database of property assessments and find that historical concentration reduced modern land values by 4.5 percent and fixed capital by 23 percent. Modern effect sizes are 23−64 percent of their historical equivalents, indicating significant rates of both persistence and convergence over the last 150 years. Using archival data on tenant contracts, I argue that the low-powered incentives of share agreements discouraged investment by large-scale owners with long-term effects.
How Equality Created Poverty in Preindustrial Japan, 1600–1870
Yuzuru Kumon
American Economic Journal: Applied Economics, April 2026, Pages 147-176
Abstract:
Despite well-developed economic institutions, premodern Japan, 1600–1868, had among the lowest real wages according to available estimates, around half those in preindustrial England. However, many Japanese peasants owned land, unlike their mostly landless English counterparts, due to institutional differences in land inheritance. Using a Malthusian model, I show that this greater landownership equality paradoxically led to Japan's lower wages and GDP per capita. Evidence from Japanese village censuses supports the mechanism. If, as many historians believe, high wages in Western Europe spurred industrialization, Japan's failure to industrialize first could have been shaped by its unusual preindustrial equality.
Seeing like a colony: The Virginia land surveyor
Peter Hazlett & Patrick Fitzsimmons
European Economic Review, May 2026
Abstract:
Surveyors in colonial Virginia were among the wealthiest members of society, with a social status rivaling that of members of the House of Burgesses and plantation owners. Many received large land grants from the Governor’s Council, which directly led to their wealth. We argue that allowing surveyors to acquire extensive land holdings advanced the colonial government’s ambition to expand the boundaries of the colony, most effectively achieved by settling people on the frontier. Surveyors, who had a comparative advantage in knowing the geography, location, and quality of unclaimed land, could reduce the measurement and search costs associated with locating fertile tracts. By granting property rights to the western frontier to surveyors, the government enabled them to identify the best lands and sell them to settlers, thereby lowering transaction costs in land markets. Using newly constructed data on Virginia surveyors, land grant records, and maps of surveyors’ land, we provide evidence of how surveyors acquired agriculturally productive land to sell to incoming settlers.
Success and failure in England's patent system: New evidence from patent applications, 1783–1834
Stephen Billington & Joe Lane
Economic History Review, forthcoming
Abstract:
Our understanding of the relationship between the English patent system and technical change during the industrial revolution is based entirely on the study of successful patents. We address this feature by providing the first study of unsuccessful patent applications in England during the first industrial revolution. The paper presents a new hand-collected dataset of 722 unsuccessful patent applications filed in England between 1783 and 1834, drawn from archival records of the Home Office. Combined with existing records of granted patents, we employ econometric analysis to empirically investigate the determinants of patent failure. Using natural language processing techniques to measure patent novelty, we find that more novel patents and patents originating from technological outsiders were more likely to fail. We also find early failure discouraged applicants from subsequent patenting attempts, although we find no evidence that failed applications were of a lower economic value than successful ones. Our findings are linked to a system of ex ante private opposition of patents, known as caveat opposition, specific to the English patent system at the time. We argue the caveat system served to block threatening competitors rather than filter out low-quality patents. Private opposition, therefore, likely impeded knowledge diffusion during Britain's industrial revolution.
Blessing from the Sage: Guan Yu Worship and Financial Development in China
Haoyuan Ding, Chang Xue & Yu Zhang
Journal of Law and Economics, February 2026, Pages 21-52
Abstract:
Guan Yu worship has been a significant cultural force in China for centuries, shaping norms that foster generalized trust and acting as an informal institution in economic activities. Our findings reveal that regions with a higher historical density of Guan temples tend to have deeper financial development. To address potential endogeneity, we use the distance of each prefecture from Guan Yu’s hometown as an instrumental variable. The instrumented results confirm the robustness of our findings. Further analysis indicates that the underlying mechanism driving these outcomes is the enhancement of interpersonal and interfirm trust.