Modernization
Closing the Productivity Gap with the US: Causes and Consequences of the Productivity Program in Western Europe
Michela Giorcelli
NBER Working Paper, December 2023
Abstract:
This paper studies to what extent the transfer of US managerial technologies to Europe after World War II contributed to closing the gap with US businesses. Between 1952 and 1958, the US government sponsored the Productivity Program, which promoted management training trips for European managers at US firms. Through the analysis of reports compiled by UK, France, Germany, and Italian participating firms, I first document that these companies claimed between 5 and 10% yearly productivity increase thanks to the program. The fact that European businesses were not forced to adopt the American management model, but could adapt it to their firm needs and existing business practices was a key aspect of the program’s success. Second, using data on US and Italian participating firms’ performance I show that Italian firms grew on average 7.8 percent faster than that of US companies in the ten years after the start of the program. Moreover, the distribution of productivity of Italian and US firms became more similar over years, confirming a performance convergence between these companies.
Sunlight, culture and state capacity
Roberto Ezcurra
Kyklos, forthcoming
Abstract:
This paper examines the impact of ultraviolet radiation (UV-R) on state capacity. The results indicate that the intensity of UV-R is a strong predictor of cross-country differences in state capacity. Countries with a higher degree of UV-R exposure tend on average to have weaker states. This finding remains unaffected after controlling for different variables that may be correlated with both UV-R and state capacity, including an extensive set of geographical, historical and contemporary factors. The observed link between sunlight and state capacity is not driven by potential outliers and is robust to the employment of alternative measures of state capacity, estimation methods and other sensitivity checks. Furthermore, the analysis also reveals that the individualistic–collectivist dimension of culture acts as a transmission channel connecting UV-R and state capacity. The estimates show that a lower degree of UV-R exposure leads to the adoption of individualistic values, which in turn contribute to the development of state capacity.
Enlightenment Ideals and Belief in Progress in the Run-Up to the Industrial Revolution: A Textual Analysis
Ali Almelhem et al.
University of Colorado Working Paper, December 2023
Abstract:
Using textual analysis of 173,031 works printed in England between 1500 and 1900, we test whether British culture evolved to manifest a heightened belief in progress associated with science and industry. Our analysis yields three main findings. First, there was a separation in the language of science and religion beginning in the 17th century. Second, scientific volumes became more progress-oriented during the Enlightenment. Third, industrial works -- especially those at the science-political economy nexus -- were more progress-oriented beginning in the 17th century. It was therefore the more pragmatic, industrial works which reflected the cultural values cited as important for Britain's takeoff.
Misallocation, productivity and development with endogenous production techniques
Burak Uras & Ping Wang
Journal of Development Economics, forthcoming
Abstract:
We study misallocation and sectoral productivity in a heterogeneous firms model with generalized production. Different from neo-classical models of production, our model endogenizes production-techniques and introduces firm-specific technique-distortions alongside factor- and scale-dependent distortions. Applying this micro-founded framework to firm-level data (US, China and India), we quantify that, for a broad range of manufacturing industry clusters, technique distortions generate more severe misallocation and sectoral TFP losses than capital and output distortions, accounting for about three quarters of the detrimental productivity effects. We thus uncover a quantitatively important channel for productivity growth and economic development resulting from within-firm organization of production.
What Happens When the States Regulate First? Analyzing Governance of the Telegraph Industry in the Antebellum United States
Srinivas Parinandi
Journal of Historical Political Economy, July 2023, Pages 277-303
Abstract:
Studies of regulation in the United States often assume that the federal government has been the major initiator of regulatory behavior and that the emergence of a regulatory state has been a modern phenomenon. This view, to some degree, belies the experience of the U.S. states, who engaged in regulatory behavior prior to the Civil War. In this paper, I utilize data on the adoption of telegraph regulation policies by the U.S. states in the 1840s and 1850s (when the telegraph was new and cutting-edge technology) in an attempt to gain purchase on what explains the rise of regulatory behavior in an era considered to be largely devoid of such activity. Using pooled event history analysis to fully capture temporal and cross-sectional variation in state policy adoption activity and employing a bevy of explanatory variables across multiple empirical specifications, I find evidence suggesting that the emergence of mass public schooling corresponds with a greater likelihood of regulatory behavior. I argue that mass schooling (usually financed through public taxation) helped create legitimacy in the view that government should utilize policymaking power toward the public good, which furthered regulatory behavior. I find additional evidence that public schooling also corresponds with state enactment of three progressive policies: allowing the general incorporation of firms, allowing married women to own property, and allowing for homestead exemption for debt obligations. The result potentially sheds light on the emergence of regulatory behavior in the U.S. states in the nineteenth century and may help us understand attempts to deprofessionalize American state government in the twenty-first century.
Nothing Gold Can Stay: Artisanal Mine Certifications and Conflict Dynamics in the Congo
Samuel Chang & Hans Bonde Christensen
University of Chicago Working Paper, December 2023
Abstract:
We examine how conflict-free certifications for artisanal mines -- used to comply with provision 1502 of the Dodd-Frank Act -- affect conflict dynamics in the Eastern Democratic Republic of the Congo (DRC). Certifications are associated with a 9.4% (16.4%) reduction in armed group–initiated conflicts (fatalities) within a 10-kilometer radius of gold mines. After certifications, there is no aggregate reduction in conflict intensity in Eastern DRC territories, but conflicts intensify further away from certified mines, consistent with certifications displacing, not reducing, conflicts. These findings illustrate that supply-chain certification programs can meaningfully influence conflict dynamics even if they are unable to resolve complex geopolitical challenges such as the humanitarian crisis in the DRC.
Reassessing China’s Rural Reforms: The View from Outer Space
Joel Ferguson & Oliver Kim
University of California Working Paper, November 2023
Abstract:
We study one of the central reforms in China’s economic miracle, the Household Responsibility System (HRS), which decollectivized agriculture starting in 1978. The HRS is commonly seen as having significantly boosted agricultural productivity -- but this conclusion rests on unreliable official data. We use historical satellite imagery to generate new measurements of grain yield, independent of official Chinese statistics. Using two separate empirical designs that exploit the staggered rollout of the HRS across provinces and counties, we find no causal evidence that areas that adopted the HRS sooner experienced faster grain yield growth. These results challenge our conventional understanding of decollectivization, land reform, and the origins of the Chinese miracle.
Epidemics, disease control, and China’s long-term development
Jun Wang & James Ang
Journal of Comparative Economics, forthcoming
Abstract:
This study examines the impact of historical disease burden on the development of contemporary China. Using historical records spanning nearly six centuries, we construct a county-level dataset for the distribution of epidemics in China. Our results indicate that historical disease pressure has a positive impact on long-term economic development. This positive association withstands rigorous testing through a series of robustness checks. Furthermore, we find that earlier institutional development in disease control and the improvement in human capital are effective channels. The establishment of disease prevention centers facilitated the early adoption of modern disease control systems, which, in turn, enhanced public health, education, and productive activities.
Can geography explain Quebec's historical poverty?
Vincent Geloso & Louis Rouanet
Southern Economic Journal, forthcoming
Abstract:
From the 19th century to the 1940s, Quebec remained poorer and less economically developed than the rest of Canada in general, and than Ontario in particular. This placed Quebec at the bottom of North American rankings of living standards. One prominent hypothesis for the initiation of this gap is tied to disparities in agricultural land quality. We formally test this hypothesis using newly available data for the mid-19th century and find it holds little explanatory power. We further argue that poor institutions in Quebec, notably seigneurial tenure, were at the root of the development gap and that the effect of land quality on living standards was institutionally contingent.
The Curse of Plenty: The Green Revolution and the Rise in Chronic Disease
Sheetal Sekhri & Gauri Kartini Shastry
American Economic Journal: Applied Economics, forthcoming
Abstract:
The rising rate of chronic disease is a leading driver of the global disease burden. Yet its determinants are not fully understood. We examine the unanticipated contribution of the Green Revolution to the rise in chronic, diet-related diseases by exploiting the faster adoption of high-yield rice and wheat in groundwater-rich districts in India. We find that boys exposed to the Green Revolution during gestation and early childhood in areas with greater adoption of new staple varieties were more likely to develop diabetes as adults. Exploring mechanisms, we find that the impact on diabetes differs in households with different dietary habits. We detect no impact on non-diet-related chronic diseases, such as cancer, asthma, and tuberculosis. We conclude that dietary changes can undermine the long-term health benefits of positive income shocks in early childhood, highlighting the need for agricultural and public health policy to emphasize dietary diversity in addition to calorie availability.
Accountability failure in isolated areas: The cost of remoteness from the capital city
Sandro Provenzano
Journal of Development Economics, March 2024
Abstract:
This paper documents that in Sub-Saharan Africa areas isolated from the capital city are less economically developed and examines potential underlying mechanisms. We apply a boundary-discontinuity design using national borders that divide pre-colonial ethnic homelands to obtain quasi-experimental variation in distance to the national capital city. We find that a one percent increase in distance to the capital city causes a decrease in the probability of detecting nightlights by 0.12 times the average probability to be lit, or to a reduction in household wealth corresponding to 3.5 percentiles of the national wealth distribution. Our results suggest that a lower provision of public goods in isolated areas is a key link between remoteness and economic performance. Despite receiving worse services, people who are isolated exhibit a higher level of trust in their political leaders. Further, isolated citizens consume the news less frequently and penalize their leaders less for misgovernance. We interpret these findings as pointing towards dysfunctional accountability mechanisms that reduce the incentives of vote-maximizing state executives to invest into isolated areas.
Long-run Impacts of Forced Labor Migration on Fertility Behaviors: Evidence from Colonial West Africa
Pascaline Dupas et al.
NBER Working Paper, December 2023
Abstract:
Is the persistently high fertility in West Africa today rooted in the decades of forced labor migration under colonial rule? We study the case of Burkina Faso, considered the largest labor reservoir in West Africa by the French colonial authorities. Hundreds of thousands of young men were forcibly recruited and sent to work in neighboring colonies for multiple years. The practice started in the late 1910s and lasted until the late 1940s, when forced labor was replaced with voluntary wage employment. We digitize historical maps, combine data from multiple surveys, and exploit the historical, temporary partition of colonial Burkina Faso (and, more specifically, the historical land of the Mossi ethnic group) into three zones with different needs for labor to implement a spatial regression discontinuity design analysis. We find that, on the side where Mossi villages were more exposed to forced labor historically, there is more temporary male migration to Côte d'Ivoire up to today, and lower realized and desired fertility today. We show evidence suggesting that the inherited pattern of low-skill circular migration for adult men reduced the reliance on subsistence farming and the accompanying need for child labor. We can rule out women's empowerment or improvements in human and physical capital as pathways for the fertility decline. These findings contribute to the debate on the origins of family institutions and preferences, often mentioned to explain West Africa's exceptional fertility trends, showing that fertility choices respond to changes in modes of production.