Findings

On the rise

Kevin Lewis

May 09, 2018

Property Rights to Frontier Land and Minerals: US Exceptionalism
Gary Libecap
NBER Working Paper, April 2018

Abstract:

Property rights are the most fundamental institution in any society. They determine who has decision-making authority over assets and who bears the costs and benefits of those decisions. They assign ownership, wealth, political influence, and social standing. They make markets possible; define timelines; and provide incentives for investment, innovation, and trade. They mitigate the losses of open access and provide the basis for long-term economic growth. Economists and economic historians have long recognized the importance of secure property rights for economic outcomes. Other political economy, philosophy, historical, and legal literatures emphasize different, but critical attributes based on how property rights are allocated and to whom. The linkages among the social, political, and economic effects are examined here with respect to US and Latin American frontier land and minerals. Property rights were sharply different across the two frontiers with apparent long-term consequences for economic growth, innovation, wealth distribution, private investment in public goods, as well as social and political stability. The distinct assignment of property rights to land and minerals is likely a basis for long-term US exceptionalism in economic performance, individualism, mobility, and optimism. The mechanisms through which property rights to land in a frontier society affect outcomes in a contemporary, highly urban one are complex. Because property rights to land were broadly distributed, Americans could participate in capital markets using land as collateral. This ability shaped opinions regarding markets, capitalism, and individual opportunity. In the 21st century, these critical attributes may be eroding, inviting more analysis from economists and economic historians.


Did Technology Transfer More Rapidly East-West than North-South?
Jamie Bologna Pavlik & Andrew Young
Texas Tech University Working Paper, March 2018

Abstract:

We offer evidence of the role of continental orientation in the historical diffusion of technologies. Diamond (1997) argued that technologies spread more slowly North-South than East-West for two reasons. First, it was relatively costly for individuals to transport innovations when experiencing North-South variations in climate. Second, some innovations (e.g, selectively bred seeds) would have been less likely to survive North-South movements. Continents with East-West orientation, then, were characterized by less costly and/or more successful sharing of technologies. We employ Comin et al.'s (2010) data on ancient and early modern levels of technology adoption in a spatial econometric analysis. Historical levels of technology adoption in a (present-day) country are related to its lagged level as well as those of its neighbors. We allow the spatial effects to differ depending on whether they diffuse East-West or North-South. Consistent with the continental orientation hypothesis, East-West spatial effects are generally positive and stronger than those running North-South.


Do only children have poor vision? Evidence from China's One‐Child Policy
Liqiu Zhao & Minghai Zhou
Health Economics, forthcoming

Abstract:

This paper examines whether only children have poor vision by exploiting the quasinatural experiment generated by the Chinese One‐Child Policy. The results suggest that being an only child increases the incidence of myopia by 9.1 percentage points. We further investigate the mechanisms through which being an only child affects the myopia and find that only children, as the only hope in a household, receive higher expectations in terms of academic performance and future educational attainment and pressure to succeed in life from parents, which contribute to the increased myopia. We also find that the school quality of only children is significantly higher than that of non‐only children. This study provides new insights into an important health consequence of One‐Child Policy in China.


Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data
Tasso Adamopoulos & Diego Restuccia
NBER Working Paper, April 2018

Abstract:

Why is agricultural productivity so low in poor countries relative to the rest of the world? Is it due to geography or constrained economic choices? We assess the quantitative role of geography and land quality for agricultural productivity differences across countries using high-resolution micro-geography data and a spatial accounting framework. Our rich spatial data provide in each cell of land covering the entire globe actual yields of cultivated crops and potential yields for 18 crops, which measure the maximum attainable output for each crop given soil quality, climate conditions, terrain topography, and a level of cultivation inputs. While there is considerable heterogeneity in land quality across space, even within narrow geographic regions, we find that low agricultural productivity in poor countries is not due to poor land endowments. If countries produced current crops in each cell according to potential yields, the rich-poor agricultural yield gap would virtually disappear, from more than 200 percent to less than 5 percent. We also find evidence of additional productivity gains attainable through the spatial reallocation of production and changes in crop choices.


Persistent shocks to urban density: Evidence from the Berlin air raids
Kalle Kappner
Economics Letters, July 2018, Pages 37-41

Abstract:

Temporary shocks can have persistent effects on the distribution of economic activity across urban space, suggesting considerable “stickiness” in adjustment to spatial equilibrium. I examine the long-run effect of World War II air raids on Berlin’s contemporary population density profile, exploiting random variation in the extent of damage caused at the scale of street blocks, while controlling for a flexible, secular time trend in the citywide density gradient. 70 years after the end of the war, blocks affected by irreparable damage feature significantly lower population density, while repairable damage had no lasting effect. These findings are consistent with a vintage effect, where large fixed costs associated with the construction of new buildings retard adjustment of the housing supply to growing demand for low-density structures.


“The Dust Was Long in Settling”: Human Capital and the Lasting Impact of the American Dust Bowl
Vellore Arthi
Journal of Economic History, March 2018, Pages 196-230

Abstract:

I find that childhood exposure to the Dust Bowl, an environmental shock to health and income, adversely impacted later-life human capital - especially when exposure was in utero - increasing poverty and disability rates, and decreasing fertility and college completion rates. The event's devastation of agriculture, however, had the beneficial effect of increasing high school completion, likely by pushing children who otherwise might have worked on the farm into secondary schooling. Lastly, New Deal spending helped remediate Dust Bowl damage, suggesting that timely and substantial policy interventions can aid in human recovery from natural disasters.


Wealth-destroying private property rights
Peter Leeson & Colin Harris
World Development, July 2018, Pages 1-9

Abstract:

According to conventional wisdom, privatizing the commons will create wealth. Yet in cases found throughout the developing world, privatizing the commons has destroyed wealth. To explain this phenomenon, we develop a theory of wealth-destroying private property rights. Privatization’s effect on social wealth depends on whether privatizing an asset confers net gains or imposes net losses on society. The decision to privatize, however, depends on whether privatizing an asset confers net gains or imposes net losses on property decision makers. When decision makers are residual claimants, these effects move in tandem; privatization occurs only if it creates social wealth. When decision makers are not residual claimants, these effects may diverge; privatization occurs if it benefits decision makers personally even if privatization destroys social wealth. We apply our theory to understand wealth-destroying land privatization in Kajiado, Kenya.


Social Capital, Government Expenditures and Growth
Giacomo Ponzetto & Ugo Troiano
NBER Working Paper, April 2018

Abstract:

This paper shows that social capital increases economic growth by raising government investment in human capital. We present a model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, we find it alleviates myopic political incentives to underinvest in human capital, and it helps the selection of politicians that ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility. We provide evidence consistent with the predictions of our model. Individuals with higher social capital are more informed about their government. Countries with higher social capital spend a higher share of output on public education.


Why Didn't the Common Law Follow the Flag?
Christian Burset
Virginia Law Review, forthcoming

Abstract:

This Article considers a puzzle about how different kinds of law came to be distributed around the world. The legal systems of some European colonies largely reflected the laws of the colonizer. Other colonies exhibited a greater degree of legal pluralism, in which the state administered a mix of different legal systems. Conventional explanations for this variation look to the extent of European settlement: where colonizers settled in large numbers, they chose to bring their own laws; otherwise, they preferred to retain preexisting ones. This Article challenges that assumption by offering a new account of how and why the British Empire selectively transplanted English law to the colonies it acquired during the eighteenth century. The extent to which each colony received English law depended on a political decision about what kind of colony policymakers wanted to create. Eighteenth-century observers agreed that English law could turn any territory into an anglicized, commercial colony on the model of Britain's North American settlements. Preserving preexisting laws, in contrast, would produce colonial economies that enriched the empire as a whole but kept local subjects poor and politically disadvantaged. By controlling how much English law each colony received, British officials hoped to shape its economic, political, and cultural trajectory. This historical account revises not only our understanding of how the common law spread but also prevailing ideas about law's place in development policy today.


Labor Scarcity, Finance, and Innovation: Evidence from Antebellum America
Yifei Mao & Jessie Jiaxu Wang
Cornell University Working Paper, March 2018

Abstract:

This paper establishes labor scarcity as an important economic channel through which access to finance shapes technological innovation. We exploit antebellum America, a unique setting with (1) staggered passage of free banking laws across states and (2) sharp differences in labor scarcity between slave and free states. We find that greater access to finance spurred technological innovation as measured by patenting activities, especially in free states where labor was relatively scarce. Interestingly, in slave states where slave labor was prevalent, access to finance encouraged technological innovation that substituted for free labor, but discouraged technological innovation that substituted for slave labor.


Infant Health, Women's Fertility, and Rural Electrification in the United States, 1930-1960
Joshua Lewis
Journal of Economic History, March 2018, Pages 118-154

Abstract:

From 1930 to 1960 rural communities, mainly in the U.S. South and Southwest, gained access to electricity. In addition to lights, the benefits included easier clothes washing, refrigeration, and pumped water. This article uses differences in the timing of electricity access across rural counties to study the effects on infant mortality and fertility. Rural electrification led to substantial reductions in infant mortality but had little effect on women's fertility. The increase in electricity access between 1930 and 1960 can account for 15 to 19 percent of the decline in rural infant mortality during this period.


Influences of Native American land use on the Colonial Euro-American settlement of the South Carolina Piedmont
Michael Coughlan & Donald Nelson
PLoS ONE, March 2018

Abstract:

We test the hypothesis that prehistoric Native American land use influenced the Euro-American settlement process in a South Carolina Piedmont landscape. Long term ecological studies demonstrate that land use legacies influence processes and trajectories in complex, coupled social and ecological systems. Native American land use likely altered the ecological and evolutionary feedback and trajectories of many North American landscapes. Yet, considerable debate revolves around the scale and extent of land use legacies of prehistoric Native Americans. At the core of this debate is the question of whether or not European colonists settled a mostly “wild” landscape or an already “humanized” landscape. We use statistical event analysis to model the effects of prehistoric Native American settlement on the rate of Colonial land grants (1749-1775). Our results reveal how abandoned Native American settlements were among the first areas claimed and homesteaded by Euro-Americans. We suggest that prehistoric land use legacies served as key focal nodes in the Colonial era settlement process. As a consequence, localized prehistoric land use legacies likely helped structure the long term, landscape- to regional-level ecological inheritances that resulted from Euro-American settlement.


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