More Modern
Cadasters and Economic Growth: A Long-Run Cross-Country Panel
Michelle D'Arcy, Marina Nistotskaya & Ola Olsson
Journal of Political Economy, forthcoming
Abstract:
Cadasters are public records of land ownership that facilitate clear assignment of property rights and land demarcation, thereby reducing transaction costs for economic agents and strengthening the state’s capacity to tax. Macro-level research on the evolution of formal land registration has largely been lacking. Using a novel dataset on the emergence and development of state-administered cadasters in 159 countries over the last millennium, we analyze empirically the association between the development of cadastral institutions and long-run economic growth. Our findings suggest a substantive positive effect of the introduction of cadasters on modern per capita income levels.
Inequality and the Industrial Revolution
Jakob Madsen & Holger Strulik
European Economic Review, May 2024
Abstract:
In this paper, we propose a new theory for why income inequality can be conducive to early industrial development. Technological advances in agriculture and population growth increase land rents relative to wages and as the landed elites become richer, demand for manufactured goods increases, which in turn facilitates industrialization. Using data for Britain over the period 1270–1940, we show that increasing inequality was a major contributor to the expansion of the manufacturing sector. Taking into account the more well-known drivers of modern growth, we find that inequality is a major contributor to the British Industrial Revolution, alongside foreign trade, education, technological knowledge and, to some extent, institutions.
Fertility and long-term economic growth
Kaixing Huang
Economic Inquiry, forthcoming
Abstract:
Empirical studies have generally found that higher fertility has a negative or insignificant effect on economic growth. This article argues that this is because existing studies have failed to capture the long-term lagged effects of fertility. By estimating a long-term lagged panel model using data from 137 countries, I find that higher fertility first reduces and then increases economic growth, and the long-term average effect is significantly positive. This finding is robust when focusing on countries at different development levels, exploiting exogenous fertility shocks from global family planning campaigns, and capitalizing on within-country fertility variation resulting from China's one-child policy.
Lithium-ion batteries and fertility in Africa
Maurizio Malpede
Journal of Population Economics, February 2024
Abstract:
This study investigates how the global adoption of modern electrical batteries influenced women’s fertility choices in the Democratic Republic of the Congo, a country rich in cobalt, an essential component of lithium-ion batteries. The findings reveal that women living in cobalt-rich villages experience higher fertility rates and a greater desire for children relative to those in non-cobalt-rich communities. I attribute this phenomenon to the use of children in cobalt mines, as opposed to other mineral mining activities, which leads to a short-term increase in household wealth and motivates parents to have more children. These results provide novel insights into our understanding of the complex relationship between economic development, natural resources, and fertility decisions in developing economies.
Aid Fragmentation and Corruption
Travers Child, Austin Wright & Yun Xiao
Review of Economics and Statistics, forthcoming
Abstract:
Aid fragmentation -- the simultaneous operation of multiple development agencies in one setting -- has long raised concerns about coordination challenges and opportunities for corruption. Leveraging unique data on project delivery in Afghanistan, we present the first microlevel empirical analysis of aid fragmentation. We find that aid delivered by a single donor can significantly reduce corruption. Projects delivered under conditions of aid fragmentation, by contrast, can facilitate corruption. We find evidence for a theoretical mechanism linking infrastructure and physical goods with waste and leakage. Our results clarify the policy losses tied to fragmentation, yielding insights for combating misappropriation of aid.
The role of institutions in shaping the growth-aid relationship
Carlos Bethencourt & Fernando Perera-Tallo
Journal of Macroeconomics, June 2024
Abstract:
Empirical evidence on the relationship between aid and economic growth is mixed and inconclusive. This paper proposes a theory to explain these contradictory findings. We build an endogenous growth model with a productive public good and homogeneous agents who allocate their time to both work and the appropriation of public resources. Aid increases public resources, raising the provision of the productive public good, but promotes rent-seeking. As recent empirical evidence suggests, a hump-shaped relationship between aid and growth emerges: too much aid is counterproductive for growth, particularly when institutions are weak. Aid transmits growth from the donor to the recipient country but harms income convergence and even prevents convergence among ex-ante identical countries when aid exceeds a certain threshold. Institutional improvements raise such a threshold. Thus, countries with lower income and lower institutional quality should receive less aid, unless an institutional reform is taken as a previous step to receive that aid.
Meritocracy across Countries
Oriana Bandiera et al.
NBER Working Paper, April 2024
Abstract:
Are labor markets in higher-income countries more meritocratic, in the sense that worker-job matching is based on skills rather than idiosyncratic attributes unrelated to productivity? If so, why? And what are the aggregate consequences? Using internationally comparable data on worker skills and job skill requirements of over 120,000 individuals across 28 countries, we document that workers' skills better match their jobs' skill requirements in higher-income countries. To quantify the role of worker-job matching in development accounting, we build an equilibrium matching model that allows for cross-country differences in three fundamentals: (i) the endowments of multidimensional worker skills and job skill requirements, which determine match feasibility; (ii) technology, which determines the returns to matching; and (iii) idiosyncratic matching frictions, which capture the role of nonproductive worker and job traits in the matching process. The estimated model delivers two key insights. First, improvements in worker-job matching due to reduced matching frictions account for only a small share of cross-country income differences. Second, however, improved worker-job matching is crucial for unlocking the gains from economic development generated by adopting frontier endowments and technology.
Early-Life Origins of Wartime Behaviour: The Irish Potato Famine and Desertion in the American Civil War
Dylan Potts
Comparative Political Studies, forthcoming
Abstract:
How does pre-war trauma impact battlefield behaviour? I study Irish troops in the American Civil War who experienced the Potato Famine over a decade prior. I use birth cohorts, sibling birth order, adult height, and the geography of last names in Ireland to measure famine exposure within the Irish group at the level of individual soldiers. Each strategy indicates that famine exposure increases desertion. Developing and testing observable implications from theory, I show that heightened risk aversion is the most plausible mechanism. Once soldiers are socialized into active combat through collective risk-sharing the famine effect dissipates. This research contributes to our understanding of the causes of contentious behaviour, how the behavioural legacies of atrocities play-out sans partisanship, and the importance of pre-migration experiences.
Knowledge Access: The Effects of Carnegie Libraries on Innovation
Enrico Berkes & Peter Nencka
Review of Economics and Statistics, forthcoming
Abstract:
Between 1883 and 1919, Andrew Carnegie funded the construction of over 1,500 public libraries across the United States, reducing the costs of accessing knowledge for millions. We study the effect of these libraries on innovation. Patenting in recipient places increased on average by 10–12 percent in the 20 years following library construction relative to a novel control group of cities that applied for but did not build libraries. We show that access to scientific knowledge and increased collaboration opportunities are possible mechanisms.
Gaining Steam: Incumbent Lock-in and Entrant Leapfrogging
Richard Hornbeck et al.
NBER Working Paper, April 2024
Abstract:
We examine the long transition from water to steam power in US manufacturing, focusing on early users of mechanical power: lumber and flour mills. Digitizing Census of Manufactures manuscripts for 1850 to 1880, we show that as steam costs declined, manufacturing activity grew faster in counties with less waterpower potential. This growth was driven by steam powered entrants and agglomeration, as water powered incumbents faced switching barriers primarily from sunk costs. Estimating a dynamic model of firm entry and steam adoption, we find that the interaction of switching barriers and high fixed costs creates a quantitatively important and socially inefficient drag on technology adoption. Despite substantial entry and exit, switching barriers remained influential for aggregate steam adoption throughout the 19th century, as water power required lower fixed costs and therefore was attractive to relatively low productivity entrants. These entrants then became incumbents, locked into water power even if their productivity grew.