This paper uses a natural experiment to estimate the causal effect of temporary trade protection on long-term economic development. I find that regions in the French Empire which became better ...protected from trade with the British for exogenous reasons during the Napoleonic Wars (1803–1815) increased capacity in mechanized cotton spinning to a larger extent than regions which remained more exposed to trade. In the long run, regions with exogenously higher spinning capacity had higher activity in mechanized cotton spinning. They also had higher value added per capita in industry up to the second half of the nineteenth century, but not later.
The United States has long been perceived as a land of opportunity for immigrants. Yet, both in the past and today, US natives have expressed concern that immigrants fail to integrate into US society ...and lower wages for existing workers. This paper reviews the literatures on historical and contemporary migrant flows, yielding new insights on migrant selection, assimilation of immigrants into US economy and society, and the effect of immigration on the labor market.
This paper examines the relationship between US crude oil and stock market prices, using a Markov-Switching vector error-correction model and a monthly data set from 1859 to 2013. The sample covers ...the entire modern era of the petroleum industry, which typically begins with the first drilled oil well in Titusville, Pennsylvania in 1858. We estimate a two-regime model that divides the sample into high- and low-volatility regimes based on the variance–covariance matrix of the oil and stock prices. We find that the high-volatility regime more frequently exists prior to the Great Depression and after the 1973 oil price shock caused by the Organization of Petroleum Exporting Countries. The low-volatility regime occurs more frequently when the oil markets fell largely under the control of the major international oil companies from the end of the Great Depression to the first oil price shock in 1973. Using the National Bureau of Economic research business cycle dates, we also find that the high-volatility regime more likely occurs when the economy experiences a recession.
•Examines the relationship between US crude oil and stock market prices•Estimate two-regime Markov switching model with high- and low-volatility regimes•High-volatility regime more likely before Great Depression and after 1973 oil shock•Low-volatility regime more likely between Great Depression to 1973 oil shock•High-volatility regime more likely when economy in a recession
This article attempts to document and account for the long-run evolution of inheritance. We find that in a country like France the annual flow of inheritance was about 20—25% of national income ...between 1820 and 1910, down to less than 5% in 1950, and back up to about 15% by 2010. A simple theoretical model of wealth accumulation, growth, and inheritance can fully account for the observed U-shaped pattern and levels. Using this model, we find that under plausible assumptions the annual bequest flow might reach about 20—25% of national income by 2050. This corresponds to a capitalized bequest share in total wealth accumulation well above 100%. Our findings illustrate the fact that when the growth rate g is small, and when the rate of return to private wealth r is permanently and substantially larger than the growth rate (say, r = 4—5% versus g = 1—2%), which was the case in the nineteenth century and early twentieth century and is likely to happen again in the twenty-first century, then past wealth and inheritance are bound to play a key role for aggregate wealth accumulation and the structure of lifetime inequality. Contrary to a widespread view, modern economic growth did not kill inheritance.
This research advances and empirically establishes the hypothesis that, in the course of the prehistoric exodus of Homo sapiens out of Africa, variation in migratory distance to various settlements ...across the globe affected genetic diversity and has had a persistent hump-shaped effect on comparative economic development, reflecting the trade-off between the beneficial and the detrimental effects of diversity on productivity. While the low diversity of Native American populations and the high diversity of African populations have been detrimental for the development of these regions, the intermediate levels of diversity associated with European and Asian populations have been conducive for development.
States use repression to enforce obedience, but repression—especially if it is violent, massive, and indiscriminate—often incites opposition. Why does repression have such disparate effects? We ...address this question by studying the political legacy of Stalin’s coercive agricultural policy and collective punishment campaign in Ukraine, which led to the death by starvation of over three million people in 1932–34. Using rich micro-level data on eight decades of local political behavior, we find that communities exposed to Stalin’s “terror by hunger” behaved more loyally toward Moscow when the regime could credibly threaten retribution in response to opposition. In times when this threat of retribution abated, the famine-ridden communities showed more opposition to Moscow, both short- and long-term. Thus, repression can both deter and inflame opposition, depending on the political opportunity structure in which post-repression behavior unfolds.
Why Enlightenment culture sparked the Industrial Revolution During the late eighteenth century, innovations in Europe triggered the Industrial Revolution and the sustained economic progress that ...spread across the globe. While much has been made of the details of the Industrial Revolution, what remains a mystery is why it took place at all. Why did this revolution begin in the West and not elsewhere, and why did it continue, leading to today's unprecedented prosperity? In this groundbreaking book, celebrated economic historian Joel Mokyr argues that a culture of growth specific to early modern Europe and the European Enlightenment laid the foundations for the scientific advances and pioneering inventions that would instigate explosive technological and economic development. Bringing together economics, the history of science and technology, and models of cultural evolution, Mokyr demonstrates that culture—the beliefs, values, and preferences in society that are capable of changing behavior—was a deciding factor in societal transformations. Mokyr looks at the period 1500–1700 to show that a politically fragmented Europe fostered a competitive "market for ideas" and a willingness to investigate the secrets of nature. At the same time, a transnational community of brilliant thinkers known as the “Republic of Letters” freely circulated and distributed ideas and writings. This political fragmentation and the supportive intellectual environment explain how the Industrial Revolution happened in Europe but not China, despite similar levels of technology and intellectual activity. In Europe, heterodox and creative thinkers could find sanctuary in other countries and spread their thinking across borders. In contrast, China’s version of the Enlightenment remained controlled by the ruling elite. Combining ideas from economics and cultural evolution, A Culture of Growth provides startling reasons for why the foundations of our modern economy were laid in the mere two centuries between Columbus and Newton. Joel Mokyr is the Robert H. Strotz Professor of Arts and Sciences and professor of economics and history at Northwestern University and Sackler Professor at the Eitan Berglas School of Economics at the University of Tel Aviv. His many books include The Enlightened Economy and The Gifts of Athena (Princeton). He is the recipient of the Heineken Prize for History and the International Balzan Prize for Economic History.
The Gun-Slave Hypothesis is the long-standing idea that European gunpowder technology played a key role in growing the transatlantic slave trade. I combine annual data from the Transatlantic Slave ...Trade Database and the Anglo–African Trade Statistics to estimate a Vector Error Correction Model of the 18th century British slave trade that captures four versions of the Gun-Slave Hypothesis: guns-for-slaves-in-exchange, guns-for-slaves-in-production, slaves-for-guns-derived and the gun-slave cycle. Three econometric results emerge. (1) Gunpowder imports and slave exports were co-integrated in a long-run equilibrium relationship. (2) Positive deviations from equilibrium gunpowder “produced” additional slave exports. This guns-for-slaves-in-production result survives 17 placebo tests that replace gunpowder with non-lethal commodities imports. It is also confirmed by an instrumental variables estimation that uses excess capacity in the British gunpowder industry as an instrument for gunpowder. (3) Additional slave exports attracted additional gunpowder imports for 2–3 more years. Together these dynamics formed a gun-slave cycle. Impulse-response functions generate large increases in slave export in response to increases in gunpowder imports. I use these results to explain the growth of slave exports along the Guinea Coast of Africa in the 18th century.
This paper investigates whether the real interest rate parity (RIRP) is valid during the three waves of globalizations that occurred in the last 150 years (1870–1914, 1944–1971, 1989 to the present). ...If any, these periods should favor RIRP, since globalization is a process where economies and financial markets become increasingly integrated into a global economic system. In contrast to the existing literature, we model the departures from RIRP as a long-term memory process and apply fractional integration methods on a sample of real interest rate differentials of seven developed countries: France, Germany, Holland, Italy, Japan, Spain, and the UK across the three globalization waves paired against the USA. We compute impulse response functions (IRF) to gain further insight into the memory characteristics of the RIRP differential processes and provide half-life estimates. We find that deviations from RIRP are mean reverting, providing robust evidence of real interest rate convergence during the three globalization waves. We shed further light on financial and commodity market integration during the three globalization waves by assessing the memory properties of uncovered interest rate parity (UIP) and relative purchasing power parity (PPP) differential processes. We find that deviations from relative PPP and UIP are not always mean-reverting processes. RIRP, relative PPP, and UIP hold simultaneously only in 7 out of 21 cases; RIRP and UIP hold in 11 out of 21 cases; RIRP hold without the support of relative PPP and UIP in 3 out of 21 cases. Thus, the evidence in favor of real interest rate convergence appears to be driven more by UIP than relative PPP. All these results are, to the authors knowledge, new to the literature.
This paper examines the long-run economic consequences of Russian serfdom. Employing data on the intensity of labor coercion just prior to emancipation in 1861, we document that a 25 percentage point ...increase in historical serfdom (1 SD) reduces household expenditure today by up to 17%. We then provide evidence on the persistence of this relationship by studying city populations over the period 1800 to 2002. Exploring mechanisms, our findings suggest that less urban agglomeration and slower industrial development in areas with a greater degree of serfdom perpetuated the negative effects of forced labor before, during, and after the Soviet period.
PDF
