national institutions and subnational development in africa we investigate the role of national institutions on subnational african development in a novel framework that accounts both for local geography and cultural genetic traits we exploit the fact that the political boundaries in the eve of african independence partitioned more than two hundred ethnic groups across adjacent countries subjecting similar cultures residing in homogeneous geographic areas to different formal institutions using both a matching type and a spatial regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within ethnicity differences in economic performance as captured by satellite images of light density the average non effect of national institutions on ethnic development masks considerable heterogeneity partially driven by the diminishing role of national institutions in areas further from the capital cities

political instability corruption and policy formation the case of environmental policy abstract this paper develops a theory of environmental policy formation taking into consideration the degree of corruptibility and political turbulence the predictions that emerge are that the interaction between the two variables is important political instability has a negative effect on the stringency of environmental regulations if the level of corruption is low but a positive effect when the degree of corruption is high corruption reduces the stringency of environmental regulations but the effect disappears as political instability increases the empirical findings are fully consistent with the predictions of the model

corruption trade and resource conversion abstract recent evidence suggests that special interest groups significantly affect tropical deforestation through lobbying we develop an open economy model in which resource conversion is determined by a self interested government that is susceptible to the influences of the political contributions it receives from the profit maximizing economic agent responsible for land conversion we investigate the effects of lobbying on the cumulative level of resource conversion and examine how trade policy influences the distortions created by political corruption we derive testable predictions that are analyzed through a panel analysis of cumulative agricultural land expansion over 1960 99 for low and middle income tropical countries our findings suggest that increased corruption and resource dependency directly promote land conversion whereas rising terms of trade reduce conversion

are modern financial systems shaped by state antiquity we demonstrate that existing differences in financial development between countries can be explained by the cumulative variations in their levels of state experience since 1 ad this dimension of early historical development has not been considered so far in studies that analyze the determinants of financial development the estimation allows for all major theories established in the literature as possible explanations for the disparity of financial development across the globe significance of state antiquity is robust to the use of alternative indicators of financial development the consideration of different lengths and periods of statehood and controlling for a range of variables or country characteristics our results highlight the important role of statehood in propelling financial system development and thus provide some support to the view that historically determined differences in the early start developmental advantage provide the basis for explaining the fundamental sources of variations in financial development between countries today

agriculture diffusion and development ripple effects of the neolithic revolution are the effects of the neolithic revolution still impacting on incomes across the world today i find strong support for this proposition using new country specific estimates of the timing of the agricultural transition and provide evidence that the differences are due to how technological diffusion is accounted for a correction for world migrations since 1500 significantly improves the fit transition year also helps to explain income in 1500 itself and an alternative measure of pre modern development state history has similar ability to predict income in 1500 and 1997

post 1500 population flows and the long run determinants of economic growth and inequality we construct a matrix showing the share of the year 2000 population in every country that is descended from people in different source countries in the year 1500 using this matrix we analyze how post 1500 migration has influenced the level of gdp per capita and within country income inequality in the world today indicators of early development such as early state history and the timing of transition to agriculture have much better predictive power for current gdp when one looks at the ancestors of the people who currently live in a country than when one considers the history on that country s territory without adjusting for migration measures of the ethnic or linguistic heterogeneity of a country s current population do not predict income inequality as well as measures of the ethnic or linguistic heterogeneity of the current population s ancestors an even better predictor of current inequality in a country is the variance of early development history of the country s inhabitants with ethnic groups originating in regions having longer histories of agriculture and organized states tending to be at the upper end of a country s income distribution however high within country variance of early development also predicts higher income per capita holding constant the average level of early development

does labour regulation affect technical and allocative efficiency evidence from the banking industry in light of the ongoing restructuring of the european banking industry and the challenging macroeconomic environment banks have increased their efforts to reduce operating costs yet the institutional features that affect banks ability to adjust costs and in particular personnel expenses which comprise a significant part of banks non interest cost structure have not been adequately studied this paper investigates the effect of labour market institutions and regulations on bank performance in 15 european countries over the period 2005 2010 using the fraser index for labour regulation and its disaggregated sub components we propose a novel methodology to measure performance based on the seminal work of kumbhakar and tsionas 2005 which allows the estimation of technical and allocative efficiency and the examination of the effect of labour market regulations in a single stage results indicate the existence of a positive relationship between the liberalisation of eu labour markets and allocative efficiency while the effect on technical efficiency appears to be negative although not statistically significant when looking at the disaggregated components of the labour index we further confirm that different forces are at play

institutions and the long run impact of early development we study the role of institutional development as a causal mechanism of history affecting current economic performance several indicators capturing different dimensions of early development in 1500 ad are used to remove the endogenous component of the variations in institutions these indicators are adjusted with large scale movements of people across international borders using the global migration matrix of putterman and weil 2010 to account for the fact that the ancestors of a population have facilitated the diffusion of knowledge when they migrate the exogenous component of institutions due to historical development is found to be a significant determinant of current output by demonstrating that the relationship between early development and current economic performance works through the channel of institutions and that better institutions can be traced back to historical factors the results of this paper shed some light on how history has played a role in shaping long run comparative development

the extent of the market and the supply of regulation we present a model in which setting up and running a regulatory institution takes a fixed cost as a consequence the supply of regulation is limited by the extent of the market we test three implications of this model first jurisdictions with larger populations affected by a given regulation are more likely to have it second jurisdictions with lower incremental fixed costs of introducing and administering new regulations should regulate more this implies that regulation spreads from higher to lower population jurisdictions and that jurisdictions that build up transferable regulatory capabilities should regulate more intensely consistent with the model we find that higher population u s states have more pages of legislation and adopt particular laws earlier in their history than do smaller states we also find that the regulation of entry the regulation of labor and the military draft are more extensive in countries with larger populations as well as in civil law countries where we argue that the incremental fixed costs are lower

political institutions and pollution control this paper models the selection of environmental policies under authoritarian and democratic regimes and tests the hypothesis that political institutions systematically affect the enactment of environmental regulations the results support the contention that political institutional arrangements rather than resource endowments largely determine policies concerning environmental regulation copyright 1992 by mit press

the colonial origins of comparative development an empirical investigation comment abstract acemoglu johnson and robinson s 2001 seminal article argues property rights institutions powerfully affect national income using estimated mortality rates of early european settlers t

history lessons institutions factor endowments and paths of development in the new world the explanations offered for the contrasting records of long run growth and development among the societies of north and south america most often focus on institutions the traditional explanations for the sources of these differences in institutions typically highlight the significance of national heritage or religion we in contrast argue that a hemispheric perspective across the wide range of colonies established in the new world by the europeans suggests that although there were many influences factor endowments or initial conditions had profound and enduring effects on the long run paths of institutional and economic development followed by the respective economies

democracy and environmental quality we develop and estimate an econometric model of the relationship between several local and global air pollutants and economic development while allowing for critical aspects of the socio political economic regime of a state we obtain empirical support for our hypothesis that democracy and its associated freedoms provide the conduit through which agents can exercise their preferences for environmental quality more effectively than under an autocratic regime thus leading to decreased concentrations or emissions of pollution however additional factors such as income inequality age distribution education and urbanization may mitigate or exacerbate the net effect of the type of political regime on pollution depending on the underlying societal preferences and the weights assigned to those preferences by the state

statehood experience legal traditions and climate change policies this study investigates how the implementation of modern climate change policies is related to former colonies length of state history and their legal heritage we argue that countries with longer statehood experience around the time of colonization were better equipped to implement the legal philosophies transplanted by their colonial powers therefore the implications of receiving british common law versus french civil law should be particularly important in countries with a greater accumulated history of statehood using a cross section of up to 78 former colonies our results provide support for this hypothesis in particular our estimates demonstrate that common law countries have weaker modern climate change policies than civil law countries and the difference is inflated by a longer statehood experience measured by the length of state history from 1 to 1800 ad legal origin has no effect in areas which by the time of colonization had no statehood experience finally we report similar results for the pattern of labor market regulations jel k15 k31 k32 o44 q54 q58

preindustrial and postwar economic development is there a link everybody knows now that the hardware dimension of development the physical infrastructure for example is a lot easier to put in place than the software to keep it operable which depends on local skills and institutions united nations development programme 1

the regulation of labor author s botero juan djankov simeon la porta rafael lopez de silanes florencio shleifer andrei abstract we investigate the regulation of labor markets through employment collective relations and social security laws in 85 countries we find that the political power of the left is associated with more stringent labor regulations and more generous social security systems and that socialist french and scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries however the effects of legal origins are larger and explain more of the variation in regulations than those of politics heavier regulation of labor is associated with lower labor force participation and higher unemployment especially of the young these results are most naturally consistent with legal theories according to which countries have pervasive regulaory styles inherited from the transplantation of legal systems

environmental regulations transfers and trade theory and evidence abstract this paper develops a theory of compensation of producers for the costs associated with environmental regulations we show that the existence of transfers can give counter intuitive effects of environmental policy on both output and trade flows in particular the compensation obtained by producers neutralizes the effect of environmental policy on output and consequently on trade flows this may help explain why previous empirical research has found weak evidence that environmental regulations affect trade patterns the theory is tested using agricultural sector data the evidence supports the hypothesis that environmental regulations and transfers are positively correlated

discounting time and time discounting subjective time perception and intertemporal preferences abstract consumers often make decisions about outcomes and events that occur over time this research examines consumers sensitivity to the prospective duration relevant to their decisions and the implications of such sensitivity for intertemporal trade offs especially the degree of present bias i e hyperbolic discounting the authors show that participants subjective perceptions of prospective duration are not sufficiently sensitive to changes in objective duration and are nonlinear and concave in objective time consistent with psychophysical principles more important this lack of sensitivity can explain hyperbolic discounting the results replicate standard hyperbolic discounting effects with respect to objective time but show a relatively constant rate of discounting with respect to subjective time perceptions the results are replicated between subjects experiment 1 and within subjects experiments 2 with multiple time horizons and multiple descriptors and with different measurement ord

effective labor regulation and microeconomic flexibility abstract microeconomic flexibility is at the core of economic growth in modern market economies because it facilitates the process of creative destruction the main reason why this process is not infinitely fast is the presence of adjustment costs some of them technological others institutional chief among the latter is labor market regulation while few economists object to the hypothesis that labor market regulation hinders the process of creative destruction its empirical support is limited in this paper we revisit this hypothesis using a new sectoral panel for 60 countries and a methodology suitable for such a panel we find that job security regulation clearly hampers the creative destruction process especially in countries where regulations are likely to be enforced moving from the 20th to the 80th percentile in job security in countries with strong rule of law cuts the annual speed of adjustment to shocks by a third while shaving off about 1 from annual productivity growth the same movement has negligible effects in countries with weak rule of law

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

the approach of institutional economics this paper assesses the old institutional economics it emphasizes the importance of key old institutionalist themes concerning the necessity of habits and rules and the role of institutions a problem in the alternative theoretical program of the new institutionalism is the untenability of its assumption of an original institution free market or state of nature even optimizing behavior requires the prior existence of habits and rules although it still lacks a complete and systematic theory the evolutionary approach of the old institutionalists tackles the problem of the interactive relationship of actor to structure without analytical reduction to one or the other

can an evolutionary approach to development predict post war economic growth might differences in levels of development prior to the era of industrialisation explain some of the dramatic differences in rates of economic growth across developing countries in recent decades this article explores the logic behind such a conjecture and presents evidence that it is true using population and agrarian densities as proxies for early development basic growth regressions are estimated for a sample of developing countries in 1960 90 and for provinces in one country china in 1978 92 the robustness of the results to the inclusion of other measures including ethnic heterogeneity and social capability is also shown