did technology transfer more rapidly east west than north south 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 n s than east west e w for two reasons first it was relatively costly for individuals to transport innovations when experiencing n s variations in climate second some innovations e g selectively bred seeds would have been less likely to survive n s movements continents with e w orientation then were characterized by less costly and or more successful sharing of technologies we employ comin s et al 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 the e w spatial correlations are generally larger more likely to be positive and more likely to be statistically significant while acknowledging that the difference between e w and n s effects is not significant in every estimation taken together the results offer compelling support for the diamond hypothesis

is diversity detrimental ethnic fractionalization public goods provision and the historical legacies of stateness existing research has shown that highly diverse countries tend to provide less public goods this article argues by contrast that the relationship is spurious both contemporary ethnic heterogeneity and low public goods provision represent legacies of a weakly developed state capacity inherited from the past classical theories of state formation are then tested to show that favorable topography and climate high population densities as well as a history of warfare are conducive to state formation using an instrumental variable approach i show that previous ethnic diversity is not consistently an impediment to the formation of indigenous states and thus to contemporary public goods provision empirically this article uses three different measurements of public goods provision and data on pre colonial levels of state formation in asia and africa to test these various hypotheses

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

inequality and fractionalization we present evidence that ethnic fragmentation explains variations in per capita income institutions and schooling better than income inequality when both are treated as endogenous to do so we identify instruments for ethnic fractionalization and income inequality based on historical experience using instrumental variables estimation we find that ethnic fractionalization explains the level of income both when income inequality is included as a control in the estimation and when it is not however we find no evidence that income inequality affects the level of income when ethnic fractionalization is properly treated as an endogenous variable we have similar findings when other development outcomes such as schooling or proxies for institutional quality are used as dependent variables these results are robust to various controls and changes in the sample size and suggest that some of the previous findings regarding the effect of income inequality on development should be attributed to ethnic fractionalization

the origins of ethnolinguistic diversity this study explores the determinants of ethnolinguistic diversity within as well as across countries shedding light on its geographic origins the empirical analysis conducted across countries virtual countries and pairs of contiguous regions establishes that geographic variability captured by variation in regional land quality and elevation is a fundamental determinant of contemporary linguistic diversity the findings are consistent with the proposed hypothesis that differences in land endowments gave rise to location specific human capital leading to the formation of localized ethnicities jel j15 j24 z13

social capital and political institutions evidence that democracy fosters trust this paper finds evidence that more democratic political institutions increase trust second generation immigrants with ancestries from 115 countries are studied within 30 european countries comparing individuals born and residing in the same country those whose father was born in a more democratic country express higher trust than those whose father was born in a less democratic country the results are robust to individual parental and ancestral country controls

in search of smoking guns what makes income inequality vary over time in different countries we investigate the forces affecting the distribution of income by analyzing an unbalanced panel of information for 16 industrialized countries for the years 1966 through 1994 income inequality is measured with the gini coefficient of equivalent disposable income individuals are the unit of analysis the statistical analysis uses panel methods the results suggest that many factors affect the development of income inequality some factors are strictly economic a decreased industrial sector generally fosters inequality and some support is found for the view that increased trade of manufactured goods from developing countries is also a factor other forces are outside a strictly defined market sphere low inequality is found when a large proportion of the labor force belongs to a trade union and also when there is a large public sector in addition demographic circumstances are important since the proportion of the population under age 15 has a positive effect on inequality we find however no association between the unemployment rate and inequality

cyclical and political influences on the size distribution of income in the us 1959 1989 the quesion of whether the size distribution of income is subject to cyclical fluctuations in unemployment and inflation has been investigated in several studies in these studies however the fact that unemployment inflation and distribution may be influenced intentionally by policy makers is ignored in order to investigate whether any political influence on the size distribution of income actually exists a model is formulated in which the distribution not only depends on unemployment and inflation but also on a variable representing the political process the model is tested using time series data pertaining to the case of the us in the period 1958 to 1989 the results indicate that inequality tends to be negatively influenced by democratic administrations

mergers and business model assimilation evidence from low cost airline takeovers this paper examines mergers that lead to an almost immediate replacement of the target firm s business model in favour of that of the acquiring firm we examine the post merger behaviour of the two leading european dedicated low cost airlines easyjet and ryanair each acquiring another low cost airline respectively go fly and buzz we find that both takeovers had an immediate and sustained impact on both the pricing structures and the extent of inter temporal price discrimination used on the acquired routes with early booking fares noticeably reduced and only very late booking fares increased overall the analysis points to a pro competitive effect of both takeovers as a consequence of the introduction of the acquiring firms business models and associated yield management pricing systems

entry exit and performance in airline markets abstract data from the airline industry indicate that 1 entry generally is not induced by price levels substantially above the norm 2 entry reduces fares and increases output and exit increases fares and reduces output and 3 incumbents cut price and maintain output in response to entry and survivors increase both price and output in response to exit these findings cast doubt on the ability of entry to prevent or reverse price increases from anticompetitive mergers

market structure and product quality a study of the 2002 japanese airline merger abstract this study examines the economic consequences of a horizontal merger between japanese airlines that took place in 2002 with particular emphasis on quality responses to the airline merger a structural model allows firms to determine not only prices but also flight frequencies the obtained estimates would reject the hypothesis that the merger facilitated coordinated effects efficiency gains from the merger are estimated as not trivial and are more strongly observed in marginal costs per flight rather than in marginal costs per passenger welfare effects of the merger are positive but vary by market structure neglecting endogenous flight frequency overstates the welfare gains especially for smaller markets finally remedial measures imposed by the authority did little for the merger outcomes

statehood democracy and preindustrial development this paper proposes a growth model linking state history to economic development it considers three state systems non statehood authoritarian statehood and democratic statehood these differ in the way a public good is provided which in turn determines growth rates under certain assumptions democratic states grow faster than authoritarian ones which in turn grow faster than non states all societies start with non statehood and transition into authoritarian statehood at some point but the timing is random when later given the opportunity only those societies that transitioned relatively recently to authoritarian statehood transition to democracy when they do they begin to grow faster eventually overtaking older and still authoritarian states this generates an inversely u shaped cross sectional relationship between development and state history consistent with modern cross country data

economies of traffic density in the deregulated airline industry this article estimates a structural model of competition among hub and spoke airlines in order to measure the strength of economies of traffic density on individual route segments we find that economies of density were strong during the sample period fourth quarter 1985 stronger than previous estimates by douglas caves laurits christensen and michael tretheway derived from traditional cost function methods we also find that the airlines competitive behavior was far from collusive in the markets under study markets requiring a connection at a hub airport our structural model also provides plausible estimates of demand elasticities we use our estimates to provide a cost based rationale for the major changes in the structure of the industry following deregulation for example the increase in airport and industry wide concentration and the increase in competition at the city pair market level and to simulate the effects of a merger of airlines that share a hub

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

competition in airline networks the case of constant elasticity demands abstract this paper is concerned with the effect of competition in airline hub and spoke networks using constant elasticity demand functions we demonstrate that competition in a single market may generate positive or negative network externalities depending on price elasticities of demand

ownership consolidation and product characteristics a study of the us daily newspaper market this paper develops a structural model of newspaper markets to analyze the effects of ownership consolidation taking into account not only firms price adjustments but also the adjustments in newspaper characteristics a new dataset on newspaper prices and characteristics is used to estimate the model the paper then simulates the effect of a merger in the minneapolis newspaper market and studies how welfare effects of mergers vary with market characteristics it finds that ignoring adjustments of product characteristics causes substantial differences in estimated effects of mergers jel g32 l13 l82 m37 do mergers affect product characteristics standard merger analyses typically study price effects only and ignore changes in product characteristics this paper endogenizes both it is likely that firms would adjust the features of their products after a merger ignoring this aspect of firm decisions in a merger analysis can lead to a bias in estimated welfare effects specifically i study how ownership consolidation affects product characteristics and welfare in the us daily newspaper market the newspaper market provides an ideal environment for analyzing the effect of mergers on product features for both econometric and economic reasons first of all individual newspapers often circulate in local markets there is substantial variation in demographics and ownership structure across these markets this variation is crucial for this study secondly the characteristics of newspapers are obviously important for welfare for example after an ownership consolidation do newspaper publishers improve or diminish the content quality do they enlarge or shrink the local news ratio do they increase or decrease content variety to address these questions i set up a structural model of the us daily newspaper

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

early starts reversals and catch up in the process of economic development early states like china and india have been experiencing more rapid economic growth in recent decades we show that more rapid growth by early starters has been the norm in economic history and that the reversal of fortune associated with the european overseas expansion was both exceptional and temporary not only was the post 1500 reversal in the process of being reversed after 1960 but also the advantage conferred by early development in the latter period was considerably greater than the growth rate disadvantage that it conferred during 1500 1960 implying a rapid undoing of the first reversal

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

agricultural transition and the adoption of primitive technology this paper tests jared diamond s influential theory that an earlier transition from a hunter gatherer society to agricultural production induces higher levels of technology adoption using a proxy for the geographic diffusion barriers of neolithic technology and an index of biogeographic endowments to isolate the exogenous component of the timing of agricultural transition the findings indicate that countries that experienced earlier transitions to agriculture were subsequently more capable of adopting new technologies in 1000 bc 1 ad and 1500 ad these results lend strong support to diamond s hypothesis jel 030 040 i introduction technology is the centerpiece of the literature on economic growth aghion and howitt 1992 2009 hsieh and klenow 2010 jones 1995 mokyr 1990 2005 nelson and phelps 1966 surprisingly little is known about what causes the wide disparity in the adoption levels of technology across the globe the importance of historical technology adoption for long run comparative economic development has recently been highlighted in the seminal contribution of comin et al 2010 they construct indicators to capture the ancient state of technology adoption in 1000 bc 1 ad and 1500 ad and show that the historical levels of technology adoption of a country crucially determines its current technology adoption levels and per capita income comin and hobijn 2010 provide further evidence that technology adoption lags explain more than 25 of per capita income differences across countries thus suggesting that a longer lag significantly lowers the present day standards of living see also comin et al 2008 however the issue of what accounts for differences in technology adoption levels across the world has so far not been addressed in the literature without a proper understanding of the sources of technology adoption the history of economic development will remain incomplete a prominent explanation for the cross country variations in technology adoption levels has been provided by diamond 1997 who links early agrarian development to the capability of adopting new technology the transition from a hunter gatherer society to agricultural production also known as the neolithic revolution that first occurred about 11 millennia ago is one of the most significant events in human history putterman 2008 the first neolithic transition occurred in the middle east where there was a shift from hunting and gathering to the cultivation of crops and animals diamond 1997 argues that following this transition food production was focused on domesticating rather than gathering wild plants and hunting animals the capacity of the agriculture sector to yield more and better food provide nourishment for more people and produce storable food led to the creation of a non food production class these specialists were responsible for the early development of writing education technology based military expertise and social and political structures which subsequently played a pivotal role in technological development along with this development agricultural settlements also facilitated more sedentary living which underlies the historical development of technology as it enabled the accumulation of technical know how this developmental head start built upon the foundations established during the transition enabled an economy to enter into the path of endogenous knowledge creation and lowered costs of adopting technologies which subsequently translated into greater technological sophistication furthermore significant improvements in farming techniques and the ensuing increases in agricultural productivity then partially contributed to the onset of the industrial revolution thus diamond s thesis proposes a fundamental link between an early start in agriculture and the subsequent sophistication in technology against this backdrop our aim is to shed some light on how the timing of agricultural transition affects technology adoption in different periods of human history

the transmission of democracy from the village to the nation state we provide evidence that a history of democracy at the local level is associated with contemporary democracy at the national level auxiliary estimates show that a tradition of local democracy is also associated with attitudes that favor democracy with better quality institutions and higher level of economic development

long run cultural divergence evidence from the neolithic revolution this paper investigates the long run influence of the neolithic revolution on contemporary cultural norms as reflected in the dimension of collectivism individualism we present a theory of agricultural origins of cultural divergence where we claim that the advent of farming in a core region was characterized by collectivist values and eventually triggered the out migration of individualistic farmers towards more and more peripheral areas this migration pattern caused the initial cultural divergence which remained persistent over generations using detailed data on the date of adoption of neolithic agriculture among western regions and countries the empirical findings show that the regions which adopted agriculture early also value obedience more and feel less in control of their lives the findings add to the literature by suggesting the possibility of extremely long lasting norms and beliefs influencing today s socioeconomic outcomes

spatial multiproduct pricing empirical evidence on intra european duopoly airline markets this paper estimates a model of spatial multiproduct duopoly pricing when the location patterns differ across markets the theoretical model suggests that the neighbouring configuration yields less competitive nash prices than the interlaced configuration i apply this model to data for intra european duopoly airline markets the empirical results support the theoretical model since i find that fares are higher on intra european markets that exhibit neighbouring configurations in the time domain this result suggests that price competition is reduced when each airline operates on a specific segment of the timetable e g the first 12 hours of the day clearly this result has several implications for policy makers and or airport authorities in charge of awarding slots

gifts of mars warfare and europe s early rise to riches abstract western europe surged ahead of the rest of the world long before technological growth became rapid europe in 1500 already had incomes twice as high on a per capita basis as africa and one third greater than most of asia in this essay we explain how europe s tumultuous politics and deadly penchant for warfare translated into a sustained advantage in per capita incomes we argue that europe s rise to riches was driven by the nature of its politics after 1350 it was a highly fragmented continent characterized by constant warfare and major religious strife no other continent in recorded history fought so frequently for such long periods killing such a high proportion of its population when it comes to destroying human life the atomic bomb and machine guns may be highly efficient but nothing rivaled the impact of early modern europe s armies spreading hunger and disease war therefore helped europe s precocious rise to riches because the survivors had more land per head available for cultiva

what drives the historical formation and persistent development of territorial states the importance of the length of state history for understanding variations in income levels and growth rates across countries has received a lot of attention in the recent literature on long run comparative development the literature however is silent about its origins this paper explores the determinants of statehood by considering the potential roles of an early transition to fully fledged agricultural production the adoption of state of the art military innovations and the opportunity for economic interaction with the regional economic leader the results demonstrate that only the association between economic interaction and the rise and development of the state is statistically robust

the evolution of u s airline competition studies by academic economists were a significant force in the movement towards deregulation of the domestic airline industry in the early 1970s levine 1965 jordan 1970 keeler 1972 douglas and miller 1974 during the critical 1977 78 period in which deregulation was imposed first de facto by the civil aeronautics board cab and then de jure by congress the chairman and vice chairman of the cab were economists for the 14 years since deregulation economists have continued intensive study of the industry in part because of the unusual availability of reliable firm and transaction level data and in part because of the rare opportunity to observe an industry as it evolves from strict economic regulation to fairly unimpeded competition and strategic behavior the simplest prediction of economists about airline deregulation and one of the few on which nearly all economists agreed was that deregulation would improve consumer welfare in comparison to continued price and entry regulation fourteen years later nearly all economists still agree on this though the degree of enthusiasm for the deregulation outcome varies considerably there was substantial disagreement among economists about the market structure that would result because studies of scale economies in the airline industry had concluded that none existed beyond the scale of the smaller major airlines of the 1970s caves 1962 eads et al 1969 many economists argued that deregulation would result in more than the 11 major airlines that existed at the time of deregulation others predicted that only a few or possibly only one airline would survive at a large scale two noted university of chicago economists sam peltzman and lester telser made a bet in 1979 on whether

aviation policy past and present for 25 years airline deregulation has been a symbol of the trend toward less expansive government the move from economic regulation to deregulation has delivered on its efficiency promises and there have been significant benefits to consumers in terms of lower prices and more convenient schedules however airline competition especially at hub airports remains imperfect the nature of these imperfections is explained better by models of oligopolistic behavior than by the contestability theory paradoxically for this industry the terrorist attack of september 11 2001 has ushered in an expanded role of government in aviation policy this expanded role does not reinstate government intervention in airline economic decisions rather it provides financial stabilization of the industry in the short run and long term structural change in aviation security

the grecian horse does immigration lead to the deterioration of american institutions concerns about the institutional impact of immigration particularly in the united states are not new we can trace them back to benjamin franklin thomas jefferson and alexander hamilton more recently in response to a literature that questions the desirability of current immigration restrictions borjas j econ lit 53 961 974 2015 speculates that immigrants coming from countries with poor institutions could reduce substantially the institutional quality in the united states to a point where it could negate all economic gains associated with immigration in terms of gdp and income using the economic freedom of north america index since 1980 we find no evidence to corroborate borjas s concerns however we find mixed evidence that immigration increases minimum wages and union density

the price effect of eliminating potential competition evidence from an airline merger this paper analyzes the gain in pricing power that a firm achieves by merging with a potential competitor in its market using pricing data for the merger of usair and piedmont empirical analysis finds that prices rose by 5 0 to 6 0 per cent on routes that one carrier served and the other was a potential entrant this was more than half the increase on routes where the two carriers had been direct competitors other important factors included carrier size market concentration incumbent s identity and the potential entrant s presence at one or both endpoints

compatibility and competition in airlines demand side network effects abstract network effects arising in air transport markets are usually viewed as resulting from the implications of joint production on the cost side in this paper we focus on network effects originating on the demand side we consider a network that links three cities involving two direct and one indirect connection two carriers with asymmetric traffic rights on this network compete sequentially at the first stage they choose their departure times at the second they set prices we show that in order to compensate its network disadvantage the weak carrier chooses its departure time as close as possible to its competitor s this is in contrast to the usual maximum differentiation principle the network effect intensifies price competition depending on the size of the market and on consumers valuation of waiting time various subgame perfect equilibrium configurations are exhibited

mergers coordinated effects and efficiency in the portuguese non life insurance industry we evaluate the impact on market power and efficiency of a series of mergers on three portuguese non life insurance markets we specify and estimate with a panel of firm level data a structural model which includes preferences technology and a market equilibrium condition firms demand curves are not very elastic firms technologies exhibit scale and scope economies and high cost efficiency scores we find that for the period following the mergers there is no evidence of i an increase in market power through coordinated behavior or ii changes in cost efficiency levels in addition social welfare increased

the credibility revolution in empirical economics how better research design is taking the con out of econometrics since edward leamer s memorable 1983 paper let s take the con out of econometrics empirical microeconomics has experienced a credibility revolution while leamer s suggested remedy sensitivity analysis has played a role in this we argue that the primary engine driving improvement has been a focus on the quality of empirical research designs the advantages of a good research design are perhaps most easily apparent in research using random assignment we begin with an overview of leamer s 1983 critique and his proposed remedies we then turn to the key factors we see contributing to improved empirical work including the availability of more and better data along with advances in theoretical econometric understanding but especially the fact that research design has moved front and center in much of empirical micro we offer a brief digression into macroeconomics and industrial organization where progress by our lights is less dramatic although there is work in both fields that we find encouraging finally we discuss the view that the design pendulum has swung too far critics of design driven studies argue that in pursuit of clean and credible research designs researchers seek good answers instead of good questions we briefly respond to this concern which worries us little

the new economic case for migration restrictions an assessment abstract migration barriers tend to reduce global production by impeding efficient spatial reallocation of labor recent research argues for a countervailing effect of barriers tending to raise global production by preventing the spread of impoverishing institutions from poor to rich countries while evidence of this mechanism is scarce it is theoretically plausible at high migration rates we propose and calibrate a simple model of dynamically efficient migration when migrants spread economic institutions between countries the net effect of migration depends on three parameters transmission the degree to which origin country total factor productivity is embodied in migrants assimilation the degree to which migrants productivity determinants become like natives over time in the host country and congestion the degree to which transmission and assimilation change at higher migrant stocks on current evidence about the magnitudes of these parameters dynamically efficient policy would not imply open borders but would imply relaxation of current restrictions

evaluating the performance of merger simulation evidence from the u s airline industry abstract this paper uses merger simulations to predict postmerger prices for five airline mergers from the 1980s and compares these predictions with observed postmerger prices i find that standard simulation methods which measure the effect of the change in ownership on unilateral pricing incentives do not generally provide an accurate forecast by incorporating postmerger information into the model i measure the relative importance of other factors that also contributed to the observed price changes the results indicate that the unexplained component of the price change is largely accounted for by supply side effects i conclude that deviations from the assumed model of firm conduct play an important role in accounting for the differences between the predicted and observed price changes this conclusion suggests that the predictive performance of merger simulation would benefit if more flexible models of firm conduct were incorporated into the methodology

slavery education and inequality abstract we investigate the effect of slavery on the current level of income inequality across us counties we find that a larger proportion of slaves over population in 1860 persistently increases inequality and in particular inequality across races we also show that a crucial channel of transmission from slavery to racial inequality is human capital accumulation i e current inequality is primarily influenced by slavery through the unequal educational attainment of blacks and whites finally we provide suggestive evidence that the underlying links run through the political exclusion of former slaves and the resulting negative influence on the local provision of education

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

do substantial horizontal mergers generate significant price effects evidence from the banking industry this study examines the price effects of recent us bank mergers that substantially increased local market concentration using the deposit interest rates that banks offer their customers as our price measure we find that over the 1991 94 time period deposit rates offered by participants in substantial horizontal mergers and their local market rivals declined by a greater percentage than did deposit rates offered by banks not operating in markets in which such mergers took place we interpret our results as evidence that these mergers led to increased market power

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

equilibria in networks we study a model in which two carriers choose networks to connect cities and compete for customers we show that if carriers compete aggressively e g bertrand like behavior one carrier operating a single hub spoke network is an equilibrium outcome competing hub spoke networks are not an equilibrium outcome although duopoly equilibria in nonhub networks can exist if carriers do not compete aggressively an equilibrium with competing hub spoke networks exists as long as the number of cities is not too small we provide conditions under which all equilibria consist of hub spoke networks

opening a can of worms the pitfalls of time series regression analyses of income inequality this paper argues that time series regression analysis is of only very limited use for understanding the determinants of income inequality the argument is based on a combination of results from the time series econometrics literature and several characteristics of inequality itself principally nonstationarity of the data in most inequality regression models and the weak theoretical foundations underlying the models a sample of postwar us data is used to illustrate the problems involved

bureaucracy and growth we revisit the hypothesis that a weberian bureaucracy enhances economic growth theoretically we develop arguments for why such a bureaucracy may enhance growth and discuss plausible counterargume

how deep are the roots of economic development the empirical literature on economic growth and development has moved from the study of proximate determinants to the analysis of ever deeper more fundamental factors rooted in long term history a growing body of new empirical work focuses on the measurement and estimation of the effects of historical variables on contemporary income by explicitly taking into account the ancestral composition of current populations the evidence suggests that economic development is affected by traits that have been transmitted across generations over the very long run this article surveys this new literature and provides a framework to discuss different channels through which intergenerationally transmitted characteristics may impact economic development biologically via genetic or epigenetic transmission and culturally via behavioral or symbolic transmission an important issue is whether historically transmitted traits have affected development through their direct impact on productivity or have operated indirectly as barriers to the diffusion of productivityenhancing innovations across populations jel j11 o33 o47 z13

on the origins of gender roles women and the plough the study examines the historical origins of existing cross cultural differences in beliefs and values regarding the appropriate role of women in society we test the hypothesis that traditional agricultural practices influenced the historical gender division of labor and the evolution of gender norms we find that consistent with existing hypotheses the descendants of societies that traditionally practiced plough agriculture today have less equal gender norms measured using reported gender role attitudes and female participation in the workplace politics and entrepreneurial activities our results hold looking across countries across districts within countries and across ethnicities within districts to test for the importance of cultural persistence we examine the children of immigrants living in europe and the united states we find that even among these individuals all born and raised in the same country those with a heritage of traditional plough use exhibit less equal beliefs about gender roles today jel codes d03 j16 n30 copyright 2013 oxford university press

the impact of industry consolidation on government procurement evidence from department of defense contracting abstract we study the relationship between market structure and public procurement outcomes in particular we ask whether and to what extent consolidation driven increases in industry concentration affect the way in which the government procures its goods and services we focus on the defense industry by far the largest contributor to federal procurement spending in the u s this industry experienced a sharp increase in the level of concentration during the 1990s driven by a series of large mergers between defense contractors using detailed microdata on department of defense dod contract awards we estimate the causal effect of industry concentration on a series of procurement outcomes leveraging the differential impact of these mergers across product markets we find that market concentration caused the procurement process to become less competitive with an increase in the share of spending awarded without competition or via single bid solicitations increased concentration also induced a shift from the use of fixed price contracts towards cost plus contracts however we find no evidence that consolidation led to a significant increase in acquisition costs we infer that the government s buyer power especially relevant in this context given the government is often the only purchaser constrained firms from exercising any additional market power gained by consolidation

factor endowments inequality and paths of development among new world economies whereas traditional explanations of differences in long run paths of development across the americas generally point to the significance of differences in national heritage or religion we highlight the relevance of stark contrasts in the degree of inequality in wealth human capital and political power in accounting for how fundamental economic institutions evolved over time we argue moreover that the roots of these disparities in the extent of inequality lay in differences in the initial factor endowments dating back to the era of european colonization we document through comparative studies of suffrage public land and schooling policies systematic patterns by which societies in the americas that began with more extreme inequality or heterogeneity in the population were more likely to develop institutional structures that greatly advantaged members of elite classes and disadvantaging the bulk of the population by providing them with more political influence and access to economic opportunities the clear implication is that institutions should not be presumed to be exogenous economists need to learn more about where they come from to understand their relation to economic development our findings not only contribute to our knowledge of why extreme differences in the extent of inequality across new world economies have persisted for centuries but also to the study of processes of long run economic growth past and present

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

wheat agriculture and family ties abstract several recent contributions to the literature have suggested that the strength of family ties is related to various economic and social outcomes for example alesina and giuliano 2014 highlight that the strength of family ties is strongly correlated with lower gdp and lower quality of institutions however the forces shaping family ties remain relatively unexplored in the literature this paper proposes and tests the hypothesis that the agricultural legacy of a country matters for shaping the strength of its family ties using data from the world values survey and the european values study the results show that societies with a legacy of cultivating wheat tend to have weaker family ties analysis at the sub national level us data and the country level corroborate these findings the estimations allow for alternative hypotheses which propose that pathogen stress and climatic variation can potentially also give rise to the formation of family ties the results suggest that the suitability of land for wheat production is the most influential factor in explaining the variation in the strength of family ties across societies and countries

historical origins of firm ownership structure the persistent effects of the african slave trade this paper uses evidence from the historical african slave trade to extend prior theory linking modern firm ownership structure to institutions and social capital we argue that institutions and so

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

openness and income the roles of trade and migration abstract this paper explores the relationship between openness to trade immigration and income per person across countries to address endogeneity concerns we extend the instrumental variables strategy introduced by frankel and romer 1999 we build predictors of openness to immigration and to trade for each country by using information on bilateral geographical and cultural distance while controlling for country size since geography may affect income through other channels we also control for climate disease environment natural resources and colonial origins most importantly we also account for the roles of institutions and early development our instrumental variables estimates provide evidence of a robust positive effect of openness to immigration on long run income per capita in contrast we are unable to establish an effect of trade openness on income we also show that the effect of migration operates through an increase in total factor productivity which appears to reflect increased diversity in productive skills and to some extent a higher rate of innovation

hybrid cooperation agreements in networks the case of the airline industry abstract this paper develops a unified framework to analyze a continuum of hybrid cooperation agreements along two dimensions their degree of revenue sharing scope of alliances and their degree of cost sharing scope of joint ventures the analysis focuses on the air transportation industry distinguishing between interline and interhub markets as economies of traffic density become stronger we find that the socially optimal cooperation agreement moves from full alliance to joint venture in interline markets whereas it moves from joint ventureto merger in interhub markets these results are driven by the tradeoff between a procompetitive effect of alliances in interline markets and an anticompetitive effect in interhub markets along with the efficiency gains associated with joint ventures in interhub markets we also develop an empirical application for intercontinental routes for the period 2010 2016 that identifies a positive impact of deeper degrees of airline cooperation revenue and cost sharing on traffic both in interline and interhub markets therefore the potential anticompetitive effect of deeper alliances in interhub markets is not observed in our sample

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

potatoes milk and the old world population boom abstract this paper explores the role of two foods potatoes and milk in explaining the increase in economic development experienced throughout the old world in the 18th and 19th centuries nunn and qian 2011 show the introduction of the potato from the new world has a significant explanatory role for within country population and urbanization growth over this period i expand on this by considering the role of milk consumption which is hypothesized to be a complement in diet to potatoes due to a differential composition of essential nutrients using a country level measure for the suitability of milk consumption the frequency of lactase persistence i show that the marginal effect of potatoes on post 1700 population and urbanization growth is positively related to milk consumption as the frequency of milk consumption approaches unity the marginal effect of potatoes more than doubles in magnitude compared to the baseline estimate of nunn and qian

the puzzling pattern of multiple job holding across u s labor markets multiple job holding mjh rates differ substantially across u s regions states and metropolitan areas rates decrease markedly with respect to labor market size these patterns have been largely overlooked despite being relatively fixed over at least the past 20 years this article explores explanations for these persistent differences we account for roughly two thirds of the mean absolute deviation in mjh across local labor markets msas the results suggest that variation in mjh across labor markets is driven by labor market differences in job opportunities and worker preferences most important in explaining variation in mjh are msa industry and occupation structure ancestry shares commute times and to a lesser extent labor market churn

inequality does cause underdevelopment insights from a new instrument consistent with the provocative hypothesis of engerman and sokoloff 1997 2000 this paper confirms with cross country data that agricultural endowments predict inequality and inequality predicts development the use of agricultural endowments specifically the abundance of land suitable for growing wheat relative to that suitable for growing sugarcane as an instrument for inequality is this paper s approach to problems of measurement and endogeneity of inequality the paper finds inequality also affects other development outcomes institutions and schooling which the literature has emphasized as mechanisms by which higher inequality lowers per capita income it tests the inequality hypothesis for development institutional quality and schooling against other recent hypotheses in the literature while finding some evidence consistent with other development fundamentals the paper finds high inequality to independently be a large and statistically significant barrier to prosperity good quality institutions and high schooling

comment on cyclical and secular influences on the size distribution of personal income in the uk some econometric tests by g weil 1986 comment on cyclical and secular influences on the size distribution of personal income in the uk some econometric tests by g weil applied economics vol 18 no 10 pp 1103 1107

state capacity and military conflict powerful centralized states controlling a large share of national income only begin to appear in europe after 1500 we build a model that explains their emergence in response to the increasing importance of money for military success when fiscal resources are not crucial for winning wars the threat of external conflict stifles state building as finance becomes critical internally cohesive states invest in state capacity while divided states rationally drop out of the competition causing divergence we emphasize the role of the military revolution a sequence of technological innovations that transformed armed conflict using data from 374 battles we investigate empirically both the importance of money for military success and patterns of state building in early modern europe the evidence is consistent with the predictions of our model

pricing and performance in monopoly airline markets since the airline deregulation act of 1978 ada much has been learned about the performance characteristics of airline markets functioning free of governmental control contrary to the initial expectations of many airline markets do not appear to conform well to the contestable markets model numerous empirical studies of the industry have concluded that performance depends on the level of actual competition a result incompatible with perfect contestability 2 in a perfectly contestable

genetic diversity and the origins of cultural fragmentation despite the importance attributed to the effects of diversity on the stability and prosperity of nations the origins of the uneven distribution of ethnic and cultural fragmentation across countries have been underexplored building on the role of deeply rooted biogeographical forces in comparative development this research empirically demonstrates that genetic diversity predominantly determined during the prehistoric out of africa migration of humans is an underlying cause of various existing manifestations of ethnolinguistic heterogeneity further exploration of this uncharted territory may revolutionize the understanding of the effects of deeply rooted factors on economic development and the composition of human capital across the globe

cyclical and secular influences on the size distribution of personal income in the uk some econometric tests 1984 cyclical and secular influences on the size distribution of personal income in the uk some econometric tests applied economics vol 16 no 5 pp 749 756

airline mergers airport dominance and market power effects of northwestrepublic and twaozark mergers on fares at minneapolisst paul and st louis

hubs and high fares dominance and market power in the u s airline industry this article estimates the importance of route and airport dominance in determining the degree of market power exercised by an airline the results indicate that an airline s share of passengers on a route and at the endpoint airports significantly influences its ability to mark up price above cost the high markups of a dominant airline however do not create much of an umbrella effect from which carriers with smaller operations in the same markets can benefit the article suggests a number of possible explanations for this asymmetry

kinship cooperation and the evolution of moral systems across the social sciences a key question is how societies manage to enforce cooperative behavior in social dilemmas such as public goods provision or bilateral trade according to an influential body of theories in psychology anthropology and evolutionary biology the answer is that humans have evolved moral systems packages of functional psychological and biological mechanisms that regulate economic behavior including a belief in moralizing gods moral values negative reciprocity and emotions of shame guilt and disgust based on a stylized model this article empirically studies the structure and evolution of these moral traits as a function of historical heterogeneity in extended kinship relationships the evidence shows that societies with a historically tightly knit kinship structure regulate behavior through communal moral values revenge taking emotions of external shame and notions of purity and disgust in loose kinship societies on the other hand cooperation appears to be enforced through universal moral values internalized guilt altruistic punishment and an apparent rise and fall of moralizing religions these patterns point to the presence of internally consistent but culturally variable functional moral systems consistent with the model the relationship between kinship ties economic development and the structure of the mediating moral systems amplified over time

the agricultural roots of chinese innovation performance abstract a debate is brewing in the literature on whether legacies of rice and wheat cultivation in china matters for cultural attributes in particular individualism vs collectivism in turn this important cultural dimension has recently been shown to affect the pattern of innovation across countries however the previous literature has not firmly connected agricultural legacies and innovation rates and has consistently used low resolution data we study the role of agricultural legacy for innovation performance using unique patent data from close to two thousand chinese counties we provide robust evidence that counties with a legacy of rice cultivation generate fewer patent applications than other counties and a legacy of wheat production tends to be associated with more patent applications the results for rice are robust to e g controlling for temperature precipitation irrigation disease burden religiosity and corruption as well as accounting for migration patterns our results firmly establish the importance of agricultural legacy for shaping the culture of innovation

unemployment and the size distribution of income the impact of changes in the level of unemployment on the u k size distribution of annual income is examined using cross section data increased unemployment is shown to have a discernible regressive effect however reductions in shares were not highly concentrated at the very bottom of the distribution many individuals affected by unemployment during the year are in households families not at the bottom of the distribution particularly because of the presence of other working members copyright 1986 by the review of economic studies limited

capacity and product market competition measuring market power in a puppy dog industry abstract in this paper we specify and estimate a structural model which accounts for competition in two variables capacity and prices the model has a two stage setup in the first stage firms make capacity decisions followed by a product differentiated price setting game in the second stage since costs are endogenized through the first stage this has important implications for the measurement of market power in the product market in particular simpler one stage specifications would result in a bias in the measurement of market power which can be linked to the taxonomy for two stage games given in fudenberg and tirole 1984 fudenberg d tirole j 1984 the fat cat effect the puppy dog ploy and the lean and hungry look american economic review paper and proceedings 74 361 366 we then estimate this model demand cost short and long run and conduct for the european airline industry using data for the period of 1976 1990 we perform a number of specification tests and reject a simple one stage specification in favor of our two stage set up in particular we find that some degree of market power in the product market exists however market conduct in the two stage set up is significantly less collusive than in the more widely employed one stage specification which is consistent with the direction of bias in puppy dog games this illustrates that collusiveness of firms market conduct in the product market is significantly overestimated whenever capacity competition is not accounted for

immigrants genes genetic diversity and economic development in the united states this paper examines the relationship between immigrants genetic diversity and economic development in the united states during the late nineteenth and the beginning of the twentieth centuries a period commonly referred to as the age of mass migration from europe to the new world our panel model estimates show that during this period immigrants genetic diversity is significantly positively correlated with measures of u s counties economic development there exists also a significant positive relationship between immigrants genetic diversity in 1870 and contemporaneous measures of u s counties average income jel j11 o51 z13

migrants ancestors and foreign investments we use 130 years of data on historical migrations to the u s to show a causal effect of the ancestry composition of u s counties on foreign direct investment fdi sent and received by local firms to isolate the causal effect of ancestry on fdi we build a simple reduced form model of migrations migrations from a foreign country to a u s county at a given time depend on 1 a push factor causing emigration from that foreign country to the entire u s and 2 a pull factor causing immigration from all origins into that u s county the interaction between time series variation in origin specific push factors and destination specific pull factors generates quasi random variation in the allocation of migrants across u s counties we find that doubling the number of residents with ancestry from a given foreign country relative to the mean increases the probability that at least one local firm engages in fdi with that country by 4 percentage points we present evidence that this effect is primarily driven by a reduction in information frictions and not by better contract enforcement taste similarities or a convergence in factor endowments

efficiencies brewed pricing and consolidation in the u s beer industry merger efficiencies provide the primary justification for why mergers of competitors may benefit consumers surprisingly there is little evidence that efficiencies can offset incentives to raise prices following mergers we estimate the effects of increased concentration and efficiencies on pricing by using panel scanner data and geographic variation in how the merger of the brewers miller and coors was expected to increase concentration and reduce costs all else equal the average predicted increase in concentration led to price increases of 2 but at the mean this was offset by a nearly equal and opposite efficiency effect

a treatment effect method for merger analysis with an application to parking prices in paris we propose a method of building control groups for retrospective merger evaluation the procedure involves two parameters a distance or radius and an order of exposure reflecting the notion that a merger can affect an outlet in a more or less direct way we implement the method of estimating the price effect of a merger in the paris parking market and illustrate the consequences of including indirectly exposed outlets in the control group the methodology applies to any industry with spatial competition and allows one to check the sensitivity of the results to the choice of the control group

skill transferability migration and development evidence from population resettlement in indonesia we use a natural experiment in indonesia to provide causal evidence on the role of location specific human capital and skill transferability in shaping the spatial distribution of productivity from 1979 1988 the transmigration program relocated two million migrants from rural java and bali to new rural settlements in the outer islands villages assigned migrants from regions with more similar agroclimatic endowments exhibit higher rice productivity and nighttime light intensity one to two decades later we find some evidence of migrants adaptation to agroclimatic change overall our results suggest that regional productivity differences may overstate the potential gains from migration

who was colonized and when a cross country analysis of determinants the process of colonization has shaped the economic and demographic contours of the modern world in this paper we study the determinants of the occurrence and timing of colonization of non european countries by western european powers of particular interest is the role of early development measures that are known to be strong correlates of present day levels of income we show that non european societies with longer histories of agriculture and statehood and higher levels of technology adoption in 1500 were less likely to be colonized and tended to be colonized later if at all we also find that proximity to the colonizing powers disease environment and latitude are significant predictors of the occurrence and timing of colonization although their impacts are less robust to choice of country sample our models have high explanatory power and their support for the significance of early development is robust to the use of alternative indicators of early development and disease to the use of instruments to focus on the exogenous component of early development and to the joint estimation of the colonization and timing equations to correct for potential selection bias