diverging solidarity labor strategies in the new knowledge economy the transition from fordist manufacturing to the so called knowledge economy confronts organized labor across the advanced market economies with a new and more difficult landscape many scholars have suggested that the future of egalitarian capitalism depends on forging new political coalitions that bridge the interests of workers in the new and old economies this article explores current trajectories of change in denmark and sweden two countries that are still seen as embodying a more egalitarian model of capitalism the authors show that labor unions in these countries are pursuing two quite different strategies for achieving social solidarity the danish aimed at equality of opportunity and the swedish aimed at equality of outcomes the article examines the origins of these different strategic paths and explores the distinctive distributional outcomes they have produced the conclusion draws out the broad lessons these cases hold for the choices currently confronting labor movements throughout the advanced industrial world

sacrifice and stigma reducing free riding in cults communes and other collectives this paper presents an economic analysis of religious behavior that accounts for the continuing success of groups with strange requirements and seemingly inefficient prohibitions the analysis does not presuppose any special motives for religious activity rather religion is modeled as a club good that displays positive returns to participatory crowding the analysis demonstrates that efficient religions with perfectly rational members may benefit from stigma self sacrifice and bizarre behavioral restrictions the model also addresses sacrifice in nonreligious social clubs fraternities communes political parties work groups and families

mr smith and the preachers the economics of religion in the wealth of nations the extension of economic analysis to problems beyond the domain of formal markets and explicit prices represents a major recent intellectual development but economic imperialism is not new and was not invented in chicago adam smith in his wealth of nations extended economic reasoning to a variety of nonmarket exchange problems one example is his analysis of religious behavior smith viewed participation in religion as a rational device by which individual enhanced the value of their human capital he also explained the behavior of the clergy and other suppliers of religious services from an economic perspective

power resources and employer centered approaches in explanations of welfare states and varieties of capitalism protagonists consenters and antagonists the power resources approach underlining the relevance of socioeconomic class and partisan politics in distributive conflict within capitalist economies is challenged by employer centered approaches claiming employers and cross class alliances to have been crucial in advancing the development of welfare states and varieties of capitalism theoretically and empirically these claims are problematic in welfare state expansion employers have often been antagonists under specific conditions consenters but very rarely protagonists well developed welfare states and coordinated market economies have emerged in countries with strong left parties in long term cabinet participation or in countries with state corporatist institutional traditions and confessional parties in intensive competition with left parties

are workers paid their marginal products status is like coase s social costs a reciprocal phenomenon given that one person s gain in status can occur only at the expense of a loss in status for others and that workers are free to choose their coworkers it follows that the competitive wage structure within a firm must be one in which individual wage differences understate individual differences in marginal products the purpose of this paper is to examine a variety of empirical evidence that relates to this proposition about the firm s internal wage structure the paper is organized as follows section i briefly summarizes the theoretical considerations that govern competitive wage determination when status matters to people and firms are viewed as voluntary associations of workers section ii then confronts the predictions of section i by examining pay and productivity schedules for a group of sales occupations for which these schedules are relatively easily observed section ii also examines the relationship between wages and productivity for a sample of university professors an occupation in which individual productivity differences are for a variety of obvious reasons relatively more difficult to measure all of the evidence examined is consistent with the hypothesis that within firms wage rates vary substantially less than do individual productivity values section iii discusses additional observations and evidence that bear on this same hypothesis it suggests that the implicit market for status may strongly influence the ways in which firms are organized to carry out the tasks they perform section iv concludes by considering the claim that egalitarian internal wage structures arise because of equity considerations it argues that the concept of equity appears very closely linked to the concept of status and suggests a strategy for assigning monetaty value to the equity considerations that so often dominate public policy decisions

optimal income tax in the presence of status effects abstract the existence of distortions from individuals competing to attain social status by using consumption signals justifies some measure of income tax as a counter acting distortion the question posed here is whether it also constitutes a reason for a more progressive income tax schedule the answer is found to be broadly negative if progressiveness is interpreted as a more convex tax schedule unless the rich are more concerned with status seeking than the poor on the other hand status seeking makes the optimal tax schedule steeper so that redistribution is increased essentially the analysis of status seeking based on a signaling approach confirms and strengthens the existing view of an optimal tax schedule and can be incorporated into the diamond american economic review 88 1998 83 95 approach

is globalization reducing poverty and inequality abstract over the past 20 years or so india china and the rest of east asia experienced fast economic growth and falls in the poverty rate latin america stagnated the former soviet union central and eastern europe and sub saharan africa regressed but what are the net trends the neoliberal argument says that world poverty and income inequality fell over the past two decades for the first time in more than a century and a half thanks to the rising density of economic integration across national borders the evidence therefore confirms that globalization in the context of the world economic regime in place since the end of bretton woods generates more mutual benefit than conflicting interests this paper questions the empirical basis of the neoliberal argument

printing and protestants an empirical test of the role of printing in the reformation the causes of the protestant reformation have long been debated this paper seeks to revive and econometrically test the theory that the spread of the reformation is linked to the spread of the printing press i test this theory by analyzing data on the spread of the press and the reformation at the city level an econometric analysis that instruments for omitted variable bias with a city s distance from mainz the birthplace of printing suggests that cities with at least one printing press by 1500 were at minimum 29 percentage points more likely to be protestant by 1600

sect subsidy and sacrifice an economist s view of ultra orthodox jews israeli ultra orthodox men study full time in yeshiva until age 40 on average why do fathers with families in poverty choose yeshiva over work draft deferments subsidize yeshiva attendance yet attendance typically continues long after exemption fertility rates are high tfr 7 6 and rising a social interaction approach explains these anomalies yeshiva attendance signals commitment to the community which provides mutual insurance to members prohibitions strengthen communities by effectively taxing real wages inducing high fertility historically the incursion of markets into traditional communities produces ultra orthodoxy subsidies induce dramatic reductions in labor supply and unparalleled increases in fertility illustrating extreme responses social groups may have to interventions

adopting a new religion the case of protestantism in 16th century germany using a dataset of territories and cities of the holy roman empire in the sixteenth century this article investigates the determinants of adoption and diffusion of protestantism as a state religion a territory s distance to wittenberg the city where martin luther taught is a major determinant of adoption this finding is consistent with a theory of strategic neighbourhood interactions introducing the reformation was a risky enterprise for territorial lords and had higher prospects of success if powerful neighbouring states committed to the new faith the actual spatial and temporal patterns of expansion of protestantism are analysed in a panel dataset

the importance of brand and competition in defining u s religious markets author affiliation brian goff department of economics 1906 college heights boulevard western kentucky university bowling green ky 42101 usa brian goff wku edu corresponding authormichelle w trawick dagger department of economics 1906 college heights boulevard western kentucky university bowling green ky 42101 usa michelle trawick wku edu acknowledgment the authors thank bob tollison colleagues participating in the economics workshop at wku and two anonymous reviewers for comments any remaining flaws are the authors responsibility 1 introductionover the past 40 years economists have vastly expanded their study of behavior in markets where there is no explicit trade of goods or services one of the most fundamental and ubiquitous of these markets is that of religious behavior where economists and other social scientists have explored a variety of influences on religious participation at the outset of this research program economic models of religious choice borrowed from long used choice theoretic concepts such as the law of demand or the cost of time more recent contributions have included household production models taking account of human capital or the role of market level forces particularly religious competition prior empirical research has resulted in the identification of a variety of determinants of religious participation these include income education race and the degree of monopolization or competitiveness in the religious market as the empirical application and testing of these models has proceeded researchers have been aware of problems in measuring various aspects of religious choice such as religious participation or religiosity at the most general level religiosity may imply a difference in a secular versus religious worldview at the level of actual observation it often measures how frequently one attends church while some of the basic measurement issues related to religious choice and behavior may be beyond the power of researchers to investigate one important aspect is not but has largely been overlooked that is the type or brand of religious choice by and large empirical research has skirted this important definitional issue and treated different types or brands of religious choice much like one would treat different brands of carbonated soft drinks using such a broad homogeneous definition of the religious product implicitly assumes that economic and demographic characteristics exert similar influences on different types or brands of religious participation and thereby assumes that such branding is not of empirical significance in defining religious markets and behavior within them 1 moreover some tension has existed in prior empirical work as to whether religious competition is an exogenous factor the common assumption or whether it helps to define the choice variable 2our central question is whether the same processes are driving religiosity across brands we ask do consumers of religion respond differently to key economic variables such as income religious competition or other factors based on the brand of religion being consumed likewise do some economic variables exert their influence independently of brand an important part of our investigation centers on how to measure brand we first rely on two indicators of brand broad denominational categories and intensity of participation in religious activity the denominational categories are mainline protestant evangelical protestant and catholic the intensity breakdown is based on geographic regions of low moderate and high religious participation in addition we also examine whether the degree of religious competition itself helps to define brand in the next section we develop theoretical explanations for variation in overall religious participation as well as by brand and discuss prior empirical work in this area

an economic analysis of the protestant reformation this paper seeks to explain the initial successes and failures of protestantism on economic grounds it argues that the medieval roman catholic church through doctrinal manipulation the exclusion of rivals and various forms of price discrimination ultimately placed members seeking the z good spiritual services on the margin of defection these monopolistic practices encouraged entry by rival firms some of which were aligned with civil governments the paper hypothesizes that protestant entry was facilitated in emergent entrepreneurial societies characterized by the decline of feudalism and relatively unstable distribution of wealth and repressed in more homogeneous rent seeking societies that were mostly dissipating rather than creating wealth in these societies the roman church was more able to continue the practice of price discrimination informal tests of this proposition are conducted by considering primogeniture and urban growth as proxies for wealth stability

an economic theory of economic analysis the case of the school of salamanca the school of salamanca often is identified as the first economic tradition in the history of the dismal science its members anticipated principles later developed by the likes of adam smith and carl menger this paper provides an economic theory of the production of economic analysis by the doctors of salamanca beginning from the observation that producers of economic analysis respond to incentives the same way producers of meat beer or bread do historically the demand for economic analysis arises from two sources governments and interest groups i argue that the changes in international trade associated with the emergence of new transatlantic markets in the sixteenth century led to an increase in the demand for economic analysis by spanish merchants and that the contribution of the school of salamanca was grounded in the predictable supply response to those fresh incentives

cooperation and political economic performance in affluent democratic capitalism research on comparative political economic performance has traditionally followed two separate tracks one concerned with collective economic gain growth and efficiency and the other focused on distribution and redistribution cooperative institutions offer a key to understanding cross national variation among the affluent capitalist democracies in both facets of political economic performance these institutions cluster along two dimensions neocorporatism and firm level cooperation pooled time series analysis for 18 nations over 1960 89 suggests that 1 neocorporatism is a major source of distributive redistributive policies and outcomes and of several sources of collective gain 2 firm level cooperation is a key contributor to economic growth

people s opium religion and economic attitudes since max weber there has been an active debate on the impact of religion on people s economic attitudes much of the existing evidence however is based on cross country studies in which this impact is confounded by differences in other institutional factors we use the worldvalues surveys to id entify the relationship between intensity of religious beliefs and economic attitudes controlling for country fixed effects we study several economic attitudes towardcooperation the government working women legal rules thriftiness andthe market economy we also distinguish across religious denominations differentiating on whether a religion is dominant in a country we find that on average religious beliefs are associated with good economic attitudes where good is defined as conducive to higher per capita income andgrowth yet religious people tendto be more racist andless favorable with respect to working women these effects differ across religious denominations overall we find that christian religions are more positively associatedwith attitudes conducive to economic growth r 2003 elsevier science b v all rights reserved jel classification a1 e0 n4 z1

interdependent preferences and the competitive wage structure this article shows by example that when workers care about relative income and are free to choose their coworkers the equilibrium distribution of wages within firms must be less dispersed than the corresponding distribution of marginal products an implicit market for within firm status is shown to produce welfare gains by sorting workers among firms in accordance with how much they are willing to pay for high rank the resulting equilibrium pareto dominates allocations in which each worker is paid his marginal product

gonna party like it s 1899 party systems and the origins of varieties of coordination this article explores the origins of peak employers associations to understand why countries produce highly centralized macrocorporatist groups weaker national associations but stronger industry level groups or highly fragmented pluralist associations the authors suggest that the structure of partisan competition played a vital causal role in the development and evolution of these peak associations the leadership for peak employers association development came from business oriented party activists and bureaucrats who sought both to advance industrial development policy and to solve specific problems of political control business oriented party leaders and bureaucrats in both predemocratic and democratic regimes feared the rising tide of democracy and labor activism and viewed employer organization as a useful tool for political control to secure parliamentary advantage and to serve as a societal counterweight to workingclass activism because leadership for association building came from the state the political rules of the game were crucial to outcomes the structure of party competition and state centralization shaped incentives for strategic coordination for both political actors and employers dedicated business parties were more likely to develop in countries with multiparty systems and limited federal power sharing than in countries with two party systems and federalism in a multiparty context where no single party was likely to gain power each party had an incentive to cooperate with other social groups moreover business oriented party leaders and bureaucrats in multiparty systems were motivated to delegate policy making authority to coordinated societal channels for industrial relations because they anticipated that employers would win more in these channels than in parliamentary settings where the center and left could form a coalition against the right again centralized party systems were more likely than federal ones to develop a dedicated national business party that transcended regional cleavages and to retain a strong role for the state in the governance of industrial relations

incentive compatibility in signaling games with a continuum of types on donne deux resultats utiles pour demontrer l existence et pour caracteriser des equilibres de separation dans des jeux de signalement

the government of chronic poverty from exclusion to citizenship development trustees have increasingly sought to challenge chronic poverty by promoting citizenship amongst poor people a move that frames citizenship formation as central to overcoming the exclusions and inequalities associated with uneven development for sceptics this move within inclusive neoliberalism is inevitably depoliticising and disempowering and our cases do suggest that citizenship based strategies rarely alter the underlying basis of poverty however our evidence also offers some support to those optimists who suggest that progressive moves towards poverty reduction and citizenship formation have become more rather than less likely at the current juncture the promotion of citizenship emerges here as a significant but incomplete effort to challenge poverty that persists over time

belief in a just world and redistributive politics international surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate at the same time social ethnographies and experiments by psychologists demonstrate individuals recurrent struggle with cognitive dissonance as they seek to maintain and pass on to their children a view of the world where effort ultimately pays off and everyone gets their just deserts this paper offers a model that helps explain i why most people feel such a need to believe in a just world ii why this need and therefore the prevalence of the belief varies considerably across countries iii the implications of this phenomenon for international differences in political ideology levels of redistribution labor supply aggregate income and popular perceptions of the poor the model shows in particular how complementarities arise endogenously between individuals desired beliefs or ideological choices resulting in two equilibria a first american equilibrium is characterized by a high prevalence of just world beliefs among the population and relatively laissez faire policies the other european equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state more generally the paper develops a theory of collective beliefs and motivated cognitions including those concerning money consumption and happiness as well as religion

reinventing welfare regimes employers and the implementation of active social policy denmark and britain have adopted quite similar active social reforms in which employers play a major role in the programmatic delivery of services however the implementation of the programs has differed dramatically in the two countries danish firms despite having had virtually no prior involvement in administering social programs have participated in far greater numbers than british employers who by contrast have long provided private employment based social benefits drawing from interviews with 107 randomly selected british and danish corporations this article seeks to explain why danish employers have participated at higher rates than their british counterparts subtle programmatic differences that reflect each country s welfare regime have had profound feedback effects on firms willingness to participate in the programs these findings have implications for regimes capacities both to correct for traps and to revise social protections to meet the needs of the new economy

relative standing comparisons risk taking and safety regulations abstract we study the question of how relative standing comparisons or status seeking influence risk taking when utility is separable in consumption and status the following results apply with non systematic risks more concern for status leads to more less risk taking when in a sense made precise in the paper the utility function is less more concave in status than in pure consumption with systematic risk risk taking always increases with the concern for status however status seeking always implies socially excessive risk taking thus suggesting a role for public regulation of risky choices

efficient status seeking externalities and the evolution of status games abstract status seeking games are games in which an individual s utility is determined by his relative expenditure on status seeking activities rather than his absolute consumption there are a number of parallels between status seeking and rent seeking activities for example a tendency for pareto excessive private investment however many status seeking activities differ from rent seeking activities insofar as they generate significant benefits to individuals not actively involved in the game given an array of more or less productive status seeking games it is likely that relatively efficient status conferring mechanisms will tend to displace less efficient ones

on limiting the market for status signals abstract in many societies individuals care how others view them in their efforts to impress such individuals engage in consumption signals which attempt to establish higher levels of status than their true status type this leads to an inefficiency which offers the possibility of a pareto improving tax policy the impacts of tax policy and benefits on the signalling equilibrium are considered

theocracy and resilience against economic sanctions abstract this paper provides a simply theory to explain the impact of sanctions on a regime s policies and behavior sanctions are generally put to strip the target country from its available rents and weaken the government s stance against growing discontent in the population we show however that sanctions may give legitimacy to an incumbent government by influencing the optimal level of religious ideology provided by the state and further stabilizing its grip to power and rents while in a good state of nature sanctions build resilience as long as religious ideology among the population is strong at bad times they compel the target country to move towards ideological moderation in a world of asymmetric information the target country always finds it optimal to send a signal that truly represents the prevailing state of nature in order to induce learning and reach a win win outcome

the economic effects of the protestant reformation testing the weber hypothesis in the german lands following max weber many theories have hypothesized that protestantism should have favored economic development with its religious heterogeneity the holy roman empire presents an ideal testing ground for this hypothesis using population figures of 272 cities in the years 1300 1900 i find no effects of protestantism on economic growth the finding is precisely estimated robust to the inclusion of various controls and does not depend on data selection or small sample size denominational differences in fertility behavior and literacy are unlikely to be major confounding factors protestantism has no effect when interacted with other likely determinants of economic development instrumental variables estimates considering the potential endogeneity of religious choice are similar to the ols results

design innovation and fashion cycles a model of fashion cycles is developed in which designs are used as a signaling device in a dating game a monopolist periodically creates a new design over time the price of the design falls as it spreads across the population once sufficiently many consumers own the design it is profitable to create a new design and thereby render the old design obsolete this paper gives conditions under which all consumers would be better off by banning the use of fashion competition among designers may lead to less frequent changes in fashion and to higher prices than monopoly copyright 1995 by american economic association

trust in large organizations several authors suggest that trust is an important determinant of cooperation between strangers in a society and therefore of performance of social institutions we argue that trust should be particularly important for the performance of large organizations in a cross section of countries evidence on government performance participation in civic and professional societies importance of large firms and the performance of social institutions more generally supports this hypothesis moreover trust is lower in countries with dominant hierarchical religions which may have deterred networks of cooperation trust hold up remarkably well on a cross section of countries this abstract was borrowed from another version of this item

the invisible hand plays dice multiple equilibria in sects markets religious participation is much more widespread in the united states than in europe while europeans tend to view sects more suspiciously than americans we propose an explanation for these patterns without assuming differences in preferences or market fundamentals we study a religious market where both demand and supply of spiritual services are endogenous such markets may have multiple equilibria further equilibria with more sects result in higher welfare and lower membership costs as secular societies tend to host on average more demanding sects

an accurate measurement of the crowd out effect income effect and price effect for charitable contributions in the past empirical research on charitable contributions has focused on two issues estimating the income and price elasticities of contributions and estimating the extent to which government funding crowded out private contributions the two fundamental problems in all these studies are the differences in the underlying conceptual models and the use of imperfect data for empirical analysis this paper addresses both of these problems

learning to love the government trade unions and late adoption of the minimum wage one counterintuitive variation in wage setting regulation is that countries with the highest labor standards and strongest labor movements are among the least likely to set a statutory minimum wage this the author argues is due largely to trade union opposition trade unions oppose the minimum wage when they face minimal low wage competition which is affected by the political institutions regulating industrial action collective agreements and employment as well as by the skill and wage levels of their members when political institutions effectively regulate low wage competition unions oppose the minimum wage when political institutions are less favorable toward unions there may be a cleavage between high and low wage unions in their minimum wage preferences the argument is illustrated with case studies of the uk germany and sweden the author demonstrates how the regulation of low wage competition affects unions minimum wage preferences by exploiting the following labor market institutional shocks the conservatives labor law reforms in the uk the hartz labor market reforms in germany and the european court of justice s laval ruling in sweden the importance of union preferences for minimum wage adoption is also shown by how trade union confederation preferences influenced the position of the labour party in the uk and the social democratic party in germany

democratic stability in venezuela elite consensus or class compromise an elite framework is often used to explain democratic stability in post 1958 venezuela i argue that a class compromise model is more useful not onlyfor understanding the venezuelan case but also for explaining the variation in regime outcomes across regions of the capitalist world economy and within the periphery to contrast the utility of the two models i analyze venezuela s political history since 1945 to demonstrate the more general usefulness of the class compromise model i compare venezuela to two countries in which democratic regimes were destabilized brazil in 1964 and chile in 1973 democratic stability occurs when state managers are able to balance capital accumulation and consumption policies democratic instability occurs when state managers lack sufficient resources to satisfy the consumption demands of a mobilized working class without threatening the accumulation interests of capitalists

government growth and private contributions to charity we exploit the time series properties of charitable giving to provide additional insights into the relationship between charitable contributions and government spending cointegration tests reveal a significant long run relationship between several categories of charitable giving and government spending granger causality tests provide evidence on the short run giving and spending relationship evidence suggests that charitable contributions to education respond quite differently to state and local government education expenditures versus federal government expenditures we argue that the government spending and charitable giving relationship depends on the source of government revenue how this revenue is used and the rational ignorance of private donors

voluntary donations and public expenditures in a federal system proponents of the new federalism argue that nonprofit organizations and local governments will fully offset federal social service expenditure cutbacks the author analyzes this proposition as a competitive game in which donations are motivated by private and public good considerations the author characterizes the response of political economic equilibrium to exogenous changes in federal expenditures when local voters are cognizant of donor reactions partial replacement is the most likely outcome though others are possible copyright 1987 by american economic association

the economics of the counter reformation incumbent firm reaction to market entry the catholic church reacted to the protestant reformation by taking on the defensive posture of an incumbent firm monopoly fighting to survive in the face of new competition contemporary firms typically respond to rival entry by rewriting their corporate charter so did the medieval catholic church but the council of trent failed as a reorganization plan because to keep economic rents flowing as before it left intact the distribution of powers and property rights among the governing body of pope and cardinals thus demonstrating that entrenched economic interests are powerful inducements to behavior even in spiritual institutions jel n00 d2 d4 d72 p16 it is to be desired that those who assume the episcopal office know what are their duties and understand that they have been called not for their own convenience not for riches or luxury but to labors and cares for the glory of god the canons and decrees of the council of trent session 25 chapter 1 church reform usually meant tightening up the rules for collecting money denys hay 1977 39 i introduction although it has not been universally applauded the extension of economics into new domains of social behavior has become increasingly common economic tools have now been applied to areas of human behavior as diverse as art culture marriage and sumo wrestling for some economists one of the most intriguing of these new realms of inquiry is the economics of religion a subject that relies on principles of rational behavior interest group analysis public choice and game theory to explain church membership as well as changes in religious institutions azzi and ehrenberg 1975 advanced one of the earliest studies in this vein more recently iannaccone 1998 enriched and continued the tradition our own previous contributions to this burgeoning body of literature have focused on the economics of the medieval church in earlier studies ekelund et al 1989 1992 treated the medieval church as an economic firm to better understand the formation of religious doctrine ekelund et al 1996 analyzed the industrial organization and rent seeking practices of the medieval church and ekelund et al 2002 explored the economics of the protestant reformation from a historical perspective the landmark change in religious institutions was the protestant reformation of the sixteenth century which eventually produced permanent changes in religious markets in a previous study ekelund and colleagues 2002 analyzed this event as a form of market entry and showed that the protestant reformation 1517 1555 was a consequence of both demand side and supply side factors this article takes the next logical step it seeks to analyze the historical response to competitive entry of an incumbent finn the medieval catholic church by explicit reference to what historians and scholars refer to as the counter reformation or alternatively the catholic reformation 1555 1648 1 we maintain that as a dominant firm the roman catholic church responded to market entry in a way predicted by economic theory after protestantism gained a foothold in the religious market the catholic church faced a residual demand curve that was composed of less elastic demanders consequently it a lowered the average price of providing the z good religious services b engaged in vigorous competition in the neighborhood of the new entrant s price c attempted to raise rivals marginal costs to move demanders back to catholicism and d tried to boost demand in its retail market while simultaneously protecting and even intensifying its rent seeking practices in its wholesale market 2 in sum the roman catholic church responded to protestant entry and to the encroaching age of reason with violence and nominal rather than fundamental doctrinal alterations ii

trade expansion and contract enforcement consider a world of traders separated in geographic economic or social space honest trade offers larger gains for more distant traders but frequencies of meetings and information flows about cheating have local bias honesty is self enforcing only between pairs of sufficiently close neighbors global honesty prevails only in a sufficiently small world the extent of self enforcing honesty is likely to decrease when the world expands beyond this size costly external enforcement is useful only if the world is sufficiently large and its net payoff need not be larger than that of a self governing small community intermediate size worlds fare worst

incentives predestination and free will i introduction max weber s 1930 the protestant ethic and the spirit of capitalism argues that the protestant reformation set the stage for post medieval economic growth using an occupational study of germans from 1895 weber shows that protestants dominate the mercantile or capitalist occupations in that country at that time period weber also argues that between 1600 and 1900 protestant countries advanced faster than their catholic neighbors and that this was the result of calvin s urging acceptance of material success and the dogma of predestination 1 an ocean of work beginning with rachfahl 1909 and sombart 1913 has since attacked weber s theological generalizations see giddens 1992 for a review tawney 1926 and robertson 1933 argue weber s causal interpretation is wrong and that economic growth laid the framework for protestantism not protestantism for economic growth samuelsson 1961 disputes the very correlation between protestantism and economic success which is the basis of the weberian hypothesis the correlation between protestantism and economic success is certainly weaker than weber suggests even in the german data that weber himself uses furthermore more modem data tends to find only a modest link between protestantism and economic success as in winter 1974 and tomes 1994 2 however for centuries there were gaps in economic success between protestant and catholic nations and new findings on early modem data tend to confirm differences between protestants and catholics at least within the u s as weber s arch critic samuelsson himself writes there is some truth in the contention that the protestant countries and especially those adhering to the reformed church were particularly vigorous economically given that there was some correlation between protestantism and economic success before the mid to late 20th century the question then becomes why this correlation existed some elements of protestant theology clearly encourage capitalism usury doctrines became less rigid under calvinism nelson 1972 avarice was de emphasized as a sin weber claims that luther s concept of a calling includes worldly success and that this is a prominent difference with catholic doctrine although this theological claim has been subject to much debate e g sombart 1915 there still appears to be some basic truth to this point one of the largest theological gaps between the denominations is that calvinism accepts the dogma of predestination while catholicism argues for a dogma of free will 3 for the purposes of this paper we will follow weber and accept broad brush definitions of doctrine rather than getting mired in the more subtle features of the two doctrines under predestination a spiritual elite is preordained before the beginning of time and will receive eternal life 4 under free will it is only through a lifetime of good actions that individuals are accepted into heaven 5 weber argues that predestination creates a more lasting basis for economic growth than the dogma of free will in this paper we present a model that formally treats weber s claim under particular circumstances and show how predestination could create the correlation between protestantism and growth that existed in the pre modern era our model also suggests conditions under which a more successful society would favor the doctrine of predestination which can be seen as a formalization of tawney s and robertson s view that economic growth created the reformation in this essay both free will and predestination create incentives which spur good behavior 6 under the doctrine of free will good behavior is motivated by an increased probability of getting into heaven under the doctrine of predestination this incentive is irrelevant because individual actions do not determine spiritual outcomes instead an individual s actions are motivated by a desire to receive positive behavior from others by convincing them that he is part of the spiritual elite

do government subsidies increase the private supply of public goods we study three different models in which public goods are supplied by private contributions in one of these models tax financed government subsidies to private contributions will definitely increase the equilibrium supply of public goods in the other two models government subsidies are neutralized by offsetting changes in private contributions we explain why it is that these models lead to opposite conclusions and we argue on the basis of our first model that a government that wants to use taxes and subsidies to increase total provision of public goods will be able to do so indeed our model yields a surprisingly decisive comparative statics result if public goods and private goods are both normal goods then an increase in the subsidy rate will necessarily increase the equilibrium supply of public goods

rituals or good works social signaling in religious organizations we develop a model of social signaling of religiosity and cooperative behavior in religious organizations the model embeds a ritual based religious organization in which signaling arises through the use of costly rituals and a discipline based religious organization in which such signaling occurs through the monitoring of past behavior we use this framework to contrast positively and normatively these two forms of social signaling we show we develop a model of social signaling of religiosity and cooperative behavior in religious organizations the model embeds a ritual based religious organization in which signaling arises through the use of costly rituals and a discipline based religious organization in which such signaling occurs through the monitoring of past behavior we use this framework to contrast positively and normatively these two forms of social signaling we show that ritual based religions while using a costly and wasteful signal also imply a higher level of coordination of behavior in social interactions and a higher incidence of mutual cooperation our welfare analysis suggests that communities are more likely to support a switch to a discipline based religion if strategic complementarities are high and if there is sufficiently high level of public information about social behavior this accords with the success of calvin s reformation in switzerland and france a process characterized by the reduction of rituals along with the creation of institutions to monitor and publicize individuals behavior such as the consistory

was weber wrong a human capital theory of protestant economic history max weber attributed the higher economic prosperity of protestant regions to a protestant work ethic we provide an alternative theory protestant economies prospered because instruction in reading the bible generated the human capital crucial to economic prosperity we test the theory using county level data from late nineteenth century prussia exploiting the initial concentric dispersion of the reformation to use distance to wittenberg as an instrument for protestantism we find that protestantism indeed led to higher economic prosperity but also to better education our results are consistent with protestants higher literacy accounting for most of the gap in economic prosperity

financing public goods public goods can be financed by direct taxation or a subsidy to private spending this paper examines the relative efficiency and distributional consequences of the two methods efficiency is shown to depend on the price elasticity of private spending and the trade off between public and private spending when this trade off is dollar for dollar however a subsidy is always more efficient than direct taxation the gains from a subsidy are larger for a mixed good than for a pure public good looking a t distributional effects the author shows when richer taxpayers may prefer a tax credit to deductibility even though they face lower prices with deductibility and also shows when richer taxpayers prefer direct taxation to either type of subsidy copyright 1987 by university of chicago press

introduction to the economics of religion after a very long hiatus economists have begun again to study the relationship between economics and religion this article seeks to summarize and evaluate the principal themes and empirical findings that have appeared in some 200 recent papers on the economics of religion although some of the research concerns the economic consequences of religiosity most applies standard economic theory to the study of individual religious activity the characteristics of religious groups and the impact of regulation and competition on religious markets

democratic limits to redistribution inclusionary versus exclusionary coalitions in the knowledge economy the knowledge economy deindustrialization and the decline of fordism have undermined the economic complementarities that once existed between skilled and semiskilled workers the result has everywhere been a decline in coordinated wage bargaining and unionization and a notable rise in labor market inequality yet the political responses have been very different across advanced democracies while labor markets for part time and temporary employment have been deregulated across the board some countries have compensated losers through increased cash transfers and active labor market programs and others have allowed inequality and insider outsider divisions to grow deeper the article argues that the divergent government responses reflect differences in underlying electoral coalitions and that these in turn mirror the structure of party and electoral systems the authors support their argument with evidence for government responses to economic shocks in the period 1980 to 2010

conspicuous consumption snobbism and conformism abstract we develop a model in which consumers purchase a conspicuous good in order to signal high income and thereby achieve greater social status in equilibrium the signalling value of conspicuous consumption depends in an identifiable way on the number of consumers and consumer behaviour is characterized by either snobbism or conformism the market demand curve for the conspicuous good may exhibit a positive slope if consumers are conformist we derive some unconventional policy implications concerning the taxation of luxuries and the voluntary provision of public goods

a signaling explanation for charity this article examines a novel but plausible motive for charitable giving charitable donations which are observable can signal wealth or income the signaling equilibrium of charitable donations has attractive properties donations increase proportionally with population size governmental funding for public goods affects private charity only through an income effect crowding out need not be complete income redistribution is generically nonneutral increasing the spread between the poorest and richest person in a community tends to increase private donations our theory are based on the assumption that people are willing to make charitable donations even if they will not increase provision of the public good the data on charitable giving support the hypothesis that donors donate at least partly for signaling purposes rather than only to aid the recipient or to obtain satisfactions unrelated to status though charitable organizations usually report donations within categories thus not allowing perfect revelation for analytical tractability we shall consider an equilibrium with perfect revelation and a continuum of types as characterized in george j mailath 1987 and norman j ireland 1994

the state and coordinated capitalism contributions of the public sector to social solidarity in postindustrial societies this article investigates the politics of change in coordinated market econo mies and explores why some countries well known for their highly cooperative arrangements manage to sustain coordination when adjusting to economic transformation while others fail the authors argue that the broad category of coordinated market economies subsumes different types of cooperative engagement macrocorporatist forms of coordination are characterized by national level institutions for fostering cooperation and feature a strong role for the state while forms of coordination associated with enterprise cooperation more typically occur at the level of sector or regional institutions and are often privately controlled although these diverse forms of coordination once appeared quite similar and functioned as structural equivalents they now have radically different capacities for self adjustment the role of the state is at the heart of the divergence among european coordinated countries a large public sector affects the political dynamics behind collective outcomes through its impact both on the state s construction of its own policy interests and on private actors goals although a large public sector has typically been written off as an inevitable drag on the economy it can provide state actors with a crucial political tool for shoring up coordination in a postindustrial economy the authors use the cases of denmark and germany to illustrate how uncontroversially coordinated market economies have evolved along two sharply divergent paths in the past two decades and to reflect on broader questions of stability and change in coordinated market economies the two countries diverge most acutely with respect to the balance of power between state and society indeed the danish state far from being a constraint on adjustment a central truism in neoliberal thought plays the role of facilitator in economic adjustment policy change and continued coordination

from farmers to merchants conversions and diaspora human capital and jewish history from the end of the second century ce judaism enforced a religious norm requiring fathers to educate their sons we present evidence supporting our thesis that this change had a major influence on jewish economic and demographic history first the high individual and community cost of educating children in subsistence farming economies 2nd to 7th centuries prompted voluntary conversions of jews that account for a share of the reduction from 4 5 to 1 2 million second the jewish farmers who invested in education gained the comparative advantage and incentive to enter skilled occupations during the urbanization in the abbasid empire in the near east 8th and 9th centuries and they did select themselves into these occupations third as merchants the jews invested even more in education a precondition for the mailing network and common court system that endowed them with trading skills demanded all over the world fourth the jews generated a voluntary diaspora within the muslim empire and later to western europe fifth the majority of world jewry lived in the near east when the mongol invasions in the 1250s brought this region back to a subsistence farming economy in which many jews found it difficult to enforce the religious norm and hence converted as it had happened centuries earlier jel j1 j2 n3 o1 z12 z13

culture openness and finance abstract differences in culture proxied by differences in religion and language cannot be ignored when examining why investor protection differs across countries we show that a country s principal religion predicts the cross sectional variation in creditor rights better than a country s natural openness to international trade its language its income per capita or the origin of its legal system catholic countries protect the rights of creditors less well than protestant countries a country s natural openness to international trade mitigates the influence of religion on creditor rights culture proxies are also helpful in understanding how investor rights are enforced across countries

redistributive conflict and social policy in latin america summary inequality has been a long standing feature of latin america this article is an examination of the redistributive and social policy struggles in two countries of the region mexico and chile while electoral democracy has propelled redistributive issues onto the policy agenda redistributive struggles are intense and progress in policy to address inequality is slow to emerge attention has been focused on cash transfer programs because of their ability to garner approval from a cross section of public opinion particularly from the most powerful while such programs have an important contribution to make to poverty reduction societal redistributive compromises are essential to an efficacious strategy to reduce poverty and inequality over the long term

electoral institutions and the politics of coalitions why some democracies redistribute more than others standard political economy models of redistribution notably that of meltzer and richard 1981 fail to account for the remarkable variance in government redistribution across democracies we develop a general model of redistribution that explains why some democratic governments are more prone to redistribute than others we show that the electoral system plays a key role because it shapes the nature of political parties and the composition of governing coalitions hence redistribution our argument implies 1 that center left governments dominate under pr systems whereas center right governments dominate under majoritarian systems and 2 that pr systems redistribute more than majoritarian systems we test our argument on panel data for redistribution government partisanship and electoral system in advanced democracies w hy do some countries redistribute more than others most work on the politics of redistribution starts from the premise that democratic institutions empower those who stand to benefit from redistribution the basic logic is succinctly captured in the meltzer richard 1981 model where the voter with the median income is also the decisive voter with a typical right skewed distribution of income the median voter will push for redistributive spending up to the point where the benefit of such spending to the median voter is outweighed by the efficiency costs of distortionary taxation this argument implies that redistibution is much greater in democracies than in nondemocracies at least of the right authoritarian variety and that among the latter inegalitarian societies redistribute more than egalitarian ones there is some evidence to supportthefirstimplication althoughitisdisputed see ross 2005 but most of the variance in redistribution is probably within the same regime type according to datafromtheluxembourgincomestudy forexample the reduction in the poverty rate in united states as a result of taxation and transfers was 13 in 1994 whereas the comparable figure for sweden was 82 thepovertyrateisthepercentageofhouseholdsbelow 50 of the median income to explain this variance we have to look at political and economic differences

the medieval church and rents from marriage market regulations this paper addresses the medieval roman catholic church s attempts to monopolize the marriage market and to wrest control over the institution from secular authority in particular the paper highlights specific doctrinal innovations and evolving rules and regulations rules surrounding endogamy the definition of a valid marriages and the escape clauses established by the church are the principal features of the argument as is the place of these manipulations in the overall monopoly of the church

pareto optimal redistribution and private charity abstract when private charity exists and is motivated by utility interdependence a non pareto optimal outcome the free rider problem typically arises nevertheless incremental fiscal redistribution cannot achieve a paretian welfare improvement so long as private charity continues at positive levels donors respond to incremental fiscal redistribution by reducing their voluntary contributions by exactly a dollar for every dollar transferred in this way no net transfer is achieved unless incremental fiscal redistribution is pursued to the point where private contributions have been driven to zero alternatively a net transfer may be achieved by fiscal measures which affect donors marginal incentives to donate

voluntary donations and public expenditures in a federalist system comment and extension in a recent paper richard steinberg 1987 examines the effects upon private donations of federal and local government spending for a public good unfortunately when discussing the consequences of changes in local spending he mis specifies the demand function for donations this error enables one to conclude from his model that it is a priori impossible for government to crowd out private donations one for one such a conclusion violates intuition because one for one crowding out should be at least theoretically possible and steinberg s model when corrected does allow donations to fall as much as the government increases its spending as this comment will show one can further conclude from the model presented in the body of steinberg s paper that the structure of the government s tax policy has no effect on the level of crowding out however the corrected model implies that the government can influence changes in private donations that are caused by increased government spending the degree of control depends upon the size of the donors income effects and upon the ability of the government to allocate the extra tax burden