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

malthus living in a slum urban concentration infrastructure and economic growth abstract the link between urban concentration primacy and economic growth at country level is not straightforward as there are benefits as well as costs associated with urban primacy recent empirical evidence suggests a differential negative effect of concentration in sub saharan africa compared to the rest of the world this paper revisits the literature on urban concentration and economic growth to shed some light on these recent results the main contribution of the paper is to show how differentiated effects of urban primacy on economic growth can be accounted for by considering a role for the quality of the urban environment in terms of urban infrastructure the role of urban infrastructure is found to be robust to a long list of controls different specifications different estimation techniques and potential bias from simultaneity and measurement error

optimal punishment schemes with state dependent preferences i introduction it is well known in the economics of crime literature that both the certainty and severity of punishment can be manipulated to deter criminal behavior as polinsky and shavell 1979 show when punishment takes the form of a fine the optimal combination of the probability of punishment and the magnitude of the fine depends on the risk attitudes of offenders and on the costs of catching and convicting offenders this paper examines how the optimal combination of certainty and severity are affected if offenders preferences are state dependent state dependent utility is commonly used in situations in which the state of the world affects how well individuals are able to enjoy the consumption of their wealth death of the individual is an obvious example and hirschleifer and riley 1992 also suggest the death of a child the loss of use of a limb or the loss of a precious heirloom there are many reasons to add conviction for a crime to this list 1 first if the individual is sent to prison his consumption opportunities are obviously diminished even without a prison sentence though utility might best be modeled as being state dependent for utility to be state independent there must exist some decrease in wealth that has the same effect on the utility function as being convicted of the crime if the offender is risk averse and has state independent utility a loss of wealth reduces the level of utility but increases marginal utility it is easy to imagine why being convicted of a crime would reduce the level of utility but it is difficult to imagine why it would increase the individual s marginal utility of wealth for example drivers who are caught speeding are angered beyond the level consistent with the expected loss of income but this additional anger does not lead to an additional increase in the marginal utility of wealth in addition to these considerations lott 1992a b provides evidence that conviction leads to increased divorce rates and constrained job opportunities the former reduces the level of utility but is unlikely to increase marginal utility and should therefore be modeled as a shift in the utility function constrained job opportunities reduce both income and job satisfaction and the reduction in job satisfaction is again best modeled as a shift in the utility function as a final argument supporting the use of state dependent preferences neilson and winter 1997 show that if offenders preferences are state dependent it is possible for them to be both risk averse and more sensitive to changes in the certainty of punishment than to proportional changes in the severity of punishment becker 1968 notes this empirical finding 2 and concludes that if offenders are expected utility maximizers they cannot be risk averse 3 polinsky and shavell 1979 demonstrate that when offenders are risk averse and have state independent utility increasing the fine increases social loss by increasing the amount of risk borne by offenders consequently in the extreme case in which it is costless to catch and convict offenders the optimal policy has a relatively low fine but punishes criminals with probability one this paper shows that if preferences are state dependent there is an additional social cost associated with setting a high probability of punishment because it makes it more likely that criminals are on their lower utility functions to avoid the additional social cost the certainty of punishment should be reduced ii the model the model presented below is identical to that in polinsky and shavell 1979 except for the addition of state dependent preferences identical individuals choose whether to commit a crime or not 4 gains from crime are random with probability q the individual gains a and with probability 1 q he gains b greater than a even though the gains are random it is assumed that the individual knows the true value of the gain before any decision must be made

understanding cultural persistence and change when does culture persist and when does it change we examine a determinant that has been put forth in the anthropology literature the variability of the environment from one generation to the next a prediction which emerges from a class of existing models from evolutionary anthropology is that following the customs of the previous generation is relatively more beneficial in stable environments where the culture that has evolved up to the previous generation is more likely to be relevant for the subsequent generation we test this hypothesis by measuring the variability of average temperature across 20 year generations from 500 1900 looking across countries ethnic groups and the descendants of immigrants we find that populations with ancestors who lived in environments with more stability from one generation to the next place a greater importance in maintaining tradition today these populations also exhibit more persistence in their traditions over time

from malthusian stagnation to modern growth this paper investigates the historical evolution of the relationship among population growth technological change and standard of living the analysis focuses on two most important differences among the malthusian regime post malthusian regime and modern growth regime these were the behavior of income per capita and the relationship between the level of income per capita and the population growth rate the modern growth regime is characterized by steady growth in both income per capita and the level of technology in the malthusian regime technological progress and population growth was glacial by modern standards and income per capita was fairly constant in contrast to the modern growth regime the relationship between per capita income and population growth in the malthusian regime was positive post malthusian regime shared one characteristic with each of the two regimes in addition this paper developed and described an endogenous growth model consistent with the above mentioned transition process

the west and the rest in the world economy 1000â 2030 this paper analyses the forces determining per capita income levels of nations over the past millennium and the prospects to 2030 in the year 1000 ad asian countries were in the lead by 1820 per capita gdp in western europe and the us was twice the asian average the divergence had grown much bigger by 1950 but by the 1970s several asian countries japan south korea taiwan hong kong and singapore had achieved considerable catch up since then there has been a major surge in china and the beginning of a similar phenomenon in india as a result the asian share of world income has risen steadily and by 2030 will be fairly close to what it was in 1820 maddison concludes by comparing his analysis with the malthusian interpretation of oded galor

reap what you sow agricultural technology urbanization and structural change abstract this paper studies how productivity enhancing agricultural technology affects urbanization by provoking structural change we investigate these issues using a natural experiment in the united states the results show that technologies which improve crop productivity lead to a less urbanized economy as economic activity relocates from manufacturing and services towards agriculture the effects are highly persistent and are driven by the technology increasing agricultural labor demand our findings highlight the potentially unintended disruptive force of innovative technologies

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

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

an assessment of proposed energy resource tax reform in russia a static general equilibrium analysis abstract a large part of government revenues in russia comes from royalties and export taxes on crude oil oil products and gas recently the russian government has considered reducing export taxes on crude oil and oil products compensated by an increase in the royalty on crude oil the objective of the paper is to analyse the economy wide effects of this proposal moreover a hypothetical replacement of export taxes and royalties with a pure rent tax is analysed a static single country multi sector computable generation equilibrium cge model is employed the primary findings are as follows a replacement of export taxes on crude oil and oil products with a royalty on crude oil provides substantial allocative efficiency gains but this policy is not a superior one welfare could be substantially improved when the export taxes and royalty are replaced with a pure rent tax that can be implemented in the form of a cash flow tax on the negative side reducing export taxes on crude oil and oil products results in a strong appreciation of the currency as a result domestic producers become less competitive in domestic markets and there is a massive increase in import demand

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

pooling of uncertainty enforcing tradable permits regulation when emissions are stochastic an under appreciated advantage of tradable permits regulation is its ability to create better decision making when emissions are stochastic in general the distribution of stochastic actual emissions around intended emissions results in over or under compliance permit tradability reduces the extent to which actual aggregate emissions deviate from regulatory targets by giving firms an additional mechanism for responding to uncertainty we construct a two period model of permit regulation with ex post enforcement to demonstrate how the permit market distributes uncertainty and to illustrate the importance of expectations toward permit market outcomes

interfuel substitution in us electricity generation ongoing changes in the us electricity market include restructuring and increased competition with this unfettering of the market the fuel choice in generation is expected to become more flexible and responsive to investigate this hypothesis studies of us electricity fuel choices over the last three decades are summarized and the most recent analysis is provided on a market very different from the one on which earlier studies were done modern data handling techniques allow the consideration of the most comprehensive database including 185 utilities on monthly data for 1993 this paper finds fuel choice to show a considerable amount of price responsiveness the amount of responsiveness is sensitive to the fuel substitution possibilities within the utility and the amount of responsiveness seems to have increased recently for oil and natural gas

malthusian dynamism and the rise of europe make war not love this paper argues that malthusian regimes are capable of sustained changes in per capita incomes shifting mortality and fertility schedules can lead to different steady state income levels with long periods of growth during the transition europe checked the downward pressure on wages through late marriage which reduced fertility and a mortality regime that combined high death rates with high incomes we argue that both emerged as a result of the black death

an assessment of optimal gas pricing in russia a cge approach domestic gas prices in russia are administratively regulated and they are substantially lower than export netback prices the administrative price regulation operates as an implicit subsidy on domestic gas consumption the russian government aims to liberalise domestic wholesale gas prices in the long term while the export netback parity is defined as a political objective it seems not to be a necessary target anymore the export netback parity is not economically rational for russia because the average export netback price of gas is higher than the marginal cost due to gazprom s market power in export gas markets an optimal domestic gas price is still not well defined this paper addresses this question by employing a comparative static single country multi sector computable generation equilibrium model cge the administrative regulation of domestic gas prices is explicitly modelled the main findings are as follows an increase in the domestic gas price provides economic efficiency gains the more elastic the export and domestic demand for gas the larger the welfare gains the optimal domestic gas price should be approximately 55 of the export netback price increasing the domestic gas price provides additional government revenues which can be used to reduce distortionary taxes on sectoral effects the structure of the russian economy shifts from energy toward non energy intensive sectors in response to an increase in the domestic gas price there is an increase in the export supply of gas furthermore an increase in the domestic gas price leads to a reduction in total co2 emissions

economy wide effects of international and russia s climate policies abstract the objectives of this paper are to analyse the economy wide effects of international climate policy on the russian economy as well as the effects of russia s climate policy on european economies our analysis is based on a general equilibrium model that includes inertias such as imperfect sectoral labour mobility and vintage capital and has a detailed depiction of the power generation sector we found that international climate policy could reduce russia s private welfare by 1 8 annually due to lower revenues from exports of fossil fuels at the sectoral level russia could gain a comparative advantage in producing energy intensive commodities and hence russia s producers of those commodities increase their production and export supplies this could result in a carbon leakage in russia eliminating implicit subsidies on domestic consumption of gas and petroleum products could reduce russia s private welfare loss by 0 6 points and eliminate the carbon leakage nevertheless eliminating implicit subsidies on gas and petroleum products might not be sufficient to achieve the pledged emission reductions by 2030 moreover this leads to an undesirable increase in coal consumption and therefore some additional climate policy such as a carbon tax or an emission trading system might be required we also found that russia s climate policy could have positive but moderate effects on the european economies in particular countries such as lithuania slovakia and hungary benefit due to decreased export prices for gas crude oil and petroleum products from russia

cultural and institutional bifurcation china and europe compared how to sustain cooperation is a key challenge for any society different social organizations have evolved in the course of history to cope with this challenge by relying on different combinations of external formal and informal enforcement institutions and intrinsic motivation some societies rely more on informal enforcement and moral obligations within their constituting groups others rely more on formal enforcement and general moral obligations towards society at large how do culture and institutions interact in generating different evolutionary trajectories of societal organizations do contemporary attitudes institutions and behavior reflect distinct pre modern trajectories this paper addresses these questions by examining the bifurcation in the societal organizations of pre modern china and europe it focuses on their distinct epitomizing social structures the clan and the city that sustain cooperation through different mixes of enforcement and intrinsic motivation the chinese clan is a kinship based hierarchical organization in which strong moral ties and reputation among clan members are particularly important in sustaining cooperation in medieval europe by contrast the main example of a cooperative organization is the city here cooperation is across kinship lines and external enforcement plays a bigger role but morality and reputation

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

endogenous private safety investment and the willingness to pay for mortality risk reductions when individuals cannot undertake safety improving expenditures the effect of an increase in the initial risk on the willingness to pay wtp for mortality risk reduction is positive because of the dead anyway effect when they can undertake safety improving expenditures the effect of an increase in the initial risk is governed by two effects the dead anyway effect which is positive and the high payment effect which is negative we treat the two types of risk reducing expenditures endogenous and exogenous as inputs in a safety improving technology function and find conditions that guarantee that the high payment effect dominates

carbon taxation in russia prospects for a double dividend and improved energy efficiency russia is not only one of the world s major sources of carbon based energy coal oil and gas but is also one the most intensive users of energy furthermore russia accounts for a disproportionately large share of global carbon dioxide emissions some 5 to 6 of global carbon dioxide emissions eia 2011a it has been estimated world bank 2008 that russia could reduce its use of primary energy use by 45 with consequent economic and environmental benefits high energy and carbon intensity of the russia economy is inter alia explained by low energy prices due to high export taxes as well as administrative regulation of domestic prices of gas and electricity and low environmental taxes carbon taxes are one such pigouvian tax and they would address concerns on several fronts simultaneously in the short to medium term they would inter alia lead to lower ghg emissions and encourage the diffusion of more energy efficient technologies in the longer term the increased cost of energy inputs is expected to induce technological progress in this analysis the macroeconomic and sectoral effects of carbon taxes on the russia economy are examined this analysis addresses the following objectives i to test the double dividend hypothesis under perfect and imperfect competition in output markets to analyse ii the incidence of carbon taxes iii impacts on sectoral competitiveness iv effects on income equity and v interactions of carbon taxes with other taxes a computable single country multi sector comparative static cge model is employed russland verfugt nicht nur uber einen der grosten vorrate an kohlenstoffbasierter energie wie kohle rohol und gas sondern ist auch einer der grosten energieverbraucher daruber hinaus ist russland fur einen uberproportional grosen anteil von kohlendioxid emission etwa 5 bis 6 der weltweiten kohlendioxidemission verantwortlich mit der einfuhrung einer kohlendioxidsteuer konnten gleichzeitig unterschiedliche wirkungen erzielt werden kurz und mittelfristig wurden kohlenstoffsteuern sowohl zu einer reduzierung von treibhausgasemissionen als auch zur einfuhrung von energieeffizienteren technologien fuhren langfristig wird erwartet dass hohe energiekosten den anreiz zur entwicklung und zur investition in energiesparenden technischen fortschritt erhohen die vorliegende arbeit analysiert und bewertet die makrookonomischen und sektoralen auswirkungen einer einfuhrung von kohlenstoffsteuern auf die russische wirtschaft die ziele der arbeit bestehen darin die hypothese der doppelten dividende fur den fall des vollkommenen und des unvollkommenen wettbewerbs auf gutermarkten zu uberprufen und die inzidenz einer kohlenstoffsteuer ihre auswirkungen auf die sektorale wettbewerbsfahigkeit ihre auswirkungen auf die einkommensverteilung und die interaktion von kohlenstoffsteuern mit anderen steuern zu analysieren und zu bewerten als methodischer ansatz wurde ein single country und multi sektor model gewahlt

physiology and development why the west is taller than the rest we hypothesise that the timing of the fertility transition is an important determinant of comparative physiological development in support we provide a model of long run growth that elucidates the links between population size average body size and income during development industrialisation is shown to be accompanied by a reduction in family size and an intensification of nutrition per child early transition countries are therefore expected to be more developed today economically and physiologically empirically the timing of the fertility transition is strongly correlated with average body size across countries

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 evolution of culture and institutions evidence from the kuba kingdom we use variation in historical state centralization to examine the long term impact of institutions on cultural norms the kuba kingdom established in central africa in the early 17th century by king shyaam had more developed state institutions than the other independent villages and chieftaincies in the region it had an unwritten constitution separation of political powers a judicial system with courts and juries a police force a military taxation and significant public goods provision comparing individuals from the kuba kingdom to those from just outside the kingdom we find that centralized formal institutions are associated with weaker norms of rule following and a greater propensity to cheat for material gain this finding is consistent with recent models where endogenous investments to inculcate values in children decline when there is an increase in the effectiveness of formal institutions that enforce socially desirable behavior consistent with such a mechanism we find that kuba parents believe it is less important to teach children values related to rule following behaviors

growing up in a recession does the historical macroeconomic environment affect preferences for redistribution we find that individuals who experienced a recession when young believe that success in life depends more on luck than effort support more government redistribution and tend to vote for left wing parties the effect of recessions on beliefs is long lasting we support our findings with evidence from three different datasets first we identify the effect of recessions on beliefs exploiting time and regional variation in macroeconomic conditions using data from the 1972 2010 general social survey our specifications control for nonlinear time period life cycle and cohort effects as well as a host of background variables second we rely on data from the national longitudinal survey of the high school class of 1972 to corroborate the age period cohort specification and look at heterogeneous effects of experiencing a recession during early adulthood third using data from the world value survey we confirm our findings with a sample of 37 countries whose citizens experienced macroeconomic disasters at different points in history

fuel switching and climate and energy policies in the european power generation sector a generalized leontief model abstract the purpose of this paper is to analyze a the role and the nature of price induced switching behavior between fossil fuels i e coal oil and natural gas in the western european power sector as well as b the fuel choice impacts of a number of public policies implemented in this sector during the last 20 years the analysis is conducted within a generalized leontief cost function framework and employs pooled data across eight countries over the time period 1978 2004 we present short run own and cross price elasticities of fossil fuel demand and assess the impacts of a set of government policies implemented over this time period the empirical results show evidence of notable short run interfuel substitution between oil and gas and particularly in countries where fossil fuels are used extensively for both base and peak load purposes these findings support the notion that ex post fossil fuel substitution takes place in dual and multi fired plants by switching load between different single fuel fired plants as well as through the conversion of power plants to be able to burn alternate fuels the results also illustrate that different public policies i e removal of coal subsidies electricity market liberalization etc have had profound impacts on fossil fuel choices and have in particular favored power generation gas use at the expense of coal finally the paper makes use of the empirical results to simulate the fuel switching impacts of different carbon prices within the european emissions trading scheme eu ets

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

interfuel substitution in the united states in this paper we use the locally flexible translog functional form to investigate the demand for energy and interfuel substitution in the united states and to provide a comparison of our results with most of the existing empirical energy demand literature motivated by the widespread practice of ignoring theoretical regularity we follow barnett s 2002 suggestions and estimate the model subject to theoretical regularity using methods developed by diewert and wales 1987 and ryan and wales 2000 in an attempt to produce inference consistent with neoclassical microeconomic theory moreover we use the most recent data published by the u s energy information administration eia and in addition to investigating interfuel substitution possibilities in total u s energy demand we follow serletis et al 2009 and also examine interfuel substitution possibilities in energy demand by sector moreover we test for weak separability with the objective of discovering the structure of the functional form in total energy demand as well as energy demand by sector

carbon taxation and market structure a cge analysis for russia abstract russia is one of the world s major sources of carbon based energy as well as one its most intensive users introducing carbon taxes can lead to a reduction in emissions and encourage investment in energy efficiency we investigate the economic effects of carbon taxes on the russian economy under perfect competition and a cournot oligopoly in output markets the main findings are i substituting carbon taxes for labour taxes can yield a strong double dividend in russia however welfare gains strongly depend on the labour supply elasticity and elasticities of substitution between capital labour and energy ii under the assumption of a cournot oligopoly with homogenous products and symmetric firms in the markets for natural gas petroleum and chemical products metals and minerals welfare costs of the environmental tax reform can be higher than under perfect competition this is because introducing carbon taxes leads to a reduction in already sub optimal output thereby exacerbating pre existing distortions arising from imperfect competition iii furthermore increases in energy costs can result in higher mark ups in some markets because of less competition resulting from firms exit

coordination commitment and enforcement the case of the merchant guild we interpret historical evidence in light of a repeated game model to conclude that merchant guilds emerged during the late medieval period to allow rulers of trade centers to commit to the security of alien merchants the merchant guild developed the theoretically required attributes secured merchants property rights and evolved in response to crises to extend the range of its effectiveness contributing to the expansion of trade during the late medieval period we elaborate on the relations between our theory and the monopoly theory of merchant guilds and contrast it with repeated game theories that provide no role for formal organization

from malthus to modern growth can epidemics explain the three regimes we model demographic and economic long run development in a setting where mortality is endogenous and subject to epidemic shocks the model replicates the full transition from malthusian stagnation to modern growth consistent with the historical facts the economy also passes an intermediate post malthusian phase where growth rates of both population and per capita income increase simultaneously as mortality rates fall and become less volatile the escape from the malthusian trap is the result of a series of mild epidemic shocks making it inevitable at some stage but its timing random calibrations show that it can differ by thousands of generations absent differences in exogenous parameters

an institution based view of executive compensation a multilevel meta analytic test we offer a multilevel meta analytic study of the firm performance executive compensation relationship comprising prior tests derived from 332 primary studies nested in 29 countries although our work modestly supports the optimal contracting theory based expectation that compensation is positively associated with performance it also reveals considerable cross country variability in this relationship we trace this variance to differences in the level of development of the formal and informal institutions protecting investors against managerial overcompensation and underperformance in terms of intentionally devised and enforced formal institutions we find significant positive moderating effects on the focal relationship of the rule of law and strength of investor protection variables for self enforcing informal institutions we find similar effects for concentrated ownership and compensation related entries in codes of good corporate governance we also find that formal and informal institutions function in a complementary manner in shaping the performance sensitivity of executive compensation the focal relationship becomes stronger when concentrated owners have access to well functioning courts and when informal norms of good governance are supported by shareholder protection laws our study thus suggests that optimal contracting theory must be supplemented with an institution based view to account for the conditioning effects of institutions on national contracting environments

crime punishment and background risks abstract we show that if the punishment for a property crime effectively eliminates an individual s initial wealth as with a very long prison sentence then such criminal activities become less desirable for a risk averse and prudent individual if his initial wealth distribution undergoes a second order stochastic dominant improvement similar results obtain under additional restrictions if the punishment reduces an individual s initial wealth by some factor less than 1 in a general equilibrium model where the endogenous victimization risk is part of individuals background risks we also show that the availability of insurance for the victimization risk lowers economy wide crime rates

dynamics and stagnation in the malthusian epoch this paper examines the central hypothesis of the influential malthusian theory according to which improvements in the technological environment during the pre industrial era had generated only temporary gains in income per capita eventually leading to a larger but not significantly richer population exploiting exogenous sources of cross country variations in land productivity and the level of technological advancement the analysis demonstrates that in accordance with the theory technological superiority and higher land productivity had significant positive effects on population density but insignificant effects on the standard of living during the time period 1 1500 ce

history lessons the birth of impersonal exchange the community responsibility system and impartial justice this occasional feature will discuss episodes and events drawn from economichistory that have lessons for current topics in policy and research responses to thiscolumn and suggestions for future ones should be sent to kenneth sokoloff c ojournal of economic perspectives department of economics university of cali fornia los angeles 405 hilgard ave los angeles california 90095 1477

the economics of exogamous marriage in small scale societies marriage is a core institution in almost every human society including small scale societies based on foraging or subsistence agriculture a crucial dimension of the marriage systems in such societies involves endogamy and exogamy that is the choice of a marriage partner from within one s own community or from an outside community we develop a model in which the exogamy rate is higher when good local matches are scarce due to small community sizes and when productivity differs across communities due to environmental shocks these theoretical predictions are supported by econometric analysis of data from the standard cross cultural sample jel d13 j11 n30 z13

the risks and rewards of criminal activity a comprehensive test of criminal deterrence whereas previous analyses of criminal deterrence have focused on the effect of criminal enforcement on crime rates this study analyzes the existence of compensating differentials for criminal pursuits by analyzing the risk rewards trade off this approach represents a more comprehensive test of the criminal deterrence hypothesis the sample consisted of black inner city youths who reported their crime participation crime income and self assessed risks from crime the risk premiums for the three principal adverse outcomes arrest conviction and prison constituted between one half and two thirds of all crime income on the average providing strong support for the criminal deterrence hypothesis

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

fossil fuel flexibility in west european power generation and the impact of system load factors this paper analyzes short run interfuel substitution in west european power generation and the impact of system load factors on fossil fuel choice the problems are studied within a restricted translog cost share model the paper concludes that interfuel substitution in existing power plants is substantial especially that between oil and gas this is consistent with the notion that short run fuel substitution takes place in dual or multi fired plants by switching load between different single fired plants and by some conversions of power plants to be able to burn alternate fuels the empirical investigation also indicates that the system load factor is a notable determinant of fossil fuel choices in west europe and the paper ends with an assessment of the fuel consequences of some load management schemes in the region

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

from foraging to farming explaining the neolithic revolution abstract this article reviews the main theories about the prehistoric shift from hunting and gathering to agriculture the transition also known as the neolithic revolution was ultimately necessary to the rise of modern civilization by creating the foundation for the later process of industrialization and sustained economic growth the article provides a brief historical survey of the leading hypotheses concerning the rise of agriculture proposed in the archaeological and anthropological literature it then turns to a more detailed review of the theories put forth in the economic literature

a missing link in family firms internationalization research family structures hennart majocchi and forlani propose and validate a new explanation of family firms internationalization heterogeneity shedding light on the role of a family firm s global niche business model this type of family firm can avoid the dominant internationalization problems usually depicted in the literature on family firms internationalization starting from the same diagnosis on extant research we explore another perspective to explain this heterogeneity the structure of the family institution we examine the relationships of family structures developed by emmanuel todd in social anthropology to family firms internationalization we explain how todd s typology of family structures can influence the new mechanisms proposed by hennart and colleagues for family firms in europe with a global niche business internationalization finally using these family structures we also reexamine two analyses on family firms internationalization therefore we introduce a new perspective for research on family firms internationalization that is based on context and has critical importance for understanding family firms strategies this new perspective has significance for international business research on family firms

on criminals risk attitudes abstract if criminals are expected utility maximizers and more sensitive to changes in the certainty than the severity of punishment they must be risk preferrers we show that risk aversion is not ruled out if the expected utility hypothesis is weakened 1997 elsevier science s a

distributional effects of higher natural gas prices in russia abstract this paper analyses the distributional effects of eliminating the implicit subsidy on natural gas consumption in russia the analysis is based on a computable general equilibrium model with multiple households and a detailed power generation sector it is found that using additional government revenues from higher domestic gas prices to increase the income of low and middle income households could improve the welfare of these households and alleviate income inequality in russia e g total private consumption of the poorest decile could increase by 3 nevertheless the most efficient revenue recycling policy would be to invest in the energy efficiency of buildings which have the largest energy savings potential in russia in the long term investing in the energy efficiency of buildings could reduce greenhouse gas emissions by 240 million tonnes of co2 equivalent per year and increase the welfare of low and middle income households e g total private consumption of the poorest decile increases by 1 it is also found that increasing the regulated domestic gas price could lead to windfall profits for non gazprom producers hence to increase government revenues the gas price reform could be supplemented by an increase in the capital income tax in the gas sector

do we punish high income criminals too heavily many critics believe that since high income criminals can afford to purchase better legal services they are less severely punished than poor criminals who commit equivalent crimes others are concerned that the penalties imposed on criminals are too small this paper shows that ignoring the effect conviction has on later earnings dramatically underestimates the total monetary penalty paid by those convicted and that the penalty structure is extremely progressive where evidence on the probability of conviction is available it shows that the highest income criminals face the highest expected penalties

family structure institutions and growth the origins and implications of western corporations siders the importance of the family as an institution little attention however has been given to the impact of the family structure and its dynamics on institutions this limits our ability to understand distinct institutional developments and hence growth in the past and present this paper supports this argument by highlighting the importance of the european family structure in one of the most fundamental institutional changes in history and reflects on its growth related implications what constituted this change was the emergence of the economic and political corporations in late medieval europe corporations are defined as consistent with their historical meaning intentionally created voluntary interest based and self governed permanent associations guilds fraternities universities communes and city states are some of the corporations that have historically dominated europe businesses and professional associations business corporations universities consumer groups counties republics and democracies are examples of corporations in modern societies the provision of corporation based institutions to mitigate problems of cooperation and conflict constituted a break from the ways in which institutions had been provided in the past historically large kinship groups such as clans lineages and tribes often secured the

malthus to solow a unified growth theory is developed that accounts for the roughly constant living standards displayed by world economies prior to 1800 as well as the growing living standards exhibited by modern industrial economies our theory also explains the industrial revolution which is the transition from an era when per capita incomes are stagnant to one with sustained growth the authors use a standard growth model with several technologies the first denoted the malthus technology requires land labor and reproducible capital as inputs the second denoted the solow technology does not require land the authors show that in the early stages of development only the malthus technology is used and due to population growth living standards are stagnant despite technological progress eventually technological progress causes the solow technology to become profitable and both technologies are employed at this point living standards improve since population growth has less influence on per capita income growth in the limit the economy behaves like a standard solow growth model excerpt