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

economic dynamics in the malthusian era evidence from the 1609 spanish expulsion of the moriscos we investigate economic dynamics in the malthusian era using the 1609 expulsion of moriscos from spain sharp population declines in former morisco districts were accompanied by decreased output and increased per capita output while these short run results are consistent with standard malthusian predictions malthusian convergence was delayed up to 1786 in former morisco districts archival sources and historical accounts suggest extractive institutions and cultural differences may have contributed to delayed convergence in population and output per capita this historic episode provides an unusually rich setting to examine malthusian dynamics highlighting the potential for sustained differences in per capita output in the malthusian era

occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

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

the economic impact of social ties evidence from german reunification we use the fall of the berlin wall in 1989 to show that personal relationships which individuals maintain for noneconomic reasons can be an important determinant of regional economic growth we show that west german households who had social ties to east germany in 1989 experienced a persistent rise in their personal incomes after the fall of the berlin wall moreover the presence of these households significantly affects economic performance at the regional level it increases the returns to entrepreneurial activity the share of households who become entrepreneurs and the likelihood that firms based within a given west german region invest in east germany as a result west german regions that for idiosyncratic reasons have a high concentration of households with social ties to the east exhibit substantially higher growth in income per capita in the early 1990s a one standard deviation rise in the share of households with social ties to east germany in 1989 is associated with a 4 7 percentage point rise in income per capita over six years we interpret our findings as evidence of a causal link between social ties and regional economic

an institution based view of international business strategy a focus on emerging economies leveraging the recent research interest in emerging economies this perspective paper argues that an institution based view of international business ib strategy has emerged it is positioned as one leg that helps sustain the strategy tripod the other two legs consisting of the industry and resource based views we then review four diverse areas of substantive research 1 antidumping as entry barriers 2 competing in and out of india 3 growing the firm in china and 4 governing the corporation in emerging economies overall we argue that an institution based view of ib strategy in combination with industry and resource based views will not only help sustain a strategy tripod but also shed significant light on the most fundamental questions confronting ib such as what drives firm strategy and performance in ib

the evolution of institutions in india and its relationship with economic growth this paper examines the evolution in a few public institutions over time in india it presents three types of evidence on institutional outcomes such as losses in power generation backlogs in disposal of court cases on perceptions based measures of governance some going back to the 1960s and finally on customs administration and whether it has been more effective at detecting evasion over time all the evidence suggests that institutional quality has not improved over time it then addresses the two way relationship between growth and institutions in terms of two apparent paradoxes the first is why growth has turned around so dramatically in india despite the relatively limited nature of reforms especially compared with other countries the second paradox is why despite nearly 30 years of rapid growth institutions have not improved the paper offers some explanations that might help explain these paradoxes

the economic impact of syrian refugees on host countries quasi experimental evidence from turkey abstract the syrian conflict generated forced immigration from northern syria to southeastern turkey arrival of refugees resembles a natural experiment which offers good opportunities to study the economic impact of immigration i study three main outcomes labor markets consumer prices and housing rents i document moderate employment losses among native informal workers which suggests that they are partly substituted by refugees prices of the items produced in informal labor intensive sectors declined due to labor cost advantages generated by refugee inflows finally refugee inflows increased the rents of higher quality housing units while there is no effect on lower quality units

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

historical frontiers and the rise of inequality the case of the frontier of granada the authors acknowledge financial support from the spanish ministry of science and technology grant eco2009 13357 the spanish ministry of economics and competitiveness grant eco2012 35430 and the andalusian council of innovation and science excellence project sej 4546

the long term effect of demographic shocks on the evolution of gender roles evidence from the transatlantic slave trade can demographic shocks affect the long run evolution of female labor force participation and gender norms this paper traces current variation in women s participation in the labor force within sub saharan africa to the emergence of a female biased sex ratio during the centuries of the transatlantic slave trade this historical shock affected the division of labor along gender lines in the remaining african population as women substituted for the missing men by taking up areas of work that were traditionally male tasks by exploiting variation in the degree to which different ethnic groups were affected by the transatlantic slave trade i show that women whose ancestors were more exposed to this shock are today more likely to be in the labor force have lower levels of fertility and are more likely to participate in household decisions the marriage market and the cultural transmission of internal norms across generations represent important mechanisms explaining this long run persistence

gender wage inequality in inclusive and exclusive industrial relations systems a comparison of argentina and chile drawing on an empirical and comparative mixed methods analysis of argentina and chile this article investigates arguments about the role of inclusive versus exclusive industrial relations systems in promoting gender wage equity and enabling attractive wage returns to women investing in higher education our findings confirm the importance of argentina s inclusive industrial relations system in narrowing gender pay differences to a greater extent than chile nevertheless chile s industrial relations institutions are not wholly exclusive its high level statutory minimum wage has played a strongly distributive role in the 2000s and compressed wages in the lower half of the wage distribution also notable is the finding from quantile regression that highly educated women in high paid jobs enjoy a larger wage premium in the class equal argentina than in chile despite a far wider wage gap between low high educated workers in chile overall

failure to launch the role of land inequality in transition delays recent work in the growth literature has provided various explanations for transition delays and the great divergence this paper provides empirical support for one theory of transition delays initial land inequality our analysis is designed to elucidate the channels via which land inequality can affect long run economic performance using a new historical data set for land inequality frankema 2009 we employ duration analysis to investigate whether higher levels of land inequality lead to longer delays in the extension of primary schooling we then investigate whether such delays affect long run economic performance via their effect on contemporaneous schooling our findings suggest that land inequality is a key determinant of delays in schooling and that such delays have a significant negative impact on long run output

inequality in landownership the emergence of human capital promoting institutions and the great divergence this paper suggests that inequality in the distribution of landownership adversely affected the emergence of human capital promoting institutions e g public schooling and thus the pace and the nature of the transition from an agricultural to an industrial economy contributing to the emergence of the great divergence in income per capita across countries the prediction of the theory regarding the adverse effect of the concentration of landownership on education expenditure is established empirically based on evidence from the beginning of the 20th century in the u s

land reforms poverty reduction and economic growth evidence from india recognition of the importance of institutions that provide security of property rights and relatively equal access to economic resources to a broad cross section of society has renewed interest in the potential of asset redistribution including land reforms empirical analysis of the impact of such policies is however scant and often contradictory this paper uses panel household data from india together with state level variation in the implementation of land reform to address some of the deficiencies of earlier studies the results suggest that land reform had a significant and positive impact on income growth and accumulation of human and physical capital the paper draws policy implications especially from the fact that the observed impact of land reform seems to have declined over time

why u s wage and employment behavior differs from that in britain and japan if a poll were to be conducted among american academic economists to select the most mystifying economic phenomenon of our time surely the sticky nominal wage rate would emerge at or near the top of the list the slow and partial response of the nominal wage rate to changes in aggregate nominal spending has been a central postulate of macroeconomic theory for the past 45 years from keynes general theory down to the standard postwar textbook keynesian paradigm to the more modern fixed wage price models of robert barro and herschel grossman i976 and edmond malinvaud i977 unwilling passively to accept nominal wage rigidity as an unexplained assumption many labour market theorists have followed the lead of costas azariadis i975 and martin baily i974 in building models to explain rigid wages and layoff unemployment as the rational outcome of a profit maximising calculus as i pointed out in an early critique of the azariadis baily model i976a their assumptions cannot explain cycles in employment but rather why workers would want fixed incomes i e a fixed wage rate and fixed employment soon thereafter barro i977 went one step further and argued that contract theory is a facade which cannot explain why workers would choose a rigid wage and variable employment in preference to the classical equilibrium quantity of employment that equates the marginal product of labour with the marginal value of time now an examination of the evidence has led me to the realisation that rigid wages cannot provide the underpinnings for a universally valid theory of the business cycle simply because wages are not universally rigid i document below with postwar quarterly data that the share of fluctuations in the manufacturing wage bill taking the form of nominal wage changes as compared to changes in hours worked is five to ten times greater in britain and japan than in

equal pay as a moving target international perspectives on forty years of addressing the gender pay gap this paper provides an overview of the key factors impacting upon the gender pay gap in the uk europe and australia forty years after the implementation of the first equal pay legislation the pay gap remains a key aspect of the inequalities women face in the labour market while the overall pay gap has tended to fall in many countries over the past forty years it has not closed in some countries it has been stubbornly resistant or has even widened in reviewing the collection of papers that make up this special issue we identify four broad themes with which to group the contributions and draw out the explanations for diverse trends theoretical and conceptual debates legal developments and their impacts wage setting institutions and changing employer demands and newly emerging pay inequalities between and within educational and ethnic groups across the four themes we underline how the trends in the gender pay gap capture the dynamism of inequalities as the market power of different groups and stakeholders changes over times three key dimensions emerge from the papers to provide a framework for future research and policy discourse the relationship between litigation and bargaining strategies the interaction between wage setting institutions and new organisational practices and the increasing and range of diversity or equality strands competing for equal treatment we conclude that progress towards closing the gender pay gap will not be easy will require a collective effort of various actors and will not be quick

the slave trade and the origins of mistrust in africa in a recent study nunn 2008 examines the long term impacts of africa s slave trade he finds that the slave trade which occurred over a period of more than 400 years had a significant negative effect on long term economic development although the article arguably identifies a negative causal relationship between the slave trade and income today the analysis is unable to establish the exact causal mechanisms underlying this reduced form relationship in this article we examine one of the channels through which the slave trade may affect economic development today combining contemporary individual level survey data with historical data on slave shipments by ethnic group we ask whether the slave trade caused a culture of mistrust to develop within africa initially slaves were captured primarily through state organized raids and warfare but as the trade progressed the environment of ubiquitous insecurity caused individuals to turn on others including friends and family members and to kidnap trick and sell each other into slavery sigismund wilhelm koelle 1854 p e h hair 1965 charles piot 1996 we hypothesize that in this environment a culture of mistrust may have evolved which may persist to this day we show that current differences in trust levels within africa can be traced back to the transatlantic and indian ocean slave trades combining contemporary individual level survey data with historical data on slave shipments by ethnic group we find that individuals whose ancestors were heavily raided during the slave trade are less trusting today evidence from a variety of identification strategies suggests that the relationship is causal examining causal mechanisms we show that most of the impact of the slave trade is through factors that are internal to the individual such as cultural norms beliefs and values jel j15 n57 z13

trends in unemployment wages and productivity the case of japan along with the high savings ratio the functioning of the labour market is one of the most important factors behind the macroeconomic performance of the postwar japan which foreign observers have christened the miracle of the rising sun in the first place the nature of the japanese labour market is important for the long run trend of japanese economic growth because labour and its quality are crucial factors for economic development the high quality of a well disciplined workforce as well as the migration of labour from rural to urban areas has contributed much to the rapid growth of the japanese economy second the nature of the labour market has influenced the pattern of japanese business cycles by buffering demand fluctuations the slow response of firms demand for labour combined with the fast response of the labour force participation ratio has prevented a sharp increase in the unemployment rate during recessions relatively flexible nominal and real wages have also enabled the japanese economy to adjust quite smoothly to supply shocks notably after the second oil crisis in this paper we shall review trends in unemployment wages and productivity in the postwar japanese economy and relate them to its macroeconomic performance we shall also summarize the current literature concerning features of the labour market evaluate quantitative estimates of trends in labour statistics and explore future prospects

the legacies of forced freedom china s treaty ports abstract this paper investigates the long run development of china s treaty ports from the mid eighteenth century until today focusing on a sample of prefectures on the coast or on the yangtze river i document the dynamic development paths of treaty ports and their neighbors in alternate phases of closedness and openness i also provide suggestive evidence on migration and sector wise growth to understand the advantage of treaty ports in the long run

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

legitimacy and the benefits of firm formalization entrepreneurs in many emerging economies start their firms informally without registering with the state we examine how informality at the time of founding affected the performance of 12 146 firms in 18 countries across sub saharan africa our findings indicate that entrepreneurs who registered their firms at founding enjoyed greater success in terms of sales and employment but these benefits varied widely across countries consistent with the idea that legitimation processes account for these benefits countries in which people trust their government more had larger advantages associated with being formal

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

the political economy of the maoist conflict in india an empirical analysis we study the maoist naxalite conflict in india by constructing a comprehensive district level database combining conflict data from four different terrorism databases to socioeconomic and geography data from myriad sources using data on 360 districts for three time periods we find that land inequality and lower incomes are important factors behind the conflict exploiting the micro structure of the data we show that growth of incomes of scheduled tribes significantly decreases the intensity of the conflict finally we show that historical property rights institutions from colonial times that go back centuries affect present day conflict outcomes

global land investments in the bio economy evidence and policy implications for countries dependent on agriculture the recent wave of investor interest in farmland could in principle help set in motion a virtuous cycle of economic growth and poverty reduction a large literature documenting failure of such investments documents the risks involved to appreciate associated opportunities and challenges we review past experience quantify country level potential for area expansion versus intensification and identify determinants of countries attractiveness for investors in the initial stages of the land rush the fact that weak land governance seems to increase rather than reduce land demand justifies an emphasis on improving institutions transparency and accountability while at the same time providing concrete suggestions for policy and research

the political economy of public goods some evidence from india we are interested in how public goods get allocated by a centralized state we use data on public goods and social structure from parliamentary constituencies in rural india to understand the allocation of these goods over the 1970s and 1980s national policies and political agendas during this period emphasized universal access to basic amenities and financed a rapid expansion in rural infrastructure we find evidence of considerable equalization in many of these facilities reflecting perhaps the importance of these commitments among the historically disadvantaged social groups those that mobilized themselves politically gained relative to the others measures of social heterogeneity that have been emphasized in the recent empirical literature on public goods are relevant but not overwhelming in their importance

increasing returns path dependence and the study of politics it is increasingly common for social scientists to describe political processes as path dependent the concept however is often employed without careful elaboration this article conceptualizes path dependence as a social process grounded in a dynamic of increasing returns reviewing recent literature in economics and suggesting extensions to the world of politics the article demonstrates that increasing returns processes are likely to be prevalent and that good analytical foundations exist for exploring their causes and consequences the investigation of increasing returns can provide a more rigorous framework for developing some of the key claims of recent scholarship in historical institutionalism specific patterns of timing and sequence matter a wide range of social outcomes may be possible large consequences may result from relatively small or contingent events particular courses of action once introduced can be almost impossible to reverse and consequently political development is punctuated by critical moments or junctures that shape the basic contours of social life

inflation and unemployment the world economy today is vastly different from the 1930s when seymour harris the chairman of this meeting infected me with his boundless enthusiasm for economics and his steadfast confidence in its capacity for good works economics is very different too both the science and its subject have changed and for the better since world war ii but there are some notable constants unemployment and inflation still preoccupy and perplex economists statesmen journalists housewives and everyone else the connection between them is the principal domestic economic burden of presidents and prime ministers and the major area of controversy and ignorance in macroeconomics i have chosen to review economic thought on this topic on this occasion partly because of its inevitable timeliness partly because of a personal interest reaching back to my first published work in 1941

fdi policies in china and india evidence from firm surveys this paper builds on the idea that economic reforms in china were designed to attract foreign direct investment fdi while the opposite happened in india we empirically examine how these different reform approaches affect foreign invested enterprises fie and domestic firms perceptions about the host country s business environment using world bank survey data we find that fies in india perceive more obstacles to business operations and development relative to domestic firms especially on issues related to government regulations and legal institutions on the contrary fies in china find government officials more helpful in promoting business development and perceive legal and financial constraints similar to their domestic counterparts these differences in perceptions between firm ownership types are consistent with the underlying diverging approaches of fdi policies adopted by the two largest developing nations

the gender wage gap a comparison of australia and canada using data from the 1989 canadian labour market activity survey and for australia the 1989 90 income distribution survey the authors investigate the reasons for the significantly lower gender wage gap in australia than in canada key similarities and differences between these two countries the authors argue make them a good basis for a natural experiment to investigate the effects of different labor market institutions in particular australia has a stronger union movement and a greater degree of centralization in wage determination than canada and most of its workers are covered by legally binding minimum working conditions the authors conclude that several differences between the countries in labor market structure notably a lower rate of return to education a lower rate of return to labor market experience and a lower level of wage inequality in australia than in canada are largely responsible for the smaller gender wage gap in australia

history institutions and economic performance the legacy of colonial land tenure systems in india we analyze the colonial land revenue institutions set up by the british in india and show that differences in historical property rights institutions lead to sustained differences in economic outcomes areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments and productivity in the post independence period than areas in which these rights were given to the cultivators these areas also have significantly lower investments in health and education these differences are not driven by omitted variables or endogeneity problems they probably arise because differences in historical institutions lead to very different policy choices

the long term effects of africa s slave trades can part of africa s current underdevelopment be explained by its slave trades to explore this question i use data from shipping records and historical documents reporting slave ethnicities to construct estimates of the number of slaves exported from each country during africa s slave trades i find a robust negative relationship between the number of slaves exported from a country and current economic performance to better understand if the relationship is causal i examine the historical evidence on selection into the slave trades and use instrumental variables together the evidence suggests that the slave trades have had an adverse effect on economic development

bringing history back into international business we argue that the field of international business should evolve its rhetoric from the relatively uncontroversial idea that history matters to exploring how it matters we discuss four conceptual channels through which history matters illustrating each with a major example first historical variation is at least a worthy complement to contemporary cross sectional variation in illuminating conceptual issues as an example we show that conclusions reached by the literature on contemporary emerging market business groups are remarkably similar to independently reached conclusions about a very similar organizational form that was ubiquitous in the age of empire second historical evidence avoids spurious labeling of some phenomena as new and by so doing may challenge current explanations of their determinants whereas some firm types today were also present earlier some types have disappeared some have appeared and some have disappeared and reappeared later third history can allow us to move beyond the oft recognized importance of issues of path dependence to explore the roots of penrosian resources we argue that the choices made by jardine s and swire s in asia today for example are an outgrowth of strategic choices first in evidence more than a century ago these would remain obscured absent an historical analysis fourth there are certain issues that are unaddressable except in the really long that is historical run exploring the causal relationship if any between foreign direct investment a staple of the international business literature and long run economic development provides one important example throughout we advocate embracing rigorous methods for analyzing small sample and qualitative data when conventional regression techniques do not apply that is we suggest that re embracing history in the mainstream is not tantamount to sacrificing methodological rigor

public goods institutions human capital and growth evidence from german history what are the origins and consequences of the state as a provider of public goods we study public goods provision established through new laws in german cities during the 1500s cities that adopted the laws subsequently began to differentially produce and attract human capital and to grow faster legal change occurred where ideological competition introduced by the protestant reformation interacted with local politics we study plagues that shifted local politics in a narrow period as sources of exogenous variation in public goods institutions and find support for a causal interpretation of the relationship between legal change human capital and growth

colonialism and modern income islands as natural experiments abstract using a new database of islands throughout the atlantic pacific and indian oceans we find a robust positive relationship between the number of years spent as a european colony and current gdp per capita we argue that the nature of discovery and colonization of islands provides random variation in the length and type of colonial experience we instrument for length of colonization using variation in prevailing wind patterns we argue that wind speed and direction had a significant effect on historical colonial rule but do not have a direct effect on gdp today the data also suggest that years as a colony after 1700 are more beneficial than earlier years we also find a discernable pecking order among the colonial powers with years under u s british french and dutch rule having more beneficial effects than spanish or portuguese rule our finding of a strong connection between modern income and years of colonization is conditional on being colonized at all since each of the islands in our da

appetite for destruction the impact of the september 11 attacks on business founding it is widely accepted that entrepreneurial creation affects destruction as new and better organizations technologies and transactions replace old ones this phenomenon is labeled creative destruction but it might more accurately be called destructive creation given the driving role of creation in the process we reverse the typical causal ordering and ask whether destruction may drive creation we argue that economic systems may get stuck in suboptimal equilibria due to path dependence and that destruction may sweep away this inertia and open the way for entrepreneurship to test this idea we need an exogenous destructive shock rather than destruction that is endogenous to the process of economic progress our identification strategy relies on the september 11 attacks as an exogenous destructive shock to the economic system centered on new york city consistent with our theoretical claim we find that 15months after the attacks the rate of business founding close to new york city exceeds the rate before the attacks even after controlling for the inflow of recovery funds furthermore the increase in the business founding rate after the attacks grows faster closer to manhattan than it does further away from the epicenter of destruction

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

reshaping institutions evidence on aid impacts using a pre analysis plan this brief summarizes the results of a gender impact evaluation study entitled reshaping institutions evidence on aid impacts using a pre analysis plan conducted between 2005 and 2009 in sierra leone the study observed the impact of pre analysis plan pap on local institutions by imposing participation requirements for marginalized groups including women and test for learning by doing effects in sierra leone on the individual and village level requiring women and young adults to take on leadership positions participate in project meetings and sign off on project finances does not have any persistent effect on their participation in local decision making or attitudes regarding leadership ability the project successfully established village organizations and tools to manage the project the distributions of the project s benefits were equitable and leakage was minimal there was a significant positive impact on the stock and quality of local public infrastructure however there are no detectible changes in the ability to raise funds for local public goods decision making process or social norms and attitudes funding for the study derived from the gobifo project the institutional reform and capacity building project ircbp the world bank development impact evaluation dime the horace w goldsmith foundation the international growth center 3ie and the national bureau of economic research nber african successes project

development and social capital abstract this paper examines social capital and its relation with economic development we focus on the role that interpersonal relationships play in social exchange whether through the market or through the provision of public goods by facilitating search and trust social capital can increase the efficiency of social exchange where formal institutions are weak but the benefits from social capital are likely to be unequally distributed given these features documenting empirically the benefits of social capital is complicated by the presence of negative and positive externalities and by the existence of leadership and group effects lessons for development policy are drawn at the end

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

income concentration in british india 1885 1946 we use a novel income tax data set to present evidence on the evolution of income concentration in the last 60 years of colonial rule in india these data allow us to study the evolution of income concentration at the country level as well as the location of top income earners across provinces we identify three key facts 1 the evolution of income concentration in british india was nonlinear following a u shape 2 the majority of top income earners were non europeans and 3 the geographical location of top income earners changed over time with the province of bombay gaining in importance in the early xxth century we provide an interpretation of these results in the light of the economic and political changes in british india over the period

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

investor protection and corporate governance recent research has documented large differences among countries in ownership concentration in publicly traded firms in the breadth and depth of capital markets in dividend policies and in the access of firms to external finance a common element to the explanations of these differences is how well investors both shareholders and creditors are protected by law from expropriation by the managers and controlling shareholders of firms we describe the differences in laws and the effectiveness of their enforcement across countries discuss the possible origins of these differences summarize their consequences and assess potential strategies of corporate governance reform we argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank centered and market centered financial systems

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

rural reforms and agricultural growth in china this paper employs province level panel data to assess the contributions of decollectivization price adjustments and other reforms to china s agricultural growth in the reform period decollectivization is found to improve total factor productivity and to account for about half of the output growth during 1978 84 the adjustment in state procurement prices also contributed positively to output growth its impact came mainly from the responses in input use the effect of other market related reforms on productivity and output growth was very small reasons for slowdown in agricultural growth after 1984 are also analyzed copyright 1992 by american economic association

landownership concentration and the expansion of education we study the relationship between large landownership concentration and the expansion of mass education in nineteenth century prussia cross sectional estimates show a negative association between landownership concentration and enrollment rates fixed effects panel estimates indicate that regions with an initially stronger landownership concentration exhibit increasing enrollment rates this relationship is not driven by differences in the supply of schooling we argue that the implementation of agricultural reforms including the stepwise abolition of serfdom is an important driver of the change in enrollment the results are consistent with the interpretation that emancipation from labor coercion increased the private demand for education

religious conversion in colonial africa within economics there has been a recent effort to better understand the notion of culture typically defined as beliefs values and norms held by individuals empirical work has focused on identifying systematic cultural differences between individuals from different ethnic and national backgrounds more recently attention has turned to the historical origins of cultural differences e g luigi guiso paolo sapienza and luigi zingales 2008 nathan nunn and leonard wantchekon 2009 colonial africa provides a natural laboratory to examine how an external intervention can have lasting impacts on people s beliefs and values this study examines the effect of european missionary activities in colonial africa on the subsequent evolution of culture as measured by religious beliefs the empirical results show that descendants of ethnic groups that experienced greater missionary contact are today more likely to self identify as christian this correlation provides evidence that foreign missionaries altered the religious beliefs of africans and that these beliefs persist as they are passed on from parents to children put differently the results show that historic events can have a lasting impact on culture the findings also provide rare empirical evidence of the historical determinants of longrun religious conversion studies of conversion typically focus on contemporary determinants see jason hwang and robert barro 2007 and the references therein although a number of studies have examined the long term impacts of missionary activities they have not considered their long run impacts on religious beliefs and values e g robert d woodberry 2004 one of the few papers that consider a historical determinant of long run conversion is by murat religious conversion in colonial africa

gender and the new inequality explaining the college non college wage gap the new inequality is often characterized by the increasing wage gap between workers with a college education and those without yet although the gap in hourly wages between college educated and non college educated women is high and rising the topic has been overshadowed by research on gender inequality and wage inequality among men using the 1990 5 percent public use microdata samples independent sources of macro data and controls for individual human capital characteristics i examine the association between the college non college wage gap and key aspects of local economic conditions for women and men while the college non college wage gap among women is comparable in size to the gap among men significant gender differences emerge in the underlying sources of high wage gaps in over 500 labor markets across the united states compared with men flexible and insecure employment conditions e g joblessness casualization and immigration are more important in fostering high wage gaps among women than are technology trade and industrial composition the prevailing explanations of rising wage inequality over time based on these gender differences i reconsider the debate on labor market restructuring and inequality and discuss a new analytical focus on differences in within gender inequality

the columbian exchange a history of disease food and ideas this paper provides an overview of the long term impacts of the columbian exchange that is the exchange of diseases ideas food crops technologies populations and cultures between the new world and the old world after christopher columbus voyage to the americas in 1492 we focus on the aspects of the exchange that have been most neglected by economic studies namely the transfer of diseases food crops and knowledge between the two worlds we pay particular attention to the effects of the exchange on the old world

the relationship between production and unemployment in japan okun s law in comparative perspective abstract this paper studies the question whether the celebrated okun s law a relation between excess capacity and unemployment applies to the postwar japanese economy though the fitness of estimation is weak the coefficient that measures the responsiveness of the output gap to the unemployment rate is very large reaching 28 this large coefficient can be attributed to the elastic response in the female participation ratio to flexible working hours to the slow adjustment in employment and to changes in industrial structures the results are compared with those in the united states

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

collectivization and china s agricultural crisis in 1959 1961 the agricultural crisis in china in 1959 61 after the initial success of the collectivization movement resulted in 30 million extra deaths in this paper a game theory hypothesis proposes the main cause of this catastrophe i argue that because of the difficulty in supervising agricultural work the success of an agricultural collective depends on a self enforcing contract in which each one promises to discipline oneself a self enforcing contract however can be sustained only in a repeated game in the fall of 1958 the right to withdraw from a collective was deprived the nature of the collectivization was thus changed from a repeated game to a one time game as a result the self enforcing contract could not be sustained and agricultural productivity collapsed the empirical evidence is consistent with this hypothesis

markets in china and europe on the eve of the industrial revolution prevailing views suggest the industrial revolution began in europe because markets had gradually become more efficient and by the 18th century the scope of economic activity was far larger than in other parts of the world this paper compares the actual performance of markets in europe and china two regions of the world that were relatively advanced in the pre industrial period but would start to industrialize about 150 years apart the analysis covers economies that account for about two fifths of the world s population in the mid 18th century and it considers some three centuries of data our findings suggest that relative levels of market function in china and europe were similar prior to the industrial revolution higher efficiency in europe is seen only in the nineteenth century when industrialization was already underway moreover these improvements occurred in a dramatic and sudden fashion further casting doubt on an evolutionary view of market development rather than being a key condition for subsequent growth gains in efficiency appeared simultaneously with the turning point of modern growth we discuss the implications of these findings for a number of explanations for long run growth and the industrial revolution

clientelism in indian villages abstract we study the operation of local governments panchayats in rural maharashtra india using a survey that we designed for this end elections are freely contested fairly tallied highly p

forced coexistence and economic development evidence from native american reservations there are large differences in economic development across native american reservations today this paper asks whether these differences can be in part explained by the forced integration of historically autonomous sub tribal bands in the 19th century to measure forced integration i combine anthropological data on intra tribal political integration in pre reservation times with historical information on the constituent bands of each reservation exploring variation in how politically integrated tribes were before reservations and variation in how politically integrated reservations were at the time of their formation i find that forced integration lowers per capita incomes today by about 30 percent to account for potential selection into forced integration i exploit historical mining rushes as a source of exogenous variation in the government s incentive to combine bands onto reservations the iv strategy confirms the baseline results i also provide quantitative evidence on the channels through which forced integration affects incomes today

land distribution and international agricultural productivity the unequal distribution of agricultural land is often cited as a source of inefficiency in agriculture previous cross country studies of agricultural productivity differences though have not considered land inequality this article addresses this issue by using cross country data on inequality in operational holdings of agricultural land from deininger and squire 1998 in an estimation of an agricultural production function the gini coefficient for land holdings is found to have a significant negative relationship with productivity this is consistent with the existence of heterogeneity in productivity by farm size within countries a one standard deviation drop in the gini coefficient implies an increase in productivity of 8 5

economic history and modern india redefining the link this paper argues that to restore the link between economic history and modern india a different narrative of indian economic history is needed an exclusive focus on colonialism as the driver of india s economic history misses those continuities that arise from economic structure or local conditions in fact market oriented british imperial policies did initiate a process of economic growth based on the production of goods intensive in labor and natural resources however productive capacity per worker was constrained by low rates of private and public investment in infrastructure excessively low rates of schooling social inequalities based on caste and gender and a delayed demographic transition to lower birthrates and the resultant heavy demographic burden placed on physical capital and natural resources

wage rigidity and unemployment in oecd countries real wage rigidity is often blamed for causing unemployment in the wake of adverse real shocks like changes in productivity or the terms of trade likewise nominal wage rigidity is blamed for causing unemployment in the wake of adverse nominal shocks like falls in nominal demand 1 however there has been relatively little systematic discussion of how these concepts should be defined some authors e g sachs 1979 have defined real wage rigidity as the opposite of nominal wage rigidity with the us nominally rigid and europe really rigid 2 the rigidity of european real wages has then been used to explain why europe has experienced a greater increase in unemployment since 1973 than the us but in this discussion real wage rigidity has not been measured in a way which would in fact predict how much unemployment would result from a given real shock the discussion has focused on the degree of nominal inertia in the system but the unemployment cost of real shocks does not depend primarily on the degree of nominal inertia but rather on the effect of unemployment in the phillips curve

swimming upstream trends in the gender wage differential in the 1980s using michigan panel study of income dynamics data for 1979 and 1988 we analyze how a falling gender wage gap occurred despite changes in wage structure unfavorable to low wage workers the decrease is traced to gender specific factors which more than counterbalanced changes in measured and unmeasured prices working against women supply shifts net of demand were unfavorable for women generally and hurt high skilled more than middle and low skilled women by analyzing wages we find support for the notion of a gender twist in supply and demand having its largest negative effect on high skilled women

egalitarianism cultural distance and foreign direct investment a new approach this study addresses an apparent impasse in the research on organizations responses to cultural distance we posit that cross country differences in egalitarianism a cultural orientation manifested in intolerance for abuses of market and political power and support for protection of less powerful actors affect multinational firms choices of destinations for foreign direct investment fdi using historically motivated instrumental variables we observe that egalitarianism distance has a negative causal impact on fdi flows this effect is robust to a broad set of competing accounts including the effects of other cultural dimensions various features of the prevailing legal and regulatory regimes other features of the institutional environment economic development and time invariant unobserved characteristics of origin and host countries we further show that egalitarianism correlates in a conceptually compatible way with an array of organizational practices pertinent to firms interactions with nonfinancial stakeholders such that national differences in these egalitarianism related features may affect firms international expansion decisions

organizational adjustment and institutional factors in japanese labour market adjustment an empirical evaluation abstract this paper examines the importance of institutional factors in the mechanism of japanese labour market adjustment the commonly held view suggests that transfers of employees both between and within firms have enhanced flexibility while contributing to the maintenance of low unemployment rates the paper produces evidence in support of the importance of transfers as an adjustment device limited to a subset of large manufacturing enterprises however the direct macroeconomic contribution of these institutional factors is marginal and the common view may have overestimated their importance

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

contracts hold up and exports textiles and opium in colonial india trade and export it is argued spur economic growth this paper studies the microeco nomics of exporting we build a heuristic model of transactions between exporters and producers and relate it to east india company operations in colonial bengal our model and the historical record stress two difficulties the exporter and its agents might not uphold payment agreements and producers might not honor sales contracts the model shows when procurement succeeds or fails highlighting the tension between these two hold up problems we analyze several cases including the east india company s cotton textile venture the famous opium monopoly and present day contract farming

egalitarianism and international investment abstract this study identifies how country differences on a key cultural dimension egalitarianism influence international investment flows a society s cultural orientation toward egalitarianism is manifested by intolerance for abuses of market and political power and a desire for protecting less powerful actors we show egalitarianism to be based on exogenous factors including social fractionalization dominant religion circa 1900 and war experience from the 19th century we find a robust influence of egalitarianism distance on cross national flows of bond and equity issuances syndicated loans and mergers and acquisitions an informal cultural institution largely determined a century or more ago egalitarianism exercises its effect on international investment via an associated set of consistent contemporary policy choices but even after controlling for these associated policy choices egalitarianism continues to exercise a direct effect on cross border investment flows likely through its direct influence on managers daily business conduct

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

empowerment and efficiency tenancy reform in west bengal the paper analyzes the effect of agricultural tenancy laws offering security of tenure to tenants and regulating the share of output that is paid as rent on farm productivity theoretically the net impact of tenancy reform is shown to be a combination of two effects a bargaining power effect and a security of tenure effect analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the indian state of west bengal in the late 1970s suggests that tenancy reform had a positive effect on agricultural productivity there

presidential address institutions and culture how and why does distant political and economic history shape the functioning of current institutions this paper argues that individual values and convictions about the scope of application of norms of good conduct provide the missing link evidence from a variety of sources points to two main findings first individual values consistent with generalized as opposed to limited morality are widespread in societies that were ruled by non despotic political institutions in the distant past second well functioning institutions are often observed in countries or regions where individual values are consistent with generalized morality and under different identifying assumptions this suggests a causal effect from values to institutional outcomes the paper ends with a discussion of the implications for future research jel a10 d7 e00

the impact of the transatlantic slave trade on ethnic stratification in africa in the last 15 years economists and economic historians have argued that africa has undergone a reversal of fortune and that ethnic fragmentation is a significant cause of africa s underdevelopment in this article we join these narratives by arguing that the transatlantic slave trade increased the degree of ethnic heterogeneity in africa today using both correlational and causal instrumental variables analysis we find an economically and statistically significant positive relationship between slave exports and ethnic heterogeneity this relationship is robust to changes in the scheme for drawing ethnic boundaries and the choice of observational unit

family policies wage structures and gender gaps sources of earnings inequality in 20 countries this study uncovers an unexpected effect of family friendly policies on women s economic attainments using hierarchical linear models the analysis combines individual level data obtained from th

the political value of land political reform and land prices in chile in this article we argue that when patron client relations are grounded in economic relationships such as between landlord and worker we should expect clientelism to influence not just how public policy the state and the political system work but also how the economy works we develop a simple model of the economic consequences of electoral clientelism when voting behavior can be observed landlords patrons provide economic rents to workers and in exchange workers vote for parties favored by landlords as votes are used by the landlords to accumulate political rents vote control increases the demand for labor and for land the model implies that the introduction of the australian ballot which destroys this form of clientelism should lead to a fall in the price of land in those areas where patron client relationships are strongest we test the predictions of the model by examining in detail the evolution of land prices in chile around may 31 1958 for which we collected original data a characteristic of rural chile at this time were patron client relations based on the inquilinaje system by which a worker the inquilino entered into a long term often hereditary employment relationship with a landlord and lived on his landlord s estate we show that the introduction of the australian ballot in 1958 led to a fall of about 26 in land prices in the areas where these patron client relationships were predominant

institutions and casinos on american indian reservations an empirical analysis of the location of indian casinos abstractthis paper empirically investigates the institutional determinants of whether a tribal government invests in a casino i find that the presence of indian casinos is strongly related to plausibly exogenous variation in reservations legal and political institutions tribal governments that can negotiate gaming compacts with multiple state governments because tribal lands span state borders had more than twice the estimated probability 77 versus 32 of operating an indian casino in 1999 tribal governments of reservations where contracts are adjudicated in state courts rather than tribal courts have more than twice the estimated probability 76 versus 34 of investing in an indian casino ceteris paribus these findings suggest that states political pressures and predictable judiciaries affect incentives to invest in casinos this study contributes more generally to the empirical literature on the effects of institutions by providing new evidence that low cost contracting is important fo

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research