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

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

information and the persistence of private order contract enforcement institutions an experimental analysis abstract we study an experimental market in which some sellers are prone to moral hazard and in which a private order contract enforcement institution exists that can mediate trade and prevent sellers from reneging on their contractual obligations using the institution to resolve the moral hazard problem is costly we demonstrate that in this market the utilization of the private order contract enforcement institution may make public and private market signals uninformative and inhibit learning we study whether this potential information externality can limit adaptation away from the private order institution when it is efficient to do so consistent with theory we find inefficient persistence when the institution is used but by contrast efficient adaptation in other situations providing information to individuals who are using the private order institution allows them to partially adapt

commodity price volatility and world market integration since 1700 abstract poor countries are more volatile than rich countries and this volatility impedes their growth furthermore commodity prices are a key source of that volatility this paper explores price volatility since 1700 to offer three stylized facts commodity price volatility has not increased over time commodities have always shown greater price volatility than manufactures and world market integration breeds less commodity price volatility thus economic isolation is associated with much greater commodity price volatility while world market integration is associated with less

the response of the informal sector to trade liberalization this paper studies the relationship between trade liberalization and informality it is often claimed that increased foreign competition in developing countries leads to an expansion of the informal sector defined as the sector that does not comply with labor market legislation using data from two countries that experienced large trade barrier reductions in the 1980 s and 1990 s brazil and colombia we examine the response of the informal sector to liberalization in brazil we find no evidence of a relationship between trade policy and informality in colombia we do find evidence of such a relationship but only for the period preceding a major labor market reform that increased the flexibility of the colombian labor market these results point to the significance of labor market institutions in assessing the effects of trade policy on the labor market

estimating the employer switching costs and wage responses of forward looking engineers this article estimates worker switching costs and how much the employer switching of experienced engineers responds to outside wage offers i use data on engineers across swedish private sector firms to estimate the relative importance of employer wage policies and switching costs in a dynamic programming discrete choice model of employer choice the differentiated firms are modeled in employer characteristic space and each firm has its own age wage profile a majority of engineers have moderately high switching costs and a minority of experienced workers are responsive to outside wage offers younger workers are more sensitive to outside wage offers

does law and order attenuate the benefits of democracy on economic growth recent studies have reported positive associations between democracy and economic growth they have also explored how associations could differ across regions or income levels however might the effects of democracy on growth also depend on factors such as institutions promoting law and order using a panel specification we employ a democracy law and order interactive term to examine if the effects of democracy on economic growth depend on these other institutions we find that positive effects of democracy diminish and might even turn negative in countries where other institutions such as those supporting law and order are strong

do institutions matter for regional development rodriguez pose a do institutions matter for regional development regional studies this paper discusses whether institutions matter for regional development and how to integrate them in regional development strategies it is found that while institutions are crucial for economic development generating an institution based regional development strategy is likely to be undermined by the lack of definition of what are efficient institutions problems related to the measurement of institutions to their space and time variability to the difficulties in establishing the right mix of formal and informal institutions and to the endogeneity between institutions and economic development make one size fits all approaches to operationalizing institutions difficult the paper posits that in order to overcome these problems it is crucial to distinguish between the institutional environment and institutional arrangements that is to target not the institutions which shape the unique character of any territ

de facto political power and institutional persistence much of the empirical work and the conceptual discussion of the impact of institutions on economic development either implicitly or explicitly assumes that institutions persist although acemoglu et al 2001 provide evidence that constraints on the executive persist many aspects of institutions change frequently less developed countries cycle between democracy and dictatorship and often change their constitutions relatedly while the current economic problems in latin america are often traced back to colonial times stanley l engerman and kenneth l sokoloff 1997 acemoglu et al 2002 the specific institutions that once underpinned the colonial economy such as the encomienda the mita or slavery vanished long ago these observations suggest that we need to develop a framework in which changes in certain dimensions of institutions are consistent with overall institutional persistence in this paper we make an attempt to highlight some important mechanisms for understanding simultaneous change and persistence in institutions institutional persistence in this context refers to the persistence of a cluster of economic institutions such as the extent of enforcement of property rights for a broad cross section of society acemoglu et al 2001 such lack of property rights enforcement may be driven by quite different specific institutions e g risk of expropriation entry barriers or economic systems such as serfdom or slavery in turn these different specific economic institutions may exist under different political institutions including dictatorships absolutist monarchies oligarchies and corrupt or even populist democracies given this rich array of possibilities a useful framework must specify which aspects of institutions can change which others have a tendency to persist in equilibrium and how the persistence of certain types of institutions could have lasting effects on economic outcomes in this paper we provide a simple model of the coexistence of change and persistence in institutions first we describe some existing approaches to the persistence of social arrangements as well as the essence of the mechanism we propose next we illustrate the key issues using the experience of the southern united states and last we provide a simple model that formalizes the main mechanism in the paper we conclude by discussing a complementary mechanism to the one presented in this paper

financial liberalization and reversals political and economic determinants what accounts for the dynamics of financial reforms this paper identifies the political regime as one of the main factors focusing on democratization and financial reform it puts forward novel evidence for a u shaped relation across countries and over time for different reform measures and a wide range of estimators partial democracy is a main obstacle to financial reforms and democratization when incomplete may lead to severe financial reform reversals nauro f campos and fabrizio coricelli

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

labor market monopsony there has been a renewed interest in monopsony in labor markets in recent years that includes both the traditional static approach to monopsony ably reviewed by boal and ransom 1997 and the new approach to monopsony with more attention paid to dynamic issues developed in detail by manning 2003 the articles presented in this supplement highlight both approaches and illustrate the range of labor market settings in which the exercise of monopsony power may be important the first use of the term monopsony in economics is widely attributed to robinson 1969 robinson conceived of monopsony as analogous to monopoly whereas monopoly refers to the case of a single seller confronted in a market by many buyers monopsony refers to the case of a single buyer confronted in a market by many sellers just as the monopolist faces a downward sloping demand curve for his product and

power coercion and the games landlords play abstract if an agent introduces triadic relationships through a threat when relations are dyadic without this threat and if by such a threat this agent reduces the welfare of others then this agent may be said to exercise power we construct a minimal model with three agents landlord laborer and merchant and three commodities and demonstrate that in the subgame perfect equilibrium of a finite move extensive form game of complete and perfect information there is no powerful individual we show next that in the infinitely repeated game there exists a subgame perfect equilibrium in which the landlord wields power

inequality democracy and institutions a critical review of recent research this paper surveys the theoretical and empirical literature on the effect of economic and political inequality on institutions the current understanding suggests that unequal societies develop exploitative and inefficient institutions empirical research which is scant and has mainly concentrated at cross national level supports to some extent the existence of an inverse relationship between inequality and institutions but more analysis is needed future empirical research should undertake country state and micro level analysis which are a necessary complement to aggregate level studies the effect of inequality could also take place indirectly through the influence of inequality on democratization

a new product growth for model consumer durables this article originally appeared in management science january 1969 volume 15 number 5 pp 215 227 published by the institute of management sciences a growth model for the timing of initial purchase of new products is developed and tested empirically against data for eleven consumer durables the basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of previous buyers a behavioral rationale for the model is offered in terms of innovative and imitative behavior the model yields good predictions of the sales peak and the timing of the peak when applied to historical data a long range forecast is developed for the sales of color television sets

poverty labor markets and trade liberalization in indonesia abstract we measure the effects of trade liberalization over the period of 1993 2002 on regional poverty levels in 259 indonesian districts and investigate the labor market mechanisms behind these effects the identification strategy relies on combining information on initial regional labor and product market structure with the exogenous tariff reduction schedule over four three year periods we add to the literature on local labor market effects of trade policies by distinguishing between tariffs for output markets and for intermediate inputs and finding that poverty reduced especially in districts with a greater sector exposure to input tariff liberalization among the potential channels behind this effect we show that low skilled work participation and middle skilled wages were more responsive to reductions in import tariffs on intermediate goods than to reductions in import tariffs on final outputs these results point towards increasing firm competitiveness as a driving factor behind the beneficial poverty effects

has democratization reduced infant mortality in sub saharan africa evidence from micro data does democracy help babies survive in sub saharan africa by using retrospective fertility surveys conducted in 28 african countries i compare the survival of infants born to the same mother before and after democratization to disentangle the effect of democracy from that of changes in population characteristics which is infeasible with country level statistics on infant mortality i find that infant mortality falls by 1 2 percentage points 12 of the sample mean after democratization in the post cold war period relevant aspects of democracy appear to be the combination of multiparty elections and leadership change

institutional traps and economic growth this article s point of departure is that low quality institutions concentration of political power and material wealth and underdevelopment are persistent over time its analytical model views an equal distribution of political power as a commitment device to enhance institutional quality thereby promoting growth the politically powerful coalition contemplates relinquishing of its power through democratization weighing this advantageous consequence against the limit on own appropriative ability that it entails the possibility of two developmental paths is exhibited with concentration of political and economic power low quality institutions and slow growth and a more equal distribution of political and economic resources high quality institutions and faster growth

farm productivity in burkina faso effects of animal traction and nonfarm income the purpose of this invited paper is to stimulate at the micro meso and macro levels debate on positive analytical approaches to agricultural productivity the session focuses on africa because it is the only developing region where crop output and yield growth is lagging seriously behind population growth the present paper treats the micro farmhousehold level macro and meso analyses are useful for tracing productivity effects of policy and infrastructure change employing broad samples over long periods micro analyses tend to track smaller samples over shorter periods but dig below the aggregate surface to discern and explain productivity differences over crops zones and farmer groups micro analysis is useful for policy and technology formulation and for infrastructure and commodity promotion strategies further many aggregate studies are limited to only a few composite product categories because of lack of more detailed data on labor land and capital allocations over crops to obtain finer distinctions among crops one needs detailed farm management surveys since the spate of african farm management studies in the 1960s and 1970s soils have rapidly degraded access to land has become increasingly constrained factor and credit markets have changed structurally and nonfarm activity by farm households has apparently increased these changes should affect productivity across farm types suggesting the need to revive attention to farm level analysis past farm level productivity work in africa which largely used positive analysis tended to stratify the sample exogenously based on farm characteristics generally by farm size use of animal traction access to credit use of new seed varieties land tenure status or income we follow these earlier studies by stratifying the farm household data by a factor we expect to affect technical parameters namely farm capital in the guinean zone of burkina faso in particular we stratify according to whether the household owns animal traction equipment foll wing barrett et al and jaeger and matlon besides adding to empirical evidence on the productivity effects of animal traction we endogenously stratify the sample with a selectivity model an approach too rarely taken with a few recent exceptions such as carter in productivity research we then estimate production functions controlling for selectivity bias such an approach also allows us to test the indirect effect of nonfarm income on productivity through its effect on technology adoption as embodied in farm capital acquisition studies of nonfarm income effects on capital acquisition are not absent in the literature e g barrett et al in eastern burkina but they have been somewhat neglected in farm level work and neglected even more in aggregate level research because of the rarity of rural nonfarm income data

recruitment restrictions and labor markets evidence from the postbellum u s south this article studies the effect of recruitment restrictions on mobility and wages in the postbellum u s south i estimate the effects of criminal fines charged for enticement recruiting workers already under contract on sharecropper mobility tenancy choice and agricultural wages i find that a 13 10 increase in the enticement fine lowered the probability of a move by black sharecroppers by 12 daily wages by 1 cent 1 and the returns to experience for blacks by 0 6 per year these results are consistent with an on the job search model where the enticement fine raises the cost of recruiting an employed worker

analysis on the growth of telecommunication services a global comparison of diffusion patterns with the development of the internet the telecommunication market has seen a rapid shift from voice based services to data based services relationships of substitutability and complementarity have emerged among communications technology services such as internet service mobile phone service and fixed telephone service the article analyses the diffusion patterns of communication services in different continents a modified logistic growth model is estimated using panel data for the years 1975 2004 the research forms a valuable framework for forecasting demand for new services based on the diffusion of incumbent services and can inform strategies for entering the communications network industry

the political economy of food price volatility the case of vietnam and rice this article argues that the structure of the vietnamese rice export system is in political economy terms a rational response to the volatility present in the international rice market in particular it is argued that the vietnamese food agency along with vinafood 1 and vinafood 2 have been structured so that they can benefit from the domestic demands for export restrictions anticipated to occur as a consequence of international price volatility and the psychological demand of consumers for price stability in turn the actions of these agencies also contribute to international price volatility and the resulting demand for export restrictions since the political and economic elite in vietnam obtain both political and economic power from this system it is unlikely to be replaced with more effective and efficient policies to combat domestic price volatility thus continued volatility in the price of rice can be expected

protection of property rights and growth as political equilibria abstract this paper presents a survey of the literature on property rights and economic growth different theoretical mechanisms that relate property rights to economic development are discussed lack of protection of property rights can result in slow economic growth through different channels expropriation of private wealth corruption of civil servants excessive taxation and barriers to adoption of new technologies the origins of property rights are also considered different theories are illustrated but more attention is paid to the social conflict view and its success and limitations the second part of the paper illustrates relevant empirical works on property rights and growth

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

the economics of labor coercion the majority of labor transactions throughout much of history and a significant fraction of such transactions in many developing countries today are coercive in the sense that force or the threat of force plays a central role in convincing workers to accept employment or its terms we propose a tractable principal agent model of coercion based on the idea that coercive activities by employers or guns affect the participation constraint of workers we show that coercion and effort are complements so that coercion increases effort but coercion always reduces utilitarian social welfare better outside options for workers reduce coercion because of the complementarity between coercion and effort workers with a better outside option exert lower effort in equilibrium and thus are coerced less greater demand for labor increases coercion because it increases equilibrium effort we investigate the interaction between outside options market prices and other economic variables by embedding the coercive principal agent relationship in a general equilibrium setup and studying when and how labor scarcity encourages coercion general market equilibrium interactions working through the price of output lead to a positive relationship between labor scarcity and coercion along the lines of ideas suggested by domar while interactions those working through the outside option lead to a negative relationship similar to ideas advanced in neo malthusian historical analyses of the decline of feudalism in net a decline in available labor increases coercion in general equilibrium if and only if its direct partial equilibrium effect is to increase the price of output by more than it increases outside options our model also suggests that markets in slaves make slaves worse off conditional on enslavement and that coercion is more viable in industries that do not require relationship specific investment by workers

endogenous enforcement institutions we model the state as a self enforcing agreement over the use of force powerful individuals punish violations of contracts and property rights and if they shirk or abuse their power society reverts to a low production anarchy stage our model has two implications first improvements in coercion move the optimal enforcement system from private ordering where coercive punishments are not used to centralized state where punihments sanction violations by citizens but not by the ruler to decentralized state where punishments sanction all violations second institutions that reinforce the allegiance of state militias to the law simultaneously insure that contract violations are punished and that the ruler does not expropriate citizens thus they are more productive than judicial institutions which solely facilitate contract enforcement the model is consistent with the historical correlation between technological advances in coercion and the transition from private to state enforcement and with the fact that institutional constraints on the executive affected the long run economic development of nations more than improvements in judicial institutions acemoglu and johnson 2005 we also provide a framework for the optimal sequencing of institutional reforms they should focus first on the binding self enforcement constraint punishment or expropriation and switch to other constraints when the initially binding constraint becomes slack

income and health spending evidence from oil price shocks health expenditures as a share of gdp in the united states have more than tripled over the past half century a common conjecture is that this is a consequence of rising income we investigate this hypothesis by instrumenting for local area income with time series variation in oil prices interacted with local oil reserves this strategy enables us to capture both partial equilibrium and local general equilibrium effects of income on health expenditures our central income elasticity estimate is 0 7 with 1 1 as the upper end of the 95 confidence interval which suggests that rising income is unlikely to be a major driver of the rising health expenditure share of gdp 2013 the president and fellows of harvard college and the massachusetts institute of technology

why were workers whipped pain in a principal agent model one reason a person hurts another is to get that person to do something this paper uses a model to show that threatening pain can be rational and that pain is inflicted upon people who are poor in the sense of having bad alternatives the model corrects a confusion in previous models of slavery gives an explanation of why child and not adult laborers were beaten during the industrial revolution and prompts a discussion of the dangers of rational choice modeling copyright 1990 by royal economic society

the value of democracy evidence from road building in kenya ethnic favoritism is seen as antithetical to development this paper provides credible quantification of the extent of ethnic favoritism using data on road building in kenyan districts across the 1963 2011 period guided by a model it then examines whether the transition in and out of democracy under the same president constrains or exacerbates ethnic favoritism across the post independence period we find strong evidence of ethnic favoritism districts that share the ethnicity of the president receive twice as much expenditure on roads and have five times the length of paved roads built this favoritism disappears during periods of democracy jel d72 h54 j15 o15 o17 o22 r42

violence and property rights abstract since the middle ages when europe was still at a malthusian stage of development interpersonal violence has been in steady decline and institutions and norms limiting violence in particular property rights have expanded here we put forward a malthusian model of violence where these trends can be interpreted as a response to easing population pressure following an acceleration in technological progress the idea is that agents rationally risk dying in violent resource competition in order to make more of their children survive starvation violence carries a positive externality because those who die free up resources for survivors this generates a socially optimal level of violence which can be implemented with the right amount of property rights protection it is shown that faster technological progress can lead to a decline in violence and improved property rights protection similar to the path followed by europe

trade liberalization and unemployment theory and evidence from india abstract a widely held view among the public is that trade liberalization increases unemployment using state and industry level unemployment and trade protection data from india we find no evidence of any unemployment increasing effect of trade reforms in fact our state level analysis reveals that urban unemployment declines with trade liberalization in states with flexible labor markets and larger employment shares in net exporter industries moreover our industry level analysis indicates that workers in industries experiencing greater reductions in trade protection were less likely to become unemployed especially in net export industries our results can be explained within a theoretical framework incorporating trade and search generated unemployment and some institutional features of the indian economy

labor coercion and the accumulation of human capital abstract this paper examines the effect of labor coercion on human capital accumulation we use micro data from puerto rico where unskilled laborers were forced to work for landowners during 1849 1874 using variation in municipality level suitability for coffee cultivation and international coffee prices we estimate the response of schooling to exogenous increases in relative demand for unskilled labor in regimes with and without forced labor during the coercive regime increased coffee prices had no effect on individuals literacy rates in coffee growing regions following the abolition of forced labor in 1874 similar changes in coffee prices reduced literacy rates by 12 consistent with a diminished skill premium in the free labor market regime relative to the coercive period

trade liberalization inequality and poverty in brazilian states this paper studies the impact of trade liberalization and international trade on household income inequality and poverty using detailed micro data across brazilian states from 1987 to 2005 results suggest that brazilian states that were more exposed to tariff cuts experienced smaller reductions in household poverty and inequality if significance of results on brazilian states depends on the choice of poverty and inequality indicators robust and contrasting results emerge when we disaggregate into rural and urban areas within states trade liberalization contributes to poverty and inequality increases in urban areas and may be linked to inequality declines in rural areas no significant effect on rural poverty appears from our study in terms of observed integration to world markets import penetration plays a similar role as trade liberalization for brazilian states as a whole on the contrary rising export exposure appears to have significantly reduced both measures of household welfare

the economic impact of the coal boom and bust in this paper we examine the impact of the coal boom in the 1970s and the subsequent coal bust in the 1980s on local labour markets in kentucky ohio pennsylvania and west virginia we address two main questions in our analysis how were non mining sectors affected by the shocks to the mining sector how did these effects differ between sectors producing local goods and those producing traded goods we find evidence of modest employment spillovers into sectors with locally traded goods but not into sectors with nationally traded goods

the elasticity of labor supply at the establishment level monopsonistic wage setting power requires that the supply of labor directed toward individual establishments is upward sloping this study utilizes institutional features to identify the supply curve the elasticity of labor supply is estimated using data for the norwegian teacher labor market in a period where the only variation in the wage level was determined centrally and with information on whether there is excess demand or not at the school level in fixed effects models the supply elasticity faced by individual schools is estimated to about 1 4 and is in the range 1 0 1 9 in different model specification

the diffusion of mobile telecommunications services in the european union we study the technological and regulatory determinants of the diffusion of mobile telecommunications services in the european union using a logistic model of diffusion we find that the transition from the analogue to the digital technology during the early 1990s and the corresponding increase in spectrum capacity had a major impact on the diffusion of mobile telecommunications countries which granted first licenses at later points in time show a significant but slow catching up effect implying international convergence only by around 2006 the impact of introducing competition has also been significant during both the analogue and the digital period though the effect was smaller than the technology effect

justifying the first order approach to principal agent problems it is of interest to know when the incentive compatibility conditio n in principal agent problems can be replaced by the condition that the agent s expected utility be stationary in effort the mirrlees rogerson conditions do not work if the principal can observe more than one observable statistic also the mirrlees rogerson assumption that the distribution function of output is convex in the agent s action is unsatisfactory even in the context of the basi c model it is too restrictive the paper presents a suite of conditio ns that are applicable to the multistatistic case and replaces the objectionable convex distribution function assumption copyright 1988 by the econometric society

the evolution of markets under entry and standards regulation the case of global mobile telecommunications abstract we analyze the effects of government policies on the evolution of an industry the global mobile telecommunications market i we find a relatively slow diffusion convergence between countries this follows partly from regulatory delay in issuing first licenses yet persisting initial cross country differences also contribute to a lack of convergence ii introducing competition has a strong immediate impact on diffusion but a weak impact afterwards sequential entry is preceded by pre emptive behavior by incumbents this is consistent with the presence of consumer switching costs iii setting a single technological standard accelerates the diffusion of analogue technologies considerably for digital technologies it is too early to draw reliable conclusions yet the available evidence suggests that setting single standards has similar beneficial effects

export price shocks and rural labor markets the role of labor market distortions abstract to what extent can workers in developing countries seize gains from trade to answer this question we resort to a unique exogenous labor demand shock triggered by a surge in the world market price of cotton in 2010 11 by capitalizing on tajikistan s geographic variation in the suitability for cotton production we identify the effect of the export price hike on wages of rural workers the shock induces agricultural firms to shift towards labor intensive cotton production the subsequent greater labor demand doubles wages for female cotton pickers on small entrepreneurial private farms but does not affect their wages on large parastatal farms we present evidence that parastatal farms recruit workers for low wages based on monopsony power and expand employment based on labor coercion of children and public sector workers our results highlight the importance of accounting for competitive structures in local labor markets when assessing the wage pass through of world market prices to workers in developing countries

the rural non farm sector issues and evidence from developing countries abstract the rural non farm sector has traditionally been viewed as a low productivity sector which produces low quality goods it is often expected to wither away as a country develops recent years have seen a shift away from this position towards recognition that the rural non farm sector can and often does contribute to economic growth rural employment poverty reduction and a more spatially balanced population distribution this paper reviews the literature on the conceptual and empirical underpinnings of this more recent perspective focussing on the experience in developing countries the paper documents the size and heterogeneity of the sector pointing to evidence that in many countries the sector is expanding rather than declining the issues associated with measuring the sector s economic contribution are discussed followed by empirical assessments for several countries and regions the distributional impact of non farm earnings is examined and it is found that a pro poor impact while by no means inevitable can be considerable the sector s trajectory over time in different settings is reviewed and the scope for and experience of various policy interventions is discussed

using survey data to assess the distributional effects of trade policy the author develops and applies a methodology to empirically explore the effects of trade policies on the distribution of income and poverty in developing countries he uses a methodology based on two links one connecting trade policies to prices and another connecting prices to household welfare the author applies the methodology to the study of the distributional effects of mercosur on argentine families the main finding is that mercosur benefits the average argentine household across the entire income distribution there is evidence of a pro poor bias of the regional trade agreement on average poor households gain more from the reform than middle income households whereas the effects on rich families are positive but not statistically significant prior to the reform argentine trade policy protected the rich over the poor and after the reform granted some protection to the poor as relative pre mercosur tariffs are higher on relatively skill intensive goods the tariff removals tend to benefit the poor over the rich these findings indicate that trade reforms may actually help improve the distribution of income and reduce poverty in the country

the effects of location and sectoral components of economic growth on poverty evidence from indonesia abstract in this paper we investigate the relationship between economic growth and poverty reduction by differentiating growth and poverty into their sectoral composition and urban rural location using data from indonesia we find that rural services growth reduces poverty in all sectors and locations however urban services growth has the largest effect on poverty in most sectors finally we also find that rural agriculture growth strongly reduces poverty in rural areas the largest contributor to poverty in indonesia this implies that while agriculture growth in rural areas still plays a major role in reducing poverty policies that enable strong growth in the services sector in both urban and rural areas would expedite poverty reduction

monopolizing violence and consolidating power governments in weak states often face an armed opposition and have to decide whether to try to accommodate and contain that adversary or to try to consolidate power and monopolize violence by disarming it when and why do governments choose to consolidate power and monopolize violence how fast do they try to consolidate power when does this lead to costly fighting rather than to efforts to eliminate the opposition by buying it off we study an infinite horizon model in which the government in each period decides how much to offer the opposition and the rate at which it tries to consolidate its power the opposition can accept the offer and thereby acquiesce to the government s efforts to consolidate or it can fight in an attempt to disrupt those efforts in equilibrium the government always tries to monopolize violence when it has coercive power against the opposition where roughly coercive power is the ability to weaken the opposition by lowering its payoff to fighting whether the government consolidates peacefully or through costly fighting depends on the size of any contingent spoils which are benefits that begin to accrue from an increase in economic activity resulting from the monopolization of violence and the higher level of security that comes with it when contingent spoils are small the government buys the opposition off and eliminates it as fast as is peacefully possible when contingent spoils are large the government tries to monopolize violence by defeating the opposition militarily jel codes d02 d74 h1 copyright 2013 oxford university press

performance standards and incentive pay in agency contracts when the presence of limited liability restricts a principal from imposing monetary fines on an agent in case of poor performance the principal might use other kinds of punishment threats to deter the agent from shirking we show that under the optimal contract in this case the principal sets a performance standard and punishes the agent if the standard is not met but rewards the agent on a profit sharing basis if the standard is significantly exceeded the optimal choice of performance standards for such contracts is discussed it is shown that punishment threats although inefficient often help the principal to discipline the agent jel classification d82

global fiscal adjustment and trade rebalancing the emergence of substantial fiscal deficits and a large build up of government debt in major advanced economies will inevitably lead to a period of fiscal consolidation in coming years in an earlier paper mckibbin and stoeckel 2010 explored the effects of this fiscal adjustment in advanced economies on the global economic outlook this paper focuses on the differences between the impacts of fiscal policy in advanced versus emerging economies in particular the need for more fiscal spending on infrastructure in emerging economies and the need for fiscal consolidation in advanced economies leads naturally to the question of what this asymmetric fiscal adjustment might do to global trade balances as well as global economic growth over the coming decades the adjustment needed in both regions is substantial and the asymmetry of the adjustment implies important consequences for trade and capital flows between regions as well as asset price adjustments within and between regions

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

market power and rents in global supply chains market power and competition policy in food supply chains has emerged as an important economic issue in economics and a highly sensitive item on the policy agenda consolidation is taking place in the food industry both in high income countries and in emerging economies but the impact of concentration in global food chains on efficiency and rent distribution is more nuanced and complex than often claimed we review the literature and extend it by developing a model which explicitly takes into account market imperfections and contract enforcement problems in supply chains increased competition benefits farms by improving contract conditions but contract enforcement becomes more complicated

do we see convergence in institutional quality a cross country analysis abstractdifferences in the quality of institutions may explain differences in per capita income yet we know relatively little on how institutions evolve this paper contributes to such knowledge by testing for convergence in legal bureaucratic and administrative institutional quality using cross section and panel methods on a large sample of countries from the 1970s to 2010 we find that countries with initially poor institutions tended to slowly catch up both when they shared the same initial conditions and when they did not however the convergence process seems to be a temporary effect following the end of the cold war

is there monopsony in the labor market evidence from a natural experiment recent theoretical and empirical advances have renewed interest in monopsonistic models of the labor market however there is little direct empirical support for these models we use an exogenous change in wages at department of veterans affairs va hospitals as a natural experiment to investigate the extent of monopsony in the nurse labor market we estimate that labor supply to individual hospitals is quite inelastic with short run elasticity around 0 1 we also find that non va hospitals responded to the va wage change by changing their own wages

coercive contract enforcement law and the labor market in 19th century industrial britain british master and servant law made employee contract breach a criminal offense until 1875 we develop a contracting model generating equilibrium contract breach and prosecutions then exploit exogenous changes in output prices to examine the effects of labor demand shocks on prosecutions positive shocks in the textile iron and coal industries increased prosecutions following the abolition of criminal sanctions wages differentially rose in counties that had experienced more prosecutions and wages responded more to labor demand shocks coercive contract enforcement was applied in industrial britain restricted mobility allowed workers to commit to risk sharing contracts with lower but less volatile wages

the gendered labor market impacts of trade liberalization evidence from brazil this paper investigates gender differences in the impact of brazil s trade liberalization on labor market outcomes to identify the causal effect of trade reforms the paper uses difference in difference estimation exploiting variation across microregions in pre liberalization industry composition the analysis finds that trade liberalization reduced male and female labor force participation and employment rates but the effects on men were significantly larger thereby tariff reductions contributed to gender convergence in labor force participation and employment rates gender differences are concentrated among the low skilled population and in the tradable sector where male and female workers are most likely to be imperfect substitutes

the making of policy institutionalized or not this paper develops a framework for analyzing different policymaking styles their causes and their consequences in latin america finding that lower institutionalization and greater use of alternative political technologies apts are more likely the lower the cost of using these technologies the higher the potential damage they can cause the lower the wealth of the economy and the more asymmetric the distribution of de jure political power moreover strategic complementarity exists in the use of alternative political technologies for instance bribes by the rich and protests by the poor are likely to be countervailing forces and will both occur in polities with weaker political institutions

when the levee breaks black migration and economic development in the american south abstract in the american south postbellum economic development may have been restricted in part by white landowners access to low wage black labor this paper examines the impact of the great mississippi flood of 1927 on black out migration and subsequent agricultural development flooded counties experienced an immediate and persistent out migration of black population over time landowners in flooded counties modernized agricultural production and increased its capital intensity relative to landowners in nearby similar non flooded counties landowners resisted black out migration however benefiting from the status quo system of labor intensive agricultural production jel j15 j43 n32 n52 n92 q54 r23

differences in labor supply to monopsonistic firms and the gender pay gap an empirical analysis using linked employer employee data from germany this article investigates women s and men s labor supply to the firm within a semistructural approach based on a dynamic model of new monopsony using methods of survival analysis and a large linked employer employee data set for germany we find that labor supply elasticities are small 1 9 3 7 and that women s labor supply to the firm is less elastic than men s which is the reverse of gender differences in labor supply usually found at the level of the market our results imply that at least one third of the gender pay gap might be wage discrimination by profit maximizing monopsonistic employers

optimal choice of a reserve price under uncertainty the revenue function for a standard auction is typically asymmetric around the revenue maximizing reserve price thus choosing a reserve price that is smaller than the revenue maximizing reserve price can result in a substantially different loss than choosing one that is larger by the same amount therefore when the revenue function is unknown it is important to consider uncertainty around the revenue function and its asymmetric structure for this purpose i propose a bayesian decision rule and illustrate its typical revenue gains i then apply the rule to the bid data from the u s timber sales

why capital hires labor a bargaining perspective organizational forms often serve as vehicles for the appropriation of quasi rent capitalist firms typically emerge when production requires noncontractible investments in specific physical assets because worker control would divert quasi rents away from ass et owners ex post conversely labor managed firms tend to emerge in niches requiring specialized human capital but general purpose physi cal assets a key result is that capitalist firms can persist in competitive markets even when labor managed firms would yield a larg er total surplus copyright 1993 by american economic association

good bad and ugly colonial activities do they matter for economic development levels of development vary widely within countries in the americas we argue that part of this variation has its roots in the colonial era when colonizers engaged in different economic activities in different regions of a country we present evidence consistent with the view that bad activities those that depended heavily on labor exploitation led to lower economic development today than good activities those that did not rely on labor exploitation our results also suggest that differences in political representation but not in income inequality or human capital could be the intermediating factor between colonial activities and current development

government policy network externalities and mobile telecommunication services evidence from oecd countries this article analyses the effect of government policy on the diffusion of mobile telecommunication services in member countries of the organization for economic cooperation and development oecd specifically we examine how the competition in and standard policies of each country affect cellular diffusion through interactions with positive and negative network externalities the empirical analysis shows that significant network externality effects exist in a cellular market although the positive effects dominate the negative effects initially the negative network externality effects become larger and outweigh the positive externality effects after a certain level of diffusion rate has been achieved in particular a single standard policy and the speed of technological innovation combined with the previous penetration rate generate a positive network externality on the diffusion of mobile telecommunications however a competition policy that solely increases the rate of new subscriptions does not gen

monopsony in the labor market this paper surveys recent theoretical and empirical research on monopsony in labor markets broadly defined as upward sloping labor supply to an employer we compare older monopsony models based on small numbers of employers with newer models based on labor market frictions such as moving costs and search we also compare older econometric approaches that focus on static wage concentration relationships with newer approaches that focus on dynamics our review of empirical estimates suggests that monopsony power based on small numbers of employers is probably rare but occasionally large while monopsony power based on frictions is probably widespread but small on average

timing disturbances in labor market contracting roth s findings and the effects of labor market monopsony this paper addresses alvin roth s findings of market contracting at times earlier than optimal for market participants which roth describes as market unraveling a market failure he proposes to solve by designing centralized buyer seller matching programs this paper shows that while roth s engineering solutions are ingenious the early contracting phenomena derive from labor market monopsony under monopsony price is unavailable to clear the market time of contract becomes the currency for working out market forces roth s matching serves to shore up the monopsony and would be unnecessary if the monopsony were removed a superior solution is to end the monopsony

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

international growth spillovers geography and infrastructure there is significant academic evidence that growth in one country has a positive impact on growth in neighbouring countries this paper contributes to this literature by analysing the heterogeneous strength of growth spillovers across world regions and by investigating the contribution of transport and communication infrastructure to explain this heterogeneity and promote neighbourhood effects by defining neighbourhood on the basis of membership of regional trade agreements we focus on spillovers that work through regional integration and trade the analysis finds significant evidence for heterogeneity in growth spillovers which are strong between oecd countries and essentially absent in sub saharan africa ssa we further find strong interaction between infrastructure and being a landlocked country this suggests that growth spillovers from regional success stories in ssa and other lagging world regions will depend on first strengthening the channels through which such spillovers can spread most importantly connective infrastructure such as transport and telecommunication links

reputational consequences of labor coercion evidence from assam s tea plantations the right to coerce an employee is seen as advantageous to employers however if coercion gives employers a bad reputation workers may be harder to recruit we study a unique setting in assam s tea plantations in the 19th century where migrant workers were recruited under two different indentured contracts one of which was more coercive and gained notoriety in the national press and policy circles using newly collected panel data on annual migration flows to seven districts over the period 1883 1900 we find that the response of migration to increased demand for labor proxied by a rising tea price was lower for the contract that had a bad reputation workers migrated under the more coercive contract only when uninformed or misled about the terms of their employment we identify the effect of information flow by distinguishing between recruiters with and without social connections with the workers

commodity prices and growth in africa a frican economies export primary commodities and most export little else policymakers as well as economists and historians of african economic development have seen these exports as both a hope and a curse the following parable tells the story once upon a time a servant of the ruler discovered a miraculous plant which grew readily in that country and whose seeds could be woven into fine cloth so desirable was this fabric that it became prized all over the world and fetched a high price after two score years the plant accounted for most of the country s trade with the world the ruler ordered the peasants to grow the plant paid them only a fraction of its price and he and his nobles became fabulously wealthy because the ruler wished to be remembered as a great ruler and as the father of his country he used his wealth to build a great army and brought machines from foreign countries to make the fine goods that previously could only be obtained from foreign merchants but the machines often broke down and the goods that they made were of poor quality and after the ruler died they were left to rust under the ruler s successor there was a war in a foreign land where the plant also grew so that there was a great shortage and its price increased threefold in only three seasons the new ruler spent his newfound riches on fantastic extravagance while immense sums were expended on public works after the manner of the east and on productive works carried out in the wrong way or too soon not even the threefold increase in prices could support these expenditures and the country soon found itself deeply in debt when the war ended and the price fell the country could no longer pay the interest on its debt or borrow more money even after it had sold its only useful public work to a foreign power so that power sent a mission to the country the publication of whose report from which the above

the political economy of indirect control this paper characterizes the efficient sequential equilibrium when a government uses indirect control to exert its authority we develop a dynamic principal agent model in which a principal a government delegates the prevention of a disturbance such as riots protests terrorism crime or tax evasion to an agent who has an advantage in accomplishing this task our setting is a standard dynamic principal agent model with two additional features first the principal is allowed to exert direct control by intervening with an endogenously determined intensity of force which is costly to both players second the principal suffers from limited commitment using recursive methods we derive a fully analytical characterization of the likelihood intensity and duration of intervention the first main insight from our model is that repeated and costly interventions are a feature of the efficient equilibrium this is because they serve as a punishment to induce the agent into desired behavior the second main insight is a detailed analysis of a fundamental tradeoff between the intensity and duration of intervention which is driven by the principal s inability to commit finally we derive sharp predictions regarding the impact of various factors on likelihood intensity and duration of intervention we discuss these results in the context of some historical episodes

trade wages and the political economy of trade protection evidence from the colombian trade reforms abstract worker industry affiliation plays a crucial role in how trade policy affects wages in many trade models yet most research has focused on how trade policy affects wages by altering the economy wide returns to a specific worker characteristic i e skill or education rather than through worker industry affiliation this paper exploits drastic trade liberalizations in colombia in the 1980s and 1990s to investigate the relationship between protection and industry wage premiums we relate wage premiums to trade policy in an empirical framework that accounts for the political economy of trade protection accounting for time invariant political economy factors is critical when we do not control for unobserved time invariant industry characteristics we find that workers in protected sectors earn less than workers with similar observable characteristics in unprotected sectors allowing for industry fixed effects reverses the result trade protection increases relative wages this positive relationship persists when we instrument for tariff changes our results are in line with short and medium run models of trade where labor is immobile across sectors or alternatively with the existence of industry rents that are reduced by trade liberalization in the context of the current debate on the rising income inequality in developing countries our findings point to a source of disparity beyond the well documented rise in the economy wide skill premium because tariff reductions were proportionately larger in sectors employing a high fraction of less skilled workers the decrease in the wage premiums in these sectors affected such workers disproportionately

new market power models and sex differences in pay in the context of certain models it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage we use this strategy to estimate the elasticity of labor supply for men and women workers at a chain of grocery stores identifying separation elasticities from differences in wages and separation rates across different job titles within the firm we estimate that women have lower elasticities so a robinson style monopsony model can explain reasonably well the lower relative pay of women in the retail grocery industry