New Economics Papers
on Business, Economic and Financial History
Issue of 2006‒07‒09
eighteen papers chosen by

  1. On the Importance of Finnishing School: Half a Century of Inter-generational Economic Mobility in Finland By Sari Pekkala; Robert E.B. Lucas
  2. Were Jews Political Refugees or Economic Migrants? Assessing the Persecution Theory of Jewish Emigration, 1881-1914. Forthcoming in: The New Comparative Economic History: Essays in Honour of Jeffrey G. Williamson, eds. Tim Hatton, Kevin O’Rourke and Alan Taylor. (May, 2006) By Leah Platt Boustan
  3. The Legacy of History for Development: The Case of Putnam's Social Capital By Guido de Blasio; Giorgio Nuzzo
  4. New evidence on state banking before the Civil War By Warren E. Weber
  5. Rottenberg and the Economics of Sport after 50 years: An Evaluation By Peter Sloane
  6. The Evolution of the Finnish Model in the 1990s: from Depression to High-tech Boom By Jaakko Kiander
  7. Contributions of Zvi Griliches By James Heckman
  8. The Effect of Internal Migration on Local Labor Markets: American Cities During the Great Depression (March, 2006). Joint with Price Fishback (University of Arizona) and Shawn Kantor (University of California-Merced). By Leah Platt Boustan
  9. The Macroeconomist as Scientist and Engineer By N. Gregory Mankiw
  10. Competing With the NYSE By William O. Brown, Jr.; J. Harold Mulherin; Marc D. Weidenmier
  11. Was Postwar Suburbanization ‘White Flight”? Evidence from the Black Migration (April, 2006) By Leah Platt Boustan
  12. Publishing Performance of Spanish Academics: 1970-2004: Institutions, Researchers et al. By David Rodriguez
  13. The work of Spanish men. A quantitative analysis based on census data, 1900-1970 By Alexander ELU TERÁN
  14. Aspects of Globalization By Ronald W. Jones
  15. Finland's First 10 Years in the European Union - Economic Consequences By Jaakko Kiander; Antti Romppanen
  16. Taxation and Debt Financing of Home Acquisition: Evidence from the Finnish 1993 Tax Reform By Tuukka Saarimaa
  17. Competition in the Promised Land: Black Migration and the Northern Labor Force, 1940-1970 (May, 2006) By Leah Platt Boustan
  18. Productivity Impacts of Offshoring and Outsourcing: A Review By Karsten Bjerring Olsen

  1. By: Sari Pekkala; Robert E.B. Lucas
    Abstract: Trends in inter-generational economic mobility in Finland are analyzed using panel data from 1950 through 1999 on more than 200 thousand sons and daughters born between 1930 and 1970. A significant decline is estimated in the inter-generational transmission elasticity from the 1930 birth cohort until the baby boom cohorts of the early 1950s. After that we observe no increase in the extent of mobility for the 1950s and 1960s birth cohorts. The quite dramatic transformation of the Finnish economy in the second half of the twentieth century is outlined in the paper. A decomposition of the intergenerational transmission elasticities across cohorts shows that most of the decline in transmission reflected a reduction in the impact of family income on duration of children's education accompanied by a decline in the returns to schooling. Despite the large volume of rural - urban migration during this period of transformation, regional mobility played only a minor role in increasing economic mobility.
    Keywords: Inter-generational mobility, cohorts, education, migration
    JEL: J62
    Date: 2005–02–10
  2. By: Leah Platt Boustan
  3. By: Guido de Blasio (Bank of Italy, Research Dept.); Giorgio Nuzzo (Bank of Italy, Branch of L'Aquila)
    Abstract: Putnam (1993) argues that (i) center-northern Italy has developed faster than southern Italy because the former was better endowed with social capital; and (ii) that the endowments of social capital across Italian territories have been highly persistent over centuries. This paper provides an empirical investigation of Putnam’s case. To evaluate the relevance of social capital, we present a test based on worker productivity, entrepreneurship, and female labor market participation. Using as instruments regional differences in civic involvement in the late ninetieth century and local systems of government in the middle age, we show that social capital does have economic effects.
    Keywords: Social Capital, Economic Development
    JEL: Z10 O10 D10
    Date: 2006–05
  4. By: Warren E. Weber
    Abstract: Prior to the Civil War there were three major differences among states in how U.S. banks were regulated: (1) Whether they were established by charter or under free-banking laws. (2) Whether they were permitted to branch. (3) Whether the state established a state-owned bank. I use a census of the state banks that existed in the United States prior to the Civil War that I recently constructed to determine how these differences in state regulation affected the banking outcomes in these states. Specifically, I determine differences in banks per capita by state over time; bank longevities (survival rates) by state, size, and type of organization; and bank failure probabilities also by state, size, and type of organization. In addition, I estimate the losses experienced by note holders and determine whether there were systematic differences in these depending on whether or not a bank was organized under a free banking law.
    Date: 2006
  5. By: Peter Sloane (University of Wales Swansea; IZA)
    Abstract: Simon Rottenberg’s seminal 1956 article in the Journal of Political Economy, 1956, is generally accepted as the starting point for the development of the economics of sport. While he recognised that certain features of professional sports leagues were unusual he saw little reason to treat this industry any differently from a conventional industry. He discusses the importance of uncertainty of outcome, the monopsonistic nature of the labour market, the nature of the product and demand (attendances). He considers alternatives to the reserve clause, such as equal revenue sharing, maximum salary limits, equal market franchise distribution and roster limits. Each of these is rejected in favour of a free market solution which, on the basis of the invariance principle, he suggests will perform just as well as the reserve clause in allocating talent to where it is most productive. The ensuing literature has focused on all these issues, many of which have created considerable debate amongst sports economists. In particular the assumption of profit maximisation has been challenged and a divergence of views, reflected in the so-called North American and European models of sports leagues has emerged. Over the last 50 years sports leagues have expanded, TV markets have opened up and legal challenges to existing practices have multiplied. This paper seeks to evaluate Rottenberg’s contribution to a rapidly expanding field and to judge its relevance today.
    Keywords: Sport, Monopsony, Monopoly Power
    JEL: J0 L0 L83
    Date: 2006–06
  6. By: Jaakko Kiander
    Abstract: Finland has recently got much admiration due to economic success reflected in rankings of competitiveness, technology, education and economic growth. This success has largely been embodied in the growth of Nokia group and ICT sector. Yet the economic boom and the success of the Finnish high tech industries is a relatively new phenomenon, starting from the mid-1990s. In fact, the years of good economic performance were preceded by an exceptionally deep recession in the beginning of the 1990s. This paper discusses the roots of the crisis of the Finnish economy, and the factors which helped it to recover and to create the technology-driven growth of the last decade. The focus is both on macroeconomic issues and on institutional change and the role of public policy. The main conclusion of this paper is that the institutional reforms (or the absence of them) seem to have played only minor role in the emergence of unemployment and in the subsequent employment revival in Finland in the 1990s. In addition to the breakthrough of ICT technologies, more traditional macroeconomic factors like changes in monetary policy and exchange rate, and pro-cyclical fiscal policy may have been of great importance. In spite of the severe economic shocks and industrial restructuring, the Finnish political governance and corporatist institutions have remained relatively stable. Political decision making has all the time been largely based on national consensus building like before. The structures of welfare state survived the fiscal crisis of the mid-1990s though the welfare state was forced to go through many small incremental changes, which reduced many entitlements. The central labour market institutions ? strong trade unions with high unionization rate, and centralized incomes policy ? have remained almost intact.
    Keywords: Finland, economic growth, social corporatism, structural change
    JEL: E60 J00 E32 O10 F00
    Date: 2004–12–15
  7. By: James Heckman
    Abstract: This paper summarizes the major research contributions of Zvi Griliches.
    JEL: B31 D24 O33
    Date: 2006–06
  8. By: Leah Platt Boustan
  9. By: N. Gregory Mankiw
    Abstract: This essay offers a brief history of macroeconomics, together with an evaluation of what has been learned over the past several decades. It is based on the premise that the field has evolved through the efforts of two types of macroeconomist— those who understand the field as a type of engineering and those who would like it to be more of a science. While the early macroeconomists were engineers trying to solve practical problems, macroeconomists have more recently focused on developing analytic tools and establishing theoretical principles. These tools and principles, however, have been slow to find their way into applications. As the field of macroeconomics has evolved, one recurrent theme is the interaction—sometimes productive and sometimes not— between the scientists and the engineers.
    Date: 2006–07
  10. By: William O. Brown, Jr.; J. Harold Mulherin; Marc D. Weidenmier
    Abstract: We study the stock exchange rivalry between the New York Stock Exchange (NYSE) and the Consolidated Stock Exchange (Consolidated) from 1885 to 1926 using a new database of bid-ask spreads and stock data collected from The New York Times and other primary sources. The magnitude of this important, but largely forgotten rivalry was substantial. From 1885 to 1895, the ratio of Consolidated to NYSE volume averaged 40 percent and reached as high as 60 percent. The market share of the Consolidated averaged 23 percent for approximately 40 years. The Consolidated focused on the relatively liquid securities on the NYSE as measured by bid-ask spreads and trading volume. Our results suggest that NYSE bid-ask spreads fell by more than 10 percent when the Consolidated began to trade NYSE stocks while bid-ask spreads for our quasicontrol group of stocks trading on the Boston Stock Exchange remain unchanged. The effect persisted over the entire history of the stock market rivalry until a series of scandals and investigations of the Consolidated by state regulators led to the demise of the exchange in the 1920s. The analysis suggests three conclusions: (1) the NYSE has faced significant long-run competition (2) the NYSE may be susceptible to a similar level of competition in the future and (3) that the Consolidated may have improved the efficiency of stock prices by contributing to the price discovery process.
    JEL: G1 G2 N2
    Date: 2006–06
  11. By: Leah Platt Boustan
  12. By: David Rodriguez
    Abstract: This work complements some of the results appearing in the article “Publishing Performance in Economics: Spanish Rankings†by Dolado et al. . Specifically we focus on the robustness of the results regardless of the time span considered, the effect of the choice of a particular database on the final results, and the effects on changes in the unit of institutional measure (departments versus institutions as a whole). Differences are significant when we expand the time period considered. There are also significant but small differences if we combine datasets to derive the rankings. Finally, department rankings offer a more precise picture of the situation of the Spanish academics, although results do not differ substantially from those obtained when overall institutions are considered.
    Keywords: rankings, economics, Spanish academics, bibliometric indicators
    JEL: A10 A11 A14
    Date: 2006–06–26
  13. By: Alexander ELU TERÁN (Universitat de Barcelona)
    Abstract: This paper presents a historical examination of employment in old age in Spain, in order to characterize this labour segment and identify and analyse its specific problems. One of these problems is the life-cycle deskilling process, already shown for certain national cases. This study explores whether this hypothesis also holds in Spain. The perspective used is essentially quantitative, as our analysis is based on the age-profession tables in Spanish population censuses from 1900 to 1970.
    Keywords: old age, labour markets, retirement.
    JEL: J14 J21 J26
    Date: 2006
  14. By: Ronald W. Jones
    Abstract: The author deals with the costs and benefits of globalisation. He also gives a simple explanation of the core economic forces behind the globalisation. The current technical development favours the decline of the fixed coordination costs of the multinational enterprises and this opens up the possibility for the enterprise to utilize the lower marginal costs elsewhere on the globe. The optimal degree of globalisation depends on the interplay between the fixed coordination costs and local marginal costs. Even though globalisation brings also costs in addition to benefits, the critics should remember, that any structural economic change tends to cause adjustment costs.
    Keywords: globalisation, structural change in economy, coordination costs, adjustment costs, marginal costs, multinational enterprises
    Date: 2006–01–03
  15. By: Jaakko Kiander; Antti Romppanen
    Abstract: This paper summarizes the economic performance of Finland in 1995?2004 and compares the actual developments to the projections made prior to the EU membership. The paper also assesses the impacts of the structural changes induced by the membership. The most pronounced impact of EU membership was on Finland?s agriculture and food industry. Joining the Common Agriculture meant a total change in the subsidy system and a sharp drop in producer prices. At the same time, agriculture and the food industry became part of the European internal market and the competition that goes with it. In sectors outside of the food chain, the impact of the EU is more difficult to ascertain. It was thought that integration would lead to increased trade in the internal market area. But this has not happened; rather the EU?s share of Finland?s foreign trade has decreased since membership.
    Keywords: Finnish economy, EU membership, integration
    Date: 2006–01–13
  16. By: Tuukka Saarimaa
    Abstract: The 1993 Finnish tax reform reduced the incentives to use debt financing in home acquisition for high-income households. Before the reform mortgage interest was deductible according to a progressive schedule creating a so-called upside-down effect, which means that the benefit from the deduction was the greater the higher was taxpayer?s income. After the reform, the deduction is made according to a flat schedule, and thus, the size of the benefit no longer depends on taxpayer?s income. We use household level data from the Income Distribution Survey of Statistics Finland to study whether high-income households have responded to the reform. Using tobit, Heckman and two-part model on repeated cross-sectional data from 1990?2000 we find that the probability of having a mortgage debt is clearly less dependent on the income of household?s head after the tax reform. This income variable measures the tax deduction effect and we conclude that the 1993 tax reform was behind the observed behavioural change. The results for the amount of mortgage debt conditional on a positive amount are more ambiguous. It seems that the tax reform had no or very little effect on the demand for the amount of mortgage debt.
    Keywords: mortgage interest deduction, tax reform, mortgage demand
    JEL: C30 R30 D10 H20
    Date: 2005–04–06
  17. By: Leah Platt Boustan
  18. By: Karsten Bjerring Olsen
    Abstract: Despite the attention that offshore outsourcing currently demands in the public media, there is little empirical evidence on its economic impact. As a consequence of rising fears of job losses associated with the phenomenon, most existing research on the subject is primarily concerned with addressing related labour market issues. The impacts on productivity, however, have received only little attention. This paper surveys the empirical literature on offshore outsourcing and its productivity effects. Due to the small number of existing studies, the survey also includes research that may serve as indirect evidence of the phenomenon’s link to productivity, such as its effect on skill upgrading. The most apparent conclusion drawn from the review is that there appears to be no clear patterns as to how offshore outsourcing affects productivity, and that much depends on both sector and firm-specific characteristics. There are some indications, however, that positive productivity effects from foreign material sourcing depends on the degree to which firms are already globally engaged, but also that such engagements generally could be close to their optimum level in developed economies. There is little existing research on offshoring of services, but it appears that its productivity enhancing effects generally are small in manufacturing plants while being of a somewhat greater magnitude for firms in the services sector. <P>Límpact des délocalisations sur la productivité : Vue d'ensemble <BR>Malgré l’intérêt que les délocalisations à l’étranger suscitent dans les médias, on dispose de peu d’éléments empiriques sur leur impact économique. Le phénomène de délocalisation faisant craindre de plus en plus des pertes d’emplois, la plupart des études qui y sont consacrées s’attachent essentiellement aux aspects qui ont trait au marché du travail, l’impact sur la productivité ne retenant guère l’attention. On commentera dans ce document les recherches empiriques sur les délocalisations à l’étranger et leur impact en termes de productivité. Vu le petit nombre d’études disponibles, on prendra également en compte les travaux qui éclairent indirectement le lien avec la productivité, notamment du point de vue de l’amélioration des qualifications. La conclusion la plus nette qui ressort de ce panorama est la suivante : il ne se dégage aucun profil clair quant à la façon dont la délocalisation à l’étranger influe sur la productivité, les caractéristiques du secteur et de l’entreprise jouant à cet égard un grand rôle. Certains éléments montrent néanmoins que l’impact positif que peut avoir la délocalisation matérielle à l’étranger est fonction du degré d’implication mondiale de l’entreprise, cette implication pouvant en général être proche de l’optimum dans les économies développées. Les recherches sont peu nombreuses sur la délocalisation des services ; il apparaît néanmoins que les gains de productivité dont la délocalisation s’accompagne dans le secteur manufacturier sont généralement faibles, alors qu’ils sont un peu plus nets dans le secteur des services.
    Date: 2006–03–06

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